AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.3
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement (this “Agreement”)
is made
as of April 27, 2007 by and between BE Aerospace, Inc., a Delaware corporation
(the “Company”),
and
Xxxxxx X. XxXxxxxxx (“Executive”).
RECITALS
WHEREAS,
Executive and the Company entered into an Amended and Restated Employment
Agreement dated as of July 31, 2006 (the “Employment
Agreement”);
and
WHEREAS,
Executive, having provided services to the Company since May 1, 1993, 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Employment Agreement is hereby restated, superseded and replaced in its entirety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. Term.
Unless
otherwise terminated pursuant to the provisions of Section 5 hereof, Executive
shall provide to the Company services hereunder during the term of his
employment under this Agreement, which 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.”
3. Position
and Duties.
Executive shall serve the Company in the capacity of Senior Vice President
of
Administration and Chief Financial Officer, or in such other position as the
Chief Executive Officer of the Company, his designee or the Board of Directors
of the Company (the “Board”)
may
designate from time to time, and shall be accountable to, and shall have such
other powers, duties and responsibilities, consistent with this capacity, as
the
Chief Executive Officer of the Company, his designee or the Board shall
determine. Executive shall perform and discharge, faithfully, diligently and
to
the best of his ability, such duties and responsibilities. Executive shall
devote substantially all of his working time and efforts to the business and
affairs of the Company.
4. Compensation.
(a) Salary.
Effective as of January 1, 2006, Executive shall receive an annual salary (the
“Salary”)
payable
at the rate of four hundred forty-five thousand dollars ($445,000) per annum.
Such rate shall be subject to adjustment from time to time by the Board as
hereinafter provided; provided,
however,
that it
shall at no time be adjusted below the Salary for the preceding year. On January
1st
of each
year during the Employment Term, the Salary 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
twelve 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 adjustment index issued by such agency that 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, less all required
deductions.
(b) Incentive
Bonus.
So long
as employed, Executive may receive an incentive bonus for each fiscal year
or
portion thereof during which Executive has been employed hereunder as determined
by the Board at the end of the applicable fiscal year. The incentive bonus,
if
any, 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 it shall accrue.
(c) Expenses.
So long
as employed, Executive shall be entitled to receive prompt payment of, or
reimbursement for, all reasonable business expenses incurred by him on behalf
of
the Company. 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 it shall accrue.
(d) Benefits.
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 accordance with Company
policy, Executive shall also be entitled to paid vacation in any fiscal year
during the Employment Term as well as all paid holidays given by the Company
to
its employees. In addition, upon termination of Executive’s employment with the
Company due to his death or Incapacity, the Executive and his eligible
dependents shall be entitled on similar terms and conditions as active
executives, for a period of two (2) years, to participate in all medical, dental
and health benefit plans available to the Company’s executive officers from time
to time to the extent the Company plans constitute welfare plans for purposes
of Section
409A of the Internal Revenue Code of 1986, as amended and the regulations and
guidance promulgated thereunder (the “Code”).
(e) Automobile.
So long
as employed, Executive shall receive an automobile either owned or leased by
the
Company or a monthly automobile allowance of $1,100 per month, at the discretion
of the Company. 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 it shall accrue.
(f) Equity
Compensation.
So long
as employed, Executive shall be entitled to participate in any applicable equity
compensation program of the Company in effect from time to time.
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5. Termination
and Compensation Thereon.
(a) Termination
Date.
The term
“Termination
Date”
shall
mean the date on which Executive’s employment with the Company is terminated for
any reason.
(b) Death.
(i) 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 natural
person, trust, corporation, limited liability company, limited or general
partnership, or any other entity (each a “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) the entire remaining
unpaid balance of the Retirement Compensation as provided in Section 5(g) below,
determined as of the Termination Date and (B) a lump sum payment amount equal
to
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.
(ii) 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 one (1) million dollars in accordance with the Death Benefit
Agreement attached as Exhibit
A
hereto.
(iii) Upon
Executive’s death, 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 equal to (A) any accrued and unpaid Salary through the date
of death, and (B) any bonuses declared to be payable to Executive for any fiscal
periods of the Company ending prior to the date of death.
(iv) Following
the Executive’s death, his eligible dependents shall be entitled to continuation
of medical, dental and health benefits for two (2) years in accordance with
Section 4(d) hereof.
(c) 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 5(c). If the Company desires to so terminate
Executive's employment, the Company shall:
(i) give
prompt notice to Executive of any such termination;
(ii) until
the
Expiration Date, (A) pay to Executive the Salary in effect on the Termination
Date, and (B) continue to provide Executive with the automobile allowance
provided pursuant to Section 4(e) hereof immediately prior to the Termination
Date in accordance with the Company’s payroll practices in effect on the
Termination Date;
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(iii) provide
the Executive and his eligible dependents with continuation of medical, dental
and health benefits for two (2) years in accordance with Section 4(d) hereof;
(iv) pay
to the
Executive, the entire remaining unpaid balance of the Retirement Compensation
as
provided in Section 5(g) below, determined as of the Termination Date;
and
(v) pay
to the
Executive (A) any accrued and unpaid Salary through the Termination Date and
(B)
any bonuses declared to be payable to Executive for any fiscal periods ending
prior to the Termination Date.
(d) Termination
by the Company or the Executive.
(i) Termination
by the Company for Cause.
The
Company may, at any time, terminate Executive’s employment hereunder with
“Cause.” Upon a termination for Cause, the Company shall have no further
obligations to Executive hereunder, except for payment of any accrued and unpaid
Salary through the Termination Date. For purposes of this Agreement,
“Cause”
shall
mean any of the of the following:
(A) the
willful and continued (after a reasonable period following such demand) failure
by the Executive to substantially perform his duties hereunder (other than
(1)
any such willful or continued failure resulting from his incapacity due to
physical or mental illness or physical injury or (2) any such actual or
anticipated failure after the issuance of a notice of termination by the
Executive for Good Reason (as defined below)), after written demand for
substantial performance is delivered by the Company to the Executive that
specifically identifies the manner in which the Company believes the Executive
has not substantially performed his duties;
(B) the
willful engaging by the Executive in misconduct which is materially injurious
to
the Company, monetarily or otherwise; or
(C) the
conviction of the Executive of a felony by a court of competent jurisdiction
in
a judgment which has become final and nonappealable if such conviction would
render it impossible for the Executive to perform his obligations hereunder
or
if the reputation of the Company would be materially damaged by the continuance
of the Executive’s employment hereunder.
For
purposes of this Section 5(d)(i) no act, or failure to act, on the part of
the
Executive shall be considered “willful” unless done or omitted to be done by him
in bad faith and without reasonable belief that his action or omission was
in
the best interest of the Company. If Executive’s employment is terminated by the
Company for Cause pursuant to this Section 5(d)(i), the Company shall have
no
further obligations to Executive hereunder after the Termination Date, except
for the payment of any unpaid Salary and benefits accrued through the
Termination Date.
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(ii) Termination
without Cause or for Good Reason other than Contemporaneously with a Change
of
Control.
(A) The
Company may, at any time, terminate Executive’s employment hereunder without
Cause and Executive may terminate Executive’s employment hereunder with “Good
Reason” (as defined below).
(B) If
Executive’s employment is terminated by the Company without Cause or by
Executive with Good Reason other than contemporaneously with a Change of Control
(as defined below), then, on the Termination Date, Executive shall receive
payment of:
(1)
any
accrued and unpaid Salary through the Termination Date;
(2)
any
bonuses declared to be payable to Executive for any fiscal periods of the
Company ending prior to the Termination Date;
(3)
a
lump sum
equal to his Salary from the Termination Date through the Expiration
Date;
(4)
the
entire remaining unpaid balance of the Retirement Compensation pursuant to
Section 5(g) hereof, determined as of the Expiration Date; and
(5)
the
Severance Pay pursuant to Section 5(f) hereof.
(C) In
addition, upon a termination without Cause or for Good Reason other than
contemporaneously with a Change of Control, any stock options or restricted
stock awards (or other equity awards) (“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, such stock options
shall continue to be exercisable until their original stated expiration date.
(iii) Termination
by Executive without Good Reason.
Executive may terminate his employment hereunder without Good Reason. If
Executive’s employment is terminated by Executive without Good Reason, then, on
the Termination Date, Executive shall receive payment of (A) any accrued and
unpaid Salary through the Termination Date, (B) any bonuses declared to be
payable to Executive for any fiscal periods of the Company ending prior to
the
Termination Date, and (C) the entire remaining unpaid balance of the Retirement
Compensation pursuant to Section 5(g) hereof, determined as of the Termination
Date.
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(e) Change
of Control.
(i) If
a
“Change of Control” (as defined in Section 5(e)(ii)) of the Company occurs, the
Company will be obligated as provided in this Section 5(e). For purposes of
determining the Company’s obligations under this Section 5(e), 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:
(A) 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
5(h) hereof;
(B) provide
that any 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 (x) the Change of Control Date and (y) 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 Equity Awards
shall continue to be exercisable until their original stated expiration
date.
(ii) Termination
Contemporaneously
with
a
Change of Control.
If the
Executive’s employment is terminated contemporaneously with a Change of Control,
the Company shall pay to the Executive (i) 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, (ii) the
entire remaining unpaid balance of the Retirement Compensation, as provided
in
Section 5(g) below determined as of the Termination Date; and (iii) the
Severance Payment pursuant to Section 7.5 hereof.
(iii) For
purposes of this provision, a “Change
of Control”
means:
(A) Individuals
who, as of January 1, 2005 (the “Effective
Date”)
constitute the Board (the “Incumbent
Board”)
cease
for any reason to constitute at least a majority of the Board, 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 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;
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(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.
(iv) For
the
purposes of this Section 5(e), 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.
(v) For
the
purposes of this Section 5(e), 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.
(vi) A
Change
of Control shall occur on the effective date of any event specified in Section
5(e)(iii) above. In connection with any determination of ownership for purposes
of Section 5(e)(iii) above, the attribution rules of Section 318(a) of the
Code
shall apply.
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(vii) For
purposes of this Agreement, “Good
Reason”
means:
(A) a
decrease
in Executive’s Salary or a failure by the Company to pay material compensation
due and payable to Executive in connection with his employment;
(B) a
change
in Executive’s responsibilities, positions,
duties, status, title or reporting relationships;
(C) Executive
ceasing to be the Senior Vice President of Administration and Chief Financial
Officer of a publicly traded company pursuant to this Agreement (or such other
positions Executive holds (1) immediately prior to the Change of Control Date,
if applicable, or (2), solely for purposes of Section 5(d), thirty (30) days
prior to the Termination Date);
(D) the
Company’s requiring Executive to be based at any office or location that is
anywhere other than Executive’s principal place of employment (1) immediately
prior to the Change of Control Date, if applicable, or (2), solely for purposes
of Section 5(d), thirty (30) days prior to the Termination Date; or
(E) a
material
breach by the Company of any term or provisions of this Agreement;
provided
that
Executive has given notice thereof to the Company and the Company has not cured
the Good Reason within thirty (30) days after receiving such
notice.
(f) Severance
Pay.
(i) If
Executive’s employment hereunder is terminated at any time (A) by the Company
without Cause or (B) by the Executive for Good Reason, then within five (5)
business days after Executive’s Termination Date, the Company shall pay to
Executive a lump sum amount equal to two (2) times the Salary (at the rate
in
effect as of the Termination Date), which lump sum shall not be
pro-rated.
(ii) If
Executive’s employment hereunder is terminated by Executive without Good Reason,
then within five (5) business days after Executive’s Termination Date, the
Company shall pay to Executive a lump sum amount equal to one (1) times the
Salary (at the rate in effect as of the Termination Date), which lump sum shall
not be pro-rated. For the avoidance of doubt, the severance payment pursuant
to
this Section 5(f)(ii) shall be payable upon the Executive’s retirement in
accordance with Company policy.
(g) Retirement
Compensation.
(i) If
Executive’s employment is terminated for any reason other than Cause, the
Company shall pay to Executive a lump sum amount equal to the amount by which
(A) the product of (1) one-half multiplied by Executive’s average annual salary
for the three (3) year period preceding the Termination Date times (2) the
number of years (including any partial year) since May 1, 1993 (the
“Retirement
Compensation”)
exceeds
(B) the sum of any amounts previously distributed to Executive pursuant to
Sections 5(g)(ii), 5(g)(iii) and 5(g)(iv). The lump sum amount to be paid shall
not be present-valued or otherwise reduced by use of any other discount or
discounting method. The payment will be made to Executive within five (5)
business days following the Termination Date.
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(ii) Within
five (5) 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 in a lump sum the amount of Retirement Compensation
that
would have been payable to Executive under Section 5(g)(i) as of the
Distribution Date.
(iii) Within
ninety (90) business days of the Distribution Date, the Company shall establish
a trust for the duration of the Employment Term, and, commencing on the
Distribution 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 5(g)(i) 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 thirty (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 5(g)(iii) 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 thirty (30)-day
periods, 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 5(g)(iii), shall be payable to Executive, and that prior to payment
of
such retirement compensation, the assets of the Retirement Trust shall be exempt
from the claims of the Company’s creditors.
(iv) 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 of the Assumed Taxes
that
the Company reasonably estimates will be payable by Executive for the calendar
year for which the distribution is being made and as a result of his beneficial
interest in the Retirement Trust. 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 tax rates.
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(h) Certain
Additional Payments by the Company.
(i) 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 5(h)) (a “Payment”)
would
be 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 rate of 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 rates 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 income
taxes.
(ii) Subject
to
the provisions of paragraph (iii) of this Section 5(h) all determinations
required to be made under this Section 5(h), 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 fifteen (15) 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 5(h), shall be paid
by
the Company to Executive within five (5) 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 5(h) 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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(iii) 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 (10) 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 thirty
(30)-day period
following the date on which Executive 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:
(A) give
the
Company any information reasonably requested by the Company relating to such
claim;
(B) 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;
(C) cooperate
with the Company in good faith in order effectively to contest such claim;
and
(D) 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 5(h)(iii), 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 provided further
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.
11
(iv) If,
after
the receipt by Executive of an amount advanced by the Company pursuant to
Section 5(h)(iii),
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 5(h)(iii))
promptly
pay to the Company the amount of 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 5(h)(iii),
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 thirty
(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.
(i) Restricted
Stock Award.
On July
31, 2006, the Company granted to the Executive, without payment by the
Executive, 104,242 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 5(i) will vest and become unrestricted
ratably over a four-year period commencing on July 31, 2007, the first
anniversary of the grant date, and on each anniversary thereafter, provided
that the
Executive is employed by the Company on each vesting date. In addition, the
Restricted Stock will immediately become fully vested and unrestricted (i)
immediately prior to a Change of Control, (ii) upon the Executive’s termination
due to death or incapacity, (iii) upon the termination of the Executive’s
employment by the Company without Cause, or (iv) upon the termination by the
Executive with Good Reason. For the avoidance of doubt, all vesting of the
Restricted Stock pursuant to this Section 5(i) shall be subject to the
provisions of Sections 5(h) and 12 of this Agreement.
(j) Grantor
Trust.
If,
at any
time during the Employment Term the Board determines that a Change of Control
is
likely to occur, the Company hereby agrees to establish a grantor trust pursuant
to Subpart E, part I, subchapter J, chapter I, subtitle A of the Code. The
grantor trust shall serve as a vehicle for accumulating assets to secure its
potential obligations to the Executive in the event of a Change of Control.
Notwithstanding the establishment of a trust, the Company’s obligation upon a
Change of Control may be paid from the general assets of the Company or from
assets of the trust. Any trust so established and any assets held therein will
be subject to the claims of the Company’s creditors.
12
6. Amendments.
No
amendment to this Agreement or any schedule hereto shall be effective unless
it
shall be in writing and signed by each party hereto.
7. Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given when delivered personally or sent by telecopy or three (3) days
after being mailed by registered or certified mail (return receipt requested)
to
the parties at the following addresses (or at such other address for a party
as
shall be specified by like notice):
If
to the
Company, to it at:
BE
Aerospace, Inc.
0000
Xxxxxxxxx Xxxxxx Xxx
Xxxxxxxxxx,
XX 00000
Attention:
General Counsel
If
to
Executive, to him at:
Xxxxxx
X.
XxXxxxxxx
0000
Xxxxx
Xxxxxxx Xxxxx
Xxxx
Xxxx
Xxxxx, XX 00000
8. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties; provided,
however,
that
this Agreement shall not supersede the Proprietary Rights Agreement dated as
of
the date hereof between Executive and the Company attached as Exhibit
B
which is
incorporated herein by reference.
9. Withholding.
Without
limiting the effect of Sections 5(h) 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.
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 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.
13
12. Section
409A.
(a) 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 200-56, and fund any such payments that are deferred
pursuant to this Section 12 that otherwise would be immediately payable to
Executive. The provisions of this Section 12 shall only apply if required to
comply with Section 409A of the Code.
(b) 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.
(c) The
provisions of Section 5(h) of this Agreement, mutatis
mutandis,
shall
apply to any imposition of taxes on Executive under said Section 409A so that
Executive shall be fully grossed up for the amount of, and shall not be
adversely affected by, such taxes.
13. Miscellaneous.
(a) Enforceability.
The
invalidity and unenforceability of any term or provision hereof shall not affect
the validity or enforceability of any other term or provision hereof. The
headings in this Agreement are for convenience of reference only and shall
not
alter or otherwise affect the meaning hereof. This Agreement may be executed
in
any number of counterparts which together shall constitute one instrument and
shall be governed by and construed in accordance with the laws (other than
the
conflict of laws rules) of the State of Florida.
(b) Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns. This Agreement
may
be assigned by the Company. Executive may not assign or delegate Executive’s
duties under this Agreement without the Company’s prior written
approval.
14
(c) 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, including,
without limitation, the right of Executive to terminate employment for Good
Reason pursuant to Section 5(e) of this Agreement, 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.
(d) Survival.
The
provisions of Sections 4, 5, 6 and 7 through 13 inclusive hereof shall each
survive any termination or expiration of this Agreement.
IN
WITNESS
WHEREOF, the parties hereto execute this Agreement as of the date first written
above.
|
EXECUTIVE
|
|
|
______________________________
|
|
|
BE
AEROSPACE, INC.
|
|
|
______________________________
|
Exhibit
A
Death
Benefit Agreement
A-1
Exhibit
B
Proprietary
Rights Agreement
B-1
