EXHIBIT 10.48
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into this December 13, 2001, effective
as of October 13, 2000, by and between Simula, Inc., an Arizona corporation (the
"Company") and Xxxxxx X. Xxxxxxx (the "Executive"):
W I T N E S S E T H :
WHEREAS, the Company desires to establish its right to the services of the
Executive, in the capacity described below, on the terms and conditions set
forth, and the Executive is to accept such employment on such terms and
conditions; and
WHEREAS, the Company desires to insure, insofar as possible, that it will
continue to have the benefit of the Executive's services over the employment
term and to protect its confidential information and goodwill; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
SECTION ONE
1.1 Employment as Executive Vice President of the Company. The Company does
hereby employ, engage and hire the Executive as an Executive Vice President and
Chief Development Officer, or such position of comparable responsibility,
authority and status as appointed from time to time, and the Executive does
hereby accept and agree to such hiring, engagement and employment. The
Executive's duties during the employment period shall be such executive and
managerial duties as are set forth hereunder, as the President of the Company
shall from time to time prescribe. The services which are to be performed by the
Executive hereunder are to be rendered at an employment location which is not
more than twenty-five (25) miles from the Executive's employment location on the
date of the Change of Control, or in such other place or places as shall be
mutually agreed upon in writing by the Executive and the Company from time to
time. The Executive will devote the preponderance of his time, energy and skill
to the performance of his duties for the Company and for the benefit of the
Company, subject to reasonable vacations and absences due to illness.
Furthermore, the Executive will exercise due diligence and care in the
performance of his duties for the Company under this Agreement.
SECTION TWO
2.1 Employment Term.
(a) The Executive shall be employed by the Company for the duties as set
forth in Section 1 for the two (2) year period commencing October 13, 2000, and
ending on October 13, 2002, (the "Employment Term"), unless the employment of
the
Executive is extended pursuant to subparagraph (b) below or terminates earlier
in accordance with the provisions of this Agreement.
(b) This Agreement will automatically renew for an additional two (2) year
period on the terms and conditions then existing, unless either party notifies
the other in writing of its decision not to renew the Agreement no less than one
(1) year prior to the end of the Employment Term; provided that in no event
shall the Employment Term exceed two (2) years from the date either party
notifies the other of its decision not to renew the Agreement. To the degree
this Agreement is in effect in any renewal of the Employment Term, the total
period under which the Executive renders services shall be referred to as the
"Employment Term."
(c) Notwithstanding the foregoing, if a Change of Control (as defined in
Section 5.2(g)) occurs when the Executive is employed by the Company, the
Company will continue thereafter to employ the Executive, and the Executive will
remain in the employ of the Company, in accordance with the terms and provisions
of this Agreement, during the Employment Period (as defined in Section 5.2(j)).
SECTION THREE
3.1 Compensation.
(a) The Company shall pay the Executive and the Executive agrees to accept
from the Company during the Employment Term compensation for his services at an
initial base salary rate, as of the date of execution of this Agreement, of Two
Hundred Thousand Dollars ($200,000) per year, payable in equal bi-weekly
installments or at such other time or times as the Executive and the Company
shall agree and as otherwise provided by law.
(b) During the Employment Term, the President shall consider and appraise
periodically, but not less frequently than annually, the Executive's
compensation. In determining such compensation, the President shall consider the
commensurate increases given to other corporate officers and key employees
generally both in the Company and in other similarly situated companies, the
scope and success of the Company's operations, the expansion of Executive's
duties and the Executive's performance of his duties.
3.2 Bonus. The Executive shall also receive such bonuses as may be declared
from time to time by the Company in its sole and absolute discretion.
3.3 Fringe Benefits. The Executive shall be entitled to the following
fringe benefits:
(a) The Executive shall be entitled to participate in such employee pension
benefit plans and employee welfare benefit plans (as such terms are defined in
Sections 3(2) and 3(1), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) as are sponsored by the Company and generally
available to salaried employee participation. Such participation shall be in
accordance
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with the terms and provisions of the respective employee pension benefit and
employee welfare benefit plans.
(b) The Executive shall also be entitled to participate in all Simula Stock
Option and Incentive Plans, in accordance with the terms and conditions of said
plans.
(c) The Executive shall also be entitled to all paid vacation and holidays
available to all employees at the Simula corporate office.
3.4 Expenses. The Company will reimburse the Executive for any and all
necessary, customary and usual expenses incurred on behalf of the Company in
accordance with Company policies, including a reasonable car allowance. The
Executive shall be responsible for additional income taxes, if any, resulting
from expenses under this Section 3.4 constituting taxable income under Section
132 of the Code (or any successor provision).
SECTION FOUR
4.1 Death or Disability. If the Executive becomes physically or mentally
disabled while employed by the Company, and as a result thereof becomes unable
to continue the proper performance of his duties for the Company, or if the
Executive dies while employed by the Company, the Executive's employment shall
automatically cease and terminate. The Company's obligation to pay the
Executive's base salary and bonuses pursuant to Sections 3.1 and 3.2 shall end
as of the date of the Executive's death or, in the case of disability, the
Executive's last day of active employment.
The Executive shall be considered to be "disabled" for purposes of this
Section 4.1, if, in the judgment of a licensed physician selected by the
Company, the Executive is "disabled" for purposes of the Company's Long Term
Disability Plan.
4.2 Normal Termination. This Agreement shall automatically renew on the
expiration of the initial Employment Term described in Section 2.1(a) without
any notice from either party, unless either party gives notice of termination
pursuant to Section 2.1(b). Unless this Agreement is terminated pursuant to
Section 4.3, the Company's obligation to pay compensation and benefits pursuant
to SECTION THREE shall continue during the Employment Term.
4.3 Termination by the Executive. Notwithstanding Section 2.1(b), the
Executive shall have the right to terminate this Agreement at any time. The
Executive agrees to provide the Company with one hundred twenty (120) days prior
written notice of any such termination. The Company's obligation to pay the
Executive's base salary and any bonuses or other compensation pursuant to
SECTION THREE shall cease as of the Executive's last day of work, subject to the
remaining provisions of this Section 4.3. Notwithstanding anything to the
contrary in this Section 4.3, if the Executive gives written notice that the
Company has materially breached any of its commitments under this Agreement,
whether with or without resigning from employment, unless the Company rectifies
the breach within one hundred twenty (120) days of the notice or
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disputes the occurrence of the alleged breach in writing within such one hundred
twenty (120) day period, the Company's obligation to pay compensation and
benefits pursuant to SECTION THREE shall continue during the Employment Term
then in effect under Section 2.1(a) or (b), even though the Executive may
thereafter resign. The Company shall be deemed conclusively to have committed
the breach if it does not dispute the occurrence of the alleged breach within
the one hundred twenty (120) day period. If the Executive resigns from the
Company pursuant to such charge of breach and there has been no determination
that the Company did not breach this Agreement, the Executive will be entitled
to receipt of compensation and benefits pursuant to SECTION THREE during the
Employment Term then in effect under Section 2.1(a) or (b). Any determination of
breach pursuant to this Section 4.3 shall be made in accordance with Section
6.1. Compensation and benefits shall remain payable during the period described
in this Section 4.3, provided that if the arbitrator determines that Company has
not materially breached this Agreement, the Executive shall be obligated to
repay to the Company the compensation and benefits paid to the Executive during
such period.
SECTION FIVE
5.1 General. In the event of a Change of Control as defined in Section
5.2(g), the provisions of this SECTION FIVE shall govern the terms and
conditions of the Executive's employment with the Company, notwithstanding any
other provision in this Agreement to the contrary. In the event of a conflict
between the provisions of this SECTION FIVE and any other provision of this
Agreement, the provisions of this SECTION FIVE shall control.
5.2 Definitions. For purposes of this SECTION FIVE, the following terms
have the meaning set forth below:
(a) "Accrued Benefits" shall mean the following amounts: (i) all salary
earned or accrued through the Termination Date; (ii) reimbursement for any and
all monies advanced in connection with the Executive's employment for reasonable
and necessary expenses incurred by the Executive through the Termination Date;
(iii) any and all other cash benefits previously earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plans then in effect; (iv) a lump sum payment of the bonus or
incentive compensation otherwise payable to the Executive with respect to the
year in which termination occurs under any bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other payments and
benefits to which the Executive may be entitled under the terms of this
Agreement and any benefit plan of the Company. Payment of Accrued Benefits shall
be made promptly in accordance with the Company's prevailing practice and the
terms of any applicable benefit plans, contracts or arrangements.
(b) "Act" shall mean the Securities Exchange Act of 1934.
(c) "Affiliate" shall mean (i) Xxxxxxx X. Xxxxxxxxxx; (ii) a corporation
other than the Company that is a member of a "controlled group of corporations"
(within
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the meaning of Section 414(b) of the Code as modified by Section 415(h) of the
Code); or (iii) a group of trades or businesses under common control (within the
meaning of Section 414(c) of the Code as modified by Section 415(h) of the Code)
that also includes the Company as a member. For purposes of determining whether
a transaction or event constitutes a Change of Control within the meaning of
Section 5.2(g), "Affiliate" status shall be determined on the day immediately
preceding the date of the transaction or event.
(d) "Base Period Income" shall be an amount equal to the Executive's
"annualized includible compensation" for the "base period" as defined in Section
280G(d)(1) and (2) of the Code.
(e) "Beneficial Owner" shall have the same meaning as given to that term in
Rule 13d-3 of the General Rules and Regulations of the Act, provided that any
pledgee of the voting securities of the Company shall not be deemed to be the
Beneficial Owner thereof prior to its disposition of, or acquisition of voting
rights with respect to, such securities.
(f) "Cause" shall be limited to (i) the engaging by the Executive in
conduct which has caused demonstrable and serious injury to the Company,
monetary or otherwise, as evidenced by a determination in a binding and final
judgment, order or decree of a court or administrative agency of competent
jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an
action, suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent jurisdiction, in effect after
exhaustion or lapse of all rights of appeal, which the Company determines has a
significant adverse impact on it in the conduct of its business; (iii)
unreasonable neglect or refusal by the Executive to perform the Executive's
duties or responsibilities (unless significantly changed without the Executive's
consent); or (iv) a significant violation by the Executive of the Company's
established policies and procedures as in effect on the date of the Change of
Control which could subject the Executive to disciplinary action by the Company.
(g) "Change of Control" shall mean one (1) or more of the following events:
(i) Any Person, other than an Affiliate, through a transaction or
series of transactions, is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty percent (20%)
or more of the combined voting power of the then outstanding securities of
the Company;
(ii) A merger or consolidation of the Company with any other
corporation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
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combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or an Affiliate,
less than sixty percent (60%) of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; provided that,
for purposes of this subparagraph (ii), a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing twenty percent (20%) or more of
the combined voting power of the then outstanding securities of the Company
(excluding any securities acquired by that Person directly from the Company
or an Affiliate) shall not result in a Change of Control;
(iii) The shareholders of either the Company approve a sale, transfer
or other disposition of all or substantially all of the assets of Simula,
Inc. to a Person other than the Company or an Affiliate;
(iv) All or substantially all of the assets of the subsidiary or
division of Simula, Inc. over which Executive has authority are sold or
transferred to, or the capital stock or ownership interests of such
subsidiary or division are merged or consolidated with, a Person other than
the Company or an Affiliate; or
(v) Individuals who, as of April 1, 2001, constitute the board of
directors of Simula, Inc. (the "Incumbent Board") cease for any reason to
constitute at least two-thirds (2/3) of the members of the Simula, Inc.
board of directors, as the case may be; provided, however, that for
purposes of this subparagraph (iv), (A) any person becoming a member of the
Simula, Inc. board of directors after April 1, 2001 whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least two-thirds (2/3) of the members then comprising the
Incumbent Board will be, considered as though such person were a member of
the Incumbent Board and (B) the Incumbent Board shall not include a
director whose initial assumption of office as a director was in connection
with an actual or threatened election contest relating to the election of
directors.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(i) "Disability" shall have the same meaning as given to that term in the
Company's long-term disability plan for employees.
(j) "Employment Period" shall mean a period commencing on the date of a
Change of Control, and ending on the earlier (i) of the second anniversary of
such date, or (ii) the date on which the Executive attains the age of sixty-five
(65) provided that the Executive meets the criteria of the "bona fide executive"
exception to the
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requirements of the Age Discrimination in Employment Act, codified at 29 U.S.C.
Section 631(c).
(k) "Good Reason" shall mean:
(i) Executive's voluntary resignation from his position within 180 days
after a Change of Control;
(ii) the required relocation of the Executive, without the Executive's
consent, to an employment location which is more than twenty-five (25) miles
from the Executive's employment location on the date of a Change of Control;
(iii) a significant reduction by the Company in the compensation and/or
benefits provided to the Executive as in effect on the date of the Change of
Control as the same may be increased from time to time during the Employment
Period which reduction is not generally effective for all executives employed by
the Company (or its successor) in the Executive's class or category;
(iv) the removal of the Executive from or any failure to reappoint the
Executive to any of the positions held by the Executive on the date of a Change
of Control or any other positions to which the Executive shall thereafter be
elected or assigned except in the event that such removal or failure to
reappoint relates to the termination by the Company of the Executive's
employment for Cause or by reason of death, disability or voluntary retirement;
(v) a significant adverse change, without the Executive's written consent,
in the nature or scope of the Executive's authority, powers, functions, duties
or responsibilities, or a material reduction in the level of support services,
staff, secretarial and other assistance, office space and accoutrements
available to a level below that which was provided to the Executive on the date
of the Change of Control and that which is necessary to perform any additional
duties assigned to the Executive following the Change of Control, which change
or reduction is not generally effective for all executives employed by the
Company (or its successor) in the Executive's class or category; or
(vi) breach of any material provision of this Agreement by the Company.
(l) "Notice of Termination" shall mean the written notice described in
Section 5.10.
(m) "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity (including a "group" as defined
in Section 13(d)(3) of the Act), other than an employee benefit plan of the
Company or an Affiliate or an entity organized, appointed or established
pursuant to the terms of any such benefit plan.
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(n) "Termination Date" shall mean, except as otherwise provided in Section
5.10, (i) the Executive's date of death; (ii) the date of the Executive's
voluntary early retirement as agreed upon in writing by the Company and the
Executive; (iii) sixty (60) days after the delivery of the Notice of Termination
terminating the Executive's employment on account of Disability pursuant to
Section 5.7, unless the Executive returns full-time to the performance of his
duties prior to the expiration of such period; (iv) the date of the Notice of
Termination if the Executive's employment is terminated by the Executive
voluntarily other than for Good Reason; and (v) sixty (60) days after the
delivery of the Notice of Termination if the Executive's employment is
terminated by the Company (other than by reason of Disability) or by the
Executive for Good Reason.
(o) "Termination Payment," subject to the limits set forth in Section
5.11(c) hereof, shall be an amount equal to (i) plus (ii), multiplied by (iii),
where
(i) Equals the Executive's rate of annual salary, as in effect on the
date of the Change of Control and as adjusted thereafter from time to time
pursuant to Section 3.1;
(ii) Equals the amount of the average annual dollar award paid to the
Executive pursuant to the Company's regular bonus plan or arrangement with
respect to the four (4) years (or the number of years of the Executive's
employment if less than four (4) years) preceding the Termination Date
which shall be determined by dividing the total dollar amount paid to the
Executive under such plan or arrangement with respect to such number of
years by four (4) (or the number of years of the Executive's employment if
less than four (4) years); and
(iii) Equals two (2).
(p) "Total Payments" shall mean the sum of the Termination Payment and any
other payments or benefits provided to or for the benefit of the Executive in
the nature of compensation, receipt of which is contingent on the Change of
Control and to which Section 280G of the Code applies.
5.3 Duties. During the Employment Period, the Executive shall, in the same
capacities and positions held by the Executive at the time of such Change of
Control or in such other capacities and positions as may be agreed to by the
Company and the Executive in writing, devote the Executive's best efforts,
attention and skill to the business and affairs of the Company, as such business
and affairs now exist and as they may hereafter be conducted. The services which
are to be performed by the Executive hereunder are to be rendered at an
employment location which is not more than twenty-five (25) miles from the
Executive's employment location on the date of the Change of Control, or in such
other place or places as shall be mutually agreed upon in writing by the
Executive and the Company from time to time. The Executive shall not be required
to be absent from such employment location for more than forty-five (45)
consecutive days in any fiscal year without the Executive's consent.
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5.4 Compensation and Benefits. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at such intervals and in accordance with
such standard policies as may be in effect on the date of the Change of Control,
an annual salary not less than the Executive's annual salary as in effect as of
the date of the Change of Control, subject to adjustment as provided in Section
3.1(b);
(b) The Executive shall be reimbursed, at such intervals and in accordance
with such standard policies as may be in effect on the date of the Change of
Control, for any and all monies advanced in connection with the Executive's
employment for reasonable and necessary expenses incurred by the Executive on
behalf of the Company, including travel expenses;
(c) The Executive shall be included to the extent eligible thereunder in
any and all plans providing general benefits for the Company's employees,
including but not limited to, group life insurance, hospitalization, disability,
medical, dental, pension, profit sharing, savings and stock bonus plans and be
provided any and all other benefits and perquisites made available to other
employees of comparable status and position, on the same terms and conditions as
generally provided to employees of comparable status and position;
(d) The Executive shall receive annually not less than the amount of paid
vacation and not fewer than the number of paid holidays received annually
immediately prior to the Change of Control or such greater amount of paid
vacation and number of paid holidays as may be made available annually to other
employees of comparable status and position with the Company; and
(e) The Executive shall be included in all plans providing special benefits
to corporate officers, including but not limited to bonus, deferred
compensation, incentive compensation, supplemental pension, stock option, stock
appreciation, stock bonus and similar or comparable plans extended by the
Company from time to time to senior corporate officers, key employees and other
employees of comparable status, including a reasonable car allowance.
5.5 Death. If the Executive shall die during the Employment Period, but
after delivery of a Notice of Termination by the Company for reasons other than
Cause or Disability or by the Executive for Good Reason, the Executive's
employment shall terminate on his date of death and the Executive's estate,
heirs and beneficiaries shall be entitled to the Executive's Accrued Benefits as
of the Termination Date, and, subject to the provisions of this Agreement, to
such Termination Payment as the Executive would have been entitled to had the
Executive survived. All benefits payable on account of the Executive's
employment or death under the Company's employee benefits plans, programs or
arrangements shall be paid or distributed in accordance with the terms of such
plans, programs or arrangements. The Executive's death following delivery of the
Notice of Termination shall not affect his or her Termination
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Date which shall be determined without regard to the Executive's death, subject
to the provisions of Section 5.10.
If the Executive shall die during the Employment Period, but prior to the
delivery of a Notice of Termination, the Executive's employment shall terminate
and the Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date and all benefits
available to them under the Company's benefit plans as in effect on the
Termination Date on account of the Executive's death.
5.6 Retirement. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the voluntary retirement of the
Executive from the Company, the Executive shall receive only his Accrued
Benefits through the Termination Date.
5.7 Termination for Disability. If the Executive has been absent from his
or her duties hereunder on a full-time basis for five (5) consecutive months
during the Employment Period on account of a Disability, the Company may provide
a Notice of Termination, which satisfies the requirements of Section 5.11, and
the Executive's employment shall, for purposes of this Agreement, terminate
sixty (60) days thereafter, unless the Executive returns to the performance of
his or her duties on a full-time basis prior to the end of the sixty (60) day
period. During the term of the Executive's Disability prior to his or her
Termination Date, the Executive shall continue to participate in all
compensation and benefit plans, programs and arrangements in which the Executive
was entitled to participate immediately prior to his or her Disability in
accordance with the terms and provisions of such plans, programs and
arrangements. If the Executive's employment is terminated on account of the
Executive's Disability, the Executive shall receive his or her Accrued Benefits,
provided that the Executive's termination for purposes of this Agreement under
this Section 5.7 shall not affect his or her entitlement to benefits on account
of his or her Disability under any long-term disability programs of the Company
in effect at the time of such termination and in which the Executive
participated immediately prior to his or her Disability.
5.8 Termination Not Giving Rise to a Termination Payment. If, during the
Employment Period, the Executive's employment is terminated for Cause, or if the
Executive voluntarily terminates his employment other than for Good Reason,
subject to the procedures set forth in Section 5.11, the Executive shall be
entitled to receive only his Accrued Benefits.
5.9 Termination Giving Rise to a Termination Payment. If, during the
Employment Period, the Executive's employment is terminated by the Executive for
Good Reason or by the Company other than by reason of death or Disability
pursuant to Section 5.7 or for Cause, subject to the procedures set forth in
Section 5.11,
(a) the Executive shall be entitled to receive, and the Company shall pay,
the Executive's Accrued Benefits and, in lieu of further salary payments for
periods following the Termination Date, as severance pay, a Termination Payment;
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(b) the Executive and his eligible dependents shall continue to be covered
for two (2) years, under the same terms and conditions, by the medical plan,
dental plan and/or group life insurance plan maintained by the Company which
covered that Executive and his eligible dependents prior to the Executive's
Termination Date. Notwithstanding the foregoing, if the Company's medical plan,
dental plan and/or group life insurance plan covering the Executive on his or
her Termination Date was amended, replaced or terminated on or after the Change
of Control and such action would constitute Good Reason within the meaning of
Section 5.2(k), the Executive and his or her eligible dependents shall be
entitled to continued coverage for purposes of this Section 5.9(b) under the
terms of the medical plan, dental plan and/or group life insurance plan which
they participated in immediately prior to the Change of Control. If the affected
plan is no longer available, the Company shall make arrangements to provide
equivalent coverage to the Executive and his or her eligible dependents. For
this purpose, "equivalent coverage" shall mean medical, dental and/or life
insurance coverage, which, when added to the coverage provided to the Executive
and his or her eligible dependents under the Company's medical plan, dental plan
and/or group life insurance plan in effect on the Executive's Termination Date,
equals or exceeds the level of benefits provided under the medical plan, dental
plan and/or group life insurance plan to the Executive and his or her eligible
dependents on the day immediately preceding the Change of Control. The Executive
and the Company shall share the cost of the continued coverage under this
Section 5.9(b) in the same proportions as the Company and similarly situated
active employees shared the cost of such coverage on the day preceding the
Executive's Termination Date. For purposes of satisfying the Company's or
Employer's obligation under the Consolidated Omnibus Budget Reconciliation Act
("COBRA") to continue group health care coverage to the Executive and his
eligible dependents as a result of the Executive's termination of employment,
the period during which the Executive is permitted to continue to participate in
the Company's medical plans and/or dental plans under this Section 5.9(b) shall
not be taken into account and treated as part of the period during which the
Executive and his eligible dependents are entitled to continued coverage under
the Company's group health plans under COBRA. Following the end of the
continuation period specified in this Section 5.9(b), the Executive and his
eligible dependents shall be covered under such plans and arrangements only as
required under the provisions of COBRA;
(c) any stock options owned by or granted to the Executive shall be deemed
immediately vested, not forfeitable, and shall be the property of the Executive,
exercisable according to their terms for the balance of the term of years of
such options; and
(d) "out-placement" services in an amount not to exceed Fifty Thousand
Dollars ($50,000) will be provided by the Company to the Executive for a period
beginning on the Executive's Termination Date. Such services shall be provided
for a period beginning on the Executive's Termination Date and ending on the
earlier of the date on which the Executive becomes employed in a position
commensurate with his or her current salary and responsibilities or the last day
of the twelve (12) month
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period which began on the Executive's Termination Date. The "out-placement"
services shall be provided by an out-placement company selected by the Company.
5.10 Additional Change of Control Payments. In the event of a Change of
Control not approved or endorsed in a resolution by the Incumbent Board, unless
and until the Company adopts and implements an anti-takeover rights plan
approved by a majority of the Incumbent Board, in addition to the compensation
set forth above in Section 5.9:
(a) all unexercised stock purchase options in the name of the Executive on
the effective date of the Change of Control shall be be deemed fully exercisable
and shall be exercised and paid for by the Company, or the Company's successor
in interest, on behalf of the Executive and the total number of shares of Common
Stock represented by the total number of options shall be fully paid,
nonassessable, and validly issued to the Executive, without payment of monetary
consideration by the Executive. Alternatively, the Executive may elect in lieu
of the receipt of shares, to relinquish his options with respect to all or any
of such shares and receive a payment equal to the price paid for common share in
such merger, tender offer, or similar transaction multiplied by the number of
common shares the Executive could have purchased with the options;
(b) in connection with the Executive's receipt of the foregoing option
shares or consideration, the Company will pay full tax assistance to keep the
Executive whole due to this immediate income, including payment of all relevant
employment taxes, income taxes, capital gains taxes, and alternative minimum
income taxes, grossed up by an amount necessary to pay all such taxes on the
amounts paid under this subparagraph (b); and
(c) in the event of a Change of Control of the Company by the exchange of
securities or issuance of stock in a merger or otherwise, the Company and its
successor in interest shall extend to the Executive the opportunity to sell or
exchange the option shares issued under provisions (a) and (b) above in a manner
and at a time that will allow the Executive to benefit, at his election, from
the exchange or issuance of stock in the merger, exchange, or other transaction.
5.11 Termination Notice and Procedure. Any termination by the Company or
the Executive of the Executive's employment during the Employment Period shall
be communicated by written Notice of Termination to the Executive if such notice
is delivered by the Company and to the Company if such notice is delivered by
the Executive, all in accordance with the following procedures:
(a) The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances alleged to provide a basis for termination.
(b) Any Notice of Termination by the Company shall be approved by a
resolution duly adopted by a majority of the directors of the Company then in
office.
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(c) If the Company shall give a Notice of Termination for Cause or by
reason of Disability and the Executive in good faith notifies the Company that a
dispute exists concerning such termination within the fifteen (15) day period
following the Executive's receipt of such notice, the Executive may elect to
continue his or her employment during such dispute. If it is thereafter
determined that (i) the reason given by the Company for termination did exist,
the Executive's Termination Date shall be the earlier of (A) the date on which
the dispute is finally determined, either by mutual written agreement of the
parties or pursuant to Section 6.1, (B) the date of the Company's Notice of
Termination for Cause, (C) the date of the Executive's death, or (D) one day
prior to the end of the Employment Period, and the Executive shall not be
entitled to a Termination Payment based on events occurring after the Company
delivered its Notice of Termination; or (ii) the reason given by the Company for
termination did not exist, the employment of the Executive shall continue as if
the Company had not delivered its Notice of Termination and there shall be no
Termination Date arising out of such notice.
(d) If the Executive shall in good faith give a Notice of Termination for
Good Reason and the Company notifies the Executive that a dispute exists
concerning the termination within the fifteen (15) day period following the
Company's receipt of such notice, the Executive may elect to continue his or her
employment during such dispute. If it is thereafter determined that (i) Good
Reason did exist, the Executive's Termination Date shall be the earlier of (A)
the date on which the dispute is finally determined, either by mutual written
agreement of the parties or pursuant to Section 6.1, (B) the date of the
Executive's death, or (C) one day prior to the end of the Employment Period, and
the Executive's Termination Payment shall reflect events occurring after the
Executive delivered his Notice of Termination; or (ii) Good Reason did not
exist, the employment of the Executive shall continue after such determination
as if the Executive had not delivered the Notice of Termination asserting Good
Reason.
(e) If the Executive does not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination under Sections 5.10(c)
and (d), and it is finally determined that the reason for termination set forth
in such Notice of Termination did not exist, if such notice was delivered by the
Executive, the Executive will be deemed to have voluntarily terminated his
employment and if delivered by the Company, the Company will be deemed to have
terminated the Executive other than by reason of death, Disability or Cause.
(f) If the opinion required to be delivered pursuant to Section 5.12(c)
shall not have been delivered on or before the date that would otherwise
constitute the Termination Date, the Termination Date shall be delayed to the
earlier of the date on which such opinion is delivered or one (1) day prior to
the end of the Employment Period.
5.12 Payment of Termination Benefits.
(a) Payment of Accrued Benefits shall be made promptly in accordance with
the Company's prevailing practice and the terms of any applicable benefit plans,
contracts or arrangements.
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(b) The Termination Payment shall be payable in a lump sum on the
Executive's Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor. The Executive shall not be required to mitigate
the amount of such payment by securing other employment or otherwise and such
payment shall not be reduced by reason of the Executive securing other
employment or for any other reason.
(c) It is the intention of the Company and the Executive that no portion of
the Termination Payment and any other payment under this Agreement, or payments
to or for the benefit of the Executive under any other agreement, plan or
arrangement be deemed to be an "excess parachute payment" as defined in Section
280G of the Code. It is agreed that the present value of the Total Payments
shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times
the Executive's Base Period Income, which is the maximum amount which the
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code or which the Company may pay without loss of deduction under
Section 280G(a) of the Code. Present value for purposes of this Agreement shall
be calculated in accordance with the regulations issued under Section 280G of
the Code. Within sixty (60) days following delivery of the Notice of Termination
or notice by the Company to the Executive of its belief that there is a payment
or benefit due the Executive which will result in an excess parachute payment as
defined in Section 280G of the Code, the Executive and the Company shall, at the
Company's expense, obtain the opinions, which need not be unqualified, of legal
counsel and certified public accountants or a firm of recognized executive
compensation consultants. The Executive shall select said legal counsel,
certified public accountants and executive compensation consultants; provided
that if the Company does not accept one (1) or more of the parties selected by
the Executive, the Company shall provide the Executive with the names of such
legal counsel, certified public accountants and/or executive compensation
consultants as the Company may select; if the Executive does not accept the
party or parties selected by the Company, the legal counsel, certified public
accountants and/or executive compensation consultants selected by the Executive
and the Company, respectively, shall select the legal counsel, certified public
accountants and/or executive compensation consultants, whichever is applicable,
who shall provide the opinions required by this Section 5.12(c). The opinions
required hereunder shall set forth (i) the amount of the Base Period Income of
the Executive, (ii) the present value of Total Payments and (iii) the amount and
present value of any excess parachute payments. In the event that such opinions
determine that there would be an excess parachute payment, the Termination
Payment or any other payment determined by such counsel to be includible in
Total Payments shall be reduced or eliminated as specified by the Executive in
writing delivered to the Company within thirty (30) days of his receipt of such
opinions or, if the Executive fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculation set
forth in such opinions there will be no excess parachute payment. The provisions
of this Section 5.12(c), including the calculations, notices and opinions
provided for herein shall be based upon the conclusive presumption that the
compensation and benefits provided for in Section 5.4 hereof and any other
compensation, including but not limited to the Accrued Benefits, earned on or
after the date of Change of Control by the Executive pursuant to the Company's
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compensation programs if such payments would have been made in the future in any
event, even though the timing of such payment is triggered by the Change of
Control, are reasonable compensation for services rendered prior to the Change
of Control; provided, however, that in the event legal counsel so requests in
connection with the opinion required by this Section 5.12(c), a firm of
recognized executive compensation consultants, selected by the Executive and the
Company pursuant to the procedures set forth above, shall provide an opinion,
upon which such legal counsel may rely, as to the reasonableness of any item of
compensation as reasonable compensation for services rendered prior to the
Change of Control by the Executive. In the event that the provisions of Sections
280G and 4999 of the Code are repealed without succession, this Section 5.12(c)
shall be of no further force or effect.
Notwithstanding anything to the contrary in this Section 5.12(c),
additional change of control payments made under Section 5.10 shall not be
subject to the limitations described herein. If, as a result of these Code
provisions, the Executive is required to pay excise tax by virtue of inclusion
of additional change of control payments under Section 5.10, then upon written
notice from the Executive to the Company, the Company shall pay the Executive an
amount equal to the total excise tax imposed on the Executive (including the
excise taxes on any excise tax reimbursements due pursuant to this sentence and
the excise taxes on any income tax reimbursements due pursuant to the next
sentence). If the Company is obligated to pay taxes for the Executive pursuant
to the preceding sentence, the Company also shall pay the Executive an amount
equal to the "total presumed federal and state taxes" that could be imposed on
the Executive with respect to the excise tax reimbursements due to the Executive
pursuant to the preceding sentence and the income tax reimbursements due to the
Executive pursuant to this sentence. For purposes of the preceding sentence, the
"total presumed federal and state taxes" that could be imposed on the Executive
shall be conclusively calculated using a combined tax rate equal to the sum of
the then prevailing maximum marginal federal and state income tax rates. No
adjustments will be made in this combined rate for the deduction of state taxes
on the federal return, the loss of itemized deductions or exemptions, or for any
other purpose. The Executive shall be responsible for paying the actual taxes.
The amounts payable to the Executive pursuant to this or any other agreement or
arrangement with Company shall not be limited in any way by the amount that may
be paid pursuant to the Code without the imposition of an excise tax or the loss
of Company deductions.
5.13 Obligations of the Executive.
(a) The Executive agrees that if, during the Employment Period, the
Executive's employment is terminated in a manner entitling the Executive to a
Termination Payment or the Executive has voluntarily terminated his employment,
the Executive shall not, for a period commencing on the Termination Date and
ending after one (1) year, (i) act in a similar capacity for any safety
technology company which competes to a substantial degree with the Company in
the aerospace and defense or automotive safety industries; or (ii) engage in any
activity involving substantial competition with the Company in the aerospace and
defense or automotive safety industries without the prior written approval of
the Company's President; provided,
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however, that nothing in this Section 5.13(a) shall prohibit the Executive from
owning stock or other securities of a competitor amounting to less than five
percent (5%) of the stated capital of such competitor.
(b) The Executive covenants and agrees, during the Executive's employment
by the Company and following his Termination Date, to hold in strict confidence
any and all proprietary information in the Executive's possession as a result of
the Executive's employment with the Company, including financial, legal,
marketing, technical and business information, contract and proposal
information, financial statements, and competition related information, but
excluding information that is generally available to the public or that
otherwise does not constitute proprietary information of the Company.
SECTION SIX
6.1 Enforcement.
(a) All claims, disputes and other matters in question between the parties
arising under this Agreement, other than Section 5.12, shall be decided by
arbitration in accordance with the commercial rules of the American Arbitration
Association, unless the parties mutually agree otherwise. Any arbitration shall
be held in Phoenix, Arizona, unless the parties mutually agree otherwise. The
Company shall pay the costs of any such arbitration. The award by the arbitrator
shall be final, and judgment may be entered upon it in accordance with
applicable law in any state or Federal court having jurisdiction thereof.
(b) If, after a Change of Control a good faith dispute arises with respect
to the enforcement of the Executive's rights under this Agreement or if any
arbitration or legal proceeding shall be brought in good faith to enforce or
interpret any provision contained herein, or to recover damages for breach
hereof and the Executive is the prevailing party, the Executive shall recover
from the Company any reasonable attorney's fees and necessary costs and
disbursements incurred as a result of such dispute or legal proceeding, and
prejudgment interest on any money judgment obtained by the Executive calculated
at the rate of interest announced by Bank One Trust Company, N. A. (or any
successor thereto) from time to time as its prime rate from the date that
payments to the Executive should have been made under this Agreement.
6.2 Payment Obligations Absolute. The Company's obligation during and after
the Employment Period to insure that the compensation and arrangements provided
herein are provided to the Executive shall be absolute and unconditional and
shall not be affected by any circumstances, provided that the Company may apply
amounts payable under this Agreement to any loan or other debts then owed to the
Company or an Affiliate by the Executive, the terms of which are reflected in a
written document signed by the Executive. The amounts payable under this
Agreement shall be in lieu of any amounts payable to the Executive under a
separate severance plan, agreement or arrangement established by the Company.
All amounts payable by the Company under this Agreement shall be paid without
notice or demand. Each and
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every payment made under this Agreement by the Company shall be final.
Notwithstanding the foregoing, in the event that the Company has paid an
Executive more than the amount to which the Executive is entitled under this
Agreement, the Company shall have the right to recover all or any part of such
overpayment from the Executive or from whomsoever has received such amount.
6.3 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, then only the portions of this Agreement which violate such
statute or public policy shall be stricken. All portions of this Agreement which
do not violate any statute or public policy shall continue in full force and
effect. Further, any court order striking any portion of this Agreement shall
modify the stricken terms as narrowly as possible to give as much effect as
possible to the intentions of the parties under this Agreement.
6.4 Governing Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance, or otherwise, by
the laws of the State of Arizona, and no action involving this Agreement may be
brought except in the Superior Court for the State of Arizona or the Federal
District Court for the District of Arizona, subject to Section 6.1.
SECTION SEVEN
7.1 Amendment or Termination.
(a) This Agreement sets forth the entire agreement between the Executive
and the Company with respect to the subject matter hereof, and supersedes all
prior oral or written negotiations, commitments, understandings and writings
with respect thereto. This Agreement may not be terminated, amended or modified
during its term as specified above except by written instrument executed by the
Company and the Executive.
(b) Upon the proper termination of this Agreement by the Company for any
reason whatsoever, or upon the termination of this Agreement by the Executive,
this Agreement shall thereupon be and become void and of no further force or
effect, except that the arbitration provisions of Section 6.1 shall continue to
govern any disputes arising hereunder. Any payments due pursuant to the terms of
this Agreement for services rendered prior to the termination shall be made as
provided in this Agreement.
(c) The provisions of SECTION FIVE of this Agreement shall be effective
until October 13, 2003, and shall continue for additional two (2) year periods
thereafter, unless the Company notifies the Executive in writing one (1) year
prior to October 13, 2003 (or the second anniversary of that date, or the date
of notification of termination, in the event the Agreement continues beyond that
date pursuant to the provisions of this Section 7.1(c)) that it does not intend
to continue those provisions of the Agreement. Notwithstanding the foregoing,
(i) if a Change of Control has occurred on or before the date on which the
Agreement would be terminated by the Company in
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accordance with this Section 7.1, the Agreement shall not terminate with respect
to that Change of Control until the end of the Employment Period, and (ii) this
Agreement shall terminate if, prior to a Change in Control, the Executive ceases
to be employed by the Employer as a corporate officer.
SECTION EIGHT
8.1 Assignment and Successors.
(a) Except as otherwise provided in this Section 8.1, this Agreement is
personal in its nature and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder.
(b) If all or substantially all of the Company's business and assets are
sold, assigned or transferred to any Person, or if the Company merges into or
consolidates or otherwise combines with any Person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the Person which is
either the acquiring or successor corporation, and such Person shall assume and
perform from and after the date of such assignment the terms, conditions and
provisions imposed by this Agreement upon the Company. Failure of the Company to
obtain such assignment shall be a breach of this Agreement. In case of such
assignment by the Company and of assumption and agreement by such Person, all
further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such Person(s).
(c) This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estate, executors, administrators, heirs and beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's estate. This Agreement shall
inure to the benefit of, be binding upon and be enforceable by, any successor,
surviving or resulting corporation or other entity to which all or substantially
all of the Company's business and assets shall be transferred whether by merger,
consolidation, transfer or sale. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.
SECTION NINE
9.1 Notice. Notices given pursuant to this Agreement shall be in writing
and (a) if hand delivered, shall be deemed given when delivered, and (b) if
mailed, shall be deemed delivered when placed in the United States mail, postage
prepaid, addressed,
If to the Executive, to:
Xxxxxx X. Xxxxxxx
0000 X. Xxxxxxx Xxx.
00
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
If to the Company, to:
President
Simula, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
or to such other addresses as the parties may provide written notice of to each
other, from time to time, in accordance with this Section 9.1
SECTION TEN
10.1 Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of, or failure to
insist upon strict compliance with, any right or power hereunder at any one or
more times be deemed a waiver or relinquishment of such right or power at any
other time or times.
10.2 Withholding. The Company shall be entitled to withhold from amounts to
be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. The Company shall be entitled to rely on an opinion of counsel if any
question as to the amount or requirement of any such withholding shall arise.
10.3 Funding. Amounts payable under this Agreement shall constitute an
unfunded general obligation of the Company payable from its general assets, and
the Company shall not be required to establish any special fund or trust for
purposes of paying benefits under this Agreement. The Executive shall not have
any vested right to any particular assets of the Company as a result of
execution of this Agreement and shall be a general creditor of the Company.
10.4 Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Executive has executed this Agreement as of
the date and year first above written.
SIMULA, INC.
By /s/ Xxxx Xxxxx
----------------------------
Its President and CEO
----------------------------
ATTEST:
By /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Its General Counsel & Secretary
----------------------------------
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Executive
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