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Exhibit 10.5(c)
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 Xxxxxx X. Xxxxx, Xx. (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 President and Chief
Executive Officer 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 President and Chief Executive Officer of the
Company and shall have such duties, functions, responsibilities and authority as
are consistent with the Executive's position as the senior executive officer in
charge of the general management, business and affairs of 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 Executive 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 $290,000 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 200% 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. Promptly following the execution
and delivery of this Agreement and completion of all applicable
registration and listing requirements, Company shall pay Executive
$597,500 in cash, and upon Executive's payment to the Parent of the
$.01 per share par value thereof, the Parent shall issue to the
Executive 70,000 shares of Stock. Unless registered pursuant to
applicable federal and state securities laws, such Stock shall bear a
customary legend restricting transferability. Executive shall be
required to return all of such cash and Stock 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 second anniversary of the Start Date. In order to give
effect to Executive's obligation under the prior sentence, Executive
agrees not to sell, assign, pledge or otherwise transfer the Stock so
acquired prior to the end of such two-year period, that the certificate
representing such Stock bear a legend to such effect and that the
Company's transfer agent be given appropriate "stop transfer"
instructions with respect thereto.
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(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 100,000 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 300,000 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 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.
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 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.
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(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
(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,
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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 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:
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(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,
(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.
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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 Chairman of the Board. 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/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx.
543 Bechers Jump
Xxxxxx Xxxxx, XX 00000
EASCO CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Chief Financial 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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