Exhibit 10.17
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EMPLOYMENT AGREEMENT
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THIS AGREEMENT is entered into as of the 27th day of April, 1998, by and
between Rayovac Corporation, a Wisconsin corporation (the "Company"), and Xxxx
X. Xxxxxx (the "Executive").
WHEREAS, the Company desires the benefit of the experience, supervision and
services of the Executive and desires to employ the Executive upon the terms and
conditions set forth herein; and
WHEREAS, the Executive is willing and able to accept such employment on
such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:
1. Employment Duties and Acceptance. The Company hereby employs the Executive,
and the Executive agrees to serve and accept employment, as the President
and Chief Operating Officer of the Company, reporting directly to the Chief
Executive Officer of the Company (the "CEO"). In connection therewith, as
President and Chief Operating Officer, the Executive shall have general
supervision of the day-to-day affairs of the Company and the supervision
and direction of the actions of the other officers of the Company, subject
to the supervision of the CEO. During the Term (as defined below), the
Executive shall devote all of his working time to such employment and
appointment, shall devote his best efforts to advance the interests of the
Company and shall not engage in any other business activities, as an
employee, director, consultant or in any other capacity, whether or not he
receives any compensation therefor, without the prior written consent of
the Board. During the Term (as hereinafter defined) or any extension
thereof,
the Executive shall maintain his principal residence in the Madison,
Wisconsin area.
2. Term of Employment. Subject to Section 4 hereof, the Executive's employment
and appointment hereunder shall be for a term commencing on the date hereof
and expiring on April 30, 2001 (the "Term"). Upon expiration of the Term,
this Agreement shall automatically extend for successive periods of one (1)
year, unless the Executive or the Company shall give notice to the other at
least ninety (90) days prior to the end of the Term (or any annual
extension thereof) indicating that it does not intend to renew the
Agreement.
3. Compensation. In consideration of the performance by the Executive of his
duties hereunder, the Company shall pay or provide to the Executive the
following compensation which the Executive agrees to accept in full
satisfaction for his services, it being understood that necessary
withholding taxes, FICA contributions and the like shall be deducted from
such compensation:
(a) Base Salary. The Executive shall receive a base salary equal to Three
Hundred Twenty-Five Thousand Dollars ($325,000) per annum during the
Term ("Base Salary"), which Base Salary shall be paid in equal monthly
installments each year, to be paid monthly in arrears. The Board will
review from time to time the Base Salary payable to the Executive
hereunder and may, in its discretion, increase the Executive's Base
Salary. Any such increased Base Salary shall be and become the "Base
Salary" for purposes of this Agreement.
(b) Bonus. The Executive shall receive a bonus for each fiscal year ending
during the Term, payable annually in arrears, which shall be based, as
set forth on Schedule A hereto, on the Company achieving certain
annual performance goals established by the Board from time to time
(the "Bonus"). The Board may, in its discretion,
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increase the annual Bonus. Any such increased annual Bonus shall be
and become the "Bonus" for such fiscal year for purposes of this
Agreement.
(c) Insurance Coverages and Pension Plans. The Executive shall be entitled
to such insurance, pension and all other benefits as are generally
made available by the Company to its executive officers from time to
time.
(d) Stock Options. All stock options previously granted to the Executive
shall remain in full force and effect in accordance with their terms.
In connection with the Executive's employment and appointment
hereunder, the Executive is being granted certain time-based and
performance-based options to purchase, in the aggregate, 72,106 shares
of Common Stock at an exercise price of $22.88 per share. If the
Company implements a new stock option program in the future, the
Executive may participate to the extent authorized by the Board.
(e) Vacation. The Executive shall be entitled to four (4) weeks vacation
each year.
(f) Other Expenses. The Executive shall be entitled to reimbursement of
all reasonable and documented expenses actually incurred or paid by
the Executive in the performance of the Executive's duties under this
Agreement, upon presentation of expense statements, vouchers or other
supporting information in accordance with Company policy. All expense
reimbursements and other perquisites of the Executive are reviewable
periodically by the Compensation Committee of the Board, if there be
one, or the Board.
(g) Automobile. The Company shall provide the Executive with the use of a
leased automobile suitable for a chief operating officer of a company
similar to the Company.
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(h) D&O Insurance. The Executive shall be entitled to indemnification from
the Company to the maximum extent provided by law, but not for any
action, suit, arbitration or other proceeding (or portion thereof)
initiated by the Executive, unless authorized or ratified by the
Board. Such indemnification shall be covered by the terms of the
Company's policy of insurance for directors and officers in effect
from time to time (the "D&O Insurance"). Copies of the Company's
charter, by-laws and D&O Insurance will be made available to the
Executive upon request.
(i) Legal Fees. The Company shall pay the Executive's actual and
reasonable legal fees incurred in connection with the preparation of
this Agreement.
4. Termination.
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(a) Termination by the Company with Cause. The Company shall have the
right at any time to terminate the Executive's employment hereunder
without prior notice upon the occurrence of any of the following (any
such termination being referred to as a termination for "Cause"):
(i) the commission by the Executive of any deliberate and
premeditated act taken by the Executive in bad faith against the
interests of the Company;
(ii) the Executive has been convicted of, or pleads nolo contendere
with respect to, any felony, or of any lesser crime or offense
having as its predicate element fraud, dishonesty or
misappropriation of the property of the Company;
(iii) the habitual drug addiction or intoxication of the Executive
which negatively impacts his job performance or the
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Executive's failure of a Company-required drug test;
(iv) the willful failure or refusal of the Executive to perform his
duties as set forth herein or the willful failure or refusal to
follow the direction of the CEO or the Board, provided such
failure or refusal continues after thirty (30) days of the
receipt of notice in writing from the CEO or the Board of such
failure or refusal, which notice refers to this Section 4(a) and
indicates the Company's intention to terminate the Executive's
employment hereunder if such failure or refusal is not remedied
within such thirty (30) day period; or
(v) the Executive breaches any of the terms of this Agreement or any
other agreement between the Executive and the Company which
breach is not cured within thirty (30) days subsequent to notice
from the Company to the Executive of such breach, which notice
refers to this Section 4(a) and indicates the Company's intention
to terminate the Executive's employment hereunder if such breach
is not cured within such thirty (30) day period.
If the definition of termination for "Cause" set forth above conflicts
with such definition in the Executive's time-based or performance-
based Stock Option Agreements to purchase 227,894 shares of Common
Stock at an exercise price of $4.39 per share (collectively, the
"Stock Option Agreements") or any agreements referred to therein, the
definition set forth herein shall control.
(b) Termination by Company for Death or Disability. The Company shall have
the right at any time to terminate the Executive's employment
hereunder without prior notice upon the Executive's in-
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ability to perform his duties hereunder by reason of any mental,
physical or other disability for a period of at least six (6)
consecutive months (for purposes hereof, "disability" has the same
meaning as in the Company's disability policy). The Company's
obligations hereunder shall, subject to the provisions of Section
5(b), also terminate upon the death of the Executive.
(c) Termination by Company without Cause. The Company shall have the right
at any time to terminate the Executive's employment for any other
reason without Cause upon sixty (60) days prior written notice to the
Executive.
(d) Voluntary Termination by Executive. The Executive shall be entitled to
terminate his employment and appointment hereunder upon sixty (60)
days prior written notice to the Company. Any such termination shall
be treated as a termination by the Company for "Cause" under Section
5, unless notice of such termination was given within sixty (60) days
after a Sale (as such term is defined in the Stock Option Agreements),
in which case such termination shall be treated in accordance with
Section 5(d) hereof.
(e) Constructive Termination by the Executive. The Executive shall be
entitled to terminate his employment and appointment hereunder,
without prior notice, upon the occurrence of a Constructive
Termination. Any such termination shall be treated as a termination by
the Company without Cause. For this purpose, a "Constructive
Termination" shall mean:
(i) a reduction in Base Salary (other than as permitted hereby);
(ii) a reduction in annual Bonus opportunity;
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(iii) a change in location of office of more than seventy-five (75)
miles from Madison, Wisconsin;
(iv) unless with the express written consent of the Executive, (a) the
assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority or
responsibilities as contemplated by Section 1 of this Agreement
or (b) any other substantial change in such position, including
titles, authority or responsibilities from those contemplated by
Section 1 of the Agreement; or
(v) any material reduction in any of the benefits described in
Section 3(e), (f), (g) or (h) hereof.
For purposes of the Stock Option Agreements, Constructive Termination
shall be treated as a termination of employment by the Company without
"Cause."
(f) Notice of Termination. Any termination by the Company for Cause or by
the Executive for Constructive Termination shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 8. For purposes of this Agreement, a "Notice of
Termination" means a written notice given prior to the termination
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets 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 and (iii) if
the termination date is other than the date of receipt of such notice,
specifies the termination date of this Agreement (which date shall be
not more than fifteen (15) days after the giving of such notice). The
failure by any party to set forth in the Notice of Termination
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any fact or circumstance which contributes to a showing of Cause or
Constructive Termination shall not waive any right of such party
hereunder or preclude such party from asserting such fact or
circumstance in enforcing its rights hereunder.
5. Effect of Termination of Employment.
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(a) With Cause. If the Executive's employment is terminated with Cause,
the Executive's salary and other benefits specified in Section 3 shall
cease at the time of such termination, and the Executive shall not be
entitled to any compensation specified in Section 3 which was not
required to be paid prior to such termination; provided, however, that
the Executive shall be entitled to continue to participate in the
Company's medical benefit plans to the extent required by law.
(b) Death or Disability. If the Executive's employment is terminated by
the death or disability of the Executive (pursuant to Section 4(b)),
the Executive's compensation provided in Section 3 shall be paid to
the Executive or, in the event of the death of the Executive, the
Executive's estate, as follows:
(i) the Executive's Base Salary specified in Section 3(a) shall
continue to be paid in monthly installments until the first to
occur of (i) twelve (12) months following such termination or
(ii) such time as the Executive or the Executive's estate
breaches the provisions of Sections 6 or 7 of this Agreement;
(ii) a pro rata portion (based on days worked and percentage of
achievement of annual performance goals) of the annual Bonus
payable to the Executive, if any, specified in Section 3(b) shall
be paid, un-
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less the Board determines to pay a greater amount in its sole
discretion;
(iii) If the Executive's employment is terminated as a result of
disability, the Executive's additional benefits specified in
Section 3(c) shall continue to be available to the Executive
until the first to occur of (i) the remaining period of the Term
(or twelve (12) months following such termination, if greater) or
(ii) such time as the Executive breaches the provisions of
Sections 6 or 7 of this Agreement; and
(iv) the Executive's accrued vacation (determined in accordance with
Company policy) at the time of termination shall be paid as soon
as reasonably practicable.
(c) Without Cause. If the Executive's employment is terminated by the
Company without Cause (pursuant to Section 4(c) or 4(e)), the
Executive's compensation provided in Section 3 shall be paid as
follows:
(i) the Executive's Base Salary specified in Section 3(a) shall
continue to be paid in monthly installments until the first to
occur of (i) the remaining period of the Term (or twelve (12)
months following such termination, if greater) or (ii) such time
as the Executive breaches the provisions of Sections 6 or 7 of
this Agreement;
(ii) the Executive's annual Bonus shall continue to be paid in
accordance with this Section 5(c) at the times set forth in
Section 3(b) until the first to occur of (i) the remaining period
of the Term or (ii) such time as the Executive breaches the
provisions of Sections 6 or 7 of this Agreement. The annual Bonus
pay-
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able pursuant to this Section 5(c) shall equal the amount of
the annual Bonus (if any) previously paid or required to be paid
pursuant to this Agreement for the full fiscal year immediately
prior to the Executive's termination of employment. For purposes
of this calculation, if termination occurs any time during the
fiscal year ending September 30, 1998, the annual bonus shall be
$162,500; and
(iii) the Executive's additional benefits specified in Section 3(c)
shall continue to be available to the Executive until the first
to occur of (i) twelve (12) months following such termination or
(ii) such time as the Executive breaches the provisions of
Sections 6 or 7 of this Agreement.
(d) Following Sale. If the Executive elects to terminate his employment
within sixty (60) days following a Sale in accordance with Section
4(d), such termination by the Executive shall be treated as a
termination by the Company without Cause, and the Executive shall be
entitled to the compensation provided in Section 5(c), except that in
no event shall Executive receive less than twelve (12) months Base
Salary and annual Bonus following the expiration of the Post-Term
Period (as defined below). Notwithstanding the foregoing, the Company
may require that the Executive continue to remain in the employ of the
Company for up to a maximum of six (6) months following the Sale (the
"Post-Term Period"). The Company shall place the maximum cash payments
payable pursuant to Section 5(c) in escrow with a commercial bank or
trust company mutually acceptable to the Company and the Executive as
soon as practicable following the Sale. For the Post-Term Period, the
Company shall make the cash payments that would otherwise be required
pursuant
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to Section 3 (all such cash payments to be deducted from the
amount placed in escrow). At the expiration of the Post-Term Period,
the Executive shall receive all cash amounts due the Executive from
the remaining amount held in escrow ratably monthly over the
Non-Competition Period (as defined below), with the balance (if any)
returned to the Company. If the Company does not require that the
Executive remain in the employ of the Company, the Company shall pay
the Executive all cash amounts payable pursuant to Section 5(c)
ratably monthly over the Non-Competition Period (all such cash
payments to be deducted from the amount placed in escrow) with the
balance (if any) returned to the Company.
Notwithstanding the foregoing, although the Executive shall not be required to
mitigate the amount of any payment provided for herein by seeking other
employment or otherwise, if the Executive does obtain other employment, the
amount of each dollar ($1.00) of compensation received from such other
employment source during the period that the Company is required to make
payments hereunder shall reduce by fifty cents ($.50) the amount otherwise
payable by the Company under Section 5(c)(i) and (ii).
6. Agreement Not to Compete.
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(a) The Executive agrees that during the Non-Competition Period (as
defined below), he 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 any class listed on an
exchange or the Nasdaq Stock Mar-
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ket). The "Non-Competition Period" is (a) the longer of the
Executive's employment hereunder or time period which he serves as a
director of the Company plus (b) a period of one (1) year thereafter.
(b) Without limiting the generality of clause (a) above, the Executive
further agrees that during the Non-Competition Period, he 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, as shown by the Company's records,
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 Non-Competition Period.
(c) The Executive agrees that during the Non-Competition Period, he shall
not, other than in connection with employment for the Company, solicit
the employment or services of any employee of Company who is or was an
employee of 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.
(d) 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 hereto to revise the foregoing restrictions to include the
maximum restrictions allowed under the applicable law.
(e) For purposes of this Section 6 and Section 7, the "Company" refers to
the Company and any
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incorporated or unincorporated affiliates of the Company.
7. Secret Processes and Confidential Information.
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(a) The Executive agrees to 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
and 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 7(a), 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 agrees to
return to the Company promptly upon its request any Company
information or materials in the Executive's possession or under the
Executive's control.
(b) 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
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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 the 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 agrees to assist the Company at the
Company's expense to obtain and from time to time enforce patents and
copyrights on the Inventions.
(c) 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.
8. Notices. All notices or other communications hereunder 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. The addresses for such notices shall be as follows:
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(a) For notices and communications to the Company:
Rayovac Corporation
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Board of Directors
with a copy to:
Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Xx.
and a copy to:
Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx,
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) For notices and communications to the Executive:
Xxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxx, Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Any party hereto may, by notice to the other, change its address for receipt of
notices hereunder.
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9. General.
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9.1 Governing Law. This Agreement shall be construed under and governed by
the laws of the State of Wisconsin, without reference to its conflicts of law
principles.
9.2 Amendment; Waiver. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, 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
breach 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.
9.3 Successors and Assigns. This Agreement shall be binding upon the
Executive, without regard to the duration of his employment by the Company or
reasons for the cessation of such employment, and inure to the benefit of his
administrators, executors, heirs and assigns, although the obligations of the
Executive are personal and may be performed only by him. This Agreement shall
also be binding upon and inure to the benefit of the Company and its
subsidiaries, successors and assigns, including any corporation with which or
into which the Company or its successors may be merged or which may succeed to
their assets or business.
9.4 Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original but which together shall constitute one and
the same instrument.
9.5 Attorneys' Fees. In the event that any action is brought to enforce any
of the provisions of this Agreement, or to obtain money damages for the breach
thereof, and such action results in the award of a judg-
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ment for money damages or in the granting of any injunction in favor of one of
the parties to this Agreement, all expenses, including reasonable attorneys'
fees, shall be paid by the non-prevailing party.
9.6 Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation during his employment
hereunder in any benefit, bonus, incentive or other plan or program provided by
the Company or any of its affiliates and for which the Executive may qualify.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Company or any affiliated company at
or subsequent to the date of the Executive's termination of employment with the
Company shall, subject to the terms hereof or any other agreement entered into
by the Company and the Executive on or subsequent to the date hereof, be payable
in accordance with such plan or program.
9.7 Mitigation. In no event shall the Executive be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. In the event that the Executive shall
give a Notice of Termination for Constructive Termination and it shall
thereafter be determined that Constructive Termination did not take place, the
employment of the Executive shall, unless the Corporation and the Executive
shall otherwise mutually agree, be deemed to have terminated, at the date of
giving such purported Notice of Termination, and the Executive shall be entitled
to receive only those payments and benefits which he would have been entitled to
receive at such date had he terminated his employment voluntarily at such date
under Section 4(d) of this Agreement.
9.8 Equitable Relief. The Executive expressly agrees that breach of any
provision of Sections 6 or 7 of this Agreement would result in irreparable
injuries to the Company, that the remedy at law for any such breach will be
inadequate and that 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
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without the necessity of proving the actual damage to the Company.
9.9 Entire Agreement. This Agreement and the schedule hereto constitute the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior negotiations, discussions, writings and
agreements between them.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RAYOVAC CORPORATION
By /s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
Chief Executive Officer
EXECUTIVE:
/s/ Xxxx X. Xxxxxx
-----------------------------------------------
Xxxx X. Xxxxxx
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SCHEDULE A
Executive Bonus Schedule
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===================================================================================
Bonus Available
Percentage of as Percentage
Plan Achieved of Annual Base Salary
-----------------------------------------------------------------------------------
137.5% 100%
130 90
122.5 80
115 70
107.5 60
100 50
90 25
80 0
===================================================================================
Any level of Company performance which falls between two specific points
set forth above under "Percentage of Plan Achieved" shall entitle the Executive
to receive a percentage of Base Salary determined on a straight line basis
between such two points. Such amount shall be calculated as follows:
[(A-B) x .1] x (C-D) + D
Where:
A = The actual Percentage of Plan Achieved.
B = The Percentage of Plan Achieved set forth above which is less than
and closest to actual results.
C = The Bonus Available as Percentage of Base Salary set forth above
which is greater than and closest to the percentage that would apply
based on actual results.
D = The Bonus Available as Percentage of Base Salary set forth above
which is less than and closest to the percentage that would apply based
on actual results.
