SEVERANCE AGREEMENT
This Agreement, dated 15 January 1997, is made by and between Rayovac
Corporation (the "Company"), a Wisconsin corporation with its principal business
address at 601 Rayovac Drive, Madison, Wisconsin 53711, and Stephen P. Shanesy,
an individual residing at 7866 Black River Road, Verona, Wisconsin 53593 (the
"Executive").
BACKGROUND
The Company considers it essential to the best interests of its shareholders to
foster the continued employment of key managers.
The basic terms of the Executive's employment were set forth in an offer of
employment from the Company's President, David A. Jones, dated 18 November 1996,
a copy of which is attached as Exhibit A, which offer was accepted by the
Executive on 21 November 1996.
The Executive and the Company wish to execute this Agreement to formalize
additional terms of the Executive's employment.
UNDERTAKINGS
Now therefore, the parties agree:
1. Term of Agreement. The term of this Agreement (the "Term") shall commence
on the date hereof and shall continue in effect through 14 January 1998;
provided, however, that commencing on 15 January 1998 and each year
thereafter, the Term shall automatically extend one
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additional year unless, not later than 30 days prior to the end of the
preceding Term, the Company or the Executive shall give notice not to
extend the Term.
2. Severance Payments.
2.1 If the Executive's employment is terminated during the Term (a) by the
Company without Cause (as defined below) or (b) by reason of death or
Disability (as defined below), then the Company shall pay the
Executive the amounts, and provide the Executive the benefits,
described in Section 2.2 (the "Severance Payments").
2.2 (a) The Company shall pay to the Executive as severance, an amount in
cash equal to the sum of (i) the Executive's base salary as in
effect for the fiscal year ending immediately prior to the fiscal
year in which such termination occurs, 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).
(b) For the 12-month period immediately following such termination,
the Company shall arrange to provide the Executive and his
dependents insurance benefits substantially similar to those
provided to the Executive and his dependents immediately prior to
the date of termination, at no greater cost to the Executive than
the cost to the Executive immediately prior to such date.
Benefits otherwise receivable by the Executive pursuant to this
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Section 2.2(b) shall cease immediately upon the discovery by the
Company of the Executive's breach of the covenants contained in
Sections 5 or 6 hereof. In addition, benefits otherwise
receivable by the Executive pursuant to this Section 2.2(b) shall
be reduced to the extent benefits of the same type are received
by or made available to the Executive during the 12-month period
following the Executive's termination of employment (and any such
benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however,
that the Company shall reimburse the Executive for the excess, if
any, of the cost of such benefits to the Executive over such cost
immediately prior to the date of termination.
2.3 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.
2.4 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 2.
3. Termination Procedures. During the Term, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written notice of termination from one party to the other
in accordance with Section 9 hereof. The notice of termination shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
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claimed to provide a basis for termination of the Executive's employment
under the provision so indicated.
4. No Rights to Employment. This Agreement shall not be construed as creating
an express or implied contract of employment, and except as otherwise
agreed in writing between the Executive and the Company and authorized by
the Board of Directors of the Company, the Executive shall not have any
right to be retained in the employ of the Company.
5. Executive's Covenant Not to Compete.
5.1 During the Non-Competition Period, the Executive 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 an
class listed on an exchange or the Nasdaq Stock Market). For purposes
of this Agreement, the "Non-Competition Period" means the period
beginning on the date hereof and continuing until the date which is
the one-year anniversary of the later to occur of (a) the end of the
Term and (b) the date of termination.
5.2 Without limiting the generality of Section 5.1 above, during the
Non-Competition Period the Executive 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 that were customers or prospects of the Company at any time
during
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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.
5.3 During the Non-Competition Period, the Executive shall not, other than
in connection with employment for the Company, solicit the employment
or services of any employee of the Company who is or was an employee
of the 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.
5.4 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 to revise the foregoing restrictions to include the maximum
restrictions allowed under the applicable law.
5.5 For purposes of this Section 5 and Section 6, the "Company" refers to
the Company and any incorporated or unincorporated affiliates of the
Company.
6. Secret Processes and Confidential Information.
6.1 The Executive will 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 or
any confidential information or materials of other
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parties received by the Executive in connection with the performance
of his duties hereunder. For purposes of this Section 6.1,
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
will return to the Company promptly upon its request any Company
information or materials in the Executive's possession or under the
Executive's control.
6.2 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 Inventions shall be the sole
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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 will assist the Company at the Company's
expense to obtain and from time to time enforce patents and copyrights
on the Inventions.
6.3 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.
7. Successors; Binding Agreement
7.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to the Severance Payments,
except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date
of termination. For purposes of this Agreement, "Company" shall mean
Rayovac Corporation, a Wisconsin corporation, and shall include any
successor to its business or assets
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which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
7.2 This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be
payable to the Executive hereunder (other than amounts which, by their
terms, terminate upon the death of the Executive) if the Executive had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the
Executive's estate.
8. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement 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.
9. Survival. The obligations of the Company and the Executive under this
Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without
limitation, those under Sections 2, 5 and 6 hereof) shall survive such
expiration.
10. Amendment; Waiver. This Agreement may be amended, modified, superseded, or
canceled, and the terms hereof may be waived, only by a written instrument
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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.
11. Equitable Relief. Breach of any provision of Sections 5 or 6 of this
Agreement would result in irreparable injuries to the Company, the remedy
at law for any such breach will be inadequate, and 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.
12. Entire Agreement. This Agreement constitutes the entire understanding of
the parties hereto with respect to the subject matter hereof and supersedes
all prior negotiations, discussions, writings, and agreements between them.
13. Validity. The invalidity or unenforceability of any provision 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.
14. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original but both of which together will
constitute one and the same instrument.
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15. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated below:
(a) "Cause" for termination by the Company of the Executive's employment
shall mean (i) the commission by the Executive of any fraud,
embezzlement or other material act of dishonesty with respect to the
Company or any of its affiliates (including the unauthorized
disclosure of confidential or proprietary information of the Company
or any of its affiliates or subsidiaries); (ii) Executive's conviction
of, or plea of guilty or nolo contendere to, a felony or other crime
involving moral turpitude; (iii) Executive's willful misconduct; (iv)
willful failure or refusal by Executive to perform his duties and
responsibilities to the Company or any of its affiliates which failure
or refusal to perform is not remedied within 30 days after receipt of
a written notice from the Company detailing such failure or refusal to
perform; or (v) Executive's breach of any of the terms of this
Agreement or any other agreement between Executive and the Company
which breach is not cured within 30 days subsequent to notice from the
Company to Executive of such breach.
(b) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, as a result of the
Executive's inability to perform his duties by reason of any mental,
physical or other disability for a period of at least 6 consecutive
months (for purposes hereof, "disability" has the same meaning as in
the Company's disability policy), the Company shall have given the
Executive a notice of termination for Disability, and, within 30 days
after such notice of termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RAYOVAC CORPORATION EXECUTIVE
By:
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Kent J. Hussey Stephen P. Shanesy
Executive Vice President