EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") effective as of September
9, 1992, is made between BANNER AEROSPACE, INC., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXX ("Xxxxxxx").
RECITALS
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The Company wishes to employ Xxxxxxx as its Vice Chairman and Xxxxxxx
is willing to accept such employment, upon the terms and conditions set forth in
this Agreement.
CONSIDERATION
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NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and Xxxxxxx covenant and agree as follows:
COVENANTS AND AGREEMENTS
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1. Employment, Duties and Acceptance
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1.1 The Company hereby employs Xxxxxxx throughout the Term (as
hereinafter defined), as its Vice Chairman of the Board, to render
such services and perform such duties as the Company's Board of
Directors may reasonably request Xxxxxxx to render or perform for the
Company and its 80% or more owned subsidiaries incorporated in the
United States. Not less than one-third of the compensation to be
paid to Xxxxxxx under this Agreement is for services to be rendered by
Xxxxxxx outside the United States, but no compensation shall be
paid to Xxxxxxx for the services performed by Xxxxxxx in any foreign
country where Xxxxxxx is paid pursuant to a separate agreement with
an affiliate of Xxxxxxx organized outside the United States.
1.2 Xxxxxxx hereby accepts such employment and agrees to render
his services and perform his duties as provided in this Agreement.
Xxxxxxx further agrees to accept election and to serve during all or
any part of the Term as a director of the Company and as a director of
any subsidiary or affiliate of the Company, with such compensation
therefor as is paid to directors of the Company who are employed by the
Company, if he is elected to any such position by the stockholders or
directors of the Company or by the stockholders or directors of any
subsidiary or affiliate, as the case may be.
1.3 Notwithstanding anything to the contrary contained in this
Section 1, Xxxxxxx shall not be required to render any service or
perform any duty which shall conflict with services he shall render to,
duties he shall perform for, or other obligations to (i) The Xxxxxxxxx
Corporation or its subsidiaries, whether as its Chairman of the Board,
Chief Executive Officer, or otherwise, or (ii) Rexnord Corporation or
its subsidiaries, whether as its Vice Chairman, or otherwise.
1.4 Xxxxxxx may render services and perform his duties from such
location as he, in his sole discretion, shall determine, and shall not
be required to maintain any residence or be physically present at any
location without his prior consent.
2. Base Salary, Bonus
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2.1 As compensation for all services to be rendered by Xxxxxxx
pursuant to this Agreement, the Company hereby agrees to pay
Xxxxxxx, subject to the provisions of Section 2.2, and Xxxxxxx agrees
to accept, a base salary at an initial rate of Two Hundred Fifty
Thousand Dollars ($250,000) per year, or such greater amount as shall
be approved by the Board of Directors or its Compensation Committee,
if it shall have such a committee with authority to fix compensation
of executive officers (such base salary as increased from time to time
being hereafter referred to as "Base Salary"), payable in equal
monthly or semimonthly installments, in accordance with Company
policy. In any event, commencing on the first anniversary thereof,
the Board of Directors of the Company, or its Compensation
Committee, shall determine whether Base Salary should be
increased in order to adequately and fairly reflect the value of
the services provided by Xxxxxxx to the Company. Nothing in this
Section 2 shall be deemed to limit the authority of the Board of
Directors or Compensation Committee to pay special bonuses to Xxxxxxx
in addition to Base Salary.
2.2 Base Salary shall be subject to withholding of such amounts as
shall be required under applicable law. Each monthly installment of
Base Salary, less such amounts as are withheld by the Company, shall be
paid to Xxxxxxx at such intervals as the Company shall pay its other
senior executives, but no less frequently than monthly, for the
services rendered during the immediately preceding pay period.
2.3 In addition to Bas Salary, Xxxxxxx shall be entitled to all
rights and benefits for which he shall be eligible under any (i) stock
option plan, (ii) bonus, participation or extra compensation plan or
incentive compensation plan, (iii) auto allowance plan, (iv) pension
or profit sharing plan, (v) group life, hospitalization or disability
insurance plan, or other health program, and (vi) other so-called
"fringe" benefit plans, formal or informal which the Company may, in
its sole discretion, provide for him or for its employees ((i)
through (v) together, the "Additional Compensation Plans"). Xxxxxxx
shall in all events be eligible and entitled to participate in all
Additional Compensation Plans, at a level, extent of participation,
and vesting no less favorable than that to which the highest
compensated executive of the Company, other than Xxxxxxx, is eligible
or entitled.
3. Expense Reimbursement. The Company agrees to reimburse
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Xxxxxxx for or to pay at Xxxxxxx'x direction all ordinary and necessary
expenses actually incurred by Xxxxxxx in the course of the performance
of his services hereunder. Xxxxxxx agrees to submit such receipts,
vouchers or other written documentation as the Company may reasonably
request in order to verify the expenditure of such funds to the
reasonably satisfaction of the Company's Treasurer or Chief Financial
Officer. If in providing services hereunder, Xxxxxxx shall be in a city
in which he does not maintain a residence (it being expressly
understood and agreed that Xxxxxxx shall not be requested to maintain a
residence in, or render services from any particular city or country),
the costs of accommodation and other business related expenses incurred
by or on behalf of Xxxxxxx in such city shall be paid or reimbursed by
the Company, and such reimbursement shall include, but not be limited
to, suitable hotel or other residential accommodations.
4. Indemnification The Company agrees to hold harmless and
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indemnify, Xxxxxxx, if he is made, or threatened to be made, a party to
any action or proceeding, whether civil or criminal, including any
action by or in the right of the company, by reason of or inuring from
the provision of his services hereunder (other than any action by the
Company against Xxxxxxx by reason of breach of this Agreement by
Xxxxxxx), or by reason of or inuring from Xxxxxxx'x acting as a
director or executive officer of the Company, against all judgements,
fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, and expenses of experts, to the fullest extent
permitted by law. If permitted by law and by the Certificate of
Incorporation and Bylaws of the Company, the Company shall advance to
Xxxxxxx all legal and other expenses incurred in defending any
threatened or pending action or proceeding.
5. Protection of Confidential Information
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5.1 In view of the fact that Xxxxxxx'x work for the Company will
bring him into close contact with many confidential affairs of the
Company not readily available to the public and plans for future
developments, Xxxxxxx agrees that unless a Trigger Event shall have
occurred:
5.1.1 During the Term and for a period of three (3) years
thereafter, to keep secret and retain in the strictest
confidence all confidential matters of the Company, including,
without limitation, "know-how", trade secrets, customer lists,
pricing policies, operational methods, technical processes,
formulae, inventions and research projects, and other business
affairs of the company, disclosed to him by the Company, and
not to disclose them to anyone outside the Company, either
during or after his employment with the Company, except (a) in
the course of performing his duties hereunder or with the
Company's express written consent, (b) as required by law, or
(c) if such matters lose their confidential nature other than
by an authorized act of Xxxxxxx;
5.1.2 To deliver promptly to the company on termination
of his employment by the Company, or at any time the Company
may so request, all memoranda, notes, records, reports,
manuals, drawings, blueprints and other documents ( and all
copies thereof) relating to the Company's business and all
property associated therewith, which he may then possess or
have under his control.
5.2 If Xxxxxxx commits a breach, or threatens to commit a
breach, of any of the provisions of Section 5.1, the Company shall
have the following rights and remedies:
5.2.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to
the Company and that money damages will not provide an
adequate remedy to the Company; and
5.2.2 The right and remedy to require Xxxxxxx to account
for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits (collectively,
"Benefits") derived or received by Xxxxxxx as the result of
any transactions constituting a breach of any of the
provisions of Section 5.1, shall not be limited by the
provisions of Section 5.2.1, and Xxxxxxx hereby agrees to
account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall
independent of the other, and shall be severally enforceable, and all
of such rights and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available to the Company at law or in
equity.
5.3 If any of the covenants contained in Section 5.1, or any part
thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which
shall be given full effect, without regard to the invalid portions.
5.4 In any of the covenants contained in Section 5.1, or any part
thereof, is held to be unenforceable because of the duration of such
provision, the parties agree that the court making such determination
shall have the power to reduce the duration of such provision and, in
its reduced form, said provision shall then be enforceable.
5.5 In the event that any action, suit or other proceeding at law
or in equity is brought to enforce the covenants contained in Section
5.1 or to obtain money damages for the breach thereof, and such action
results in the award of a judgement for money damages or in the
granting of any injunction in favor of the Company, all expenses
(including reasonable attorney's fees) of the Company in such action,
suit or other proceeding shall (on demand of the Company) be paid by
Xxxxxxx.
6. Intellectual Property. The Company shall be the sole
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owner of all the products and proceeds of Xxxxxxx'x services hereunder,
including, but not limited to, all materials, formats, suggestions,
developments, arrangements packages, programs and other similar
intellectual properties related directly and solely to the Company's
business that Xxxxxxx may develop or create in rendering services to
the Company during the Term, free and clear of any claims by Xxxxxxx
(or anyone claiming under Xxxxxxx) of any kind or character whatsoever
(other than Xxxxxxx'x right to receive payments hereunder). Xxxxxxx
shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company may from time to time
deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend it right, or title and interest in or to any
such properties.
7. Term. The term of Xxxxxxx'x employment under this
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Agreement (the "Term") shall commence as of September 9, 1992 and shall
extend to and include the third (3rd) anniversary of such date, unless
sooner terminated pursuant to Section 9 of this Agreement; provided,
however, that commencing on the first anniversary of the commencement
date, and on each anniversary thereafter, the Term shall automatically
be extended for one additional year unless, not later than ninety (90)
days preceding such date, Xxxxxxx or the Company shall give written
notice to the other party that it does not wish to extend the Term for
such additional period.
8. Termination
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8.1 If Xxxxxxx shall die during the Term, the Term shall
terminate (i) the Company shall pay Xxxxxxx'x legal
representatives (in addition to any death benefits Xxxxxxx may
be entitled to receive under any other plan or agreement),
monthly or semimonthly installments of Base Salary up to and
including the first anniversary of the last day of the month
in which Xxxxxxx'x death occurs, and (ii) following the end of
the fiscal year in which Xxxxxxx'x death occurs, the Company
shall pay Xxxxxxx'x legal representatives (in addition to any
death benefits Xxxxxxx may be entitled to receive under any
other plan or agreement) the full amount which xxxx have been
payable to Xxxxxxx, and shall provide Xxxxxxx'x legal
representatives all benefits to which Xxxxxxx would have been
entitled, but for his death, through the end of the fiscal
year in which his death occurs, under any Additional
Compensation Plans.
8.2 If, during the Term, Xxxxxxx shall become physically
or mentally disabled, whether totally or partially, so that he
is unable substantially to perform his services hereunder for
(i) a period of nine (9) consecutive months, or (ii) for
shorter periods aggregating nine (9) months during any twelve
month period, the Company may at any time after the last day
of the nine (9) consecutive months of disability or the day on
which the shorter periods of disability shall have equaled an
aggregate of nine (9) months, by written notice to Xxxxxxx
(but before Xxxxxxx has recovered from such disability),
terminate the Term. Notwithstanding such disability, the
Company (A) shall continue to pay Xxxxxxx monthly or
semimonthly installment of Base Salary up to and including the
date of such termination, and the Company shall thereafter pay
Xxxxxxx (in addition to any disability benefits Xxxxxxx may be
entitled to receive under any other plan or arrangement)
monthly or semimonthly installment of fifty percent (50%) of
Base Salary up to an including the second anniversary of the
date of such termination, and (B) following the end of the
fiscal year in which such termination shall have occurred,
shall pay Xxxxxxx (in addition to any disability benefits
Xxxxxxx may be entitled to receive under any other plan or
agreement) the full amount which would have been payable to
Xxxxxxx and shall provide Xxxxxxx all benefits to which
Xxxxxxx would have been entitled, but for such termination,
through the end of the fiscal year in which termination has
occurred, under any Additional Compensation Plan.
8.3 In the event of gross neglect by Xxxxxxx of his
duties hereunder, conviction of Xxxxxxx of any felony, or of
any lesser crime or offense involving the property of the
company or any of its subsidiaries or affiliates, willful
misconduct by Xxxxxxx in connection with the performance of
his duties here under or any other conduct which would
constitute a material breach of Xxxxxxx'x obligations to the
Company, the Company may at any time by written notice to
Xxxxxxx terminate the Term, without any liability to the
Company, except the Company (i) shall pay Xxxxxxx all monthly
or semimonthly installments of Base Salary up to and including
the date of such termination, and (ii) following the end of
the fiscal year in which such termination shall have occurred,
shall pay Xxxxxxx the full amount which would have been
entitled, but for such termination, though the end of the
fiscal year in which termination has occurred, under any
Additional Compensation Plan, but prorated up to and including
the date of such termination.
9. Company's Obligation on Change in Control or Trigger Event
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9.1 Xxxxxxx shall receive the Severance Payment
and benefits as defined and provided for in Section
9.3, and Xxxxxxx'x employment shall terminate upon
receipt and in consideration thereof, if a Change in
Control or Trigger Even, both as defined in Section
9.2, shall occur.
9.2 As used in this Section 9, the following
terms shall have the following meanings:
(i) "Change in Control" shall mean an event
that would be required to be reported in response to
Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Securities and Exchange Act of
1934, as amended (the "Exchange"), as in effect on
January 1, 1992.
(ii) A "Trigger Event" shall be deemed to
have occurred if: (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange
Act), wit the exception of Xxxxxxx or any "affiliate"
of Xxxxxxx (as defined in Section 15 hereof), is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities
entitled to vote generally in the election of
directors; (B) during a period of two (2) consecutive
fiscal years, individuals who at the beginning of
such period constitute the Board of Directors cease
for any reason to constitute a majority thereof
unless the election, or the nomination for election
by the Company's stockholders, of each director was
approved by a note of at least two-thirds (2/3) of
the directors then still in office who were directors
at the beginning of the period; (C) the Company shall
become a subsidiary of another corporation or shall
be reorganized, merged, or consolidated into another
corporation (other than a reorganization which
qualifies pursuant to Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended from time
to time) unless, in each case, pursuant to a
transaction in which the holders of more than eighty
percent (80%) of the combined voting power of the
Company's then outstanding voting securities entitled
to vote generally in the election of directors will
retain similar voting power of such other
corporation's voting securities; (D) substantially
all of the assets of the Company are sold to another
corporation; (E) substantially all of the assets of
the Company are sold pursuant to a plan of complete
liquidation adopted by the Company's stockholders; or
(F) whether or not conditioned on shareholder
approval, the issuance by the Company of common stock
of the Company representing a majority of the
outstanding common stock, or voting securities
representing a majority of the combined voting power
of the outstanding voting securities of the Company
entitled to vote generally in the election of
directors, after giving effect to such transaction.
9.3
(i) Upon the occurrence of a Change in
Control or Trigger Event described in Section 9.2(i),
respectively, Xxxxxxx shall be entitled to a cash
payment (the "Severance Payment") from the Company on
the date of such Change in Control or Trigger Event,
and the Company shall pay to Xxxxxxx within three (3)
business days after such date the Severance Payment,
in a lump sum, by a single check in an amount equal
to 2.99 times the sum of A plus B minus C, i.e., 2.99
x [(A + B) - B] = Severance Payment.
A being Base Salary as of the date
immediately preceding such Change in Control
or Trigger Event;
B being the amount of the bonus or bonuses
paid to Xxxxxxx by the Company in the fiscal
year of the company immediately preceding
the year in which the Change in Control or
Trigger Event occurs;
C being the portion of the acceleration of
payments to Xxxxxxx under stock options
which are vested solely due to a Xxxxx in
Control or Trigger Event which is considered
a parachute under Section 280G of the
Internal Revenue Code of 1986, as amended
from time to time.
(ii) The Company shall indemnify Xxxxxxx to
the fullest extent permitted by law, for all
reasonable legal and accounting fees and expenses
incurred by him in seeking to obtain or enforce or
retain any right or benefit provided by this
Agreement, such indemnification to be in addition to
any indemnification under the Company's Certification
of Incorporation, Bylaws and insurance to which
Xxxxxxx shall be entitled.
9.4 Notwithstanding anything contained in this
Section 9 to the contrary, Xxxxxxx may, in his sole
discretion, elect to defer the termination of his
employment and the payment of the Severance payment,
resulting from any Change in Control or Trigger Event
(a "Severance Deferral"), by written notice (the
"Severance Deferral Notice") given to the Company at
any time prior to the earlier of (i) the thirtieth
day next following Xxxxxxx'x receipt of the Severance
Payment, and (ii) Xxxxxxx'x negotiation of the
severance Payment. The Severance Deferral Notice
shall not be effective unless it is accompanied by
the check representing the Severance Payment. If
Xxxxxxx shall elect a Severance Deferral, he may
nevertheless at any time thereafter, upon written
notice (the "Severance Effectiveness Notice") to the
Company, elect to accept such termination and
Severance Payment, in which event, the Severance
Payment shall be paid to Xxxxxxx with three (3)
business days after receipt by the Company of the
Severance Effectiveness Notice, in an amount equal to
the greater of the Severance Payment (A) had to be
computed as of the date of the Change in Control or
Trigger Event, or (B) had it been computed as of the
date of the Severance Effectiveness Notice. If,
subsequent to a change in Control or a Trigger Event,
but prior to the receipt and acceptance by Xxxxxxx of
the Severance Payment, the Term shall expire, or if
for any reason the Term shall terminate, whether as a
result of the death or disability of Xxxxxxx, or the
existence of cause for termination, the Severance
Payment shall, nevertheless, be paid to Xxxxxxx
within three (3) business days following such
termination, but the payment of Severance Payment
shall then be in lieu of, and shall be deemed to
satisfy, the Company's obligations under Section 8,
to pay any Base Salary to Xxxxxxx or his legal
representatives, for any period subsequent to
termination, or any bonus or bonuses to Xxxxxxx or
his legal representatives to the extent such bonus
or bonuses are included in the computation of the
Severance Payment, but shall not relieve the Company
from any oblation to provide Xxxxxxx or his legal
representatives any other benefits under Additional
Compensation Plans in accordance with Section 8.
10. Notices. All notices, request, consents and
other communications, required or permitted to be
given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered
personally or sent by prepaid telegram, or mailed,
first-class, postage prepaid, by registered or
certified mail, as follows:
10.1 If to the Company
Banner Aerospace, Inc.
00000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attn: Chairman of the Board.
10.2 If to Xxxxxxx:
Xx. Xxxxxxx X. Xxxxxxx
0 Xxxxxx Xxxx
Xxxxxx XX0 0XX
XXXXXX XXXXXXX
With a copy to:
Xxxxxx X. Xxxxxx, Esquire
The Xxxxxxxxx Corporation
P.O. Box #10803
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Or to such other address as either party shall designate by notice in writing to
the other in accordance herewith.
11. Assignment. This Agreement is binding upon and
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shall inure to the benefit of the parties hereto and their
respective successors, and the assigns of the Company.
Notwithstanding the foregoing, neither party shall assign or
transfer any rights or obligation hereunder, except that the
Company may assign or transfer this Agreement to a successor
corporation in the event of a merger, consolidation or
transfer or sale of all or substantially all of the assets of
the Company, provided that no such assignment shall relieve
the Company from liability for its obligations hereunder. Any
purported assignment, other than as provided above, shall be
null and void.
12. Waiver, Modification or Amendment. No waiver of
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any provision of this Agreement or modification or amendment
of the same shall be effective, binding or enforceable unless
in writing and signed by each of the parties hereto.
13. Applicable Law. This Agreement shall be governed
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by and administered in accordance with the laws of the State
of Delaware applicable to agreements made and to be entirely
performed in such state.
14. Entire Agreement. This Agreement sets forth the
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entire agreement and understanding of the parties relating to
the subject matter hereof, and supersedes all prior agreement,
arrangements and understandings, written or oral, relating to
the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied
in the Agreement, and neither party shall be bound by or
liable for any alleged representations, promise or inducement
not set forth.
15. Subsidiaries and Affiliates. As used herein, the
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term "subsidiary" shall mean any corporation or other entity
controlled by the corporation in question, and the term
"affiliate" with respect to any specified person or entity
shall mean and include any person or entity that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with the person or
entity specified.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Employee has executed this Agreement on the _______ day of
_________ 1992.
BANNER AEROSPACE, INC.
By:_________________________
Title:______________________
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XXXXXXX X. XXXXXXX
