EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made and dated
as of May 5th, 1994, by and between Best Lock Corporation, a
Delaware Corporation, ("BLC") and Russell C. Best, a resident of
Boone County, Indiana, ("Best").
W I T N E S S E T H :
WHEREAS, Best is a member of the Board of Directors of BLC
and in such capacity participates in policy making decisions for
BLC and is in receipt of BLC's confidential business information;
WHEREAS, Best is employed by BLC as an executive officer;
WHEREAS, Best desires to be assured of a secure minimum
compensation for his services as chief executive officer of BLC
over a defined term;
WHEREAS, BLC desires to assure Best's continued employment
by BLC as its chief executive officer;
WHEREAS, BLC desires reasonable protection of the
confidential business information of BLC, BLC's subsidiaries, and
BLC's other affiliated corporations which has been developed over
the years at substantial expense and assurance that Best will not
compete with BLC for a reasonable period of time after
termination of his employment with BLC;
WHEREAS, BLC and Best desire to record the terms of their
agreement in writing.
NOW, THEREFORE, in consideration of these premises, the
mutual covenants and undertakings herein contained, and the
continued employment of Best by BLC as its chief executive
officer, the receipt and sufficiency of which are hereby
acknowledged, BLC and Best, each intending to be legally bound,
covenant and agree as follows:
Section 1. The Agreement is hereby effective May 1, 1994.
Section 2. Upon the terms and conditions set forth in this
Agreement, BLC employs Best as its chief executive officer, and
Best accepts such employment by BLC.
Section 3. Best shall devote his full time and best efforts
to BLC and to fulfilling the duties of his position as chief
executive officer of BLC pursuant to the direction of the BLC
Board of Directors. Provided, however, that the constraints
imposed by this section and Section 11 hereof shall not preclude
Best from serving as an officer, employee, and/or director of any
subsidiary or affiliate of BLC; or, at the direction of or with
the approval of BLC, any other organization.
Section 4. The term of this Agreement shall be from the
date hereof until December 31, 1998. Provided, however, that
such term shall be automatically extended for an additional year
on December 31, 1994, and on December 31 of each year thereafter
unless either party hereto gives written notice to the other
party not to so extend at least thirty (30) days prior to
December 31 of the year notice is given, in which case no further
automatic extension shall occur and the term of this Agreement
shall end at 11:59 p.m. on the fifth (5th) December 31 subsequent
to the date of such notice.
Section 5. For all services rendered pursuant to this
Agreement and as consideration for the covenants contained
herein, Best shall receive an annual minimum salary of Four
Hundred Twenty-Five Thousand Dollars ($425,000.00) ("Base
Compensation") payable while Best is an employee of BLC in
accordance with BLC's policy for payment of salaries to its
senior management personnel as in effect from time to time. BLC
covenants and guarantees that the Base Compensation shall be paid
by BLC as provided herein while Best is an employee of BLC and
BLC shall pay the amounts of Base Compensation and any additional
compensation amounts after Best's employment by BLC is terminated
as provided by Section 10 hereof. BLC shall consider from time
to time increases in the salary it pays Best based upon the
following standards:
- Past performance of Best and the contribution which
Best will make to the business and profits of BLC
during the term and any extension of the term of this
Agreement;
- Adjustments to the salaries of other senior management
personnel of BLC; and
- Inflation.
Section 6. So long as Best is employed by BLC pursuant to
this Agreement, he shall be included as a participant in all
benefit plans generally available to employees of BLC or
specifically available to executive officers of BLC. Further, so
long as Best is employed by BLC pursuant to this Agreement, in
addition to Base Compensation provided for by this Agreement,
Best shall participate in all bonus and incentive plans made
available by BLC to its senior management personnel and he shall
be entitled to receive bonuses and incentive payments as provided
by such plan(s) in amounts consistent with his salary/Base
Compensation and with his position as an executive officer of
BLC.
Section 7. During the term and any extensions of the term
of this Agreement, Best shall receive reimbursement from BLC for
all reasonable business expense incurred in the course of his
employment by BLC.
Section 8. Immediately after the effective date of this
Agreement, BLC shall loan Best a sum of money not more than Three
Million Four Hundred Thousand Dollars ($3,400,000.00) and in such
amount as Best and BLC's Board of Directors may approve pursuant
to the terms of an installment promissory note (the "Note")
substantially in the form attached hereto as Exhibit 1. At such
time, Best shall deliver the Note to BLC. The principal owing
under the Note shall be payable in equal annual installments over
a period of thirty (30) years. Such Note shall: (i) bear
interest at a rate of seven and two-tenths percent (7.2%) per
annum; (ii) provide that the entire unpaid balance of principal
and accrued interest may be prepaid at any time without penalty;
(iii) be secured with assets acceptable in value and nature to
both parties hereto, but in any case with any and all assets
purchased by Best with the loaned funds; and (iv) provide that in
the event of a default in the payment of any installment of
principal or interest, the entire unpaid balance of principal and
accrued interest shall become immediately due and payable and may
be called for payment by BLC as provided by the Note.
Section 9. Subject to the respective continuing obligations
of the parties including, but not limited to, those set forth in
Subsections 11(a), 11(b), and 11(c) hereof, Best's employment by
BLC may be terminated prior to the expiration of the term or any
extensions of the term of this Agreement as follows:
a. BLC, by action of its Board of Directors and upon
written notice to Best, may terminate Best's employment
with BLC immediately for cause. For purposes of this
Subsection 9(a), "cause" shall be defined as: (i) the
willful and continued failure of Best to substantially
perform his duties as an executive officer of BLC; (ii)
action by Best involving willful misfeasance or gross
negligence in the performance of his duties as an
executive officer of BLC; (iii) upon the order of a
federal or state court or administrative agency having
jurisdiction over BLC where such order involves or
relates to Best's fitness for continued employment by
BLC; (iv) conviction of Best of the commission of a
felony; or (v) any intentional breach by Best of a
material term, condition, or covenant of this
Agreement.
b. BLC, by action of its Board of Directors and upon
written notice to Best, may terminate Best's employment
with BLC immediately without cause.
c. Best, by written notice to BLC, may terminate his
employment with BLC immediately for cause. For
purposes of this Subsection 9(c) "cause" shall be
defined as: (i) any action by BLC's Board of Directors
to remove Best as an executive officer of BLC, except
where BLC's Board of Directors properly acts to remove
Best from the position of an executive officer for
"cause" as defined in Subsection 9(a) hereof; or(ii)
any intentional breach by BLC of a material term,
condition, or covenant of this Agreement.
d. Best, upon written notice to BLC, may terminate his
employment with BLC without cause.
e. Best's employment with BLC shall terminate in the event
of Best's death or disability. For purposes hereof
"disability" shall be defined as Best's inability by
reason of illness or other physical or mental
incapacity to perform the duties required by his
employment for any consecutive three hundred sixty-five
(365) day period, provided that notice of any
termination by BLC because of Best's "disability" shall
have been given to Best ninety (90) days prior to the
occurrence of the three hundred sixty-fifth (365th)
consecutive day of disability and prior to the full
resumption by Best of the performance of such duties.
Section 10. The following definitions are applicable to
this section and any other section of this Agreement in which
these terms appear. "Actual Salary" shall mean the actual salary
compensation amount paid to Best including Base Compensation and
any increases to such compensation received pursuant to Section 5
of this Agreement, exclusive of any lump sum bonuses, incentive
payments, or contingent compensation amounts. "Average
Compensation Amount" shall mean the amount of compensation equal
to the average of the aggregate amounts of Actual Salary, lump
sum bonuses, incentive payments, or contingent compensation
received by Best in each of the three (3) calendar years
immediately preceding the year in which Best's employment by BLC
is terminated. In the event of termination of Best's employment
with BLC pursuant to Section 9 hereof, Best shall continue to be
paid by BLC as follows:
a. In the event of termination pursuant to Subsection 9(a)
or 9(d), BLC shall continue to pay Best his Actual
Salary through the date of termination specified in the
notice of termination, and Best shall be entitled to no
additional compensation payments pursuant to this
Agreement.
b. In the event of termination pursuant to Subsection 9(b)
or 9(c), BLC shall continue to pay Best his Actual
Salary through the date of termination specified in the
notice of termination, and continue to pay Best his
Actual Salary through the term and any then current
extensions of this Agreement. In addition, BLC shall
pay Best on December 31 of each year within the term of
this Agreement and any then current extensions thereof,
an amount equal to the difference between the Average
Compensation Amount and the Actual Salary received by
Best during that calendar year as an additional
compensation payment.
c. In the event of termination pursuant to Subsection
9(e), BLC shall pay Best his Actual Salary (i) in the
event of his death, through the date of his death, or
(ii) in the event of Best's disability, through the
date of proper termination because of disability as
required by Subsection 9(e), and Best shall be entitled
to no additional compensation payments pursuant to this
Agreement.
Section 11. In order to induce BLC to enter into this
Agreement, Best hereby covenants and agrees as follows:
a. Best shall keep confidential and not improperly divulge
for the benefit of another party or use for his own
benefit during the term and any extensions of the term
of this Agreement any of the intellectual property,
business secrets, or other confidential information of
any of BLC or any corporation affiliated with BLC
including, but not limited to, Frank E. Best, Inc.
("FEBI"), Best Universal Lock Co. ("BUL"), Walter E.
Best Company, Inc. ("WEBCO"), or any of BLC's
subsidiaries. All of each such corporation's
confidential information shall be the sole and
exclusive property of each such corporation,
respectively.
b. Best shall not during the term and any extension of the
term of this Agreement, during or after termination of
his employment with BLC pursuant to Section 9 hereof,
except as an officer, employee, and/or director of any
of the corporations set forth in Section 11(a) hereof,
enter into the locking or security system business or
otherwise place himself in a position to be in
competition with BLC, FEBI, BUL, WEBCO, any subsidiary
of BLC, or any other corporation affiliated with BLC,
at any place within the United States.
c. Best shall not, except in the good faith performance of
his duties as an executive officer of BLC, either on
his own account or for any other person, firm, or
company, solicit, interfere with, or endeavor to cause
any employee of BLC or any corporation affiliated with
BLC to leave his or her employment or to induce or
attempt to induce any such employee to breach any
employment agreement with BLC or any corporation
affiliated with BLC.
Section 12. Any termination of Best's employment with BLC
as contemplated by Section 9 hereof, except in the circumstance
of Best's death, shall be communicated by written "Notice of
Termination" by the terminating party to the other party hereto.
Any "Notice of Termination" pursuant to Subsections 9(a), 9(c),
or 9(e) shall indicate the specific provisions of this Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such
termination.
Section 13. If a dispute arises regarding the termination
of Best pursuant to Section 9 hereof or as to the interpretation
or enforcement of this Agreement and Best obtains a final
judgment in his favor in a court of competent jurisdiction or his
claim is settled by BLC prior to the rendering of a judgment by
such a court, all reasonable legal fees and expenses incurred by
Best in contesting or disputing any such termination or seeking
to obtain or enforce any right or benefit provided for in this
Agreement or otherwise pursuing his claim shall be paid by BLC,
to the extent permitted by law.
Section 14. Best is not required to mitigate the amount of
the Base Compensation, Actual Salary, or Average Compensation
Amount payable pursuant to this Agreement after termination of
his employment by BLC by seeking other employment or otherwise,
nor shall the amount of any payment of Base Compensation, Actual
Salary, or Average Compensation Amount provided for in this
Agreement after termination of Best's employment with BLC be
reduced by any compensation earned by Best as a result of
employment by another employer when such employment is not in
breach of the covenants contained in Section 11 of this
Agreement.
Section 15. Should Best die after termination of his
employment with BLC under circumstances where any payments are
being made pursuant to Subsection 10(b) or 10(c) hereof and while
any amounts are payable to him hereunder, this Agreement shall
inure to the benefit of and be enforceable by Best's executors,
administrators, heirs, distributees, devisees, and legatees and
all amounts payable hereunder shall be paid in accordance with
the terms of this Agreement to Best's devisee, legatee, or other
designee or, if there is no such designee, to his estate.
Section 16. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Best: Russell C. Best
755 Eagle Creek Drive
Zionsville, Indiana 46077
If to BLC: Best Lock Corporation
6161 East 75th Street
Indianapolis, Indiana 46250
or to such address as any party hereto may have furnished to the
other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
Section 17. The validity, interpretation, and performance
of this Agreement shall be governed by the laws of the State of
Indiana and the United States of America.
Section 18. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by Best and BLC.
Section 19. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by any party which are not set forth
expressly in this Agreement.
Section 20. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement which
shall remain in full force and effect.
Section 21. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one in the same agreement.
Section 22. This Agreement is personal in nature and each
party hereto shall not, without consent of the other party,
assign or transfer this Agreement or any rights or obligations
hereunder except as provided in Section 15 above. Provided,
however, that this Agreement and the provisions hereof shall
inure to the benefit of and be binding upon any successor in
interest of BLC through merger, reorganization or otherwise
through the operation of law. In the event of any merger,
reorganization, or other transaction affecting BLC as a corporate
entity, all references to BLC, as the circumstance may be, herein
shall be construed to mean the surviving corporation or entity
existing after such merger, reorganization, or other transaction.
IN WITNESS WHEREOF, the parties have caused the Agreement to
be executed and delivered as of this day and year first above set
forth.
BEST LOCK CORPORATION
By: /s/ Walter E. Best
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Walter E. Best, President and
Chief Executive Officer
ATTEST:
/s/ Roger E. Beaverson
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Roger E. Beaverson, Secretary
RUSSELL C. BEST
/s/ Russell C. Best
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