EXHIBIT 99.1
July 31, 2001
X. X. Xxxxxxx Xxxx, III
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Xxxxxx:
This letter will evidence our agreement to amend your employment letter
agreement with Allied Research Corporation (the "Company") dated as of November
27, 2000 (the "original letter").
The fourth sentence of Section 4 of the original letter is deleted in its
entirety and the following is substituted in lieu thereof:
"The bonus will be payable within ten (10) days of the public
release by the Company of its financial results for the
relevant calendar year."
The first two (2) sentences of Section 7 of the original letter are deleted
in their entirety and the following is substituted in lieu thereof:
"Your employment may be terminated at any time by you or by
the Company with or without Cause without prior written
notice. This at-will employment relationship cannot be
changed except in a writing signed by the Chairman of the
Compensation Committee."
The provisions of Section 8 of the original letter are deleted in their
entirety and the following is substituted in lieu thereof:
"8. PAYMENTS UPON TERMINATION OF EMPLOYMENT
The payments you will be entitled to receive from the Company
upon termination of your employment will be as follows:
(a) If you terminate your employment or if the Company
terminates your employment with or without Cause, the Company
will pay you any accrued and unpaid compensation
(subject to normal withholding and other deductions) to the
effective date of termination of your employment.
(b) In addition, you may be entitled to additional payments
under paragraphs 8(c) or 8(d) below.
(c) If your employment with the Company is terminated by the
Company within twelve (12) months following a Change in
Control or if you terminate your employment with the Company
within twelve (12) months following a Change in Control:
(A) you will be entitled to aggregate severance
payments equal to the sum of (x) three (3) times your
salary immediately prior to the termination (whether
paid or deferred) and (y) three (3) times the average
annual bonus earned by you (whether paid or deferred)
for the three most recent annual periods or such shorter
period if the termination occurs before you have served
for three annual periods (for the purpose of this
paragraph 8 (c)(A)(y), you are deemed to have earned
your full fifty percent (50%) bonus for 2001); and
(B) you will be entitled to receive medical, dental,
vision, long-term care, life and disability insurance
coverage and your SEP entitlement for three (3) years
following the termination at levels comparable to that
provided immediately prior to your termination (all at
the cost of the Company except for any contributions
paid by you prior to the termination).
(d) If your employment with the Company is terminated by the
Company without Cause or if you terminate your employment
with the Company following (i) a material adverse alteration
or diminution in the nature or status of your authority,
duties or responsibilities from those in effect immediately
prior to such change, (ii) a reduction in your title of
Chairman of the Board, President and Chief Executive Officer
or (iii) a reduction in your base salary:
(A) you will be entitled to aggregate severance
payments equal to the sum of (x) the Tenure Period (as
herein defined) times your salary immediately prior to
the termination (whether paid or deferred) and (y) the
Tenure Period times the average annual bonus earned
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by you (whether paid or deferred) for the three most
recent annual periods or such shorter period if the
termination occurs before you have served for three
annual periods (for the purpose of this paragraph 8
(d)(A)(y), you are deemed to have earned your full fifty
percent (50%) bonus for 2001); and
(B) you will be entitled to receive medical, dental,
vision, long-term care, life and disability insurance
coverage and your SEP entitlement for the Tenure Period
following the termination at levels comparable to that
provided immediately prior to your termination (all at
the cost of the Company except for any contributions
paid by you prior to the termination).
(e) For purposes of paragraph (d) above, the term "Tenure
Period" shall mean: (i) one (1) year, if your employment
terminates on or prior to December 31, 2001; (ii) two (2)
years, if your employment terminates after December 31, 2001
and on or prior to December 31, 2002; and (iii) three (3)
years, if your employment terminates after December 31, 2002.
(f) The aggregate severance payments set forth in paragraphs
8(c)(A) or 8(d) (A) above shall be payable within thirty (30)
days following the date of the termination.
(g) If either the Company or you receives confirmation from
the Company's independent counsel or its certified public
accounting firm (the "Tax Advisor"), that any payment by the
Company to you would be considered to be an "excess parachute
payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, or any successor statute
then in effect (the "Code"), then the aggregate payments by
the Company shall be reduced to the highest amount that may
be paid to you by the Company without having any portion of
any amount payable treated as such an "excess parachute
payment", and, if permitted by applicable law and without
adverse tax consequence, such reduction shall be made to the
last payment due hereunder.
(h) You shall not be obligated to seek other employment or
take any other action by way of mitigation of the amounts
payable to you under any provisions of this letter agreement.
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(i) For purposes hereof, the term "Change of Control" means
(A) the acquisition (other than by the Company) by any
person, entity or "group" within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") (excluding, for this purpose, the
Company or its subsidiaries or any employee benefit plan
of the Company or its subsidiaries which acquires
beneficial ownership of voting securities of the
Company) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act), of 50%
or more of either the then outstanding shares of common
stock or the combined voting power of the Company's then
outstanding capital stock entitled to vote generally in
the election of directors; or
(B) individuals who, as of the date hereof, constitute
the Board (as of the date hereof 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 date hereof 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 shall be considered as though such person were a
member of the Incumbent Board; or
(C) approval by the shareholders of the Company of (x)
a reorganization, merger, consolidation or share
exchange, in each case, with respect to which persons
who were the shareholders of the Company immediately
prior to such reorganization, merger, consolidation or
share exchange do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote
generally in the election of directors of the
reorganized, merged, consolidated or other surviving
company's then outstanding voting securities, (y) a
liquidation or dissolution of the Company or (iii) the
sale of all or substantially all of the assets of the
Company."
The first sentence of Section 9 of the original letter is deleted in its
entirety and the following is substituted in lieu thereof:
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"For a one (1) year period from and after termination of your
employment for any reason (except if such termination occurs
within twelve (12) months following a Change of Control), you
shall not engage, directly or indirectly, either on your own
behalf or on behalf of any other person, firm, corporation or
other entity, in any business competitive with any business
of the Company (or any of its subsidiaries), in the
geographic area or areas in which Company (or any of its
subsidiaries) is conducting business at the time of
termination of your employment, or own more than 5% of any
such firm, corporation or other entity."
In all other respects, the provisions of the original letter are ratified
and confirmed as of the date hereof.
Sincerely,
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx,
Chairman of Compensation Committee of
Allied Research Corporation
ACCEPTANCE
I accept the foregoing amendment to my employment letter agreement with Allied
Research Corporation under the terms set forth herein:
/s/ X. X. Xxxxxxx Xxxx, III
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X. X. Xxxxxxx Xxxx, III
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