1
TERMINATION BENEFITS AGREEMENT
------------------------------
AGREEMENT, dated the 5th day of July, 1995, between BRK Brands, Inc. (the
"Company") and the undersigned executive employee of the Company whose name and
address appear on the signature page hereto (the "Executive").
W I T N E S S E T H :
---------------------
WHEREAS, the Company considers it important to the best interests of the
Company and its affiliates, that the Executive be encouraged to continue to be
employed by the Company;
WHEREAS, the Company considers it imperative to the best interests of the
Company and its affiliates 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 affiliates;
WHEREAS, the Company anticipates that providing severance benefits will
operate as an incentive for the Executive to continue to be employed by the
Company and to refrain from activities contrary to the interests of the Company
and its affiliates;
NOW, THEREFORE, to induce the Executive to continue to be employed by the
Company, to refrain from activities contrary to the interests of the Company and
its affiliates and for other good and valuable consideration, the Company and
the Executive agree as follows:
1. Circumstances Triggering Receipt Of Severance Benefits.
------------------------------------------------------
The Company shall provide the Executive with the benefits set forth in
Section 4 of this Agreement if his employment is terminated by the Company
during the term of this Agreement without cause attributable to the Executive.
The Executive shall not be entitled to the benefits set forth in Section 4 if:
2
a) the Executive voluntarily terminates his employment with the
Company;
b) the Executive dies or becomes incapacitated during the term of
his employment; or
c) the Executive's employment is terminated by the Company for one
or more of the following reasons:
(1) The Executive has been convicted of, or has pleaded guilty
or NOLO CONTENDERE to any felony or a crime involving moral
turpitude;
(2) The Executive has materially failed or refused to perform
his duties hereunder and such material failure or refusal
has continued 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 has breached any provision of Section 5
hereof; or
(4) The Executive has committed any fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or other
act of dishonesty or intentional malfeasance against the
Company.
2. Notice of Termination.
----------------------
Termination of the Executive's employment with the Company by the Company
or by the Executive shall be communicated by written "Notice of Termination" to
the other party.
3. Nonrenewal.
----------
This Agreement shall not renew automatically and shall expire at the end of
the term specified in Section 14 below unless both parties, in writing, agree to
its renewal 60 days prior to its termination. To be effective, such renewal of
this Agreement must set forth the term of the renewal period and be signed by
both parties. Expiration of this Agreement shall not in
- 2 -
3
and of itself serve to terminate Executive's employment with the Company and
shall, in and of itself, give rise to no right to the benefits set forth in
Section 4 below.
4. Termination Benefits.
--------------------
a) Subject to the conditions set forth in Section 1 and as specified
in this Section 4, the Executive shall be entitled to receive the following
benefits:
(1) PERIODIC PAYMENTS. The Executive shall be paid a monthly
termination benefit in an amount equal to 1/12th of his annual base salary in
effect as of the termination date less any applicable payroll or other taxes
required by law to be withheld ("monthly payment"). For purposes of this
Agreement, "annual base salary" shall not include any cost of living
adjustments, bonus payments, or other forms of supplementary compensation.
Provided that Executive complies with his obligations under Section 5 and is
otherwise entitled to benefits under Section 1, Executive shall receive a
minimum of three monthly payments, and thereafter, if Executive is still
unemployed, he shall continue to receive monthly payments until such time as he
becomes employed, he dies, he becomes incapacitated, or he has received a total
of 12 monthly payments, whichever occurs first. Said monthly payments shall be
paid on the last business day of the month beginning with the first month
following the date of termination.
(2) ACCRUED BUT UNUSED VACATION TIME. The Company shall pay to
the Executive, in a lump sum within 31 days after the termination date, all
vacation time accrued but unused by the Executive prior to the termination date.
(3) INSURANCE BENEFITS. Subject to his payment of the employee
contribution or share as specified in the Company's employee benefit plans and
his continuing compliance
- 3 -
4
with Section 5 of this Agreement, the Executive shall continue to participate to
the same extent and level he was participating as of the termination date, in
any life, accident, disability, health and dental insurance plans and other
similar fringe benefits of the Company in effect on the termination date for a
period of six months from the termination date unless the Executive obtains
other employment prior to the expiration of six months in which event the
Executive's participation in the foregoing benefit plans will terminate on such
earlier date as he and any members of his family covered by the Company's
benefit plans become eligible for coverage under any benefit plan offered to the
Executive by virtue of such other employment.
b) It is understood and agreed that the Company's obligation to make
monthly payments as specified in Section 4(a) (1) and to allow continuing
participation in employee benefit plans as specified in Sections 4(a)(2) and (3)
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 making the monthly payments and cease
any contribution for employee benefits and may further recover from the
Executive any monthly payments made to and any monthly premium payments made for
the Executive prior to the date of its determination but after the Executive
initially failed to comply.
(c) It is further understood and agreed that the Executive will
promptly notify the Company if he obtains other employment and the Executive
promises that he will return any monthly payment erroneously made to him prior
to the Company's receipt of notification of the Executive's other employment
together with a reimbursement of any
- 4 -
5
premium payment erroneously made on his behalf by the Company prior to its
receipt of such notice.
(d) Finally, it is understood and agreed that the monthly payments
specified in Section 4(a)(1) shall be reduced to the extent of any unemployment
or other insurance benefits paid to the Executive by the State or the Company.
5. Continuing obligations.
----------------------
The Executive acknowledges that by virtue of his employment by the Company
and the nature of his duties, the Executive has acquired confidential
information and trade secrets of the Company and its corporate affiliates (the
latter being hereafter referred to as the "Group") and that he has also gained
influence with the Company's and the Group's customers, suppliers and employees.
The Executive further acknowledges that in order to protect the Company's and
the Group's business, certain restrictions on the Executive's activities are
reasonably necessary. It is understood and agreed that absent an agreement to
such restrictions, the Company would not enter into this Agreement. Therefore,
in order to induce the Company to enter into this Agreement and to reasonably
protect the Company's and the Group's business, the Executive hereby agrees as
follows:
a) CONFIDENTIALITY. All documents, records, techniques, trade secrets
and other information which have come into the Executive's possession from time
to time during his employment by the Company shall be deemed to be confidential
and proprietary to the Company and shall not be disseminated by the Executive to
any third party at any time either before or after his employment by the Company
terminates except to the extent necessary to the Executive's proper performance
of his duties as an executive of the Company. The
- 5 -
6
Executive further agrees to retain in confidence any confidential information
known to him concerning the Company and its subsidiaries and corporate
affiliates and their respective businesses so long as such information is not in
the public domain. (For purposes of this paragraph, information shall not be
deemed in the public domain if its initial disclosure constituted a breach of
confidentiality.) The Executive further agrees that upon his termination, he
will promptly return to the Company any Company documents or articles. The
obligations of the Executive under this Section 5 shall be in addition to, and
shall not limit, any other obligation of the Executive to the Company with
respect to the matters set forth herein or otherwise, except as required by law.
(b) NON-COMPETITION/SOLICITATION/DISPARAGEMENT. The Executive agrees
that he shall not during his employment by the Company and for a period of one
year following his termination of employment with the Company without prior
written consent of the Company directly or indirectly for himself or on behalf
of or as an employee or agent of any other:
(1) Engage in or be employed by or in any business which shall
directly or indirectly compete with the Company in the provision of services or
the making, processing, adapting for sale or selling of goods or materials of a
kind and nature with which he was concerned to a material extent at any time
during the period beginning with his hire by the Company; provided that nothing
in this subsection shall restrain Executive from such action as aforesaid in any
business insofar as his duties or work shall relate to services, good or
materials of a kind or nature with which Executive was not concerned to a
material extent at any time during the period beginning with his hire by the
Company;
- 6 -
7
(2) canvas or solicit business from any customer of the Company
unless such business is of a completely different kind and nature from that of
the Company;
(3) Interfere or seek to interfere or take such steps as may
interfere with the continuance of supplies to the Company from any suppliers who
are, or who have been at any time during his employment by the Company,
supplying components, materials or services to the Company;
(4) Solicit or entice or endeavor to solicit or entice any
employee away from the Company;
(5) Solicit or entice or endeavor to solicit or entice any agent
or distributor away from the Company;
(6) Speak negatively about the Company, its Board of Directors,
or its personnel.
(c) INTELLECTUAL PROPERTY. The Executive shall, without additional
remuneration, promptly communicate and disclose to the Company:
(1) All inventions, discoveries, products, product modifications
and improvements, whether patentable or not, conceived, originated or developed
by the Executive, solely or jointly with others, during any period of employment
by the Company, or at the facilities, expense or request of the Company, or
based on knowledge or information obtained from the Company or any member of the
Group during the course of or incidental to his employment (hereinafter together
called "Inventions"). Upon request of the Company, the Executive shall without
additional remuneration (except that the Company shall reimburse the Executive
for expenses reasonably incurred by Executive in connection with the development
- 7 -
8
or assignment of said invention) assign to the Company, or as the Company may
lawfully direct, any and all Inventions, free from all encumbrances and
restrictions. All such assignments shall include the patent rights in the United
States and throughout the world. With respect to patentable Inventions, in the
event the Company or other member of the Group does not file or cause to be
filed an application for patent rights within two years after the Executive
discloses completely to the Company such invention, and provided that the
Company has not utilized such invention as part of the secret know-how used or
licensed by the Company or by any of the Group, if within one year thereafter
Executive requests the Company in writing to do so, the Company will release
such invention to Executive provided that Executive files a patent application
thereon within one year following the date of such request, and offers to grant,
and upon acceptance of such offer does grant, the Company, or such person or
entity as the Company shall direct, non-exclusive, worldwide, royalty-free
licenses for manufacture and sales with respect thereto. It is agreed that the
Executive's promises as set forth in this paragraph (c)(1) do not apply to
inventions for which no equipment, supplies, facilities or trade secrets of the
Company were used and which were developed entirely on the Executive's own time
unless the invention relates to the business of the Company or the Company's
actual or demonstrably anticipated research or development or the invention
results from any work performed by the Executive for the Company.
(2) Any trademarks, labels of product or other designs conceived,
originated or developed by him, whether solely or jointly with others, during
any period of employment by the Company, or at the Company's facilities, expense
or request, or based upon knowledge or information obtained from the Company
during the course of his employment (hereinafter
- 8 -
9
together called "Protected Material"). Protected Material which relates to the
business or products of the Company, or of any member of the Group, is
hereinafter called "BRK Protected Material," and such BRK Protected Material and
any copyrights and trademarks arising therefrom shall be solely and exclusively
the property of the Company, their successors and assigns, absolutely and
forever. The Company shall, for itself and for members of the Group, have the
rights, in the capacity of an employer of an employee for hire, to secure
trademark registrations and copyright in such BRK Protected Material throughout
the world in its own name or in any other name designated by it, and all
renewals and extensions of such trademark registration and copyright, whether
now or hereafter created, and shall have the sole and exclusive right to use and
dispose of such BRK Protected Material and to direct the use and disposition
thereof throughout the world in any manner whatsoever, and at its sole
discretion to refrain therefrom. The Executive hereby assigns to the Company all
such future copyrights, and agrees to execute and deliver all such documents as
are necessary or desirable to secure and protect the rights of the Company and
of the members of the Group and the rights of their respective successors and
assigns in such BRK Protected Material and to protect the Company from liability
therefore, the Company to reimburse the Executive for expenses reasonably
incurred in connection with such assignment.
(d) ADDITIONAL COVENANT. As a separate and additional covenant
with the Company, which is for this purpose the agent of the Group, the
provisions of Sections 5(a), 5(b), subsections (1) through (6) inclusive, and
5(c) shall apply respectively to each member of the Group as if herein set out
seriatim.
- 9 -
10
(e) REPRESENTATION. THE EXECUTIVE REPRESENTS AND WARRANTS THAT
THE KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSED AT THE TIME OF HIS ACCEPTANCE
OF EMPLOYMENT WITH THE COMPANY ARE SUFFICIENT TO PERMIT HIM TO EARN A LIVELIHOOD
SATISFACTORY TO HIMSELF WITHOUT VIOLATING ANY PROVISION OF SECTION 5 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.
(f) 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 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 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.
- 10 -
11
6. 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 or any of its affiliates in the event of the Executive's termination.
7. 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 shareholder approval. For the purposes hereof,
the "present value" of any payment shall be determined in accordance with
Section 280(G) of the Code.
8. Assignment and Transfer.
------------------------
a) THE EXECUTIVE. 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. If the
Executive should die or become incapacitated while receiving the three initial
monthly payments specified in subsection 4(a),
- 11 -
12
those initial three monthly payments, to the extent that they have not already
been paid to the Executive, shall be paid in accordance with the terms of this
Agreement to his estate's personal representatives or administrators or his
trustee, whichever applies. In the case of the Executive's bankruptcy while any
amounts are payable to him hereunder, all such payments otherwise provided
herein may at the discretion of the Company be paid in accordance with the terms
of this Agreement to his trustee in bankruptcy. Payment to any of the aforesaid
representatives, administrators or trustees shall be deemed to satisfy in full
the Company's obligations under this Agreement.
b) THE COMPANY. 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, and the provisions of this Agreement
shall inure to the benefit of any such successor in interest to the Company. It
is further intended that the provisions of this Agreement shall be binding on
any such successor in interest to the Company, provided that if the terms of
such merger, consolidation or transfer render it impractical to pay the benefits
provided by this Agreement, the Company shall only be required to make
reasonable efforts to procure the payment of equivalent benefits.
9. Notices.
-------
For the purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered mail, return receipt requested,
postage prepaid, addressed as follows:
- 12 -
13
If to the Executive, to the address set forth below his name on the
signature page hereto.
If to the Company:
BRK Brands, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
U.S.A.
Attention: Senior Vice President and Chief Financial Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices or change of address shall
be effective only upon receipt.
10. Governing Law.
-------------
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Illinois.
11. Waiver and Modification.
-----------------------
Except as necessary in order to conform the terms of Section 5 of this
Agreement to any restrictions imposed by law so as to render the terms of each
subsection thereof enforceable to the fullest extent possible, no provisions of
this Agreement may be modified, waived, or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision 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. No agreements or representations, oral or otherwise, express or
implied, with respect to the
- 13 -
14
subject matter hereto have been made by either party which are not set forth
expressly in this Agreement.
12. Separability.
------------
The invalidity or unenforceability of any 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, 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. The parties further authorize any court of
competent jurisdiction to impose any limitation or other modification necessary
to render the various subsections of Section 5 enforceable to the maximum extent
possible.
13. Non-assignability.
-----------------
This Agreement is personal in nature and Executive shall not, without
the consent of the Company, assign or transfer this Agreement or any rights or
obligations hereunder. Without limiting the foregoing, the Executive's right to
receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, and in the event of any
attempted assignment or transfer contrary to this paragraph the Company shall
have no liability to pay any amount so attempted to be assigned or transferred,
provided that the Company may choose to pay benefits as specified in subsection
8(a) above.
- 14 -
15
14. Term of Agreement.
-----------------
This Agreement shall become effective as of the date first above written
and shall terminate on December 31, 1997, unless renewed annually in writing by
the parties in accordance with Section 3.
- 15 -
16
TERMINATION BENEFITS AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above set forth.
BRK Brands, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
- 16 -