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EXHIBIT 10 (aa)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of the 1st day of November,
1999 between ESCO ELECTRONICS CORPORATION, a Missouri corporation ("Company" or
"ESCO") and Xxxxxx X. Xxxxx, (the "Executive").
WITNESSETH THAT:
WHEREAS, the Executive has been elected by the Board of Directors of the Company
to the positions of Chairman, President, and Chief Executive Officer of the
Company; and
WHEREAS, the Executive possesses executive skills and experience which
the Company believes are of substantial value and importance to the success of
the Company's business operations; and
WHEREAS, the Company wishes to retain the benefit of the services of
the Executive in connection with the conduct of its business; and
WHEREAS, the Executive is willing to render service on the terms
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows.
1. TERM. This Agreement shall commence effective as of November
1, 1999, and shall continue until November 1, 2003, or such
shorter period as may be mutually agreed upon subject to the
termination provisions of this Agreement.
2. DUTIES. The Executive shall perform such duties normally
associated with the office(s) of Chairman, President and CEO
and such other duties assigned to him by the Board of
Directors of the Company.
3. SALARY. The Executive shall be paid an annual salary of not
less than Four hundred and twenty-five thousand dollars
($425,000) during the term of this Agreement, increased in
accordance with the normal practices of the Company.
4. BONUS. The Executive shall be eligible to receive an annual
bonus during the term of this Agreement upon achieving
performance goals determined by the Human Resources and Ethics
Committee of the Board of Directors of the Company
("Committee") in accordance with and subject to the terms of
the Company's Performance Compensation Plan ("PCP"), as in
effect from time to time.
5. OTHER INCENTIVE COMPENSATION. During the term of this
Agreement, the Executive shall be entitled to participate in
any stock options, restricted share awards, performance shares
and other executive compensation and benefits as the Committee
shall, from time to time, determine in its discretion.
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6. WELFARE BENEFITS. During the term of this Agreement, the
Executive shall be entitled to participate in such medical,
dental, life insurance, long-term disability insurance, and
other benefits which the Company provides from time to time to
other senior executive officers.
7. CLUB MEMBERSHIPS. The Company shall continue to pay the
monthly dues and related fees for the Executive's membership
in the clubs to which he belongs as of the date hereof.
8. AUTOMOBILE. During the term of this Agreement, the Company
shall continue to provide the Executive with an automobile in
accordance with Company policy, as in effect from time to
time.
9. FINANCIAL PLANNING. During the term of this Agreement, the
Company shall provide the Executive with financial planning
assistance up to the maximum limits established by Company
policy in effect from time to time.
10. TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE OF
CONTROL. In recognition of the unique position of the
Executive as the Chairman, President and CEO of the Company,
it is hereby acknowledged and agreed that a Change of Control
as defined in the Company's Severance Plan (the "Severance
Plan") would necessarily result in a "change in the
[Executive's] . . . position or responsibilities (including
reporting responsibilities)" representing a "reduction in his
status, . . ., position or responsibilities as in effect
immediately prior thereto" within the meaning of paragraph
3(c)(iii) of the Severance Plan. Consequently, the Executive
may give a Notice of Termination in accordance with such
Severance Plan based solely on the Change of Control, itself,
on or before the effective date of any Change of Control, such
notice to be effective on the effective date of the Change of
Control. If such notice is given by the Executive, no further
compensation or benefits of any kind shall be payable to him
under this Agreement, but the Severance Plan Benefits shall be
paid in accordance with the terms and conditions of paragraph
4(a) and the other provisions of the Severance Plan.
11. TERMINATION OF EMPLOYMENT PRIOR TO TERMINATION IN CONNECTION
WITH A CHANGE OF CONTROL. During the term of this Agreement,
the Executive's employment may be terminated for any reason or
no reason without cause, by ESCO upon written notice to the
Executive. If the Executive is deceased, any sum payable under
these termination provisions to the Executive and not
otherwise directed by any plan referenced herein shall be paid
to Executive's spouse, if any, and if none, to the beneficiary
as designated in any records on file with ESCO Electronics
Corporation Retirement Plan, or if none, to the Executive's
estate.
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a. Termination by the Company other than for Cause.
If, during the term of this Agreement, but under
circumstances not described in paragraph 10, above, the
Executive's employment is terminated by the Company for
reasons other than "Cause" (as hereinafter defined), then,
provided Executive executes the Standard Severance Agreement
and Release then in general use by ESCO for this purpose, the
Executive shall receive the following:
1. The Company shall continue to pay the Executive his base
salary at the rate in effect at the date of such termination
of employment for 36 months following such termination
("Severance Period").
2. As a supplement to the payment of the Executive's base
salary rate under subparagraph 1, above, the Company shall
also pay the Executive his Average PCP Percentage (as
hereinafter defined) for 36 months following such termination.
For this purpose, his Average PCP Percentage shall be his
average annual percentage (of base salary) under the Company's
Performance Compensation Plan for the five consecutive fiscal
years immediately preceding the fiscal year in which the
termination occurs (disregarding the highest and lowest
percentage).
3. At the time of such termination of employment, the Company
shall pay the Executive the lump sum actuarial equivalent of a
supplemental retirement benefit equal to the difference
between (a) the amounts which would have been payable under
any tax-qualified defined benefit retirement plan (and any
non-qualified supplement to such plan) of ESCO's applicable to
the Executive (collectively, the "Retirement Plan") if he had
remained employed by the Company at his Base Salary and
Average PCP rate for three years after the Date of Separation
and (b) the amounts actually payable under the Retirement
Plan.
4. If the Executive is eligible for participation in the
Company's retiree medical plan, he shall participate therein
in accordance with its terms; otherwise upon proper
application by Executive and payment of the employee portion
of the premium, the Company shall furnish Executive medical
continuation in accordance with the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA");
provided that during the period of his eligibility the
Executive will pay only the rate which active employees pay
for similar coverage for up to 18 months.
5. The Company shall continue to provide the Executive the
financial planning services which the Company was providing at
the date of such termination, until the federal income tax
filing deadline for the Executive's third taxable year
following the taxable year during which such termination
occurs.
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6. The Executive's life insurance and long term disability
benefits will terminate in accordance with the plans or
policies in effect at the time of such termination of
employment.
7. The Executive shall have the right to convert any split
dollar life insurance policy on his life which is in effect at
the date of such termination into an individual policy with
the Executive as the sole owner of such policy, except that
the Company shall be entitled to repayment of all premiums
paid by the Company on such policy.
8. The Company shall continue to pay the Executive's club
membership dues and related fees (which it is paying at the
time of such termination) for 36 months following such
termination, or until the Executive's death, if he dies during
such 36 month period.
9. The Company shall continue to lease for the benefit of the
Executive the automobile which is it leasing at the date of
such termination, for 36 months following such termination or
until the Executive's death if he dies during such 36 month
period. Upon the expiration of such 36 month period, if the
Executive is still alive, the Company shall purchase such
automobile and transfer all right, title and interest in it to
the Executive.
10. All outstanding stock options shall become fully vested
and exercisable, all restricted shares shall become fully
vested, and all awards outstanding under the Company's
Performance Share Plan shall be considered fully earned and
vested and shall be paid out and/or distributed upon such
termination, in accordance with the terms of the plan(s).
11. The Company agrees to provide the Executive with Directors
and Officers liability coverage during the Severance Period,
and for five years thereafter, for covered actions through the
date of Executive's separation from service subject to the
insurance carrier's approval of such coverage.
b. Termination by the Company for Cause.
If during the term of this Agreement, the Executive's
employment is terminated for "cause" (as hereafter defined), he shall
receive his regular salary and benefits through the date of
termination. All other benefits shall cease unless specifically
otherwise provided by the benefit plan(s).
For purposes of this Agreement, "Cause" shall mean:
1. Executive's willful and continued failure to substantially
perform his duties (other than as a result of incapacity due
to physical or mental condition), after a written demand for
performance is delivered to Executive which specifically
identifies the manner in which Executive has not substantially
performed his duties; or
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2. Executive's disability or incapacity which extends for a
period of nine consecutive months and which renders Executive,
in the judgement of the Board, substantially unable to perform
the services for which he has been employed, or
3. Executive's willful commission of misconduct which is
materially injurious to the Company, monetarily or otherwise;
provided that any material violation of paragraph 13 of this
Agreement by Executive during his employment shall constitute
willful misconduct without further proof of injury; or
4. conviction of Executive of a felony, or
5. a determination by the Board, after Executive has been
given written notice of the meeting of such Board at which
this question will be taken up and has had an opportunity to
appear before the Board at such meeting and defend himself,
that Executive has committed fraud, embezzlement, theft, or
misappropriation against or from the Company; or
6. Executive's material breach of any provision of this
Agreement.
For purposes of this paragraph 11, no act or failure to act shall be considered
"willful" unless done or omitted to be done without good faith and without a
reasonable belief that the act or omission was in the best interest of ESCO.
c. Termination by the Executive for Good Reason.
If, during the term of this Agreement, but under
circumstances not described in paragraph 10, above, the
Executive terminates his employment for "Good Reasons" (as
hereinafter defined), then, in addition to his regular salary
and benefits through the date of termination, provided the
Executive executes the Standard Severance Agreement and
Release then in general use by ESCO for this purpose, the
Executive shall receive the same benefits as if the Company
had terminated him other than for Cause. "Good Reason" shall
mean the occurrence of any one or more of the following
events:
1. any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated failure
not occurring in bad faith and which is remedied by the
Company promptly after receipt of written notice thereof given
by the Executive and other than a failure to comply with
paragraphs 3 through 9 hereof inclusive solely by reason of a
reduction in compensation or benefits that applies to all
Senior Management employees;
2. the Company's requiring the Executive to move his residence
from the Greater St. Louis, Missouri area;
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3. The Company assigning duties to Executive which are,
expressly or in practical effect, a material and substantial
demotion from or substantial reduction of Executive's present
executive and/or managerial responsibilities, whether or not
accompanied by a reduction in remuneration, provided the
Executive has given not less than 30 days' written notice to
the Board of Directors of ESCO; or
4. any purported termination by the Company of the Executive's
employment otherwise than pursuant to a Change of Control
or for Cause as expressly permitted by this Agreement.
12. CONTINUED EMPLOYMENT NOT GUARANTEED. None of the provisions
of this Agreement shall be construed as a guarantee of the
Executive's continued employment nor shall they limit the
ability of the Board of Directors of the Company to terminate
the employment relationship at any time, with or without cause
upon at least 30 days' advance written notice to the
Executive. None of the provisions of this Agreement shall be
construed as a guarantee on the part of the Executive that he
will continue to perform services for the Company nor shall
they limit the ability of the Executive to resign at any time
upon at least 30 days' advance written notice to the Company.
13. CONFIDENTIAL INFORMATION; COMPANY PROPERTY; NONSOLICITATION;
COMPANY INTERESTS. By and in consideration of the mutual
promises contained herein, and the compensation and benefits
to be provided by the Company hereunder, the Executive agrees
that:
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and will not, during the period of
his employment disclose to anyone, directly or
indirectly, any trade secret or confidential information
regarding the business of ESCO Electronics Corporation or
any subsidiary company, including without limitation such
information referred to in paragraph 13(d) hereof.
Confidential Information for this purpose shall include,
but not be limited to, trade secrets, audit information,
ethics investigation information, product information,
engineering information, manufacturing information,
customer lists, employees, Company policies and
procedures, bidding and proposal information or strategy,
product cost or pricing information, any employee's
compensation, benefits or skills and specialties and
financial information, all (i) obtained by the Executive
during his employment by the Company, and (ii) not
otherwise public knowledge (other than because of an
unauthorized act by the Executive or another individual).
Upon the termination of employment, the Executive will
return to the Company all such Confidential Information
in his position which is in written, tangible,
electronic, magnetic, or other reproducible form without
retaining any copies thereof. After termination of
employment, the Executive shall not communicate or
divulge such Confidential Information to anyone except
(a) an authorized representative of the Company, or (b)
to someone else when compelled by an order or subpoena of
a court or
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other governmental body after at least two (2) weeks
prior written notice to the Company, if possible, and if
such written notice is not possible, then with as much
written or oral notice as is possible under the
circumstances.
(b) Except as expressly provided herein, promptly following
the Executive's termination of employment, the Executive
shall return to the Company all property of the Company
and all copies thereof in the Executive's possession or
under his control or to which he has access nor shall he
attempt to reproduce or have reproduced any such
property, except that the Executive may retain his
diaries, Rolodexes, and calendars.
(c) During the period commencing on the date hereof through
the Severance Period, the Executive will not solicit or
otherwise induce any employee of the Company or any
Company Affiliate to leave the employ of the Company or
such Company Affiliate or to become associated, whether
as an employee, officer, partner, director, consultant or
otherwise, with any business organization.
(d) Executive will not, during the period of his employment
and for a period of three (3) years from the date he
ceases to be employed by the Company directly or
indirectly, either for himself or for any other person,
divert or take away or attempt to divert or take away
(call on or solicit or attempt to call on or solicit) any
of the Company's customers or distributors, including,
but not limited to, those with whom he became acquainted
while employed as an Executive for the Company. The
Executive specifically agrees that the three (3) year
period is reasonable.
If the Executive fails to comply with any of his
undertakings hereunder except as otherwise required by
law, no further payments or contracted benefits shall be
provided to or in respect of the Executive by the Company
pursuant to this Agreement or otherwise. The provisions
of paragraph 14 shall not apply to any alleged violations
of this paragraph and the Company shall be entitled to
obtain temporary and permanent injunctive relief, as well
as damages, for any violation of the provisions of this
paragraph by Executive.
14. ENFORCEMENT - ARBITRATION. Except as provided in paragraph
13, any controversy or claim arising out of or relating to the
application, interpretation or enforcement of this Agreement,
and any claim of every nature and description by the Executive
against the Company and/or any of its parent, subsidiary,
affiliated entities, corporation, partnerships, and their
members, officers, directors, managers, partners, employees,
fiduciaries, administrators, agents or attorneys or by the
Company against the Executive which cannot be settled by
negotiation of the parties, including, but not limited to, any
and all claims arising subsequent to the date of this
Agreement under each of the statutes, common law, contractual
and other authorities enumerated in Exhibit A, attached hereto
and made a part thereof, shall be settled by final and binding
arbitration administered by the
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American Arbitration Association ("Association") under its
Employment Dispute Resolution Rules (as amended and effective
on November 1, 1993, subject to the then-current fees) and
judgement on the award rendered by the arbitration may be
entered in any court having jurisdiction thereof subject to
the following provisions, except as otherwise mutually agreed
by the parties with respect to a particular dispute or
provision at the time:
a. If the parties cannot agree upon an arbitrator, a
seven-person panel shall be submitted to the parties by the
Association. If there is a non-selection of the first such
panel, the Association shall submit a second seven-person
panel to the parties. If there is still a non-selection, the
Association shall then appoint a single arbitrator in
accordance with its rules subject to each party's objection
for cause, and if the claim involves an alleged statutory
violation, the arbitrator shall be an attorney.
b. The initiating party shall pay one-half of the
administrative fee(s) and the defending party shall pay
one-half of such fee(s).
c. Each party may take two (2) depositions and the deposition
of any expert as a matter or right, and the parties may engage
in additional prehearing discovery only for good cause shown
to the arbitrator. Any documents to be introduced in evidence
and any documents subpoenaed, as well as a list of all
witnesses to be called, shall be submitted to the other party
at least thirty (30) days prior to the initial hearing date
unless the arbitrator otherwise orders.
d. Any hearing shall be recorded by a professional reporter.
Each party shall have at least thirty (30) days to submit
post-hearing briefs, and the hearing shall not be deemed
closed until after the date for submission of such briefs. Any
extensions are subject to the control of the arbitrator.
e. The arbitration provisions of this Agreement shall not
apply to any claims by the Executive for benefits if they are
not payable by the Company or if there is another final and
binding dispute resolution in the plan, for Workers'
Compensation or unemployment compensation or as excluded in
paragraph 13, hereof.
f. Notice of any claim must be given by the aggrieved party in
writing to the other party within six (6) months of the date
the aggrieved party first has knowledge of the event, or
should have knowledge of the event giving rise to the claim;
otherwise, the claim shall be void and deemed waived even if
there is a federal or state statute of limitations which would
have given more time to pursue the claim. The written notice
shall identify and describe the nature of each claim asserted,
the statutes, regulation, Agreement provision or other
authority on which it is based and a brief statement of the
facts supporting such claim. The notice
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shall be sent by certified mail to the last address supplied
in writing by the other party.
g. The arbitrator acting under this Agreement may award
damages, and any other relief (s)he deems just and proper
which is provided in any statute applicable to the claim,
including attorney's fees. The decision of the arbitrator
shall be final and binding on all parties and anyone claiming
by or through them. The remedy provided in this paragraph 14
shall be the exclusive remedy for all unsettled disputes
between the parties except those specifically excepted in
subparagraph e. above.
15. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the Executive and shall be binding upon the
Company, and its successors and assigns.
16. AMENDMENT. This Agreement may be amended by mutual written
agreement of the parties. The parties also recognize the
possibility of circumstances arising in which this Agreement
would be terminated by mutual written agreement without
terminating Executive's employment.
17. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the State of
Missouri, excluding Missouri's choice of law rules, and except
to the extent governed by federal law.
18. CONSULTANT SERVICES. The Company may ask the Executive to
serve as a consultant to the Company from time to time after
the Executive's employment ceases. Until October 1, 2003, the
Executive agrees to perform such consulting services as part
of this Agreement and recognizes that this Agreement covers
such consulting services up to a maximum of 30 hours per month
without any additional compensation other than as provided
herein.
IN WITNESS WHEREOF, the foregoing Agreement has been executed effective
as of November 1, 1999.
/s/ XXXXXX X. XXXXX
______________________________ ESCO ELECTRONICS CORPORATION
Xxxxxx X. Xxxxx
1 NOV '99 /s/ X.X. Xxxxxx
Date:__________________________ By:_____________________________________
VP Administration
Title:__________________________________
1 NOV 99
Date: ___________________
528523
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EXHIBIT A TO EMPLOYMENT AGREEMENT
o Title VII of the Civil Rights Act of 1964, as amended.
o Age Discrimination in Employment Act, as amended (including the Older
Workers Benefit Protection Act).
o The Civil Rights Acts of 1866, 1870 and 1871.
o The Civil Rights Act of 1991.
o Fair Labor Standards Acts, as amended, (including Xxxxx-Xxxxxx,
Xxxxx-Xxxxx, and Service Contracts Acts) and any state labor standards
acts.
o Occupational Safety and Health Act
o Employee Polygraph Protection Act
o Worker Adjustment and Retraining Notification Act
o Family and Medical Leave Act
o The United States and Missouri Constitutions.
o National Labor Relations Act, as amended.
o Employee Retirement Income Security Act, as amended.
o Americans with Disabilities Act.
o Family and Medical Leave Act.
o Missouri Human Rights Act.
o Missouri Service Letter Statute.
o Missouri Final Pay Act
o All other common law and federal, state and local civil rights acts, acts
regulating any term, condition, or privilege of employment, acts regulating
the employment or reemployment of veterans or privacy rights, and all other
regulations, orders and executive orders relating to any term, condition or
privilege of employment.
o This Agreement and all other contractual rights
o Benefits payable by the Company and for which there is not another final
and binding dispute resolution procedure provided in the plan, after
exhaustion of any other such procedure.
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