1
EXHIBIT 10.51.
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of this 1st day of January 1997, between BRK Brands,
Inc. (the "Company") and the undersigned executive whose name and address
appear on the signature page hereto (the "Executive").
WITNESSETH:
WHEREAS, the Company considers it important to the best interests of the
Company and its affiliated corporations that the Executive be encouraged to
maintain employment with the Company;
WHEREAS, the Company considers it imperative to the best interests of
the Company and its affiliated corporations that the Executive be subject to
certain restrictions concerning the activities which he may undertake for
himself or others unrelated to the Company and its corporate affiliates and
would not enter into an agreement to provide certain benefits to Executive
absent such restrictions; and
WHEREAS, the Company anticipates that entering into an employment
agreement will operate as an incentive for the Executive to maintain
employment with the Company and to refrain from activities contrary to the
interests of the Company and its corporate affiliates;
NOW, THEREFORE, to induce the Executive to maintain employment with the
Company and to refrain from activities contrary to the interests of the
Company and its corporate affiliates, and to induce the Company to continue
Executive's employment with the Company and to provide certain benefits to
Executive, the Company and the Executive agree as follows:
2
1. Terms of Employment
(a) Duration of Employment. Executive shall be employed by the
Company through December 31, 1999 (the "Employment Period").
(b) Position/Duties. The Executive shall serve as Chairman of the Board
of Directors of the Company and its parent, First Alert, Inc., through at
least June 30, 1998. Thereafter, the Executive shall perform such duties as
he may be directed to perform by the Board of Directors of the Company
("Board").
(c) Business Efforts. So long as the Executive is employed by the
Company, the Executive shall devote a significant portion of his business
time to the performance of his duties under this Agreement but in no event
less than twenty (20) days per year.
(d) Salary. Provided that the Executive continues to be employed by the
Company, he shall be paid an annual base salary of $100,000.00, less any
applicable payroll or other taxes required to be withheld and any required
employee contributions towards benefits pursuant to Company employee benefit
plans or such other amount not less than $100,000 as may be determined by
the Board in its discretion.
(e) Bonus. In addition to a base annual salary, the Executive shall be
entitled to receive such bonuses as the Board may determine to be
appropriate or as provided by separate agreement between the Company and
the Executive. Nothing contained in this Agreement is intended to affect
any rights to bonus which the Executive currently has or as precluding the
entry into any future agreement concerning bonuses.
(f) Insurance Benefits. The Executive shall be eligible to participate
in all insurance benefit plans and group health programs sponsored by the
Company which are applicable to non-
- 2 -
3
exempt employees throughout the period of the Executive's employment by the
Company, provided that the Executive pays the employee share of any premium
attributable to said benefit.
(g) Annual Physical. The Executive may elect to undergo a physical
examination by a physician of the Executive's choice once each calendar year.
All fees and medical expenses associated with said physical examination shall be
paid by the Company.
(h) Other Benefits. The Executive shall further be eligible to participate
in other employee benefit plans such as pension and 401 (k) plans and receive
such benefits as vacation and leave time on the same terms as are applicable to
other officers of the Company.
2. Termination of Employment.
(a) By the Company. During the term of this Agreement and any extension
thereof, the Executive's employment with the Company may be terminated by the
Company only for cause. For purposes of this Agreement, the following reasons
shall constitute "cause":
(1) The Executive is convicted of, or pleads guilty or nolo
contenders to any felony or a crime involving moral turpitude;
(2) The Executive materially fails or refuses to perform his duties
and such material failure or refusal continues for a period of
ten (10) days following written notice of such failure or refusal
in reasonable detail, it being understood that the Company's
failure to achieve its business plan or projections shall not
itself be considered a failure or refusal to perform duties;
(3) The Executive breaches any provision of Section 5 hereof;
- 3 -
4
(4) The Executive commits any fraud, embezzlement, misappropriation
of funds, breach of fiduciary duty or other act of dishonesty or
intentional malfeasance against the Company; or
(5) The Executive's death or permanent incapacity.
(b) By the Executive. During the term of this Agreement and any extension
thereof, the Executive's employment with the Company may be terminated by the
Executive for any reason.
(c) Effect of Termination of Employment. The termination of the
Executive's employment pursuant to subsections 2(a) or 2(b) shall relieve the
Company of any further obligation to pay to the Executive salary pursuant to
subsection 1(d) or bonus, or to permit the Executive's participation in any
benefit plan (other than medical/dental insurance or group health program
coverage as set forth below) pursuant to subsection 1(f), but shall not relieve
the Company of its obligation to provide an annual physical examination pursuant
to subsection 1(g) above and continuing medical/dental insurance or group health
program coverage pursuant to Section 4 below, unless the Executive's employment
is terminated by the Company pursuant to subsections 2(a)(1), (3) or (4), and
provided that the Executive continues at all times to comply with his
obligations under Section 5 below.
3. Notice of Termination/Resignation.
Termination of the Executive's employment with the Company by the Company
pursuant to subsection 2(a) or resignation from employment with the Company by
the Executive pursuant to subsection 2(b) shall be communicated by a written
"Notice of Termination" or "Notice of Resignation" to the other party. (In the
case of the Executive's death or permanent incapacity,
- 4 -
5
receipt of actual notice of death or incapacity by the Company shall be deemed
Notice of immediate Resignation.) Except in the case of the Executive's death or
permanent incapacity, the Notice of Termination or Notice of Resignation may, at
the discretion of the party giving the notice, be effective immediately or at a
future specified date. The date the Executive ceases performance of services for
the Company pursuant to said Notice, or pursuant to the expiration of the term
of this Agreement on December 31, 1999 or a later date, shall be considered the
"Termination Date."
4. Continuing Medical/Health Insurance or Group Health Program Coverage.
Provided that the Executive complies with his obligations under Section 5,
the Executive shall be entitled to receive the following benefits after the
Termination Date, without regard to whether said Termination Date occurs during
the term of this Agreement or subsequent to its expiration:
(a) The Executive and Jasmine R. Cresswell Candlish ("the Executive's
Wife") shall be eligible to continue to participate, to the same extent and
level they were participating as of the Termination Date, in any Company
sponsored group medical and dental plans (whether insured or self-insured) for
non-bargaining unit employees and their spouses ("Group Plan") in effect on the
Termination Date, for the maximum allowable period under COBRA ("COBRA
Coverage"). Participation in said Group Plan by the Executive and the
Executive's Wife shall be subject to his/her payment of the regular employee
contribution or share for employee and spouse coverage as specified in the Group
Plan. Provided that the Executive or the Executive's Wife pays said regular
employee contribution, the remainder of the premium for COBRA Coverage shall be
paid by the Company.
- 5 -
6
(b) If, as of the date the Executive is no longer eligible for COBRA
Coverage, the Executive has not reached the minimum age for coverage under
Medicare, the Company shall at the Company's option: (1) purchase for the
Executive a medical/dental insurance policy (to be effective as of the date the
Executive is no longer eligible for COBRA Coverage) which will provide benefits
comparable to those then available to employees of the Company under the Group
Plan; or (2) directly reimburse the Executive for any medical/dental costs
incurred by him after the date the Executive is no longer eligible for COBRA
Coverage on the same terms as such costs would be paid by the Group Plan if the
Executive were insured under such Group Plan then in effect at the Company. The
Executive's benefits pursuant to this sub-section 4(b) shall terminate on the
date the Executive becomes eligible for Medicare coverage. It is understood that
depending upon the circumstances at the time, the payments made pursuant to this
subsection (whether the payments are made to purchase insurance or to directly
reimburse the Executive for medical/dental costs) may constitute taxable income
to the Executive. In the event that such payments constitute taxable income, it
is agreed that the payments will be reported to the Internal Revenue Service and
any other appropriate taxing authority as taxable income to the Executive, and
it is further agreed that the Executive shall be solely responsible for any
taxes associated with such payments.
(c) If, as of the date the Executive's Wife is no longer eligible for
COBRA Coverage pursuant to subsection 4(a), the Executive's Wife has not reached
the minimum age for coverage under Medicare, the Company shall at the Company's
option: (1) purchase for the Executive's Wife a medical/dental insurance policy
(to be effective as of the date the Executive's Wife is no longer eligible for
COBRA Coverage) which will provide benefits comparable to those then
- 6 -
7
available to spouses of employees of the Company under the Group Plan; or (2)
directly reimburse the Executive or, in the case of the Executive's demise, the
Executive's Wife, for any medical/dental costs incurred by her after the date on
which the Executive's Wife is no longer eligible for COBRA Coverage on the same
terms as such costs would be paid by the Group Plan if the Executive's Wife were
insured under such Group Plan then in effect at the Company. The Executive's
Wife's benefits pursuant to this subsection 4(c) shall terminate on the date the
Executive's Wife becomes eligible for Medicare coverage. It is understood that
depending upon the circumstances at the time, the payments made pursuant to this
subsection (whether the payments are made to purchase insurance or to directly
reimburse the Executive or the Executive's Wife for medical/dental costs) may
constitute taxable income to either the Executive or to the Executive's Wife. In
the event that such payments do constitute taxable income, it is agreed that the
payments will be reported to the Internal Revenue Service and any other
appropriate taxing authority as taxable income to the Executive and/or the
Executive's Wife, and it is further agreed that the Executive and/or the
Executive's Wife shall be solely responsible for any taxes associated with such
payments.
(d) It is understood and agreed that the Company's obligation to allow
continuing participation in employee benefit plans as specified in subsection
4(a) and the Company's obligations to provide the benefits as specified in
subsections 4(b) and (c) is contingent upon the Executive's continuing
compliance with his obligations under Section 5. If the Company determines
that the Executive has failed to comply with said obligations, it may cease
any contribution for employee benefits, may cease any further payment of
medical/dental insurance premiums or reimbursement of medical/dental costs,
and may further recover from the Executive
- 7 -
8
any premium payments made for or reimbursement payments made to the Executive
prior to the date of the Company's determination but after the Executive
initially failed to comply.
It is further understood and agreed that if the Executive, the Executive's
wife or both of them, receive medical and dental plan coverage from another
employer of the Executive which is comparable to that provided under this
Agreement as such coverage may be in effect for them from time to time, the
COMPANY'S obligations to provide coverage under this Section 4 to the Executive,
the Executive's Wife or both of them, as the case may be, shall cease.
5. Restrictions on Activities.
(a) Competition. The Executive acknowledges that he has been and will
continue to be employed by the Company in a key executive capacity which has
given and will give him access to confidential information concerning the
Company's products, suppliers, customers. manufacturing operations and
research and development activities throughout the world, that the Company is
engaged in a highly competitive business and that the success of the Company's
business in the marketplace depends upon its goodwill, reputation for quality
and dependability and the preservation of confidential information. The
Executive further acknowledges and agrees that reasonable limits may be placed
on his ability to compete against the Company as provided herein so as to
protect and preserve the legitimate business interests and goodwill of the
Company.
During his employment with the Company and the Non-Competition Period (as
defined below), the Executive will not (anywhere in the world where the Company
or any of its divisions, subsidiaries or affiliates then conducts business)
engage or participate in, directly or indirectly, as principal, agent, employee,
employer, consultant, investor or partner, or assist in the
- 8 -
9
management of, or own any stock or any other ownership interest in, any
business which competes with the Company (as defined below). For purposes of
this Agreement, a business shall be considered to compete with the Company
only if it engages directly or indirectly in the business of designing,
manufacturing, marketing, distributing or selling (1) residential smoke
detectors which are not capable of being monitored by an alarm control panel,
(2) rechargeable lanterns and flashlights, (3) fire extinguishers, (4) night
lights, (5) electromechanical or electronic timers which are stand alone
devices and not part of a lighting control system, (6) passive infrared motion
sensors which are not part of any lighting control or building control system,
(7) fire-resistant storage boxes, (8) carbon monoxide detectors, (9) fire
escape ladders, (10) child safety or elder care products or (11) any other
products which the Company is developing, designing, manufacturing, marketing,
distributing or selling during the Executive's employment with the Company.
Notwithstanding the foregoing, the Executive may own, directly or indirectly,
less than 1% of the capital stock of any public corporation, may serve as a
director of The Black & Decker Corporation, and may serve as a director of
such other corporations, which may have any of the foregoing competing
businesses as part of their business, as the Board may from time to time
agree, without violating this subsection 5(a). For purposes of this Agreement,
the "Non-Competition Period" shall mean the period equal to the longer of (i)
the period from the effective date of this Agreement to December 31, 1997,
(ii) twelve (12) consecutive months immediately following the date the
Executive ceases being employed by the Company, whether the Executive's
termination from employment with the Company is voluntary or otherwise, or
(iii) twelve (12) consecutive months immediately following the date the
Executive ceases receiving salary payments from the Company hereunder.
- 9 -
10
(b) Non-Solicitation of Employees. Customers and Suppliers. The Executive
acknowledges that by virtue of his employment with the Company he has had and
will have the opportunity to develop knowledge of and relationships with the
Company's employees, customers, and suppliers. The Executive further
acknowledges that the Company's relationships with its employees, customers, and
suppliers are critical to its ability to operate and its financial well-being.
While employed by the Company and during the Non Solicitation Period (as
defined below), the Executive will not solicit, or attempt to solicit, any
officer, director, consultant, executive or employee of the Company or any of
its divisions, subsidiaries or affiliates to leave his or her engagement with
the Company or such division, subsidiary or affiliate nor will he call upon,
solicit, divert or attempt to solicit or divert from the Company or any of its
divisions, subsidiaries or affiliates any party of whose name he was aware
during the term of his employment with the Company and who is, was, or was
solicited to become a customer of the Company or its divisions, subsidiaries
or affiliates at any time during the course of the Executive's employment with
the Company nor will he divert or attempt to divert from the Company or any of
its divisions, subsidiaries or affiliates any supplier (or potential supplier
of whose name he is aware) of the Company, its divisions, subsidiaries or
affiliates; provided, however, that nothing in this subsection 5(b) shall be
deemed to prohibit the Executive from calling upon or soliciting a customer or
supplier during the Non-Solicitation Period if such action relates solely to a
business which does not compete with the Company. For purposes of this
Agreement, the "Non-Solicitation Period" shall mean the period of thirty-six
(36) consecutive
- 10 -
11
months immediately following the Termination Date whether the Executive's
termination from employment with the Company is voluntary or otherwise.
(c) Proprietary Information. By virtue of his employment by the Company,
the Executive has had and will have access to confidential specifications,
strategic or technical data, marketing research data, product research and
development data, manufacturing techniques, confidential customer lists and
sources of supply, and trade secrets, all of which are confidential and may be
proprietary and are owned or used by the Company, its divisions, subsidiaries
or affiliates. Such information shall hereinafter be called "Proprietary
Information" and shall include any and all items enumerated in the preceding
sentence and coming within the scope of the business of the Company or any of
its divisions, subsidiaries or affiliates as to which the Executive may have
had access, whether conceived or developed by others or by the Executive alone
or with others during the period of his service to the Company, whether or not
conceived or developed during regular working hours. Proprietary Information
shall not include any records, data or information which are in the public
domain during the period of service by the Executive, provided the same are
not in the public domain as a consequence of disclosure directly or indirectly
by the Executive in violation of this Agreement.
The Executive agrees that Proprietary Information is of critical importance
to the Company. The Executive has kept all Proprietary Information in a
fiduciary capacity for the sole benefit of the Company. The Executive has not
and shall not directly or indirectly disclose (except as required by law) to any
person other than the Company or its employees authorized to receive such
disclosure by the Company, or use for his own benefit or for the benefit of any
other person or entity:
- 11 -
12
(1) any of the Company's trade secrets. at any time hereafter, and
(2) any Proprietary Information as defined in subsection 5(c) of this
Agreement but which does not qualify as a trade secret under
Illinois law. while he is employed by the Company and for a
period of thirty-six (36) months following the Termination Date
whether the Executive's termination from employment with the
Company is voluntary or otherwise.
(d) Non-Disparagement. The Executive further agrees that (1) he has not
and will not, at any time following the date of this Agreement, take any action
that will demean, disparage or criticize the Company, its subsidiaries,
divisions or affiliates or any of their respective officers, employees, agents,
directors or stockholders, and (2) he has not and will not make any negative or
adverse remarks whatsoever to any third party, including without limitation,
actual or potential customers, distributors, sales representatives and investors
of the Company and past, current or future employees and/or consultants of the
Company, concerning the business, operations, technologies, products, services,
marketing strategies, pricing policies, management. affairs and financial
condition of the Company, its subsidiaries, divisions, affiliates and/or their
successors, assigns, stockholders, officers, directors and employees; provided,
however, that nothing contained in this subsection shall be deemed to prohibit
the Executive from truthfully responding to inquiries pursuant to legal process,
providing information as required by law, conducting internal employee
performance appraisals, providing information to the Board or the Company's
officers. employees, and investors as necessary to the performance by the
Executive of his duties. or otherwise performing his duties.
- 12 -
13
(e) Return of Documents. The Executive agrees that upon his termination
from the Company, whether voluntary or otherwise, the Executive shall deliver
to the Company all notes, letters, documents and records which may contain
Proprietary Information which are then in his possession or control and shall
destroy any and all copies and summaries thereof not returned to the Company.
(f) Assignment of Inventions. The Executive agrees to assign and transfer
to the Company or its designee, without any separate remuneration or
compensation, his entire right, title and interest in and to all Inventions in
the Field (as defined below), together with all United States and foreign
rights with respect thereto, and at the Company's expense to execute and
deliver all appropriate patent and copyright applications for securing United
States and foreign patents and copyrights on Inventions in the Field and to
perform all lawful acts, including giving testimony, and to execute and
deliver all such instruments that may be necessary or proper to vest all such
Inventions in the Field and patents and copyrights with respect thereto in the
Company, and to assist the Company in the prosecution or defense of any
interference which may be declared involving any of said patent applications,
patents, copyright applications or copyrights. For the purposes of this
Agreement, the words "Inventions in the Field" shall include any discovery,
process, design, development, improvement, application, technique, or
invention, whether patentable or copyrightable or not and whether reduced to
practice or not, conceived or made by the Executive, individually or jointly
with others (whether on or off the Company's premises or during or after
normal working hours) while in the employ of the Company, and which was or is
directly or indirectly related to the business of the Company or any of its
subsidiaries, divisions or affiliates, or which resulted or results from or
was suggested by any
- 13 -
14
work performed by any employee or agent thereof during the Executive's
employment by the Company and for a period of thirty-six months following the
Termination Date.
(g) Additional Protections. The obligations of the Executive under the
foregoing subsections 5(a) through 5(f) shall be in addition to, and shall not
limit, any other obligations of the Executive to the Company imposed either by
law or agreement with respect to the matters set forth in this Section 5.
(b) Representation. THE EXECUTIVE REPRESENTS AND WARRANTS THAT THE
KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSED AT THE TIME OF EXECUTION OF THIS
AGREEMENT ARE SUFFICIENT TO PERMIT HIM TO EARN A LIVELIHOOD SATISFACTORY TO
HIMSELF WITHOUT VIOLATING ANY PROVISION OF SECTION 6 HEREOF. FOR EXAMPLE, BY
USING SUCH KNOWLEDGE, SKILLS AND ABILITIES, OR SOME OF THEM, IN THE SERVICE
OF A NON-COMPETITOR THE EXECUTIVE FURTHER REPRESENTS AND WARRANTS THAT HIS
ABILITY SO TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF DOES NOT DEPEND UPON
HIS ABILITY TO OBTAIN COMPENSATION FOR HIS SERVICES AT, OR IN EXCESS OF, THE
LEVEL AT WHICH HE WILL BE COMPENSATED BY THE COMPANY.
6. Remedies.
It is specifically understood and agreed that any breach of the provisions
of Section 5 of this Agreement will result in serious and irreparable injury to
the Company's business and that the remedy at law alone will be an inadequate
remedy for such breach, and that in addition to any other remedy it may have,
the Company shall be entitled to obtain the specific performance of this
Agreement by the Executive and to seek both temporary and permanent injunctive
relief (to
- 14 -
15
the extent permitted by law) without the necessity of proving actual damages.
In addition to the foregoing, the Company shall have no obligation to make any
payment or provide any benefit to the Executive under Section 4 of this
Agreement on or after the date on which any breach of the provisions of
Section 5 of this Agreement occurs and shall have the right to cease such
payments and benefits.
7. No Other Benefits.
Except as specifically provided in this Agreement, the Executive shall
not be entitled to any compensation, severance or other benefits from the
Company, its parent or any of their respective divisions, subsidiaries or
affiliates in the event of the Executive's termination of employment for any
reason.
8. Limitations on Payments.
Anything herein to the contrary notwithstanding, in no event shall the
present value of all payments made to the Executive by the Company hereunder
which constitute "parachute payments" (within the meaning of Section
280(G)(b)(2) of the Internal Revenue Code of 1986. as amended (the "Code"),
without regard to clause A(ii) thereof), when aggregated with any other payments
made by the Company to the Executive which constitute "parachute payments" (as
so defined), exceed 299% of the Executive's "base amount" (within the meaning of
said Section 280(G)) unless the applicable percentage of the holders of the
Company's common stock outstanding as of the date of such payments shall
approve such payments after appropriate disclosure. The Company agrees to make
reasonable efforts to obtain such stockholder approval. For the purposes hereof,
the "present value" of any payment shall be determined in accordance with
Section 280(G) of the Code.
- 15 -
16
9. Severable Provisions.
The provisions of this Agreement are severable and the invalidity of any
one or more provisions shall not affect the validity of any other provision,
except that if a court of competent jurisdiction invalidates or voids Section 5
of this Agreement or any portion thereof, the Company shall be entitled to
discontinue any payments or benefits that would otherwise be provided under
Section 4 and the Executive shall forfeit his rights to the same. In the event
that a court of competent jurisdiction, in the course of a proceeding to enjoin
the Executive's violation of Section 5, shall determine that specific
performance of any portion of Section 5 of this Agreement cannot be obtained in
whole or in part because of the duration or scope thereof, the parties hereto
agree that said court in making such determination shall have the power to
reduce the duration and scope of such provision to the extent necessary to
permit an order of specific performance, and that the Agreement in its reduced
form shall be enforced to the full extent permitted by law.
10. Notices.
All notices hereunder, to be effective, shall be in writing and shall be
delivered by hand or mailed by certified mail, postage and fees prepared, as
follows:
IF TO THE COMPANY: BRK BRANDS, INC.
3901 Liberty Street Road
Aurora, IL 60504-8122
Attn: Haldon K. Grant
If to the Executive, to the address set forth below his name on the
signature page hereto; or to such other address as a party may notify the other
pursuant to a notice given in accordance with this Section 11.
- 16 -
17
11. Miscellaneous.
(a) Modification. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
except as specifically referenced herein. This Agreement may not be amended
or revised except by a writing signed by both parties or by a court of
competent jurisdiction as provided in Section 9 above.
(b) Waiver. No waiver by either party hereto at anytime of (1) any
breach by the other party hereto of any provision of this Agreement, or (2)
compliance with any condition of this Agreement to be performed by such
other party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time.
(c) Assignment and Transfer. This Agreement shall not be terminated by
the merger or consolidation of the Company with any corporate or other entity
or by the transfer of all or substantially all of the assets of the Company to
any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to
the Executive by this Agreement be encumbered, transferred or in any way
anticipated, except as specifically provided herein.
(d) Captions. Captions herein have been inserted solely for convenience
of reference and in no way define, limit or describe the scope or substance
of any provision of this Agreement.
- 17 -
18
(e) Governing Law. This Agreement shall be construed under and enforced in
accordance with the laws of The State of Illinois.
12. Term of Agreement. This Agreement shall become effective as of
January 1, 1997, and continue in effect through December 31, 1999. The
Executive's obligations under Section 5, and the Company's obligations under
subsection 1(g) and Section 4 shall continue without regard to expiration.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
The Executive BRK Brands, Inc.
Malcolm Candlish By: David V. Harkins
- ---------------------------------- ------------------------------
Malcolm Candlish David V. Harkins
465 Walls Way Chairman of the
Osprey, Florida 34229 Compensation Committee
- 18 -