Exhibit 10.5
EMPLOYMENT
AGREEMENT
This amended and restated Employment
Agreement amends and restates as of January 1, 2006 the
Employment Agreement dated as of February 29, 1996, as
amended, between Knoll, Inc., a Delaware corporation (the
“Company”), and Burton B. Staniar
(“Executive”).
WHEREAS , Executive and the Company
desire to embody in this Agreement the terms and conditions of
Executive’s employment by the Company;
NOW, THEREFORE, the parties hereby
agree:
ARTICLE I
Employment, Duties and
Responsibilities
1.01. Employment . The
Company shall employ Executive as Chairman of the Company.
Executive hereby accepts such employment. Executive agrees to
devote fifty percent (50%) of his business time and efforts to
promote the interests of the Company.
1.02. Duties and
Responsibilities . Executive shall have such duties and
responsibilities as are customarily associated with such position
and as are assigned to the Executive from time to time by the Board
of Directors of the Company (the “Board”). Executive
shall in any event perform such additional services, without the
receipt of additional compensation, with respect to the
Company’s subsidiaries as are assigned from time to time by
the Board.
1.03. Member of the Board .
During the Term (as defined below), prior to any stockholder
meeting at which directors will be elected (or prior to the
circulation of any written consent in respect of the election of
directors), the Company shall nominate Executive to be a member of
the Board and of the Board of Directors of the Company’s
principal United States operating subsidiary.
ARTICLE II
Term
2.01. Term . (a) The
term of this Agreement (the “Term”) shall commence on
January 1, 2006 and shall continue for a period of one year
from such date; provided, however, that the term of the
Executive’s employment shall be automatically extended
without further action of either party for successive additional
periods of one year, unless written notice of either party’s
intention not to extend has been given to the other party at least
sixty (60) days prior to the expiration of the then effective
term.
(b) Executive represents and
warrants to the Company that to the best of his knowledge, neither
the execution and delivery of this Agreement nor the performance of
his duties hereunder violates or will violate the provisions of any
other agreement to which he is a party or by which he is
bound.
ARTICLE III
Compensation and
Expenses
3.01. Salary, Bonuses and
Benefits . As compensation and consideration for the
performance by Executive of his obligations under this Agreement,
Executive shall be entitled to the
following (subject, in each case, to the
provisions of Article V hereof):
(a) The Company shall pay Executive
a base salary (“Base Salary”) during the Term, payable
in accordance with the normal payment procedures of the Company and
subject to such withholdings and other normal employee deductions
as may be required by law, at the rate of $200,000 per annum. The
Company agrees to review such compensation (for possible increases,
not decreases) not less frequently than annually during the
Term.
(b) Executive shall participate
during the Term in such pension, life insurance, health, disability
and major medical insurance plans, and in such other employee
benefit plans and programs, for the benefit of the employees of the
Company, as may be maintained from time to time during the Term, in
each case to the extent and in the manner available to other
executive officers of the Company and subject to the terms and
provisions of such plans or programs. Executive confirms that he is
aware that the Company or one of its affiliates may seek to obtain
for their benefit “key man” insurance covering the
Executive and Executive agrees to use his reasonable best efforts
(without the incurrence of any unreimbursed out-of-pocket expenses)
to cooperate in connection therewith.
(c) Executive shall be entitled to a
paid vacation, in accordance with Company policy (but not
necessarily consecutive vacation weeks) during the Term.
(d) During and after the Term the
Company agrees that if Executive is made a party, or compelled to
testify or otherwise participate in, any action, suit or
proceeding, (a “Proceeding”), by reason of the fact
that he is or was a director or officer of the Company or any of
its subsidiaries, the Executive shall be indemnified by the Company
to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law or authorized by the Company’s
certificate of incorporation or bylaws or resolutions of the
Company’s Board against all cost, expense, liability and loss
reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director or officer of the
Company or subsidiary, for the period of any applicable statute of
limitations or, if longer, for the period in which any such
Proceeding which commenced within the period of any such statute of
limitations is pending. The Company shall advance to the Executive
all reasonable costs and expenses incurred by him in connection
with a Proceeding within 20 days after receipt by the Company of a
written request for such advance. Such request shall include an
itemized list of the costs and expenses and an undertaking by the
Executive to repay the amount of such advance if it shall
ultimately be determined that, pursuant to applicable law, he is
not entitled to be indemnified against such costs and expenses.
During the Term (and thereafter for the period of any applicable
statute of limitations), the Company agrees to purchase from a
reputable insurance company, and maintain, a directors’ and
officers’ liability insurance policy covering the Executive,
in amounts reasonably determined by the Board to be appropriate for
directors and officers of the Company given the Company’s
business, securities, operations and financial
condition.
3.02. Expenses . The Company
will reimburse Executive for reasonable business-related expenses
incurred by him in connection with the performance of his duties
hereunder during the Term, subject, however, to the Company’s
policies relating to business-related expenses as in effect from
time to time during the Term.
3.03. Parachute Gross-Up .
The sole shareholder of the Company has previously approved the
making of all payments due under or pursuant to this Agreement
after having received full disclosure of all material facts
concerning such payments. As a result, the provisions of
Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) are expected to be inapplicable.
Notwithstanding anything to the contrary in this Agreement and in
addition to any other compensation or other amount payable by the
Company to the Executive pursuant to this Agreement or otherwise,
if it shall be determined that, notwithstanding such shareholder
approval, any payment or distribution by the
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Company to or for the benefit of the Executive,
pursuant to the terms of this Agreement or otherwise or resulting
from the accelerated vesting of shares of common stock or options
to acquire common stock of the Company (a “Payment”),
are subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise
Tax”), the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes on the
Gross-Up Payment, (including any interest or penalties imposed with
respect to such taxes, and any Excise Tax imposed upon the Gross-Up
Payment), the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. If the Excise
Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of the Executive’s employment
or otherwise (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions
payable by the Executive with respect to such excess) at the time
that the amount of such excess is finally determined. The Executive
and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with
respect to the Payments. All determinations required to be made
under this Section, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by
the Company’s independent accountants. If the Internal
Revenue Service determines that Excise Tax is larger than the
amount calculated by the Company’s accountants, and the
Company does not contest such determination and prevail in such
contest at its own expense, the Gross-Up Payment due the Executive
shall be recalculated and any additional amounts owed Executive
shall be promptly paid to him.
ARTICLE IV
Exclusivity, Etc.
4.01. Exclusivity . Executive
agrees to perform his duties, responsibilities and obligations
hereunder efficiently and to the best of his ability. Executive
agrees that he will devote fifty percent (50%) of his working
time, care and attention and best efforts to such duties,
responsibilities and obligations throughout the Term. Executive
also agrees that he will not engage in any other business
activities, pursued for gain, profit or other pecuniary advantage,
that are competitive with the activities of the Company, except as
permitted in Section 4.02 below. Executive agrees that all of
his activities as an employee of the Company shall be in conformity
with all policies, rules and regulations and directions of the
Company not inconsistent with this Agreement.
4.02. Other Business Ventures
. Executive agrees that, so long as he is employed by the Company,
he will not own, directly or indirectly, any controlling or
substantial stock or other beneficial interest in any business
enterprise which is engaged in, or competitive with, any business
engaged in by the Company. Notwithstanding the foregoing, Executive
may own, directly or indirectly, up to 1% of the outstanding
capital stock of any business having a class of capital stock which
is traded on any national stock exchange or in the over-the-counter
market.
4.03. Confidentiality;
Non-competition . (a) Execut
