AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (this "Agreement") dated as of July
31, 2006, is between BE Aerospace, Inc., a Delaware corporation (the "Company")
and Xxxx X. Xxxxxx ("Executive").
WHEREAS, Executive and the Company entered into an amended and restated
Employment Agreement dated as of August 1, 2005, as amended December 31, 2005 by
two amendments (said Employment Agreement and amendments hereinafter
collectively the "Employment Agreement"); and
WHEREAS, Executive, having provided services to the Company since August
1, 1987, agrees to provide services for an additional period as provided herein,
and the Company wishes to procure such services; and
WHEREAS, Executive and the Company wish to further amend and restate the
Employment Agreement in its entirety in the manner set forth herein;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties agree as follows:
1. REFERENCE TO EMPLOYMENT AGREEMENT.
The Employment Agreement is hereby restated, superseded and replaced
in its entirety by this Agreement.
2. ARRANGEMENT.
Executive shall provide to the Company, and the Company shall accept
from Executive, the services set forth in Section 4.2 below, subject to the
terms and conditions set forth in this Agreement.
3. TERM.
Executive shall provide to the Company services hereunder during the
term of this Agreement which, unless otherwise terminated pursuant to the
provisions of Article 7 hereof, shall be the period ending three (3) years from
any date as of which the term is being determined (the "Employment Term"). The
date on which the Employment Term ends, including any extensions thereof, is
sometimes hereinafter referred to as the "Expiration Date." Pursuant to, and in
accordance with, Section 7.7 hereof, the Company is required to engage Executive
to render consulting services to the Company after Executive ceases to be
employed by the Company.
4. CAPACITY, SERVICES AND PERFORMANCE.
4.1 Capacity. Executive shall serve the Company as its Chairman of the
Board of Directors (the "Board") and Chief Executive Officer, or in such other
Board or executive capacity as the Board may designate from time to time, but
only upon agreement with Executive.
4.2 Services. In the capacity set forth in Section 4.1 above, Executive
shall be retained by the Company and shall perform such duties and
responsibilities on behalf of the Company as Executive and the Board shall by
mutual agreement from time to time determine.
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4.3 Performance. During the Employment Term, Executive shall use his
business judgment, skill and knowledge to the advancement of the Company's
interests and to the discharge of his duties and responsibilities hereunder;
provided, however, that Executive shall be required only to devote so much time
as Executive determines is reasonably necessary to discharge his duties as
Chairman of the Board and Chief Executive Officer, and, subject to the
provisions of Section 6 below, Executive may engage in other business activities
during the Employment Term.
5. COMPENSATION AND BENEFITS.
5.1 Salary. Effective as of January 1, 2006 Executive shall receive an
annual salary (the "Salary") of nine-hundred and four thousand dollars
($904,000) during each year of the Employment Term. The Salary shall be subject
to adjustment from time to time by the Board; provided, however, that at no time
shall the Salary be adjusted below the Salary for the preceding year. Commencing
on January 1, 2007, and on January 1st of each year thereafter during the
Employment Term, the Salary then in effect shall be increased by an amount not
less than the amount determined by applying to the Salary then in effect the
percentage increase in the U.S. Bureau of Labor Statistics Consumer Price Index
Revised - Urban Wage Earners and Clerical Workers - National - All Items
(1982-84 = 100) (the "Index") for the consecutive twelve (12) month period
(January through December) immediately preceding such January 1. If the Index is
no longer issued, the Board and Executive shall agree upon a substitute index
issued by such agency which most reasonably reflects the criteria utilized in
the most recent issue of the Index. Except as otherwise provided in this
Agreement, the Salary shall be payable biweekly or in accordance with the
Company's current payroll practices, and shall be pro-rated for any period of
service less than a full year.
5.2 Bonuses. Executive may receive bonuses from the Company when, as and
if determined from time to time by the Board. Any such bonuses paid to Executive
shall be in addition to the Salary then in effect.
5.3 Benefits. So long as employed, Executive shall be entitled to
participate in all employee benefit plans, life insurance plans, disability
income plans, incentive compensation plans and other benefit plans, other than
retirement plans, as may be from time to time in effect for executives of the
Company generally. In addition, Executive and his spouse, for as long as they
each may live, shall be entitled to (i) all medical, dental and health benefits
available from time to time to the Company's executive officers and their
spouses, respectively (other than medical reimbursement plans) on similar terms
and conditions as active employees (provided that the level of such benefits is
not greater than the benefits available on December 31, 2004), and (ii) the
benefits available under the Company's executive medical reimbursement plan in
effect as of March 1, 2001.
5.4 Business Expenses. So long as employed, the Company shall pay or
reimburse Executive for all reasonable business expenses incurred or paid by him
in the performance of his services. Any reimbursement shall be paid in
accordance with Company policy, but in any event, no later than March 15th of
the year following the year in which the expense reimbursement accrues.
5.5 Automobile. So long as employed, Executive shall receive either, an
automobile owned or leased by the Company or a monthly automobile allowance, as
determined by the Company, which automobile or allowance shall be at least
equivalent to that which the Company was providing to Executive as of April 30,
2006. The automobile allowance, if applicable, shall be paid in accordance with
Company policy, but in any event, no later than March 15th of the year following
the year in which the automobile allowance was accrued.
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5.6 Equity Incentive Compensation. So long as employed, Executive shall
be entitled to participate in any applicable equity incentive compensation
program of the Company.
6. PROPRIETARY RIGHTS AND NON-COMPETITION.
Executive acknowledges that the Company is engaged in a continuous
program of research, development and production in connection with its business,
present and future, and hereby covenants as follows:
6.1 Confidentiality. Executive will maintain in confidence and will not
disclose or use, either during or after the Employment Term, any proprietary or
confidential information or know-how belonging to the Company ("Proprietary
Information" hereinafter defined), whether or not in written form, except to the
extent required to perform duties on behalf of the Company. For purposes of this
Agreement, "Proprietary Information" shall mean any information, not generally
known to the relevant trade or industry, which was obtained from the Company, or
which was learned, discovered, developed, conceived, originated or prepared by
Executive in connection with this Agreement. Such Proprietary Information
includes, without limitation, software, technical and business information
relating to the Company's inventions or products, research and development,
production processes, manufacturing and engineering processes, machines and
equipment, finances, customers, marketing and production and future business
plans, information belonging to customers or suppliers of the Company disclosed
incidental to Executive's performance under this Agreement, and any other
information which is identified as confidential by the Company, but only so long
as the same is not generally known in the relevant trade or industry.
6.2 Inventions.
6.2.1 Definition of Inventions. For purposes of this Agreement,
"Inventions" shall mean any new or useful art, discovery,
contribution, finding or improvement, whether or not
patentable, and all related know-how. Inventions shall
include, without limitation, all designs, discoveries,
formulae, processes, manufacturing techniques, semiconductor
designs, computer software, inventions, improvements and
ideas.
6.2.2 Disclosure and Assignment of Inventions. Executive will
promptly disclose and describe to the Company all Inventions
which he may solely or jointly conceive, develop, or reduce to
practice during the Employment Term or the Consulting Period
(as defined in Section 7.7) (i) which relate at the time of
conception, development, or reduction to practice of the
Invention to the Company's business or actual or demonstrably
anticipated research or development, (ii) which were
developed, in whole or in part, on the Company's time or with
the use of any of the Company's equipment, supplies,
facilities or trade secret information, or (iii) which
resulted from any work performed by Executive for the Company
(the "Company's Inventions"). Executive hereby assigns to the
Company all of his right, title and interest world-wide in and
to the Company's Inventions and in all intellectual property
rights based upon the Company's Inventions; provided, however,
that Executive does not assign or agree to assign any
Inventions, whether or not relating in any way to the
Company's business or demonstrably anticipated research and
development, which were made by him prior to the date of this
Agreement, or which were developed by him independently during
the Employment Term and not under the conditions stated in
subparagraph (ii) above.
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6.3 Documents and Materials. Upon termination of this Agreement or at any
other time upon the Company's request, Executive will promptly deliver to the
Company, without retaining any copies, all documents and other materials
furnished to him by the Company (other than personal copies of documents
relating to the Executive's employment terms), prepared by him for the Company
or otherwise relating to the Company's business, including, without limitation,
all written and tangible material in his possession incorporating any
Proprietary Information.
6.4 Competitive Employment. During the Employment Term, the Consulting
Period (as defined in Section 7.7), if applicable, and for a period of two (2)
years thereafter (collectively, the "Extended Term"), Executive will not engage
in any employment, consulting, or other activity in any business competitive
with the Company without the Company's written consent, which consent shall not
be unreasonably withheld; provided, however, that nothing in this Section 6.4
shall preclude Executive from serving as a director of any other corporation, or
a partner or investor in a private equity firm.
6.5 Non-Solicitation. During the Extended Term, Executive will not
solicit or encourage, or cause others to solicit or encourage, any employees of
the Company to terminate their employment with the Company.
6.6 Acts to Secure Proprietary Rights.
6.6.1 Further Acts. Executive agrees to perform, during and after
the Employment Term and the Consulting Period, if applicable,
all acts deemed necessary or desirable by the Company to
permit and assist it, at its expense, in perfecting and
enforcing the full benefits, enjoyment, rights and title
throughout the world in the Company's Inventions. Such acts
may include, without limitation, execution of documents and
assistance or cooperation in the registration and enforcement
of applicable patents and copyrights or other legal
proceedings.
6.6.2 Appointment of Attorney-In-Fact. In the event that the Company
is unable, for any reason whatsoever, to secure Executive's
signature to any lawful and necessary document required to
apply for or execute any patent, copyright or other
applications with respect to any of the Company's Inventions
(including improvements, renewals, extensions, continuations,
divisions or continuations in part thereof), Executive hereby
irrevocably appoints the Company and its duly authorized
officers and agents as his agents and attorneys-in-fact to
execute and file any such application and to do all other
lawfully permitted acts to further the prosecution and
issuance of patents, copyrights or other rights thereon with
the same legal force and effect as if executed by him,
intending hereby to create a so-called "durable power" which
will survive any subsequent disability.
6.7 No Conflicting Obligations. Executive's performance of this Agreement
does not breach and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him.
6.8 Corporate Opportunities. Executive agrees that during the Employment
Term and the Consulting Period, if applicable, he will first present to the
Board, for its acceptance or rejection on behalf of the Company, any opportunity
to create or invest in any company which is or will be involved in equipping or
furnishing airplane cabin interiors, which comes to his attention and in which
he, or any of his affiliates, might desire to participate. If the Board rejects
the same or fails to act thereon in a reasonable time, Executive shall be free
to invest in, participate or present such opportunity to any other
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natural person, corporation, limited liability company, limited or general
partnership, or any other entity (each, a "Person").
6.9 Specific Performance. Executive acknowledges that a breach of any of
the promises or agreements contained herein could result in irreparable and
continuing damage to the Company for which there may be no adequate remedy at
law, and the Company shall be entitled to seek injunctive relief and/or a decree
for specific performance.
7. TERMINATION AND CHANGE OF CONTROL.
7.1 Termination Date; Termination Prior to Change of Control or More
than Three Years Following a Change of Control.
7.1.1 Termination Date. The term "Termination Date" shall mean the
date on which Executive's employment with the Company
terminates for any reason prior to the Expiration Date.
7.1.2 Termination by Executive. If Executive resigns prior to, or
more than three years following, the occurrence of a Change of
Control, then on the Termination Date, Executive shall receive
payment of (i) his unpaid Salary through the Termination Date,
(ii) the Retirement Compensation pursuant to Section 7.6
hereof, determined as of the Termination Date, (iii) the other
retirement benefits pursuant to Section 7.6 hereof, and (iv)
the Severance Pay pursuant to Section 7.5 hereof. In addition,
Executive and his spouse shall continue to be entitled to
medical, dental and health benefits pursuant to Section 5.3
hereof and the Company shall engage Executive to render
consulting services to the Company in accordance with Section
7.7 hereof.
7.1.3 Termination by Company. If the Company terminates the
Executive's employment hereunder prior to or more than three
years following the occurrence of a Change of Control for any
reason other than death pursuant to Section 7.2 or incapacity
pursuant to Section 7.3, then on the Termination Date,
Executive shall receive payment of (i) any accrued and unpaid
Salary through the Termination Date, (ii) bonuses payable to
Executive for any fiscal periods of the Company ending prior
to the Termination Date, (iii) a lump sum equal to his Salary
from the Termination Date through the Expiration Date, (iv)
the Retirement Compensation pursuant to Section 7.6 hereof,
determined as of the Expiration Date, (v) the other retirement
benefits pursuant to Section 7.6 hereof, and (vi) the
Severance Pay pursuant to Section 7.5 hereof. In addition, (A)
Executive and his spouse shall continue to be entitled to
medical, dental and health benefits pursuant to Section 5.3
hereof, (B) any stock options, restricted stock awards or
other equity awards granted to Executive that would not vest
on or prior to the Termination Date shall vest and be
exercisable immediately, and, notwithstanding any termination
of employment provisions set forth in the applicable
agreement, all stock options shall continue to be exercisable
until their original stated expiration date and (C) the
Company shall engage Executive to render consulting services
to the Company in accordance with Section 7.7 hereof.
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7.2 Death.
7.2.1 Executive's employment hereunder shall terminate upon his
death. In such event, the Company shall, within thirty (30)
days following the date of death, pay to such Person as
Executive shall have designated in a notice filed with the
Company, or if no such Person shall have been designated, to
his estate, a lump sum payment equal to (i) the Salary that
would have been due to Executive had this Agreement been in
effect from the date of his death until the Expiration Date
and (ii) the Retirement Compensation as provided in Section
7.6 below.
7.2.2 Upon Executive's death during or after the Employment Term,
the Company shall, within thirty (30) days following the date
of death, also pay to such Person as Executive shall have
designated in a notice filed with the Company, or if no such
Person shall have been designated, to his estate, a lump-sum
death benefit in the amount of $3 million in accordance with
the Death Benefit Agreement attached as Exhibit A hereto.
7.2.3 Upon Executive's death, The Company shall, within thirty (30)
days following his date of death, also pay to such Person as
Executive shall have designated in a notice filed with the
Company, or if no such Person shall have been designated, to
his estate, a lump-sum equal to (A) any accrued and unpaid
Salary through his date of death, and (B) any bonuses payable
to Executive for any fiscal periods of the Company ending
prior to the date of death. Executive's spouse shall continue
to be entitled to medical, dental and health benefits pursuant
to Section 5.3 hereof.
7.3 Incapacity. If the Executive shall for at least six (6) consecutive
months during the Employment Term have been unable to perform his material
duties under this Agreement by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, the Company may
terminate Executive's employment as provided in this Section 7.3. If the Company
desires to so terminate Executive's employment, the Company shall:
(i) give prompt notice to Executive of any such termination; and
(ii) until the Expiration Date, continue to pay to Executive an annual
amount equal to two (2) times the Salary in effect on the
Termination Date. The payments shall be made in equal bi-monthly
installments commencing on the first payroll period following the
Termination Date; and
(iii) pay to Executive the entire Retirement Compensation, or the
remaining unpaid balance thereof if payments of such Retirement
Compensation have commenced, as provided in Section 7.6 and below;
and
(iv) pay to Executive within ten (10) business days after the Termination
Date a lump-sum equal to (A) any accrued and unpaid Salary through
the Termination Date and (B) any bonuses payable to Executive for
any fiscal periods of the Company ending prior to the Termination
Date; and
(v) continue to provide medical, dental and health benefits as provided
in Section 5.3 hereof.
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Any dispute between the Board and Executive with respect to
Executive's incapacity shall be settled by reference to a competent medical
authority mutually agreed to by the Board and Executive or his personal
representative, whose decision shall be binding on all parties.
7.4 Change of Control; Definitions.
7.4.1 Change of Control. If a "Change of Control" of the Company
occurs, the Company will be obligated as provided in this
Section 7.4.1. For purposes of determining the Company's
obligations under this Section 7.4.1, the date on which a
Change of Control occurs shall be referred to as the "Change
of Control Date." If a "Change of Control" occurs during the
Employment Term, the Company or its successor in interest
shall:
(i) within five (5) business days after the Change of
Control Date, pay to Executive the amount of any
Gross-Up Payment payable by the Company to Executive
under Section 7.8 hereof;
(ii) continue to provide to Executive and his spouse, for
their respective lifetimes, medical, dental and health
benefits as provided in Section 5.3 hereof; provided,
however, that the terms and level of such benefits shall
be substantially similar as Executive and his spouse
were receiving as of the Termination Date, or if
greater, as they were receiving on December 31, 2004;
(iii) provide that any stock options, restricted stock awards
or other equity awards granted to Executive that would
not vest on or prior to the Change of Control Date shall
vest and, if applicable, be exercisable upon the earlier
of (i) the Change of Control Date and (ii) the execution
of an agreement, if any, that would constitute a Change
of Control (regardless of whether such agreement is
consummated), and, notwithstanding any termination of
employment provisions set forth in the applicable
agreement, such stock options (or similar equity awards)
shall continue to be exercisable until their original
stated expiration date; and
(iv) engage Executive to render consulting services to the
Company in accordance with Section 7.7 hereof.
7.4.2 Definitions.
(i) For purposes of this Agreement, a "Change of Control"
means:
(A) Individuals who, as of January 1, 2005 (the
"Effective Date") constitute the Board of
Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
provided that any Person becoming a director
subsequent to the Effective Date whose election,
or nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board (other than an election or
nomination of an individual whose initial
assumption of office is in connection with an
actual or
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threatened election contest relating to the
election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act)
shall be, for purposes of this Agreement,
considered as though such Person were a member of
the Incumbent Board;
(B) a transaction or other event occurs such that any
Person or Persons acting as a group acquires
ownership of stock of the Company that, together
with stock held by such Person or group,
constitutes more than 50% of the total fair market
value or total voting power of the stock of the
Company;
(C) a transaction or other event occurs such that any
one Person or group acquires (or has acquired
during the 12-month period ending on the date of
the most recent acquisition by such Person or
group) ownership of stock of the Company
possessing 35% or more of the total voting power
of the stock of the Company; or
(D) a transaction or other event occurs such that any
one Person or group acquires (or has acquired
during the 12-month period ending on the date of
the most recent acquisition by such Person or
group) ownership of assets of the Company that
have a total gross fair market value equal to or
more than 40% of the total gross fair market value
of all of the assets of the Company immediately
prior to such acquisition or acquisitions;
provided, however, that no acquisition of
ownership of the assets of the Company shall be
deemed a Change of Control if the acquiring Person
or group is:
(1) A shareholder of the Company in exchange
for or with respect to its stock;
(2) Any Majority Owned Entity, as defined
below, of the Company;
(3) A Person or group of which the Company is
a Majority Owned Entity; or
(4) A Majority Owned Entity of any Person or
group described by (3), above.
(ii) For the purposes of this Section 7.4.2, Persons will not
be considered to be acting as a group solely because
they purchase or own stock of the same corporation at
the same time, or as the result of the same public
offering. However, Persons will be considered to be
acting as a group if they are owners of a Person that
enters into a merger, consolidation, purchase or
acquisition of stock or assets or similar business
transaction with the Company.
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(iii) For the purposes of this Section 7.4.2, a "Majority
Owned Entity" of any Person is any entity, 50% or more
of the total value or voting power of which is owned,
directly or indirectly, by such Person.
(iv) A Change of Control shall occur on the effective date of
any event specified in Section 7.4.2(i) above. In
connection with any determination of ownership for
purposes of Section 7.4.2(i) above, the attribution
rules of Section 318(a) of the Internal Revenue Code of
1986, as amended (the "Code"), shall apply.
7.5 Severance Pay.
If Executive's employment with the Company is terminated for any
reason, other than due to (i) Executive's death pursuant to Section 7.2 hereof,
or (ii) Executive's incapacity pursuant to Section 7.3 hereof, then within five
(5) business days after Executive's Termination Date, the Company shall pay to
Executive, a lump sum amount equal to the Salary in effect on the Termination
Date, which lump sum shall not be pro-rated. The obligations of the Company
pursuant to this Section 7.5 are in addition to any other obligations under
Section 7 hereof.
7.6 Retirement Compensation.
7.6.1 Amount of Retirement Compensation. In recognition that
Executive founded the Company and will not be eligible for any retirement plan
to be offered by the Company to its executives (as provided in Section 5.3
above), Executive shall be entitled to retirement compensation ("Retirement
Compensation") equal to the product of (i) 150% times (ii) the annual Salary
then in effect (the "Specified Annual Salary") multiplied by (iii) the number of
years of service provided by Executive to the Company, such service having
commenced as of August 1, 1987 ("Commencement Date"), with a ratable adjustment
should Executive's final period of service be less than a full year. The
Retirement Compensation as so determined shall be paid to Executive (or in the
event of Executive's subsequent death, to such Person as Executive shall have
designated in a notice filed with the Company or, if no such Person shall have
been designated, to his estate) at the times specified in Section 7.6.2 below,
or contributed to the Retirement Trust described in Section 7.6.3 below in
accordance with that Section. The amount of the Retirement Compensation so due
and payable shall not be present-valued or otherwise reduced by use of any other
discount or discounting method.
7.6.2 Payment of Retirement Compensation.
(i) Within five business days after the date on which the BE
Aerospace, Inc. Executive Compensation Trust II dated April
21, 1999, as amended, is terminated (the "Distribution Date"),
the Company will distribute the amount of Retirement
Compensation that would have been payable to Executive under
Section 7.6.1 as of the Distribution Date, based on his years
of service through the Distribution Date and his then
Specified Annual Salary.
(ii) Within five (5) business days after Executive's actual
Termination Date, the Company shall pay to Executive an amount
equal to (x) the Retirement Compensation payable to Executive
as determined in Section 7.6.1 hereof less (y) the sum of (1)
the amount of Retirement Compensation previously distributed
to Executive pursuant to Section 7.6.2(i) hereof, and (2) the
amounts previously distributed pursuant to Section 7.6.3(i) or
7.6.3(ii).
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7.6.3 Retirement Trust.
(i) Within ninety days after the Distribution Date, the Company
shall establish a trust for the duration of the Employment
Term, and, commencing on such date and on a quarterly basis
thereafter, each a "Contribution Date" the Company shall
contribute to the trust (the "Retirement Trust") for the
benefit of Executive an amount equal to (a) the Retirement
Compensation that would be payable to Executive under Section
7.6.2(ii) if the Contribution Date was his Termination Date
minus (b) the total of all contributions made to the
Retirement Trust by the Company as of such Contribution Date.
The Retirement Trust to which the Company shall make these
contributions shall be irrevocable. The Retirement Trust shall
provide that Executive may withdraw from the Retirement Trust,
within the 30 day period beginning on the date on which he
receives notice from the Company that the Company has made a
contribution pursuant to this Section 7.6.3(i) an amount up to
but not to exceed the amount of that contribution. If and to
the extent that Executive fails to exercise this withdrawal
right within the 30 day period, such withdrawal right shall
lapse. The Retirement Trust also shall contain such other
provisions as the Company and Executive reasonably agree are
necessary in order for the Retirement Trust to qualify as a
grantor trust under Section 671 of the Code with Executive as
the grantor. The trust agreement for the Retirement Trust
shall provide that any assets remaining in the Retirement
Trust, after payment of all the Retirement Compensation
payable pursuant to this Section 7.6, shall be paid to
Executive, and that the Retirement Trust shall be exempt from
the claims of the Company's creditors.
(ii) As of the last day of each calendar quarter ending on or after
the Distribution Date, during the Employment Term, the trustee
of the Retirement Trust shall be required to distribute to
Executive 25% of the amount by which (x) the Assumed Taxes
that the Company reasonably estimates will be assessed upon
Executive for the calendar year for which the distribution is
being made as a result of his beneficial interest in the
Retirement Trust, exceeds (y) the amount withdrawn by
Executive in such calendar year pursuant to Section 7.6.3(i).
For this purpose, the term "Assumed Taxes" shall mean the
Federal, State and local income and employment taxes that
would be payable by Executive for the year in question,
assuming that the amount taxable would be subject to the
highest Federal and applicable State and local income and
employment taxes.
7.7 Consulting Arrangement. In the event that Executive's employment
terminates for any reason (including, without limitation, the Executive's
voluntary resignation) other than death pursuant to Section 7.2 or incapacity
pursuant to Section 7.3, then the Company shall retain the Executive to perform
consulting services for a period of five (5) years following the Termination
Date (the "Consulting Period"). The terms of the Executive's consulting
arrangement are set forth on Exhibit B attached hereto.
7.8 Certain Additional Payments by the Company.
7.8.1 Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment,
distribution, benefit, equity-based or other compensation or
other transfer or action by the Company to or for the benefit
of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise and including without limitation any additional
payments required under this Section 7.8) (a "Payment") would
be
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subject to an excise tax imposed by Section 4999 of the Code,
or any interest or penalties are incurred by Executive with
respect to any such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), the Company shall make a
payment to Executive (a "Gross-Up Payment") in an amount such
that after payment by Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, Executive
retains (or has had paid to the Internal Revenue Service on
his behalf) an amount of the Gross-Up Payment equal to the sum
of (x) the Excise Tax imposed upon the Payments and (y) the
product of any deductions disallowed because of the inclusion
of the Gross-Up Payment in Executive's adjusted gross income
and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment
is to be made. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to (i) pay federal
income taxes at the highest marginal rates of federal income
taxation for the calendar year in which the Gross-Up Payment
is to be made, and (ii) pay applicable state and local income
taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local.
7.8.2 Subject to the provisions of Section 7.8.3, all determinations
required to be made under this Section 7.8, including whether
and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Deloitte &
Touche LLP (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and
Executive within 15 business days of the receipt of notice
from Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control,
Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 7.8,
shall be paid by the Company to Executive within five days of
the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion
that failure to report the Excise Tax on Executive's
applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7.8 and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
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7.8.3 Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation,
accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 7.8.3, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
7.8.4 If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 7.8.3, Executive becomes
entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with the
requirements of Section 7.8.3 promptly pay to the Company the
amount of
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such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt
by Executive of an amount advanced by the Company pursuant to
Section 7.8.3, a determination is made that Executive shall
not be entitled to any refund with respect to such claim and
the Company does not notify Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
7.9 Restricted Stock Award. On July 31, 2006, the Company granted to the
Executive, without payment by the Executive, 387,878 shares of restricted common
stock of the Company (the "Restricted Stock"). The Restricted Stock was granted
pursuant to and on the terms provided in the Company's 2005 Long-Term Incentive
Plan, as amended (the "Plan"), and, to the extent not inconsistent with the
terms hereof, the applicable restricted stock Award Document (as defined in the
Plan). The Restricted Stock granted to the Executive pursuant to this Section
7.9 will immediately become fully vested and unrestricted on the earliest of:
(i) the fourth anniversary of the date hereof, provided that the Executive is
employed by the Company or is rendering consulting services pursuant to Section
7.7 hereof on such anniversary date, (ii) immediately prior to a Change of
Control, (iii) the Executive's death or incapacity, or (iv) termination of the
Executive's employment by the Company for any reason. For the avoidance of
doubt, all vesting of the Restricted Stock pursuant to this Section 7.9 shall be
subject to the provisions of Sections 7.8 and 12 of this Agreement.
8. WITHHOLDING.
Without limiting the effect of Sections 7.8 and 12, all payments
made by the Company under this Agreement shall be reduced by any amounts in
respect of income, social security, FICA and other similar taxes at the
then-prevailing rates required to be withheld by the Company under applicable
law.
9. INDEMNIFICATION.
To the maximum extent permitted under Florida law as from time to
time in effect, and subject to any mandatory exclusion of indemnification under
Delaware law applicable to the indemnification of Executive under this Section
9, the Company hereby agrees to indemnify Executive and hold him harmless from,
against and in respect of any and all damages, deficiencies, actions, suits,
proceedings, demands, assessments, judgments, claims, losses, costs, expenses,
obligations and liabilities arising from or related to the performance of the
services under this Agreement by Executive.
10. LEGAL FEES.
In the event of a dispute between the parties with respect to any
payments due hereunder in connection with a Change of Control, the Company will
pay the costs of any legal fees and related expenses incurred in connection with
such dispute. Such costs and expenses shall be advanced to Executive currently
as reasonably required to continue such action or proceeding.
11. UNFUNDED STATUS.
This Agreement is intended to constitute an unfunded plan for
incentive compensation. Except with respect to the Retirement Compensation,
nothing contained herein shall give the Executive any rights that are greater
than those of a general unsecured creditor of the Company. In its sole
13
discretion, the Stock Option and Compensation Committee of the Board may
authorize the creation of trusts, acquisition of life insurance policies or
other arrangements to meet the obligations created under this Agreement.
12. SECTION 409A.
12.1 Notwithstanding any provision of this Agreement to the contrary, if
Executive is a "specified employee" as defined in Section 409A of
the Code he shall not be entitled to any payments upon a termination
of his employment until the earlier of (i) the first business day
following the date which is six months after Executive's termination
of employment for any reason other than death or (ii) Executive's
date of death. The Company shall establish a trust pursuant to Rev.
Proc. 92-64, promulgated under subpart E, part I, subchapter J,
chapter 1, subtitle A of the Code, as modified by Notice 2000-56,
and fund any such payments that are deferred pursuant to this
Section 12.1 that otherwise would be immediately payable to the
Executive. The provisions of this Section 12.1 shall only apply if
required to comply with Section 409A of the Code.
12.2 If any provision of this Agreement contravenes any regulations or
Treasury guidance promulgated under Section 409A of the Code, or if
any tax is imposed under such Section 409A on any payment to be
received by Executive hereunder, this Agreement or any provision
hereof may be reformed by Executive, subject to the consent of the
Company which consent shall not be unreasonably withheld, to
maintain, to the maximum extent practicable, the original intent of
the applicable provision without violating the provisions of Section
409A of the Code. Executive agrees in good faith to consider any
such reformation proposed by the Company.
12.3 The provisions of Section 7.8 of this Agreement, mutatis mutandis,
shall apply to any imposition of taxes on Executive under Section
409A of the Code so that Executive shall be fully grossed up for the
amount of, and shall not be adversely affected by, such taxes.
13. WAIVER.
Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right that Executive or the Company may have hereunder
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. Similarly, the waiver by any party hereto
of a breach of any provision of this Agreement by the other party will not
operate or be construed as a waiver of any other or subsequent breach by such
other party.
14. SEVERABILITY.
If any part of this Agreement is found to be invalid or
unenforceable, that part will be deemed amended to achieve as nearly as possible
the same economic effect as the original provision, and the remainder of this
Agreement will remain in full force and effect.
15. NOTICES.
Any notice or other communication in connection with this Agreement
shall be deemed to be delivered if in writing, addressed as provided below (or
to such other Person or address as to which either party may notify the other in
accordance with this Section 15) and actually delivered at said address:
14
If to Executive, to him at:
Xxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
If to the Company, to it at:
BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
16. SURVIVAL.
The provisions of Sections 5.3 and 6 through 17 inclusive hereof
shall each survive any termination or expiration of this Agreement.
17. MISCELLANEOUS.
This Agreement, including the attached exhibits, constitutes the
entire understanding of the parties with respect to the subject matter hereof,
and supersedes all prior and contemporaneous understandings and agreements,
whether oral or written, regarding such subject matter. This Agreement may be
amended or modified only by a written instrument signed by Executive and by a
duly authorized representative of the Company. This Agreement may be executed in
any number of counterparts, which together shall constitute one and the same
instrument. Except as otherwise provided in this Agreement, this Agreement shall
be governed by and construed in accordance with the laws (other than the
conflicts of law rules) of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, as
of the date first above written.
EXECUTIVE BE AEROSPACE, INC.
By:
--------------------------- -----------------------------
Title:
15
Exhibit A
---------
Death Benefit Agreement
A-1
Exhibit B
---------
Terms of the Consulting Arrangement(1)
1. Purpose.
As the founder of the Company, the Executive has knowledge,
experience and skills are unique and essential to the Company. The Company
acknowledges that following the Executive's termination of employment, it is in
the best interest of the Company and its shareholders to retain the Executive as
a consultant and advisor.
2. Term.
The term of the Executive's consulting services will commence on
the Termination Date and terminate on the fifth (5th) anniversary of the
Termination Date (the "Consulting Period").
3. Consulting Services.
(a) Services.(2)
The Executive's services hereunder during the Consulting
Period shall consist of strategic planning, financial planning, merger and
acquisition advice and consultation to the Company, as well as providing
periodic advice and consultation regarding key staffing and recruitment issues
and such other services mutually agreed to by the Executive and the Company (the
"Consulting Services"). At all times the Consulting Services shall be
non-exclusive and the Executive shall only be required to devote so much time as
is reasonably necessary to discharge the Consulting Services; provided, however,
that in no event will the Consulting Services provided during each year of the
Consulting Period cause the Executive's termination to cease to be a Separation
of Service for purposes of Section 409A of the Code.
(b) Service Standards.
The Executive shall perform the Consulting Services in a
commercially reasonable manner. In no event shall the Executive have any
liability to the Company arising out of or related to the Executive's
performance of the Consulting Services except to the extent it arises directly
by reason of the Executive's gross negligence or willful misconduct in
performing such Consulting Services.
----------
(1) Defined terms have the meanings ascribed thereto in the Agreement.
(2) Consulting Services to be confirmed upon the Termination Date.
(c) Expenses.
During the Consulting Period the Company shall:
(i) provide the Executive with an office at its Wellington,
Florida facility or such other location otherwise reasonably agreed by
the Company and the Executive; and
(ii) provide the Executive with a full time assistant; and
(iii) provide the Executive with travel in accordance with the
Company's policy regarding Authorization and Limitation on Officer
Travel as in effect on the Termination Date; and
(iv) provide Executive with an automobile or automobile
allowance in accordance with Section 5.5 of the Agreement; and
(v) pay or reimburse the Executive for reasonable out-of-
pocket expenses incurred in connection with the Executive's
performance of the Consulting Services in accordance with past
practices; provided, however, that in no event shall reimbursement
occur after March 15th of the year following the year in which
expenses are incurred.
4. Nature of the Relationship.
(a) Independent Contractor.
The Executive shall perform the Consulting Services in the
capacity of an "independent contractor," being solely responsible for his
actions or inactions. Nothing in this Exhibit or the Agreement shall be
construed to create an employment relationship between the parties. With respect
to the Consulting Services, the Executive will not be an employee of the Company
for any purpose, including, without limitation: (i) for federal, state or local
tax, employment, withholding or reporting purposes; or (ii) for eligibility or
entitlement to any benefit under any of the Company's employee benefit plans
(including, without limitation, those plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended), incentive, compensation or
other employee programs or policies.
(b) Code of Conduct.
During the Consulting Period, the Executive shall comply with
the Company's Code of Conduct and its Delegation of Authority or any successor
policies, each as in effect from time to time (as if the Executive were a
non-management employee with respect to the Delegation of Authority Policy).
(c) Payment of Taxes.
The Executive shall be responsible for, and shall maintain
adequate records of, expenses that the Executive incurs in the course of
performing the Consultant Services hereunder and shall be solely responsible for
and shall file, on a timely basis, tax returns and payments required to be filed
with or made to any federal, state or local tax authority with respect to the
2
Executive's performance of the Consulting Services. Neither federal, state nor
local income tax of any kind shall be withheld or paid by the Company with
respect to any amount paid to the Executive during the Consulting Period. The
Executive is responsible for withholding and paying all employment taxes and
income withholding taxes as required.
(d) Indemnification.
To the fullest extent permitted under applicable laws, rules
and regulations and the Company's applicable corporate governance documents, the
Company agrees to indemnify and hold the Executive harmless from any loss or
liability, cost and expense (including, but not limited to, reasonable
attorney's fees) incurred by the Executive as a result of the Executive being
made a party to any action or proceedings by reason of the Executive's provision
of the Consulting Services.
5. Consulting Fees.
During the Consulting Period, the Executive shall receive a
consulting fee of fifteen percent (15%) of his Salary in effect immediately
prior to the Termination Date per calendar year (the "Fees"), payable in monthly
installments in arrears on the last day of the month (pro-rated for partial
months).
6. Effect of Death or Disability.
In the event of the Executive's death or Disability, the
Executive shall no longer be required to perform the Consulting Services and the
Executive or his estate or beneficiaries, as applicable, shall be entitled to a
lump sum payment equal to the amount of Fees payable to the Executive for the
remainder of the Consulting Period. The lump sum payment shall be made within
ten (10) business days following the effective date of the Executive's
termination.
7. Termination of Consulting Period. The Consulting Period may
not be terminated and the terms and conditions of the consulting relationship
may not be amended or modified, without the prior written consent of both the
Company and the Executive.
8. Documents and Materials.
Upon termination of the Consulting Period or at any other time
upon the Company's request, the Executive will promptly deliver to the Company,
without retaining any copies, all documents and other materials furnished to the
Executive by the Company, prepared by the Executive for the Company or otherwise
relating to the Company's business, including, without limitation, all written
and tangible material in the Executive's possession incorporating any
Proprietary Information.
9. Proprietary Rights and Non Competition.
The provisions of Section 6 of the Agreement shall apply
during the Consulting Period. All references to Employment Term in Section 6
shall also be deemed to refer to the Consulting Period.
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