EMPLOYMENT AGREEMENT
AGREEMENT made this 8th day of December, 1998, by and between
UNITED INDUSTRIAL CORPORATION, a Delaware corporation having an address at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Employer"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter called "Employee").
W I T N E S S E T H :
In consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Employment. Employer agrees to employ Employee and Employee
agrees to serve Employer upon the terms and conditions hereinafter set forth.
2. Term. Subject to Employee being employed by Employer as its
Chief Executive Officer on December 31, 1998, the employment of Employee
hereunder shall be effective and shall commence on January 1, 1999 (the
"Effective Date") and shall terminate as of the close of business on June 30,
2001 (the "Termination Date"). The period from the Effective Date through the
Termination Date is referred to as the term of this Agreement.
3. Duties and Extent of Services. Employee agrees to serve
Employer and its subsidiary companies faithfully and to the best of his ability
under the direction of the Board of Directors of Employer, devoting his entire
business time, energy and skill to his duties hereunder; provided that, subject
to the approval of the Board of Directors of Employer, Employee may serve on the
board of directors of companies other than Employer and its subsidiaries. The
principal place of employment of Employee shall be at the offices of AAI
Corporation ("AAI"), a
subsidiary of Employer, which are currently located in ▇▇▇▇ Valley, Maryland.
Employee understands and agrees, however, that in connection with his employment
hereunder, he may be required from time to time to travel on behalf of Employer.
The principal duties of Employee shall be to serve as
President and Chief Executive Officer of Employer and AAI and, in such capacity,
to render such managerial, administrative and other services to Employer and AAI
and their subsidiaries as normally are associated with and incident to such
positions as Employer from time to time may require of him. If, during the term
of this Agreement, the Board of Directors of Employer so determines, in its
absolute discretion, to elect Employee to any additional office of Employer or
its subsidiary companies consistent with his position, or a director of Employer
or its subsidiary companies, Employee agrees to accept and serve in such office
or capacity, for no additional compensation or remuneration.
4. Compensation.
(a) Salary. Employer agrees to pay (or to cause AAI to pay) to
Employee, as compensation for all of the services to be rendered by Employee
under or pursuant to this Agreement, a salary at the rate of four hundred forty
thousand dollars ($440,000) per annum, commencing as of the Effective Date,
payable in accordance with Employer's normal payroll practices. Such salary
shall be subject to annual review by Employer's Board of Directors and, at the
discretion of the Board, may be increased, but not decreased below such amount.
Employee shall also be eligible to receive annual bonuses as may be granted by
Employer's Board of Directors pursuant to Employer's Performance Sharing Plan
("PSP") formula, plus an amount up to forty percent (40%) of the PSP formula in
the sole
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discretion of Employer's Board of Directors; provided, however, that the total
bonus to which Employee is entitled pursuant to this Section 4(a) shall in no
event be greater than three hundred thirty thousand dollars ($330,000) per
annum.
(b) Employee Benefit Plans. During the term of this Agreement,
Employee shall be eligible to participate in any life insurance, medical,
retirement, pension or profit-sharing, disability or other benefit plans or
arrangements now or hereafter generally made available by Employer or AAI to
executive employees of Employer or AAI to the extent Employee qualifies under
the provisions of any such plans. Subject to the foregoing, Employer and AAI
shall have the right to change insurance companies and modify insurance policies
covering employees of Employer and AAI. Employer agrees to provide (or to cause
AAI to provide) medical coverage to Employee after retirement at age 65 1/2
consistent with such coverage then provided to Employer's executive employees.
Such coverage shall be provided either through Employer's or AAI's plan or a
private plan, at Employer's option, but only if and to the extent Employee does
not receive such coverage from another source. Employer shall purchase and keep
in effect during the term of this Agreement a key man life insurance policy with
respect to Employee in the amount of not less than $200,000, provided that
Employer is able to obtain a policy in the amount of $5,000,000 and that
Employee is insurable at normal premium rates for such a policy. Employee shall
designate the beneficiary as to $200,000 of such policy, and Employer shall be
the beneficiary as to any portion of such policy in excess of such amount.
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(c) Stock Options. Employer shall grant to Employee on the
first business day after the Effective Date options to acquire 100,000 shares of
common stock of Employer pursuant to the terms of Employer's 1994 Stock Option
Plan (the "Plan") and the grant letter in the form annexed hereto as Exhibit A.
The exercise price of such options shall be equal to the fair market value of
such common stock as of the grant date.
(d) Vacation. Employee shall be entitled to four (4) weeks
vacation with pay per year.
(e) Taxes. Employee understands that any and all payments
described in this Agreement will be subject to such tax treatment as applies
thereto, and to such withholding as may be required under applicable tax laws.
5. No Competition. Employee agrees that during the term of
this Agreement he will not, within the continental United States, directly or
indirectly, engage or participate or make any financial investments in or become
employed by or render advisory or other services to or for any person, firm or
corporation, or in connection with any business activity, other than that of
Employer and its subsidiary companies, directly or indirectly in competition
with any of the business operations or activities of Employer and its subsidiary
companies. Nothing herein contained, however, shall restrict Employee from
making any investments in any company whose stock is listed on a national
securities exchange or actively traded in the over-the-counter market, so long
as such investment does not give him the right to control or influence the
policy decisions of any such business or enterprise which is or might be
directly or indirectly in competition with any of such business operations or
activities of Employer or any of its subsidiary companies.
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6. Confidentiality; etc.
(a) Employee will not divulge, furnish or make accessible to
anyone (other than in the regular course of business of Employer or any of its
subsidiary companies) any knowledge or information with respect to confidential
or secret methods, processes, plans or materials of Employer or any of its
subsidiary companies, or with respect to any other confidential or secret
aspects of the business of Employer or any of its subsidiary companies.
(b) Employee agrees to communicate and to make known to
Employer all knowledge possessed by him relating to any methods, developments,
inventions and/or improvements, whether patented, patentable or unpatentable
which concerns in any way the business of Employer or any of its subsidiary
companies or the general industry of which they are a part, from the time of
entering upon employment until the termination thereof, and whether acquired by
Employee before or during the term of his employment; provided, however, that
nothing herein shall be construed as requiring any such communication where the
method, development, invention and/or improvement is lawfully protected from
disclosure as the trade secret of a third party, including, without limitation,
any former employer of Employee or by any other lawful bar to such
communication.
(c) Any methods, developments, inventions and/or improvements,
whether patentable or unpatentable, along the lines of the business of Employer
or any of its subsidiary companies, which Employee may conceive of or make while
in the employ of Employer, shall be and remain the property of Employer.
Employee agrees promptly to communicate and disclose all such methods,
developments, inventions and/or improvements to Employer and to
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execute and deliver to Employer any instruments deemed necessary by Employer to
effect disclosure and assignment thereof to it. Employee further agrees, on
request of Employer, to execute patent applications based on such methods,
developments, inventions and/or improvements, including any other instruments
deemed necessary by Employer for the prosecution of such patent applications or
the acquisition of Letters Patent in the United States and/or any foreign
countries.
(d) Employee agrees that for a period of three (3) years from
and after the termination or expiration of his employment by Employer, whether
pursuant to the terms of this Agreement or otherwise, he will not:
(i) directly or indirectly solicit, raid, entice or induce any
employee of Employer or of any of its subsidiary companies to be employed by any
person, firm or corporation which is, directly or indirectly, in competition
with the business or activities of Employer or any of its subsidiary companies;
or
(ii) directly or indirectly approach any such employee for
these purposes; or
(iii) authorize or knowingly approve the taking of such
actions by other persons on behalf of any such person, firm or corporation, or
assist any such person, firm or corporation in taking such action; or
(iv) directly or indirectly solicit, raid, entice or induce
any person, firm or corporation (other than the U.S. Government or its agencies)
who or which on the date hereof is, or at any time during the period of
employment hereunder shall be, a customer of Employer or of any of its
subsidiary companies to become a customer for the same or similar products which
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it purchased from Employer or any of its subsidiary companies, of any other
person, firm or corporation, and Employee shall not approach any such customer
for such purpose or authorize or knowingly approve the taking of such actions by
any other person.
(e) Employee agrees that during the term of his employment by
Employer, whether under this Agreement or otherwise, he will not at any time
enter into, on behalf of Employer or any of its subsidiary companies, or cause
Employer or any of its subsidiary companies to enter into, directly or
indirectly, any transactions with any business organization in which he or any
member of his immediate family may be interested as a partner, trustee,
director, officer, employee, shareholder, lender of money or guarantor.
7. Injunctive Relief. Employee acknowledges that the services
to be rendered by him hereunder are of a special, unique and extraordinary
character and that it would be very difficult or impossible to replace such
services and further that irreparable injury would be sustained by Employer and
its subsidiary companies in the event of a violation by Employee of any of the
provisions of this Agreement, and by reason thereof Employee consents and agrees
that if he violates any of the provisions of this Agreement, Employer shall be
entitled to an injunction to be issued by any court of competent jurisdiction
restraining him from committing or continuing any violation of this Agreement.
8. Survival of Provisions. The provisions of Sections 5, 6 and
7 hereof shall survive the termination or expiration of this Agreement,
irrespective of the reason therefor.
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9. Expenses. Employer shall reimburse Employee for all
reasonable expenses properly incurred by him on behalf of Employer in the
performance of his duties hereunder, provided that proper vouchers are submitted
to Employer by Employee evidencing such expenses and the purposes for which the
same were incurred.
10. Disability. If Employee shall be incapacitated by reason
of mental or physical disability or otherwise during the term of this Agreement
so that he is prevented from performing his principal duties and services
hereunder for a period of three (3) consecutive months or one or more periods
aggregating three (3) months during any twelve (12) month period, Employer shall
have the right to terminate this Agreement by sending written notice of
termination to Employee, and thereupon his employment pursuant to this Agreement
shall terminate and Employee shall be entitled to no further payments hereunder,
other than (i) for any compensation due pursuant to Section 4 hereof through the
date of such termination, (ii) the reimbursement, pursuant to Section 9 hereof,
of any expenses incurred prior to the date of such termination, and (iii) the
continuation of Employee's base salary pursuant to Section 4(a) hereof for a
period of six (6) months from the date of such termination, but not beyond the
Termination Date or the date on which Employee shall commence to receive
benefits pursuant to Employer's long term disability plan, as then in effect.
11. Death. In the event of the death of Employee during the
term hereof, this Agreement shall automatically terminate and Employer shall
have no further obligations hereunder, other than to pay to Employee's estate
any compensation due pursuant to Section 4 hereof through the date of such
termination and to reimburse, pursuant to Section 9 hereof, any expenses
incurred by Employee through the date of such termination. Employer, however,
may pay to Employee's
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estate an additional amount equal to up to six (6) months' salary and bonus, in
the sole discretion of Employer's Board of Directors.
12. Termination by Employer for Cause. Employer shall have the
right to terminate the employment of Employee under this Agreement as well as
any and all payments to be made hereunder, other than for any compensation due
pursuant to Section 4 hereof through the date of such termination and any
reimbursement, pursuant to Section 9 hereof, of expenses incurred by Employee
through the date of such termination, if Employee shall commit any of the
following acts of default:
(i) Employee shall have committed any material breach of any
of the provisions or covenants set forth herein; or
(ii) Employee shall have committed any act of gross negligence
in the performance of his duties or obligations hereunder; or
(iii) Employee shall have committed any material act of
dishonesty or breach of trust against Employer or any of its subsidiary
companies; or (iv) Employee's conviction of, or plea of nolo contendere to, a
felony.
If Employer elects to terminate this Agreement as set forth
above, Employer shall send written notice to Employee terminating this Agreement
and describing the action of Employee constituting the act of default, and
thereupon no further payments of any type shall be made or shall be payable to
Employee hereunder notwithstanding any other provisions of this Agreement,
except as set forth in the first sentence of this Section 12.
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13. No Conflicting Agreements. Employee represents and
warrants that he is not a party to any agreement, contract or understanding,
whether employment or otherwise, which would in any way restrict or prohibit him
from undertaking or performing employment in accordance with the terms and
conditions of this Agreement.
14. Entire Agreement. This Agreement and Exhibit A hereto set
forth the entire understanding of the parties with respect to the subject matter
hereof, and no statement, representation, warranty or covenant has been made by
either party except as expressly set forth herein. This Agreement shall not be
changed or terminated orally. This Agreement supersedes and cancels all prior
agreements between the parties, whether written or oral, relating to the
employment of Employee on or after the Effective Date. Upon the Effective Date,
the Employment Agreement dated March 26, 1996 between Employer and Employee
shall be cancelled and shall be of no further force or effect.
15. Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York,
without regard to its conflict of laws principles.
16. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, telecopied or mailed, first class, postage
prepaid, certified mail, return receipt requested, to each of the parties at its
or his address above written or as set forth beneath their signatures below or
at such other address or telecopy number as either of the parties may designate
in conformity with the foregoing.
17. Section Headings. The section headings set forth in this
Agreement are for convenience only and shall not be considered as part of this
Agreement in any respect nor shall they in any way affect the substance of any
provisions contained in this Agreement.
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18. Successors and Assigns. This Agreement shall not be
assignable by Employee. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs and personal representatives of Employee and the successors and assigns of
Employer.
19. Severability. If, at any time subsequent to the date
hereof, any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
UNITED INDUSTRIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: VP & General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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