Exhibit 10.1
XXXXXXX X. XXXXXXXX XX.
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st
day of September, 1998 by and between ENGINEERED SUPPORT SYSTEMS, INC., a
Missouri corporation (hereinafter called "Employer"), and XXXXXXX X.
XXXXXXXX XX. (hereinafter called "Employee").
WHEREAS, Employee desires to be employed by Employer and Employer
desires to employ Employee under the terms and conditions set forth in this
Agreement; and
WHEREAS, it is Employer's intention to employ Employee upon the
terms and conditions herein, which recognize and compensate Employee for the
obligations of Employee undertaken hereunder, including specifically, but
not by way of limitation, the agreement of Employee not to compete with the
business of Employer, as provided in paragraph 8, for the period provided in
paragraph 8 upon the cessation of Employee's employment by Employer for any
reason.
NOW, THEREFORE, in consideration of the foregoing and the promises
and agreements herein contained, the parties agree as follows:
1. Employment. Employer hereby employs Employee in the capacity of
----------
Chairman of the Board and Chief Executive Officer, and Employee hereby
accepts such employment from Employer upon the terms and conditions
hereinafter set forth. This Agreement replaces any and all other employment
agreements by and between Employee and Employer dated prior to the date of
this Employment Agreement.
2. Term of Employment. The term of Employee's employment under this
------------------
Agreement shall be for the period commencing as of November 1, 1998, and
continuing through October 31, 2001, and thereafter continuing from year to
year unless terminated by either party at any time during any such further
term upon the giving of thirty (30) days notice of termination and/or
termination pay, or upon the earlier occurrence of any of the following
events:
(a) Upon the death of Employee.
(b) At Employee's option upon thirty (30) days written notice.
(c) In the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties under this Agreement for ninety
(90) consecutive days or one hundred twenty (120) days in any calendar year,
whether or not consecutive, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of Employee's
Disability shall be made by a qualified licensed physician chosen by the
Employer subject to Employee's approval, which approval shall not be
unreasonably withheld. In the event Employer and Employee cannot agree on
the choice of a physician, then such physician shall be
1
chosen by the xxxx of the St. Louis University School of Medicine, St.
Louis, Missouri, or if said xxxx is unwilling or unable to do so, by the
xxxx of another medical school of recognized national repute. The cost of
such determination shall be borne by Employer, and in the absence of fraud
or bad faith, shall be binding on all parties hereto. Upon termination for
any of the foregoing causes, Employee shall be entitled to receive only the
compensation accrued and unpaid as of the date of termination and shall not
be entitled to additional compensation or other consideration except as
otherwise expressly provided in this Agreement, or such other compensation
plans in effect in which Employee is a participant at the time of
termination.
(d) For cause upon seven (7) days written notice. For purposes of
this Agreement "cause" shall mean default of Employee's faithful performance
of the terms and conditions of this Agreement and such failure or such other
action which materially adversely affects or is materially detrimental to
the operation of Employer's business.
3. Duties of Employee. During Employee's employment by Employer,
------------------
Employee shall serve Employer to the best of Employee's ability and shall
perform such duties and in such capacities as are assigned to Employee from
time to time by the Board of Directors of Employer. Employee agrees during
such period to devote substantial time and efforts to the business of
Employer, and to be loyal and faithful at all times, constantly endeavoring
to improve Employee's ability and knowledge of the business of Employer in
an effort to increase the value of Employee's services for the mutual
benefit of Employee and Employer. Additionally, Employee agrees to do and
perform the specific function set out on Exhibit "A" attached hereto and
incorporated herein by reference.
4. Base Compensation. Subject to the other provisions of this
-----------------
Agreement and in consideration of services rendered hereunder, Employer
agrees to pay the Employee, for Employee's service during the term of
Employee's employment, a Base Salary as follows:
For the period of November 1, 1998 through October 31, 1999, annual
compensation of Five Hundred Fifty Thousand ($550,000.00) payable in
bi-monthly installments of Twenty-Two Thousand Nine Hundred Sixteen Dollars
and Sixty-Six Cents ($22,916.66) on the 15th day and last day of each month,
or upon such other installments as agreed by Employee and Employer.
5. Bonus Compensation.
------------------
(a) In addition to the Base Compensation provided in Paragraph 4
hereof, Employer shall pay to Employee an annual bonus to be paid in full in
an amount equal to the amount applying the Bonus Formula contained in a
certain Bonus Plan for the Chairman and CEO of Engineered Support Systems,
Inc. dated September 1, 1998 adopted by the Board of Directors and as from
time to time amended. Such amounts shall be payable on or before October 31
for each fiscal year during the term of this Agreement. A copy of the Bonus
Plan dated September 1, 1998 labeled Exhibit "A" is attached hereto and
incorporated herein by reference.
(b) Employee shall be entitled to such other salary, bonuses or
deferred compensation pay as from time to time adopted by the Board of
Directors of the Company or Engineered Support Systems, Inc.
2
6. Deferred Compensation. Upon the retirement of Employee in
---------------------
accordance with the terms and conditions of the Engineered Air Systems
Employee Stock Ownership Plan, or its successor plan, or in the event of the
death or disability of Employee, Employer agrees to pay to Employee, or his
designated beneficiary if applicable, the following:
(a) In the event of death or retirement, twenty-four (24) equal
monthly installments of Twenty Seven Thousand Five Hundred Dollars
($27,500.00) payable on the first day of the first month following death or
retirement and the first day of each month thereafter for twenty-three (23)
months.
(b) In the event of disability as defined herein, monthly
installments of Twenty Seven Thousand Five Hundred ($27,500.00) commencing
on the first day of the first month that Employee is so disabled as herein
provided, and on the first day of each month thereafter until Employee
returns to work as herein provided, but in no event for more than sixty (60)
consecutive months. If Employee returns to the service of the Employer
within said sixty (60) consecutive days and receives a written opinion of
his then attending physician that he is capable of performing his duties
hereunder, then the 60-day period will commence to run again in the event he
shall later become disabled.
7. Extent of Service. Employee will devote such time, attention and
-----------------
energy to the business as is reasonable necessary to perform his duties.
8. Covenants of Employee.
---------------------
(a) During the term of Employee's employment with Employer, and for
a period of one (1) year after the cessation of such employment, for
whatever reason, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any manner
directly or indirectly:
(i) 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, in
competition with the business of Employer, as the same may exist at the date
of such cessation, any knowledge, formulae, devices, information, business
methods, techniques, customer lists, supplier lists, business plans or other
information or data of Employer, without regard to whether all of the
foregoing matters will otherwise be deemed confidential, material or
important, the parties hereto stipulating that as between them, the same are
important, material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer, and that
any breach of this Agreement.
(ii) Engage, directly or indirectly, either personally or
as an employee, partner, associate, officer, manager, agent, advisor,
consultant or otherwise, or by means of any corporate or other entity or
device, in any business which is competitive (as hereinafter defined) with
the business of Employer.
(b) For purposes hereof, a business will be deemed competitive if
it is conducted in
3
whole or in part within the continental United States where Employer then
conducts its business and if it involves the manufacture or sale of
environmental control systems for government or commercial use, or any other
business which is in any manner competitive, during or as of the date of
cessation of Employee's employment, with any business then being conducted
by Employer or as to which Employer has then formulated definitive plans to
enter.
(c) All of the covenants on behalf of Employee contained in the
paragraph 8, shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of
action against Employer, whether predicted on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to restrict the activities
of Employee under this paragraph 8 only to the extent necessary for the
protection of legitimate business interests of Employer, and the parties
specifically covenant and agree that should any of the clauses or provisions
set forth herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be illegal, invalid
or unenforceable under present or future laws effective during the term of
this Agreement, then and in that event, it is the intention of the parties
hereto that, in lieu of each such clause or provision there shall be
substituted or added, and there is hereby substituted or added, as a part of
this Agreement a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be legal, valid and
enforceable.
9. Expenses.
--------
(a) The Employer shall pay One Thousand Five Hundred Dollars
($1,500.00) per month as an expense allowance.
(b) During the period of Employee's employment, Employer will pay
directly, or reimburse Employee, for reasonable and necessary expenses as
from time to time authorized by the Board of Directors of Employer and
incurred by Employee in the interest of the business of Employer. All such
expenses paid by Employee, will be reimbursed by Employer upon presentation
by Employee, from time to time, of an itemized account of such expenditures,
to the extent necessary to permit the deductibility thereof for Federal
income tax purposes in accordance with the from time to time company policy.
(c) Employer agrees to pay for the monthly dues and charges for
Employee's country club memberships and memberships at other clubs,
including but not limited to, St. Albans Country Club, Old Warson Country
Club, Xxxxx Valley Country Club, Xxxxxxx Country Club, the Media Club, the
Missouri Athletic Club, the University Club, Stadium Club, St. Louis Club.
To the extent that any such payments are not deductible as ordinary and
necessary business expenses, in accordance with the Internal Revenue Code,
such expenditures will be treated at additional salary to Employee.
10. Automobile. During the period of this Agreement, Employer shall
----------
pay a car allowance as from time to time adopted by the Board of Directors
but in no event less than Five Hundred Dollars ($500.00) per month.
4
11. Documents. Employee agrees that all documents, instruments,
---------
drawings, plans, contracts, proposals, records, notebooks, invoices,
statements and correspondence, including all copies thereof, relating to the
business of Employer shall be the property of Employer; and upon the
cessation of Employee's employment with Employer, for whatever reason, all
of the same then in Employee's possession, whether prepared by Employee of
others, will be left with or immediately delivered to Employer.
12. Additional Employee Benefits. The Employee shall automatically
----------------------------
become enrolled in the Employer's medical, life insurance, disability
income, profit sharing trust and 401(k) programs at such time as he becomes
eligible to participate in the respective programs pursuant to the terms of
the respective programs.
13. Vacation. Employee shall be entitled to five (5) weeks paid
--------
vacation each calendar year.
14. Remedies. In the event of the violation of Employee of any of
--------
the terms of this Agreement, notwithstanding anything to the contrary
contained in this Agreement, Employer may terminate the employment of the
Employee by written notice thereof to Employee and with compensation to
Employee only to the date of such termination. 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 Employer and will authorize
recourse to injunction and/or specific performance as well as to all other
legal or equitable remedies to which Employer may be entitled. No remedy
conferred by and of the specific provisions of this Agreement is intended to
be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity, by status or otherwise. The
election of any one or more remedies by Employer shall not constitute a
waiver of the right to pursue other available remedies at any time or
cumulatively from time to time. Employee represents and admits that in the
event of the cessation of Employee's employment for any reason, Employee's
experience and capabilities are such that Employee can obtain employment in
business engaged in other lines or of a different nature, and that the
enforcement of a remedy by way of injunction will not prevent Employee from
earning a livelihood. In the event it becomes necessary for Employer to
institute a suit at law or in equity for the purpose of enforcing any of the
provisions of this Agreement, Employer shall be entitled to recover from
Employee, Employer's reasonable attorneys' fees plus court costs and
expenses.
15. Severability. All agreements and covenants herein contained are
------------
severable, and in the event any of them shall be held to be invalid or
unenforceable by any court of competent jurisdiction, this Agreement shall
continue in full force and effect and shall be interpreted as if such
invalid agreement or covenant were not contained herein.
16. Waiver of Modification. No amendment, waiver of modification of
----------------------
this Agreement or of any covenant, condition or limitation herein contained
shall be valid unless in writing and duly executed by the party to be
charged therewith, and no evidence of any amendment, waiver or modification
shall be offered or received in evidence in any proceeding, arbitration or
litigation between parties hereto arising out of or affecting this
Agreement, or the
5
rights or obligations of the parties hereunder, unless such amendment,
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 or modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights granted
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, not
prevent Employee or Employer from thereafter enforcing strict compliance
with any and all of the terms and conditions hereof.
17. Notices. All notices requests, demands or other communication
-------
hereunder ("Notice") shall be in writing and shall be given by registered or
certified mail, return receipt requested, if to Employer to:
Engineered Support Systems, Inc.
Attention: Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
If to Employee, to:
Xxxxxxx X. Xxxxxxxx Xx.
00000 Xxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
or to such other addresses as to which the parties hereto give Notice in
accordance with this Paragraph 17.
18. Construction. This Agreement shall be governed by and construed
------------
and interpreted according to the laws of the State of Missouri,
notwithstanding the place of execution hereof, nor the performance of any
acts in connection herewith or hereunder in any other jurisdiction. For all
purposes hereof, reference to Employer shall include each and every
subsidiary and affiliated company of Employer.
19. Assignability. The services to be performed by Employee
-------------
hereunder are personal in nature and therefore Employee shall not assign his
rights or delegate his obligations under this Agreement, and any attempted
or purported assignment or delegation not herein permitted shall be null and
void.
20. Successors. Subject to the provisions of paragraph 19, this
----------
Agreement shall be binding upon and shall inure to the benefit of Employer
and Employee and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
21. Termination Compensation. In the event that Employer terminates
------------------------
Employee's employment for any reason except for cause, then in such event
Employee shall be entitled to
6
termination pay equal to twice the total compensation paid to Employee for
the fiscal year ending prior to the year of termination. This termination
pay shall be payable in twenty-four (24) equal monthly installments
commencing on the first day of the first month after such termination. For
purposes of this Agreement, "total compensation" shall include all
compensation deducted by the Employer for the Employee for the prior fiscal
year, the amounts contributed to any Employee retirement plan, the value of
benefits, including medical insurance, disability insurance, automobile club
dues and the like, and contributions to company retirement plans.
22. Split Dollar Life Agreements. The Employer agrees to keep in
----------------------------
full force and effect until Employee agrees in writing a certain life
insurance policy subject to a Split Dollar Agreement dated on or about April
25, 1988, as well as such other split dollar policies that may be put in to
place in the future.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"EMPLOYEE"
/s/ Xxxxxxx X. Xxxxxxxx Xx.
--------------------------------
XXXXXXX X. XXXXXXXX XX.
"EMPLOYER"
ENGINEERED SUPPORT SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx, Secretary
7
