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Exhibit 10.5(f)
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated December 20, 1996, is made by and between Easco
Corporation, a Delaware corporation (the "Company") and a direct subsidiary of
Easco, Inc. (the "Parent"), and Xxxxx X. XxXxxxxxx (the "Executive").
RECITALS:
A. It is the desire of the Company to assure itself of the management
services of the Executive by engaging him as the Vice President -- Operations of
the Company.
B. The Executive desires to commit himself to serve the Company on the
terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "ANNUAL BASE SALARY" is defined in Section 5(a).
(b) "BENEFITS" is defined in Section 5(b).
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) A "BONUS YEAR" shall be a 12-month period beginning on
January 1 of any given year and ending on December 31 of such year,
except that the first Bonus Year shall commence on the Start Date and
shall terminate December 31, 1997.
(e) "CAUSE": For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder for
matters arising out of or related to
(i) the Executive's personal dishonesty, inability or
unwillingness to perform duties appropriate to his employment
by the Company or any Subsidiary, willful misconduct, material
conflict of interest or material breach of fiduciary duty owed
to the Company or any Subsidiary,
(ii) any material (as opposed to technical) willful
violation of any law, rule, regulation or final
cease-and-desist order, or
(iii) any material breach by Executive of any
provision of any agreement between the Executive (on the one
hand) and the Company or any Subsidiary or other parties (on
the other hand) which remains uncured for more than ten days
after written notice describing such breach is given to the
Executive by the Company or the Subsidiary.
(f) "COMMITTEE" shall mean the Compensation Committee of the
Board.
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(g) "DISABILITY" shall mean the absence of the Executive from
the Executive's duties to the Company on a full-time basis for a total
of 16 weeks during any 12- month period as a result of incapacity due
to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(h) "GOOD REASON" shall mean the Company's failure to vest in
Executive the duties and responsibilities consistent with those set
forth in Section 3 or failure to make any payment to the Executive when
due which, in either case, remains uncured for more than ten days after
written notice describing such breach is given to the Company to the
Executive.
(i) "HOSTILE SALE OF THE PARENT OR COMPANY" shall mean a Sale
of the Parent or Company described in subsection (k)(i) which is not
approved by a majority of the members of the Board of Directors of the
Parent who had such status as of the consummation of the transaction
and also as of the date one year prior thereto. If on the date of such
consummation there are no people satisfying such condition then the
transaction shall be deemed to be a Hostile Sale of the Parent or
Company.
(j) "PERFORMANCE BONUS" is defined in Section 5(c).
(k) "SALE OF THE PARENT OR COMPANY" shall mean
(i) a sale by one or more stockholders in one
transaction or a series of related transactions, of equity
securities representing more than 50% of the aggregate voting
power of shares entitled to vote in the election of directors
of the Parent or the Company, or
(ii) a liquidation, dissolution or other winding up
of the Parent or the Company.
(l) "START DATE" shall mean November 26, 1996.
(m) "STOCK" shall mean the $.01 par value common stock of the
Parent.
(n) "SUBSIDIARY" shall mean any direct or indirect subsidiary
of the Company.
(o) "TERM OF EMPLOYMENT" is defined in Section 2.
2. EMPLOYMENT. The Company shall employ the Executive and the Executive
shall enter the employ of the Company, for the period set forth in this Section
2, in the positions set forth in Section 3 and upon the other terms and
conditions herein provided. The term of employment under this Agreement shall
commence on the Start Date and continue indefinitely until terminated pursuant
to Section 7 (the "Term of Employment").
3. POSITION AND DUTIES. During the Term of Employment, the Executive
shall serve as the Vice President -- Operations of the Company and shall have
such duties, functions, responsibilities and authority as are consistent with
the Executive's position as an executive responsible for operations at the
Company.
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4. PLACE OF PERFORMANCE. In connection with his employment during the
Term of Employment, the Executive shall be based at the corporate headquarters
of the Company currently located in Girard, Ohio, but subject to relocation at
the mutual agreement of the Company's Chief Executive Officer and the Board.
5. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. The Executive shall receive a base
salary ("Annual Base Salary") at a rate of $137,500 per annum, payable
in accordance with the Company's payroll practice for senior
executives.
(b) BENEFITS. During the Term of Employment, the Executive
shall be entitled to such health, dental, life and disability insurance
coverage and other similar benefits as the Company provides to its
senior executive employees generally.
(c) PERFORMANCE BONUS. As additional compensation for services
rendered, for each Bonus Year contained within the Term of Employment,
the Executive shall be eligible to receive a cash Performance Bonus in
an amount ranging from 0% to 150% of his Annual Base Salary, with such
percentage to be determined on the basis of the Company's financial
performance as set forth in a separate document to be approved by the
Committee (the "Schedule"). The Performance Bonus for each Bonus Year
shall be paid no later than 15 days after the amount of such has been
finally determined.
(d) EXPENSES. The Company shall promptly reimburse the
Executive for all reasonable travel and other business expenses
incurred by the Executive in the performance of his duties to the
Company upon submission of proper documentation therefor.
6. SPECIAL INITIAL COMPENSATION
(a) SIGNING BONUS. Company shall pay Executive $240,000 in
cash under the following payment terms:
Promptly after Execution
of this Agreement $100,000
First Anniversary
of Start Date $70,000
Second Anniversary
of Start Date $70,000
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Executive shall be required to return the following indicated amounts
to the Company upon the termination of his employment
(i) by the Company for Cause or
(ii) by the Executive for any reason other than
Death, Disability or Good Reason
prior to the indicated respective dates.
Second Anniversary
of Start Date $100,000
Third Anniversary
of Start Date $70,000
Fourth Anniversary
of Start Date $70,000.
(b) STOCK GRANT. Promptly following execution and delivery of
this Agreement and completion of all applicable registration and
listing requirements, and upon Executive's payment to the Parent of the
$.01 per share par value thereof, the Parent shall issue to the
Executive 12,500 shares of Stock. Unless registered pursuant to
applicable federal and state securities laws, such Stock shall bear a
customary legend restricting transferability.
(c) LOAN. Pursuant to a separate note and security agreement
Company will lend the Executive an amount equal to his additional 1996
Federal and State income taxes incurred by reason of the Stock grant
described in subsection 6(b), or such lesser amount as the Executive
shall elect. Such note shall bear interest, with annual compounding, at
the applicable Federal Mid-Term Rate set forth pursuant to Section
1274(d)(1) for the month of the loan and shall provide for repayment in
three equal installments on December 31, 1997, 1998 and 1999. The
proceeds of such loan shall be disbursed to Executive not later than
the time or times that Executive shall make the applicable tax payments
provided that the Executive has furnished to the Company, reasonably in
advance, information sufficient for the Company to calculate the amount
of the loan.
(d) STOCK OPTIONS. Pursuant to separate stock option grant
letters and, as applicable, the terms of the Company's Stock Option
Plan, the Company shall grant the Executive options with respect to
37,500 shares of Stock. One-half of these options shall be exercisable
at $3.00 per share and one-half at $6.00 (which was the fair market
value at the date of grant, November 24, 1996 by the Committee, subject
to approval of the Board (which was obtained November 26, 1996, subject
to entering into this Agreement)). These options shall become
exercisable in 33 1/3% installments on the first, second and third
anniversaries of the Start Date, provided that the Executive is still
employed on each of such respective dates and provided further that no
option shall be exercisable in any year to the extent that by reason of
such exercise any portion of the compensation payable to the Executive
would fail to be deductible by the Company or Parent by reason of
Section 162(m) of the Internal Revenue Code of 1986. The options shall
also be fully vested, and, at the election of the
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Parent, settled for cash in connection with a Sale of the Parent or
Company, in a manner similar to that specified in one or more recently
executed agreements of other senior executives of the Company.
(e) ADDITIONAL STOCK OPTIONS. Pursuant to separate stock
option grant letters and, as applicable, the terms of the Company's
Stock Option Plan, the Company shall grant the Executive options with
respect to 50,000 shares of Stock, exercisable at $5.75 (which was the
fair market value at the date of grant, November 26, 1996).
(i) These options shall become exercisable in 33 1/3%
installments on January 1, 1998, January 1, 1999 and January
1, 2000, provided that:
(A) The Executive is still employed on each
of such respective dates, and
(B) Either
(1) The Company's Earnings for the
Contract Year immediately preceding such
date is at least 80% of the Target Earnings
for such Contract Year indicated on the
Schedule, or
(2). The total of the Company's
Earnings for the Contract Year immediately
preceding such date and the Company's
Earnings for the Contract Year containing
such date is at least 80% of total of the
Target Earnings for such two Contract Years
indicated on the Schedule.
(ii) Notwithstanding the above, the options shall
also be fully vested
(A) On the seventh anniversary of the Start
date if the Executive is employed on such date, or
(B) in connection with a Sale of the Parent
or Company, (and also, at the election of Parent,
cashed out) in a manner similar to that specified in
one or more recently executed agreements of other
senior executives of the Company.
7. TERMINATION. The Executive's employment hereunder may be terminated
by the Company or the Executive, as applicable, without any breach of this
Agreement only under the following circumstances:
(a) DEATH. The Executive's employment hereunder shall
terminate upon his death.
(b) DISABILITY. If the Company determines in good faith that
the Disability of the Executive has occurred during the Term of
Employment, the Company may give the Executive written notice in
accordance with Section 13(b) of its intention to terminate
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the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive, provided that within the 30
days after such receipt, the Executive shall not have returned to
full-time performance of his duties. The Executive shall continue to
receive his Annual Base Salary and Benefits until the date of
termination.
(c) CAUSE. The Company may terminate the Executive's
employment hereunder for Cause.
(d) WITHOUT CAUSE. The Company may terminate the Executive's
employment hereunder without Cause upon 30 days notice.
(e) GOOD REASON. The Executive may terminate his employment
hereunder for Good Reason upon 30 days notice.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by the Company (or by the Executive pursuant to
subsection (e)) shall be communicated by a notice of termination to the
Executive (or to the Company, as appropriate). For purposes of this
Agreement, a "notice of termination" shall mean a written notice which
(i) indicates the specific termination provision in the Agreement
relied upon, (ii) sets forth in reasonable detail any facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision indicated and (iii)
specifies the effective date of the termination.
8. SEVERANCE BENEFITS.
(a) TERMINATION WITHOUT CAUSE: If the Executive's employment
shall terminate without Cause (pursuant to Section 7(d)) or with Good
Reason (pursuant to Section 7(e)), then, if the Executive agrees to
comply with the provisions of paragraph (ii),
(i) the Company shall continue to pay the Executive
his Annual Base Salary under the payment schedule otherwise in
effect and pay the Executive's COBRA premium, until the
earlier of
(A)
(I) if the termination occurs
within six months following a Hostile Sale
of the Parent or Company, the second
anniversary of such termination, or
(II) if the termination occurs
under any other circumstances, the first
anniversary of such termination, and
(B) the date Executive commences other paid
employment with a regular work schedule of at least
35 hours per week;
(ii) such payments shall be made provided that the
Executive agrees in writing
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(A) to a general release of the Parent, the
Company and affiliates in the form used generally by
the Company in the case of the termination of
employment of senior executives,
(B) actively to seek other paid employment,
and
(C) that he shall not, so long as he is
receiving payments pursuant to Section 8(a)(i),
without the prior written consent of the Board,
directly or indirectly engage in, or have any
interest in, or manage or operate any person, firm,
corporation, partnership or business (whether as
director, officer, employee, agent, representative,
partner, security-holder, consultant or otherwise)
that engages in the business of providing soft alloy
aluminum extrusions or vinyl extrusions, and which
directly compete with the Company in any of its
markets; PROVIDED, HOWEVER, that Executive shall be
permitted to acquire stock in such a corporation
provided such stock is publicly traded and the stock
so acquired is not more than one percent of the
outstanding shares of such corporation.
(b) TERMINATION BY DISABILITY: If the Executive's employment
is terminated by reason of the Executive's Disability, the Executive or
his estate shall continue to receive his Annual Base Salary until the
date Executive's employment terminates.
9. REPRESENTATIONS OF EXECUTIVE.
(a) The Executive represents that he is under no contractual
or other legal constraint which would prevent him from executing this
Agreement or carrying out in full his responsibilities hereunder.
Executive indemnifies the Company from any cost, loss, liability,
damage or expense (including attorney's fees) which it may incur by
reason of any breach of the representation set forth in this Section
9(a).
(b) The Executive also represents, warrants and covenants
that:
(i) he is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act of 1933 (the "Act");
(ii) the purchase of the Stock hereunder by the
Executive will be for his own account;
(iii) the Executive has such knowledge and experience
in financial and business matters that he is capable of
evaluating the merits and risks of purchasing the Stock and
has been provided with comprehensive disclosure regarding all
aspects of the Company's business;
(iv) the Executive is not acquiring Stock with a view
to any distribution thereof in a transaction that would
violate the Act or the securities laws of any State of the
United States or any other applicable jurisdiction; and
10. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of Stock deliverable pursuant to Section 6 or upon the
exercise of an option, or any portion thereof, may be either previously
authorized but unissued shares or issued
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shares which have then been reacquired by the Parent. Such shares shall be fully
paid and nonassessable. The Parent shall not be required to issue or deliver any
certificate or certificates for shares of Stock granted pursuant to Section 6 or
purchased upon the exercise of an option or portion thereof prior to fulfillment
of all of the following conditions:
(a) The obtaining of approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the
exercise of the option as the Committee may from time to time establish
for reasons of administrative convenience.
11. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that during his employment he will have access to:
(a) confidential or secret plans, programs, documents,
agreements, internal management reports, financial information or other
material relating to the business, services or activities of the
Company, and
(b) trade secrets, market reports, customer investigations,
customer lists and other similar information that is proprietary
information of the Company
(collectively referred to as "Confidential Information"). The Executive
acknowledges that such Confidential Information as is acquired and used by the
Company is a special, valuable and unique asset of the Company. In addition, all
records, files and other materials obtained by the Executive in the course of
his employment with the Company shall remain the property of the Company. The
Executive will not use Confidential Information or property of the Company for
his own benefit or the benefit of any person or entity with which he may be
associated. The Executive will not disclose any Confidential Information to any
person, firm, corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of the Company. The obligations of
this Section shall not apply to (i) information that enters the public domain
without a breach of this Agreement by the Executive or (ii) information
developed by or known to the Executive independently of disclosure to him by the
Company.
12. BINDING ON SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the Parent, the Company, the Executive and their
respective successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
13. GOVERNING LAW. This Agreement shall be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
New York.
14. CONSENT AND JURISDICTION. Each party hereto irrevocably and
unconditionally
(a) agrees that any suit, action or other legal proceeding
arising out of this Agreement may be brought in the United States
District Court for the Southern District of New York or, if such court
does not have jurisdiction or will not accept jurisdiction, in the
Supreme Court of the State of New York, New York County,
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(b) consents to the jurisdiction of any such court in any such
suit, action or proceeding, and
(c) waives any objection which such party may have to the
laying of venue of any such, suit, action or proceeding in any such
court.
15. VALIDITY. The invalidity or unenforceability of any provision or
provisions 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.
16. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Parent or the Company, addressed to:
Xxxxxxxx X. Xxxxxx
American Industrial Partners
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
With a copy to:
Xxx X. Xxxxxxxx
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
(b) If to the Executive, to him at the address set forth below
under his signature;
or at any other address as any party shall have specified by notice in writing
to the other parties.
17. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
18. ENTIRE AGREEMENT. The terms of this Agreement and the other
documents contemplated hereby are intended by the parties to be the final
expression of their agreement with respect to the employment of the Executive by
the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement and
the other documents contemplated hereby shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial, administrative, or other legal proceeding to vary
the terms of this Agreement.
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19. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by the Executive, and
the Chief Executive Officer of the Company. By an instrument in writing
similarly executed, the Executive or the Company may waive compliance by the
other party or parties with any provision of this Agreement that such other
party was or is obligated to comply with or perform; PROVIDED, HOWEVER, that
such waiver shall not operate as a waiver of, or estoppel with respect to, any
other or subsequent failure. No failure to exercise and no delay in exercising
any right, remedy, or power hereunder preclude any other or further exercise of
any other right, remedy, or power provided herein or by law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE
/s/ Xxxxx X. XxXxxxxxx
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Xxxxx X. XxXxxxxxx
0000 Xx. Xxxxx Xxxx.
Xxxxxx, Xxxx 00000
EASCO CORPORATION
By: /s/ Xxxxxx X. Xxxxx, Xx.
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Name: Xxxxxx X. Xxxxx, Xx.
Title: Chief Executive Officer
EASCO INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board
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