Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective
the 19th day of August, 2002 ("Effective Date"), by and between Rayovac
Corporation, a Wisconsin corporation (the "Company"), and Xxxxxxx X. Xxxxxxx
(the "Executive").
WHEREAS, the Company and the Executive wish to terminate as of the
Effective Date the terms of the Separation Agreement and Release between the
Executive and the Company dated November 29, 2001 ("Separation Agreement")
(except to the extent set forth herein) and to otherwise enter into new terms
and conditions of employment as the Company desires to employ the Executive upon
the terms and conditions set forth herein and the Executive desires to accept
such employment on these 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 with the Company as
Executive Vice President - Chief Financial Officer. 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 in this regard, without the
prior written consent of the Board.
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 September 30, 2005 (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 of Three
Hundred Twenty-Five Thousand Dollars ($325,000) per annum effective as
of the Effective Date for the duration of the Term ("Base Salary"),
which Base Salary shall be paid in equal semi-monthly installments
each year, to be paid semi-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 (i) for the fiscal
year ending September 30, 2002 shall be based on fifty percent (50%)
of Executive's previous base annual salary of $275,000 and (ii) for
fiscal years ending September 30, 2003, 2004 and 2005 shall be based
on sixty percent (60%) of Base Salary, provided the Company achieves
certain annual performance goals established by the Board from time to
time (the "Bonus"). The Board may, in its discretion, 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 COVERAGE AND BENEFIT PLANS. The Executive shall be entitled
to such insurance and all other benefits as are generally made
available by the Company to its executive officers from time to time,
including participation in the company's Comprehensive Medical Plan,
Dental Insurance Plan, Long Term Disability Plan, Business Travel
Accident Plan, Profit Sharing and Savings Plan (401(k)), Executive
Deferred Compensation and life insurance programs, and Supplemental
Employment Retirement Plan.
(d) STOCK OPTIONS. Notwithstanding anything in the Separation Agreement to
the contrary, those Stock Options (as defined in the Separation
Agreement) previously granted to Executive that have not vested as of
the Effective Date shall be forfeited to the Company as of such date,
and all unexercised Stock Options previously granted to Executive that
have vested as of the Effective Date shall be exercisable by Executive
pursuant to the terms of the applicable Stock Option Agreements
governing such Stock Options. In addition, the Company shall grant to
Executive 98,990 new Stock Options ("New Options") under The 1997
Rayovac Incentive Plan ("1997 Plan"). The grant date of such New
Options shall be the Effective Date and such New Options shall have an
exercise price equal to the closing price on the New York Stock
Exchange as of August 16, 2002. Fifty Percent (50%) of New Options
shall be Time-Vesting Options and Fifty Percent shall be
Performance-Vesting Options. Time-Vesting Options shall vest 1/3
October 1, 2003, 1/3 October 1, 2004 and 1/3 October 1, 2005. Subject
to the Company meeting performance goals established by the Board, the
Performance-Vesting Options shall vest 1/3 October 1, 2003, 1/3
October 1, 2004 and 1/3 October 1, 2005. The terms and conditions of
such New Options shall be substantially similar to the terms and
conditions of previous option grants.
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(e) RESTRICTED STOCK AWARD. Notwithstanding anything in the Separation
Agreement to the contrary, (i) all restrictions on Executive's First
Set of Restricted Stock (as defined in the Separation Agreement) have
lapsed as of the Effective Date, (ii) the Second Set of Restricted
Stock (as defined in the Separation Agreement) has been forfeited to
the Company effective November 29, 2001, and (iii) the restrictions on
the Third Set of Restricted Stock (as defined in the Separation
Agreement) shall lapse in accordance with the terms of the applicable
Restricted Stock Award Agreement.
Further, in connection with the Executive's employment and appointment
hereunder, the Executive is also hereby be granted the following
additional restricted shares of the Company's common stock:
(i) On the Effective Date, Executive shall be awarded 24,088
shares of the Company's common stock, provided, however,
that such award of stock shall include a restriction
prohibiting the sale, transfer, pledge, assignment or other
encumbrance of such shares prior to the earlier of October
1, 2003 or a change in control of the Company (as defined
in the 1997 Plan) ("Change in Control"), and, provided
further, that such restricted stock shall be forfeited to
the Company in the event the Executive's employment with
the Company terminates prior to the earlier of October 1,
2003 or a Change in Control for any reason other than (i)
termination by the Company without cause, or (ii)
termination due to death or disability.
(ii) On October 1, 2002, Executive shall be awarded that number
of shares of the Company's common stock equal in value to
$346,667; provided, however, that such award of stock shall
include a restriction prohibiting the sale, transfer,
pledge, assignment or other encumbrance prior to the
earlier of October 1, 2005 or a Change in Control, and,
provided further, that such restricted stock shall be
forfeited to the Company in the event the Executive's
employment with the Company terminates prior to the earlier
of October 1, 2005 or a Change in Control for any reason
other than (i) termination by the Company without cause, or
(ii) termination due to death or disability.
The terms and conditions of such new restricted stock awards shall be
substantially similar to the terms and conditions of previous
restricted stock award grants.
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(f) NOTES: This Agreement shall not affect or modify the terms and
conditions of the First Note and Second Note as set forth in the
Separation Agreement.
(g) VACATION. The Executive shall be entitled to four (4) weeks vacation
each year.
(h) 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 may be reviewed
periodically by the Compensation Committee of the Board or the Board.
(i) VEHICLE. Pursuant to the Company's policy for use of vehicles by
executives, Executive shall be provided the use of a leased vehicle.
Unless the Executive's employment is terminated by the Company for
Cause or by the Executive pursuant to Section 4(d), Executive shall be
permitted to drive his Company vehicle for the duration of the
12-month period following termination; at the end of such 12-month
period, Executive will be permitted to purchase his Company vehicle at
book value as of such date.
(j) D&O INSURANCE. The Executive shall be entitled to indemnification from
the Company to the maximum extent provided by law. 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.
(k) 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.
(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;
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(iii) the habitual drug addiction or intoxication of the Executive
which negatively impacts his job performance or the 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 (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 upon thirty (30) days prior written notice upon the
Executive's inability 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), if within 30 days
after such notice of termination is given, the Executive shall not
have returned to the full-time performance of his duties. 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.
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(e) NOTICE OF TERMINATION. Any termination by the Company for Cause 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 the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of
Cause shall not waive any right of the Company hereunder or preclude
the Company from asserting such fact or circumstance in enforcing its
rights hereunder.
5. EFFECT OF TERMINATION OF EMPLOYMENT.
(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) WITHOUT CAUSE, DEATH OR DISABILITY. If the Executive's employment is
terminated by the Company without Cause or by reason of death or
disability, then the Company shall pay the Executive the amounts and
provide the Executive the benefits as follows:
(i) The Company shall pay to the Executive as severance, an amount
in cash equal to double the sum of (i) the Executive's Base
Salary, and (ii) the annual Bonus (if any) earned by the
Executive pursuant to any annual bonus or incentive plan
maintained by the Company in respect of the fiscal year ending
immediately prior to the fiscal year in which the termination
occurs, such cash amount to be paid to the Executive ratably
monthly in arrears over the Non-Competition Period (as defined
below).
(ii) For the greater of (i) the 24-month period immediately following
such termination or (ii) the remainder of the Term, the Company
shall arrange to provide the Executive and his dependents the
additional benefits specified in Section 3(c). Benefits
otherwise receivable by the Executive pursuant to this Section
5(b)(ii) shall cease immediately upon the discovery by the
Company of the Executive's breach of the covenants contained in
Section 6 or 7 hereof.
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(iii) The Executive's accrued vacation (determined in accordance with
Company policy) at the time of termination shall be paid as soon
as reasonably practicable.
(iv) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state, or local
law and any additional withholding to which the Executive has
agreed.
(v) If the Executive's employment with the Company terminates during
the Term, the Executive shall not be required to seek other
employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to this Section
5.
6. AGREEMENT NOT TO COMPETE.
(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 Market). 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
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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 incorporated or unincorporated affiliates of the
Company.
7. SECRET PROCESSES AND CONFIDENTIAL INFORMATION.
(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 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,
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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:
(a) For notices and communications to the Company:
Rayovac Corporation
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(b) For notices and communications to the Executive:
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxx Xxxxx
Xxx Xxx, XX 00000
Any party hereto may, by notice to the other, change its address for
receipt of notices hereunder.
9. GENERAL.
(a) 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.
(b) 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.
(c) 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
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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.
(d) 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.
(e) 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
judgment 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.
(f) 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.
(g) 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.
(h) 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 without the necessity of proving the
actual damage to the Company.
(i) SEPARATION AGREEMENT AND RELEASE. The Separation Agreement and Release
between the parties dated November 29, 2001 is hereby terminated
except to the extent set forth herein and all rights and obligations
thereunder are of no further force or effect (except to the extent set
fort herein).
(j) 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 with respect to the
subject matter hereof.
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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/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
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