EMPLOYMENT AGREEMENT
Exhibit
10.1
D3
Technologies Inc., a California corporation ("Corporation"), a
wholly owned subsidiary of LMI AEROSPACE, INC. (“Parent”), a
Missouri corporation, and Xxxx X. Xxxxx ("Employee") hereby
agree as follows
1. Employment. The
Corporation hereby employs Employee, and Employee accepts employment from the
Corporation, upon the terms and conditions hereinafter set forth. Any
and all employment agreements heretofore entered into between the Corporation
and Employee are hereby terminated and cancelled, and each of the parties hereto
mutually releases and discharges the other from any and all obligations and
liabilities heretofore or now existing under or by virtue of any such employment
agreements, it being the intention of the parties hereto that this Agreement,
effective immediately, shall supersede and be in lieu of any and all prior
employment agreements between them.
2. Term
of Employment.
(A) The
initial term of Employee's employment under this Agreement shall commence on
July 31, 2007 and shall terminate on December 31, 2010; provided, however,
that
this Agreement shall be automatically extended for additional terms of one
year
each unless not later than October 31 of any year beginning in 2010, either
party has given written notice to the other party of its or his intention not
to
extend the term of this Agreement; and provided, further, that the term of
employment may be terminated upon the earlier occurrence of any of the following
events:
(1) Upon
the termination of the business or corporate existence of the
Corporation;
(2) At
the Corporation’s option, in the event the Corporation determines that Employee
is not performing the duties required of him hereunder to the satisfaction
of
the Corporation;
(3) Upon
the death of the Employee;
(4) At
the Corporation's option, if Employee shall suffer a permanent disability;
(For
the purposes of this Agreement, "permanent disability" means any physical or
mental impairment that renders the Employee unable for a period of six (6)
months or more to perform the essential job functions of his position, even
with
reasonable accommodation, as determined by a physician selected by the
Corporation. The Employee acknowledges and agrees that he shall
voluntarily submit to a medical or psychological examination for the purpose
of
determining his continued fitness to perform the essential functions of his
position whenever requested to do so by the Corporation. If the
Corporation elects to terminate the employment relationship on this basis,
the
Corporation shall notify the Employee or his representative in writing and
the
termination shall become effective on the date that such notification is
given;
(5) At
the Corporation's option, upon ten (10) calendar days’ written notice to
Employee, in the event of any breach or default by Employee of any of the terms
of this Agreement or of any of Employee's duties or obligations
hereunder. In lieu of providing ten (10) calendar days’ advance
written notice, the Corporation, at its sole option, may terminate the
Employee’s services immediately and pay him an amount that is equivalent to ten
(10) calendar days of his salary, less any deductions required by
law;
(6) At
the Corporation’s option, without any advance notice, in the event that the
Employee engages in conduct which, in the opinion of the Corporation, (1)
constitutes dishonesty of any kind (including, but not limited to, any
misrepresentation of facts or falsification of records) in Employee’s relations,
interactions or dealings with the Corporation or its customers; (2) constitutes
a felony; (3) potentially may or will expose the Corporation to public disrepute
or disgrace, or potentially may or will cause harm to the customer relations,
operations or business prospects of the Corporation; (4) constitutes harassment
or discrimination towards any person associated with the Corporation, whether
an
employee, agent or customer, based upon that person’s race, color, national
origin, sex, age, disability, religion, or other protected status; (5) reflects
disruptive or disorderly conduct, including but not limited to, acts of
violence, fighting, intimidation or threats of violence against any person
associated with the Corporation, whether an employee, agent or customer, or
possessing a weapon while on the Corporation’s premises or while acting on
behalf of the Corporation; (6) is indicative of abusive or illegal drug use
while on the Corporation’s premises or while acting on the Corporation’s behalf;
or (7) constitutes a willful violation of any governmental rules or regulations;
or
(7) At
the Employee’s option, after providing the Corporation with at least thirty (30)
calendar days advance written notice of his intention to terminate the
employment relationship.
If
employment is terminated for any of the reasons set forth in subparagraphs
(3)
through (7) of this section 2(A), Employee shall be entitled to receive only
the
Base Salary (as that term is hereinafter defined) accrued but unpaid as of
the
date of the termination and shall be ineligible to receive any additional
compensation or severance pay. If, on the other hand, employment is
terminated by the Corporation during the term of this Agreement for any reason
other than those set forth in paragraphs (3) through (7) of this section 2(A),
subject to the conditions set forth in paragraphs 2(C) and (D) of this
Agreement, the Corporation shall provide severance pay to Employee in an amount
based upon his length of service with the Corporation. Specifically,
the Corporation shall provide Employee with six (6) months of Base Salary if
he
has less than five (5) years of service with the Corporation as of the date
of
his termination and with twelve (12) months of Base Salary if he has five (5)
or
more years of service with the Corporation as of the date of his
termination. Such severance pay shall be paid in equal monthly
installments, unless the Corporation, within its sole discretion, elects to
pay
the present value of the severance pay in a lump sum within thirty (30) calendar
days of the termination.
(B) If
employment is terminated in conjunction with a change in the control of the
Corporation or the Parent or in conjunction with the sale of substantially
all
of the operating assets of the Corporation or the Parent, the Corporation will
provide Employee with severance pay under the circumstances specified in
subparagraphs (1) and (2) of this paragraph (B), and the conditions set forth
in
paragraphs 2(C) and (D) of this Agreement. For the purposes of this
Agreement, a “change in control” is defined as the sale of substantially all of
the operating assets of the Corporation or the Parent or the acquisition of
more
than fifty percent (50%) of the stock of the Corporation or the Parent by a
group of shareholders or an entity which acquires control of the Corporation
or
the Parent (a “Purchaser”).
(1) If
the change in control or the sale results in the involuntary termination of
Employee or results in the Employee electing to terminate his employment for
Good Reason (as defined in paragraph 2(E)(2)), the Corporation shall provide
Employee with severance pay in an amount that is equal to two times his annual
Base Salary and shall pay Employee any reasonably anticipated Performance Bonus
for the fiscal year in which he was terminated on a prorated basis.
(2) If
Employee voluntarily terminates his employment without Good Reason (as defined
in paragraph 2(E)) within ninety (90) days after the change in control or the
sale, the Corporation shall provide Employee with six (6) months of Base Salary
if he has less than five (5) years of service with the Corporation as of the
date of his termination and with twelve (12) months of Base Salary if he has
five (5) or more years of service with the Corporation as of the date of his
termination.
(3) For
purposes of this paragraph 2(B), in the event a change of control occurs after
April 1, 2010, Employee may take up to nine (9) months from the date of change
of control to claim severance pay, as provided in paragraph 2(B)(1) and
(2).
(C) The
severance pay provided for in section 2(A) of this Agreement shall be paid
in
equal monthly installments, unless the Corporation, within its sole discretion,
elects to pay the present value of the severance pay in a lump sum within thirty
(30) calendar days of the termination. For purposes of calculating
the present value of the severance pay, the discount rate shall be the prime
rate quoted in the Wall Street Journal on the day the Corporation elects to
pay
the present value of the severance pay in a lump sum.
(D) Notwithstanding
anything to the contrary, (i) the amount of severance pay provided under this
Agreement shall not under any circumstances exceed the limitations set forth
in
§ 280G of the Code, and (ii) the Corporation’s obligation to pay the severance
pay provided for in this section 2 shall be conditioned on Employee’s execution
of a written release satisfactory to the Corporation.
(E) For
the purposes of paragraph 2(B), “Good Reason” shall mean the occurrence of any
of the following events: (1) a significant reduction of Employee’s
duties, authority or responsibilities relative to Employee’s duties, authority
or responsibilities as in effect immediately prior to such reduction; (2) the
Purchaser requiring Employee to relocate his primary work office to a facility
or location more than fifty (50) miles from Employee’s then-present location; or
(3) the Purchaser refusing to offer full time employment to Employee on terms
comparable to those provided by the Corporation prior to the
acquisition.
3. Compensation.
(A) During
the period from July 31, 2007 to December 31, 2007, the Corporation shall
compensate Employee for Employee's services rendered hereunder by paying to
Employee a monthly salary (the "Monthly Base Salary") of Fourteen Thousand,
Five
Hundred Eighty-Three Dollars and Thirty-Three Cents ($14,583.33), less any
authorized or required payroll deductions. During the period from
January 1, 2008 to December 31, 2008, the Employee’s annual salary (the “Base
Salary”) shall be One Hundred Eighty-One Thousand, One Hundred and Twenty-five
Dollars ($181,125.00), less any authorized or required payroll
deductions. During the period from January 1, 2009 to December 31,
2009, the Employee’s Base Salary shall be One Hundred Eighty-Seven Thousand,
Four Hundred and Sixty-Four Dollars ($187,464), less any authorized or required
payroll deductions. During the period from January 1, 2010 to
December 31, 2010, the Employee’s Base Salary shall be One Hundred Ninety-Four
Thousand and Twenty-Six Dollars ($194,026), less any authorized or required
payroll deductions. Thereafter, as long as this Agreement remains in
effect, the annual Base Salary that the Corporation shall pay to the Employee
for his services rendered hereunder will be One Hundred Ninety-Four Thousand
and
Twenty-Six Dollars ($194,026) less any authorized or required payroll
deductions. Payment of this salary will be made in accordance with
the payroll policies of the Corporation in effect from time to
time.
(B) With
respect to each complete fiscal year of the Corporation during which (i) the
Employee is employed under the terms of this Agreement as of the last day of
such fiscal year, and (ii) the Corporation's "Annual Income from Operations"
(as
that term is hereinafter defined) is more than Three Million Dollars
($3,000,000.00), the Corporation shall pay to Employee, in addition to the
Base
Salary, an annual "Performance Bonus".
(1) The
amount of the 2007 Performance Bonus (if any) shall be calculated in a manner
consistent with the past practice of the Corporation, but awarded in the sole
discretion of the Chief Executive Officer of the Parent, with the consent of
the
Compensation Committee and the Board of Directors of the Parent.
(2) The
amount of the 2008 Performance Bonus (if any) and for each year thereafter
shall
be equal to Seven Tenths of One Percent (0.7%) of the Corporation's Annual
Income from Operations.
For
purposes of the calculation of the Performance Bonus, the Corporation's "Annual
Income from Operations" means the consolidated Income from Operations of the
Corporation and its subsidiaries, for a given fiscal year, as determined by
the
firm of independent certified public accountants providing auditing services
to
the Corporation, using generally accepted accounting principles consistently
applied, and calculated without regard to (a) federal and state income tax,
(b)
any interest expense or other income and expense as they appear on the
Corporation’s annual audited financial statements, (c) any amortization of
intangibles associated with the 2007 purchase of the Corporation by the Parent,
(d) any intercompany corporate charges other than those specifically on behalf
of the Corporation which arise after the purchase by the Parent, and (e) any
income or loss attributable to any other corporation or entity (including the
assets of a corporation or entity that constitute an operating business)
acquired by or merged into the Corporation subsequent to the effective date
of
this Agreement. The Corporation shall pay to Employee any Performance
Bonus due the Employee hereunder not later than fifteen (15) days after the
receipt by the Corporation of its annual audited financial statements, which
the
Corporation expects to receive within ninety (90) days after the end of each
fiscal year of the Corporation.
(C) In
addition to the Base salary and Performance Bonus (if any), Employee shall
be
entitled to receive such bonus compensation as the Board of Directors of the
Parent may authorize from time to time.
(D) The
Parent retains the right to modify or adjust the manner in which the Performance
Bonus is calculated in the event that the Corporation or Parent either acquires
the assets of another entity, or any portion thereof, or sells its assets,
or
any portion thereof, to another entity.
4. Duties
of Employee
(A) Employee
shall serve as President and Chief Executive Officer for the Corporation or
in
such other positions as may be determined by the Board of Directors of the
Parent, and Employee shall perform such duties on behalf of the Corporation
and
its subsidiaries by such means, at such locations (subject to paragraph
2(E)(2)), and in such manner as may be specified from time to time by the
officers or Board of Directors of the Parent.
(B) Employee
agrees to abide by and conform to all rules established by the Corporation
applicable to its employees.
(C) Employee
acknowledges that he is being employed as a full-time employee, and Employee
agrees to devote so much of Employee's entire time, attention and energies
to
the business of the Corporation as is necessary for the successful operation
of
the Corporation and shall endeavor at all times to improve the business of
the
Corporation. Employee shall not accept any business commitments other
than with the Corporation without the advance written consent of the
Corporation’s President.
5. Expenses. During
the period of Employee's employment, except as otherwise specifically provided
in this Agreement, the Corporation will pay directly, or reimburse Employee
for,
all items of reasonable and necessary business expenses approved in advance
by
the Corporation if such expenses are incurred by Employee in the interest of
the
business of the Corporation. The Corporation shall also reimburse
Employee for automobile expenses incurred by Employee in the performance of
Employee's duties hereunder. The amount of such reimbursement shall
be in accordance with the automobile expense reimbursement policy adopted (and
as it may be modified from time to time) by the
Parent’s Board of Directors. All such expenses paid by Employee will
be reimbursed by the Corporation upon presentation by Employee, from time to
time (but not less than quarterly), of an itemized account of such expenditures
in accordance with the Corporation's policy for verifying such
expenditures.
6. Fringe
Benefits
(A) Employee
shall be entitled to participate in any health, accident and life insurance
program and other benefits which have been or may be established by the
Corporation on the same basis as other salaried employees of the
Corporation.
(B) Employee
shall be entitled to an annual vacation without loss of compensation for such
period as may be determined by the Board of Directors of the
Parent.
(C) The
Corporation shall furnish to the Employee during the term of his employment
an
automobile selected by the Corporation to aid the Employee in the performance
of
his duties. Upon agreement of the Corporation and the Employee, the
Corporation may, in lieu of the automobile, provide the Employee with a Five
Thousand Dollar ($5,000.00) annual automobile allowance.
7. Covenants
of Employee.
(A) The
terms “Confidential Information” and “Trade Secrets” as used in this Agreement
mean any information which derives independent economic value, actual or
potential, from not being generally known to the public or to other persons
who
can obtain economic value from its disclosure or use and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. Confidential Information and Trade Secrets include, but are
not limited to:
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(i)
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computer
programs, software and firmware, system documentation, and data
processing;
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(ii)
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marketing,
sales, pricing, cost, and budgeting
data;
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(iii)
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marketing,
sales, and service proposals;
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(iv)
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business
plans and projections;
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(v)
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management
and recruiting practices;
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(vi)
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information
regarding the development and performance of
processes;
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(vii)
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financial
and business data relating to the Corporation or the Parent, including,
but not limited to, employee lists, salaries and benefits, personnel
skills, training and abilities, and
management;
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(viii)
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customer
contacts, proposals or agreements;
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(ix)
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customer
cost and pricing information;
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(x)
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financial
information; and
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(xi)
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customer
lists and customer and prospective customer
information.
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(B) During
the term of Employee’s employment with the Corporation and for all time
thereafter, Employee covenants and agrees that Employee will not in any manner
directly or indirectly, except as required in Employee’s duties to the
Corporation, disclose or divulge to any person, entity, firm or company
whatsoever, or use for Employee’s own benefit or the benefit of any other
person, entity, firm or company, directly or indirectly, any Confidential
Information or Trade Secrets, knowledge, documents, data, or other information,
in whatever form maintained, obtained by, or known to Employee as result of
the
employment relationship with Corporation and Parent, the parties hereto
stipulating, as between them that disclosure of the same to or use of the same
by third parties would greatly affect the effective and successful conduct
of
the business of the Corporation and the goodwill of the Corporation, and that
any breach of the terms of this subparagraph (B) shall be a material breach
of
this Agreement.
(C) During
the term of Employee’s employment with the Corporation and for a period of one
(1) year (the “Covenant Term”) after cessation for whatever reason of such
employment (except as hereinafter provided in subparagraph D of this paragraph
7), Employee covenants and agrees that Employee will not in any manner directly
or indirectly, either as an employee, employer, lender, owner, technical
assistant, partner, member, agent, principal, broker, advisor, consultant,
manager, shareholder, director, or officer, or in any other capacity, on
Employee’s behalf or on behalf of any person, firm, partnership, entity or
corporation, or by any agent or employee:
(i) call
upon, solicit, contact, divert, take away, do business with or attempt to
call
upon, solicit, contact, divert, take away or do business with any customer
of
the Corporation or any potential customer of the Corporation who Employee
had
contacted, solicited or serviced while at Corporation and about whom Employee
has Corporation Trade Secrets or Confidential Information; or
(ii) solicit
the services of, interfere with the employment or business relationship of,
or
endeavor to employ any employee or independent contractor of the Corporation
who
worked as an Executive and/or Engineer at the Corporation within a period of
one
(1) year prior to the date of termination of Employee’s employment with
Corporation.
(D) The
parties agree that the Covenant Term provided for in the preceding subparagraph
(C) shall be:
(i) reduced
to six (6) months in the event all of the operating assets or all of the common
stock of the Corporation or the Parent is sold to any entity or individuals
unaffiliated with the Corporation or the Parent, its successors or assigns;
or
(ii) eliminated
if the business currently operated by the Corporation or the Parent is
terminated and the assets of the Corporation or the Parent are
liquidated.
(E) All
the covenants of Employee contained in this paragraph 7 shall be construed
as
agreements independent of any other provision of this Agreement, and the
existence of any claim or cause of action against the Corporation, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the
enforcement by the Corporation of these covenants.
(F) It
is the intention of the parties to restrict the activities of Employee under
this paragraph 7 only to the extent necessary for the protection of legitimate
business interests of the Corporation and the Parent, and the parties
specifically covenant and agree that should any of the provisions set forth
therein, under any set of circumstances not now foreseen by the parties, be
deemed too broad for such purpose, said provisions will nevertheless be valid
and enforceable to the extent necessary for such protection.
8. Documents. Upon
cessation of Employee’s employment with the Corporation, for whatever reason,
all company property, including, but not limited to, all documents, records
(including without limitation, customer records), books, notebooks, records,
personal notes, list of customers, and all reproductions, duplicates, contracts
and correspondence pertaining to the Corporation’s customers statements or
correspondence, including copies thereof, relating to the business of the
Corporation or the Parent then in Employee’s possession, whether prepared by
Employee or others, will be delivered to and left with the Corporation, and
Employee agrees not to retain copies of the foregoing documents without the
written consent of the Corporation.
9. Remedies. In
the event of the breach by Employee of any of the terms of this Agreement,
notwithstanding anything to the contrary contained in this Agreement, the
Corporation may terminate the employment of Employee in accordance with the
provisions of paragraph 2 of this Agreement. It is further agreed
that any breach or evasion of any of the terms of this Agreement by Employee
will result in immediate and irreparable injury to the Corporation and will
authorize recourse to injunction and/or specific performance as well as to
other
legal or equitable remedies to which the Corporation may be
entitled. In addition to any other remedies that it may have in law
or equity, the Corporation also may require an accounting and repayment of
all
profits, compensation, remuneration or other benefits realized, directly or
indirectly, as a result of such breaches by the Employee or by a competitor’s
business controlled, directly or indirectly, by the Employee. No
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy and each and every remedy given hereunder
or
now or hereafter existing at law or in equity by statute or
otherwise. The election of any one or more remedies by the
Corporation or the Parent shall not constitute a waiver of the right to pursue
other available remedies. Employee expressly agrees to pay all
reasonable costs and attorneys’ fees incurred by the Corporation or the Parent
in order to enforce the Employee’s obligations under this Agreement, regardless
of whether litigation is commenced or prosecuted to a judgment.
10. Severability. All
agreements and covenants contained herein are severable, and in the event any
of
them shall be held to be invalid by any court of competent jurisdiction, this
Agreement, subject to subparagraph 7(F) hereof, shall continue in full force
and
effect and shall be interpreted as if such invalid agreements or covenants
were
not contained herein.
11. Entire
Agreement. This Agreement constitutes the entire
agreement between the Corporation and the Employee with respect to the subject
matter hereof and supersedes all prior proposals, negotiations, representations,
communications, writings, outlines and agreements between the Corporation and
the Employee with respect to the subject matter hereof, whether oral or written,
which shall be of no further force and effect. No amendments to this
Agreement, except as expressly provided herein to the contrary, may be made
except by a writing signed by both parties.
12. Waiver
or Modification. No waiver or modification of this
Agreement or of any covenant, condition or limitation herein shall be valid
unless in writing and duly executed by the party to be charged therewith, and
no
evidence of any waiver or modification shall be offered or received in evidence
in any proceeding or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid,
and the parties further agree that the provisions of this Paragraph may not
be
waived except as herein set forth. Failure of a party to exercise or
otherwise act with respect to any of its rights hereunder in the event of a
breach of any of the terms or conditions hereof by the other party shall not
be
construed as a waiver of such breach nor prevent the other party from thereafter
enforcing strict compliance with any and all of the terms and conditions
hereof.
13. Assignability. This
Agreement may be assigned by the Corporation to another entity which purchases
substantially all of the assets of the Corporation or the Parent or acquires
a
majority of the stock of the Corporation or the Parent. The services
to be performed by Employee hereunder are personal in nature and, therefore,
Employee shall not assign Employee’s rights or delegate Employee’s obligations
under this Agreement, and any attempted or purported assignment or delegation
not herein permitted shall be null and void.
14. Successors. Subject
to the provisions of paragraph 12, this Agreement shall be binding upon and
shall inure to the benefit of the Corporation and Employee and their respective
heirs, executors, administrators, legal administrators, successors and
assigns.
15 Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given if delivered personally or mailed
by certified or registered mail, return receipt requested, if to the
Corporation, to:
D3
Technologies Inc.
C/O
Xxxxxx X. Xxxx, President
LMI
AEROSPACE, INC.
X.X.
Xxx
000
Xx.
Xxxxxxx, XX 00000-0000
and,
if
to Employee, to:
Xxxx
X.
Xxxxx
00000
Xxxxxx Xxxxxxx Xxxx
Xxx
Xxxxx, XX 00000
or
to
such other address as may be specified by either of the parties in the manner
provided under this paragraph 15.
16. Construction. This
Agreement shall be deemed for all purposes to have been made in the State of
Missouri and shall be governed by and construed in accordance with the laws
of
the State of Missouri, notwithstanding either the place of execution hereof,
nor
the performance of any acts in connection herewith or hereunder in any other
jurisdiction.
17. Venue. The
parties hereto agree that any suit filed arising out of or in connection with
this Agreement shall be brought only in the United States District Court for
the
Eastern District of Missouri, unless that court lacks jurisdiction, in which
case such action shall be brought only in the Circuit Court for St. Louis
County, Missouri.
18. Disclosure
of Existence of Agreement. To preserve the respective
rights under this Agreement, the parties may advise any third party of the
existence of this Agreement and its terms, and each party specifically releases
and agrees to indemnify and hold the other party harmless from any liability
for
doing so.
19. Opportunity
to Review. The parties hereby represent and warrant
that they have had an opportunity to review this Agreement and consult their
respective attorneys about the Agreement, and understand the meaning and effect
of each paragraph of this Agreement.
The
parties have executed this Agreement as of July 31, 2007.
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D3
TECHNOLOGIES INC.
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(“Corporation”)
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By:
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/s/
Xxxxxx X. Xxxx
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Xxxxxx
X. Xxxx
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/s/
Xxxx X. Xxxxx
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(“Employee”)
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