EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made as of the 1st day of December,
2005 by and between Xxxx Xxxxxxxxxxx ("Employee") and DHB Industries, Inc., a
Delaware corporation (together with all divisions, subsidiaries and groups, the
"Company").
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. TERM. The Company agrees to employ Employee, and Employee agrees to be
employed by the Company, subject to the terms and conditions of this Agreement,
for the period commencing on December 1, 2005 (the "Effective Date") and
terminating on November 30, 2007 (as may be earlier terminated or extended as
set forth below, the "Employment Period"), unless earlier terminated as provided
in Section 7; provided, however, that Employee shall have the right to extend
the Employment Period until November 30, 2009 provided he provide notice to the
Company of such extension to the Company no less than sixty (60) days prior to
November 30, 2007.
2. EMPLOYMENT DUTIES.
2.1 TITLE. During the Employment Period, Employee shall be employed in
the business of the Company. Employee shall serve with the title of Chief
Operating Officer. Employee shall devote substantially all of his working
time and efforts to the performance of his duties under this Agreement.
2.2 LOCATION. In performing his duties hereunder, Employee shall be
available for reasonable travel, as the needs of the business of the
Company may require. Employee shall be based at the Company's Pompano
Beach, Florida facility.
2.3 REPORTING. Employee shall report to the Chief Executive Officer
and President of the Company, and to such other persons as such Chief
Executive Officer shall direct from time to time.
3. COMPENSATION/BENEFITS. In consideration of Employee's services
hereunder, the Company shall provide Employee the following:
3.1 BASE SALARY. During the Employment Period, the Employee shall
receive an annual rate of base salary ("Base Salary") in an amount not less
than $500,000; provided, however, if at any time Xxxxx X. Xxxxxx ceases to
serve as a director and Chief Executive Officer of the Company, the
Employee's base salary shall be increased to $1,250,000 per annum effective
as of the date Xxxxx X. Xxxxxx ceases to serve as a director and Chief
Executive Officer of the Company.
3.2 BONUSES. Commencing at the close of each fiscal year of the
Company during the Employment Period, the Company shall review the
performance of the Company and of Employee during the prior fiscal year,
and the Company may provide Employee with additional compensation as a
bonus if the Board, or any compensation committee thereof, in its sole
discretion, determines that Executive's contribution to the Company
warrants such additional payment and the Company's anticipated financial
performance of the present period permits such payment. Bonuses shall be
paid as a lump sum not later than sixty (60) days after the end of the
Company's preceding fiscal year, provided Employee remains employed and has
not given notice of termination at the time such payment is due.
3.3 EQUITY COMPENSATION. To induce Employee to enter into this
Agreement, Employee shall be granted by the Company a warrant or option to
purchase shares of common stock of the Company, pursuant to a separate
agreement, dated the date hereof, between the Company and Employee, in the
form attached as Schedule 3.3 hereto.
3.4 VACATIONS. Employee shall be entitled to two (2) weeks of paid
vacation per calendar year. Unused vacation shall not be carried over to
any subsequent year.
3.5 OTHER BENEFITS. The Company shall provide to Employee such other
benefits, including the right to participate in medical and other benefit
plans, as are made generally available to executives of the Company from
time to time.
4. EXPENSES/INDEMNIFICATION.
4.1 EXPENSES. The Company shall reimburse Employee for the reasonable
business expenses incurred by Employee in the course of performing his
duties for the Company, upon submission of invoices, vouchers or other
appropriate documentation, as may be required in accordance with the
policies in effect from time to time for executive employees of the
Company.
4.2 INDEMNITY. To the fullest extent permitted by law, the Company
shall indemnify Employee with respect to any actions commenced against
Employee in his capacity as an officer, director, employee, agent or
fiduciary or former officer, director, employee, agent or fiduciary of the
Company, or any affiliate thereof for which Employee may render service in
such capacity, whether by or on behalf of the Company, its shareholders or
third parties, and the Company shall advance to Employee on a timely basis
an amount equal to the reasonable fees and expenses incurred in defending
such actions, after receipt of an itemized request for such advance, and an
undertaking from Employee to repay the amount of such advance, with
interest at a reasonable rate from the date of the request, as determined
by the Company, if it shall ultimately be determined that Employee is not
entitled (as a matter of law or by judicial determination) to be
indemnified against such expenses. This indemnity shall survive any
termination of employment under this Agreement and is in addition to and
not in limitation of any other right to indemnification or exoneration to
which Employee is entitled at law, or under the governing charter documents
of the Company. The Company agrees to use its best efforts to secure and
maintain officers' and directors' liability insurance, including coverage
for Employee.
5. COVENANTS AND CONFIDENTIAL INFORMATION.
5.1 RESTRICTIVE COVENANTS. Employee acknowledges the Company's
reliance on and expectation of Employee's continued commitment to
performance of his duties and responsibilities during the Employment
Period. In light of such reliance and expectation on the part of the
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Company, during the applicable period hereafter specified in Section 5.2,
Employee shall not, directly or indirectly, do or suffer either of the
following:
(a) (1) own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or otherwise
affiliated or associated as an employee, agent, representative,
consultant, independent contractor or otherwise with, any other
corporation, partnership, proprietorship, firm, association or other
business entity engaged in the business of, or otherwise engage in the
business of, manufacturing, selling or distributing body armor or body
armor related products within the United States in direct or indirect
competition with the Company or any of its affiliates;
(2) solicit any business or contracts from any customers of the
Company or its affiliates, any past customers of the Company or its
affiliates, or any prospective customers of the Company or its
affiliates (i.e., potential customers from which the Company or its
affiliates has solicited business at any time during the twelve (12)
month period preceding the expiration or termination of the Employment
Period), except as necessitated by Employee's position with the
Company and then only in furtherance of the business interests of the
Company or its affiliates;
(3) induce or attempt to induce any such customer to alter its
business relationship with the Company or its affiliates except as
necessitated by Employee's position with the Company and then only in
furtherance of the business interests of the Company or its
affiliates;
(4) solicit or induce or attempt to solicit or induce any
employee of the Company or its affiliates to leave the employ of the
Company or any of its affiliates for any reason whatsoever or hire any
employee or any person who was an employee of the Company or its
affiliates within the twelve (12) month period prior to such hiring;
or
(5) directly or indirectly, engage in any conduct or make any
statement, whether in commercial or noncommercial speech, disparaging
or criticizing in any way the Company or any of its affiliates, or any
products or services offered by any of them, nor shall Employee engage
in any other conduct or make any other statement that could be
reasonably expected to impair the goodwill of any of the Company or
any if its affiliates, the reputation of any products or services of
the Company or any of its affiliates or the marketing of such products
or services.
(b) disclose, divulge, discuss, copy or otherwise use or suffer
to be used in any manner, other than in accordance with Employee's
duties hereunder, any confidential or proprietary information relating
to the Company's or any of its affiliates' businesses, prospects,
finances, operations or properties or other trade secrets of the
Company or any of its affiliates, it being acknowledged by Employee
that all such information regarding the business of the Company or any
of its affiliates compiled or obtained by, or furnished to, Employee
while Employee shall have been employed by or associated with the
Company is confidential and/or proprietary information and the
Company's exclusive property; provided, however, that the foregoing
restrictions shall not apply to the extent that such information: (A)
is clearly obtainable in the public domain; (B) becomes obtainable in
the public domain, except by reason of the breach by Employee of the
terms hereof or by another person barred by a similar duty of
confidentiality; or (C) is required to be disclosed by rule of law or
by order of a court or governmental body or agency.
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5.2 APPLICABLE PERIODS. The applicable periods shall be:
(a) so long as Employee is an employee of the Company; and
(b) for a period of twelve (12) months after termination of employment
or the expiration of the Employment Period.
5.3 INJUNCTIVE RELIEF. Employee agrees and understands that the remedy
at law for any breach by his of this Section 5 will be inadequate and that
the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that the
Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing in
this Section 5 shall be deemed to limit the Company's remedies at law or in
equity for any breach by Employee of any of the provisions of this Section
5 which may be pursued or availed of by the Company.
5.4 ACKNOWLEDGMENT BY EMPLOYEE. Employee has carefully considered the
nature and extent of the restrictions upon his and the rights and remedies
conferred upon the Company under this Section 5, and hereby acknowledges
and agrees that the same are reasonable in time and territory, do not
stifle the inherent skill and experience of Employee, would not operate as
a bar to Employee's sole means of support, are fully required to protect
the legitimate interests of the Company, and do not confer a benefit upon
the Company disproportionate to the detriment of Employee.
6. PROPRIETARY RIGHTS.
6.1 COPYRIGHTS. At all times during the Employment Period, all right,
title and interest in all copyrightable material which Employee shall
conceive or originate, either individually or jointly with others, and
which arise out of the performance of this Agreement, will be the property
of the Company and are by this Agreement assigned to the Company along with
ownership of any and all copyrights in the copyrightable material. At all
times during the Employment Period, Employee agrees to execute all papers
and perform all other acts necessary to assist the Company to obtain and
register copyrights on such materials in any and all countries, and the
Company agrees to pay expenses associated with such copyright registration.
Works of authorship created by Employee for the Company in performing his
responsibilities under this Agreement shall be considered "works made for
hire" as defined in the U.S. Copyright Act. In addition, Employee hereby
assignees to the Company all proprietary rights, including but not limited
to, all patents, copyrights, trade secrets and trademarks Employee might
otherwise have, by operation of law or otherwise, in all inventions,
discoveries, works, ideas, information, knowledge and data related to
Employee's access to confidential information of the Company during the
Employment Period.
6.2 KNOW-HOW AND TRADE SECRET. All know-how and trade secret
information conceived or originated by Employee which arises out of the
performance of his obligations or responsibilities under this Agreement
during the Employment Period or otherwise shall be the property of the
Company, and all rights therein are by this Agreement assigned to the
Company.
6.3 JOINT VENTURES, ETC. If, during the Employment Period, Employee is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company.
Except as formally approved by the Board of Directors, Employee shall not
be entitled to any interest in such project, program or venture or to any
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commission, finder's fee or other compensation in connection therewith
other than the compensation to be paid to Employee as provided in this
Agreement.
6.4 RETURN OF MATERIALS. Upon termination of the Employment Period,
Employee shall deliver promptly to the Company all records, manuals, books,
documents, letters, memoranda, notes, notebooks, reports, data, tables,
calculations, customer and prospective customer lists, and copies of all of
the foregoing, which are the property of the Company, and all other
property, trade secrets and confidential information of the Company,
including, but not limited to, all documents which in whole or in part
contain any trade secrets or confidential information of the Company, which
in any of these cases are in his possession or under his control.
7. TERMINATION; CHANGE OF CONTROL.
7.1 AT-WILL EMPLOYMENT. Employee's employment hereunder is "at will"
and may be terminated at any time, with or without cause, at the option of
the Company, subject only to the obligations under Section 7.2 below.
Additionally, this Agreement may be terminated by Employee by delivering
written notice to the Company in the manner specified below. Simultaneous
with any termination or resignation hereunder, the Employment Period shall
expire.
7.2 RIGHTS UPON TERMINATION; PAYMENT OF BENEFITS EARNED THROUGH DATE
OF TERMINATION. Upon any termination of Employee's employment during the
Employment Period, Employee shall in all events be paid all accrued but
unpaid Base Salary and all earned but unpaid compensation (vacation) earned
through his Date of Termination (as defined below). Employee shall also
retain all such rights with respect to vested equity-based awards as are
provided under the circumstances under the applicable grant or award
agreement, and shall be entitled to all other benefits which are provided
under the circumstances in accordance with the provisions of the Company's
generally applicable employee benefit plans, practices and policies and
Employee shall have no further entitlements with respect thereto.
7.3 NOTICE OF TERMINATION. Notice of termination of this Agreement or
of any termination of Employee's employment (other than by reason of death)
shall be communicated by written notice (a "Notice of Termination") from
one party to the other in accordance with this Section 7 and Section 8.
"Date of Termination," with respect to any termination of Employee's
employment during the Employment Period, shall mean the effective date of
termination specified in the Notice of Termination.
7.4 CHANGE OF CONTROL. If an Event of a Change in Control (as defined
below) occurs during the Employment Period, Employee shall be entitled to
the following benefits: (i) the immediate vesting of all outstanding
warrants and/or options to purchase shares of the Company's common stock
and any such outstanding warrants and/or options held by the Employee shall
remain exercisable through the end of the stated term thereof, (ii) a cash
lump sum payment equal to four (4) months base salary payable at Employee's
then current rate, and (iii) medical benefits provided under Section 3.5
for a period of four (4) months commencing with the date of consummation of
the Event of a Change in Control. For purposes of this Agreement, an "Event
of a Change in Control" shall mean (a) the sale, whether by way of merger,
consolidation, or other disposition, of all or substantially all of the
business and/or assets of the Company, (b) the sale by the then
stockholders of the Company in a single transaction or in a series of
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related transactions of at least 50% of the outstanding voting power of the
Company; (c) an exchange by the then stockholders of the Company of their
shares in a transaction that qualifies as a reorganization within the
meaning of the Internal Revenue Code of 1986, as amended; or (d) the
liquidation or dissolution of the Company, except that a liquidation or
reorganization effected in a bankruptcy case by or against the Company
under Title 11 of the United States Code, as well as any transactions
carried out by or for the Company in connection with such bankruptcy
liquidation or reorganization, shall not be an Event of a Change in
Control.
8. NOTICE. Any notice required or permitted hereunder shall be in writing
and shall be deemed sufficient when given by hand or by nationally recognized
overnight courier or by express, registered or certified mail, postage prepaid,
return receipt requested, and addressed, if to the Company at 000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000, and if to Employee at the address set forth
in the Company's records (or to such other address as may be provided by
notice). Notice shall be effective three (3) days after it is delivered to any
courier, or immediately if delivered in hand.
9. MISCELLANEOUS. This Agreement constitutes the entire agreement between
the parties concerning the subjects hereof and supersedes any and all prior
agreements, term sheets or understandings. This Agreement may not be assigned by
Employee, and may be assigned by the Company and shall be binding upon, and
inure to the benefit of, the Company's successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Headings herein are for convenience
of reference only and shall not define, limit or interpret the contents hereof.
10. AMENDMENT. This Agreement may be amended, modified or supplemented by
the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective. No waiver by either party of any
breach by the other party of any condition or provision contained in this
Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by Employee or an
authorized officer of the Company, as the case may be.
11. SEVERABILITY. The provisions of this Agreement are severable. The
invalidity of any provision shall not affect the validity of any other
provision, and each provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
12. RESOLUTION OF DISPUTES; ENFORCEMENT. Any controversy or claim seeking
equitable relief pursuant to this Agreement, all controversies and claims
arising under or in connection with this Agreement or relating to the
interpretation, breach or enforcement hereof and all other disputes between the
parties in connection with the employment of the Employee shall be heard in the
courts of the State of New York, County of Nassau ("Court") which shall have
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exclusive jurisdiction of any and all such disputes and which shall apply the
law specified in Section 17 below. Each party shall pay the cost of his or its
own legal fees and expenses incurred in connection with any such litigation. No
party to any such litigation shall be liable to the other for multiple,
punitive, exemplary or consequential damages. All parties consent to the
jurisdiction of the Court, and agree inter alia that service may be had pursuant
to the provisions of any "long-arm statute" so-called applicable to proceedings
pending within such Court.
13. SURVIVORSHIP. The provisions of Sections 4, 5 and 6 of this Agreement
shall survive Employee's termination of employment. Other provisions of this
Agreement shall survive any termination of Employee's employment to the extent
necessary to the intended preservation of each party's respective rights and
obligations.
14. WITHHOLDING. All amounts required to be paid by the Company shall be
subject to reduction in order to comply with applicable federal, state and local
tax withholding requirements.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
16. DEFINITION OF TERMS. The term "AFFILIATE," when used in this Agreement
with respect to any person, means any other person that, directly or indirectly,
controls, is controlled by or is under common control with the first person. The
term "PERSON," when used in this Agreement, means any natural person or entity
with legal status.
17. GOVERNING LAW. This Agreement shall be construed and regulated in all
respects under the internal laws of the State of New York, without regard to
principles of conflict of laws of such state.
18. CAPTIONS. All captions are provided for convenience, do not form a part
of this Agreement, and are not admissible for purposes of construction.
IN WITNESS WHEREOF, this Agreement is entered into as of the date first
written above.
DHB INDUSTRIES, INC.
By: /s/ XXXXXX XXXXXX
_____________________________________
Name: Xxxxxx Xxxxxx
Its: Compensation Committee Chairman
/s/ XXXX XXXXXXXXXXX
_____________________________________
Xxxx Xxxxxxxxxxx
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