EMPLOYMENT AGREEMENT
Exhibit
10.35
LMI AEROSPACE, INC., a
Missouri corporation (the “Corporation”), and Xxxxxx X. Xxxx (“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
January 1, 2008 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 Employee’s 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 Employee 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 Employee’s position,
even with reasonable accommodation, as determined by a physician selected by the
Corporation. The Employee acknowledges and agrees that Employee shall
voluntarily submit to a medical or psychological examination for the purpose of
determining Employee’s continued fitness to perform the essential functions of
Employee’s 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 Employee’s 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 Employee an amount that is equivalent to ten (10) calendar
days of Employee’s 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 Employee’s 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
Employee’s length of service with the Corporation. Specifically, the Corporation
shall provide Employee with six (6) months of Base Salary if Employee has less
than five (5) years of service with the Corporation as of the date of Employee’s
termination and with twelve (12) months of Base Salary if Employee has five (5)
or more years of service with the Corporation as of the date of Employee’s
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 in conjunction with the sale of substantially all of the
operating assets of the Corporation, 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 acquisition of more than fifty percent (50%) of the stock of
the Corporation by a group of shareholders or an entity which acquires control
of the Corporation (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 Employee’s employment
for a good reason as determined by the Corporation (such as the Purchaser
refusing to offer full time employment to Employee on terms comparable to those
provided by the Corporation prior to the acquisition or the Purchaser requiring
Employee to move to a new location), the Corporation shall provide Employee with
severance pay in an amount that is equal to two times Employee’s annual Base
Salary and shall pay Employee any reasonably anticipated Performance Bonus for
the fiscal year in which Employee was terminated on a prorated
basis.
(2) If
Employee voluntarily terminates Employee’s employment without a good reason (as
determined by the Corporation) 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 Employee has less than five (5) years of service with the
Corporation as of the date of Employee’s termination and with twelve (12) months
of Base Salary if Employee has five (5) or more years of service with the
Corporation as of the date of Employee’s termination.
(3) For
purposes of this paragraph 2(B), in the event a change of control occurs after
April 1, 2007, 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.
3. Compensation.
(A) During
the period from January 1, 2008 to December 31, 2008, the Corporation shall
compensate Employee for Employee’s services rendered hereunder by paying to
Employee an annual salary (the “Base Salary”) of Two Hundred Eighty Five
Thousand, Five Hundred Sixteen Dollars ($285,516.00), 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 Two Hundred Ninety Four Thousand,
Eighty One Dollars ($294,081.00), 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 Three Hundred Two Thousand, Nine Hundred Three
Dollars ($302,903.00), 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 Employee's services rendered
hereunder will be Three Hundred Two Thousand, Nine Hundred Three Dollars
($302,903.00), 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 fiscal year 2008 of the Corporation, (i) provided that Employee is
employed under the terms of this Agreement as of the last day of 2008, and (ii)
the Corporation’s “Annual Income from Operations” (as that term is hereinafter
defined) is more than the lesser of Fifteen Million Dollars ($15,000,000.00) or
Sixty Percent (60%) of the Corporation’s annual budget for Annual Income from
Operations, the Corporation shall pay to Employee, in addition to the Base
Salary, an annual “Performance Bonus”. Thereafter, with respect to each complete
fiscal year of the Corporation subsequent to 2008 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 Sixty Percent (60%) of the Corporation’s
annual budget for Annual Income from Operations, the Corporation shall pay to
Employee, in addition to the Base Salary, an annual “Performance
Bonus”.
The
amount of the annual Performance Bonus (if any) shall be equal to:
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(1)
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five
percent (5.0%) of the Employee’s Base Salary;
plus
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(2)
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Seventy
Five hundredths of one percent (0.750%) of the excess of the Corporation’s
Annual Income from Operations over the thresholds defined in (B)
above.
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In the
event the Corporation’s Annual Income from Operations for fiscal year 2008 of
the Corporation is less than the lesser of Fifteen Million Dollars
($15,000,000.00) or Sixty Percent (60%) of the Corporation’s Annual budget for
Annual Income from Operations, the Employee shall not be entitled to a
Performance Bonus with respect to such fiscal year. Thereafter, in years
subsequent to 2008, in the event the Corporation’s Annual Income from Operations
for any given fiscal year is less than Sixty Percent (60%) of the Corporation’s
Annual budget for Annual Income from Operations, the Employee shall not be
entitled to a Performance Bonus with respect to fiscal year 2008.
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) any bonus paid to the
Corporation’s Chairman of the Board and any formula bonuses paid pursuant to
employment contracts, (b) federal and state income tax, (c) any interest expense
or other income and expense as they appear on the Corporation’s annual audited
financial statements, (d) any income or loss related to D3 Technologies, 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
Corporation may authorize from time to time.
(D) The
Corporation retains the right to modify or adjust the manner in which the
Performance Bonus is calculated in the event that the Corporation 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 Chief Executive Officer of the Corporation or in such other
positions as may be determined by the Board of Directors of the Corporation, and
Employee shall perform such duties on behalf of the Corporation and its
subsidiaries by such means, at such locations, and in such manner as may be
specified from time to time by the officers or Board of Directors of the
Corporation.
(B) Employee
agrees to abide by and conform to all rules established by the Corporation
applicable to its employees.
(C) Employee
acknowledges that Employee 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 Corporation’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 for 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
Corporation.
(C) The
Corporation shall furnish to the Employee during the term of Employee’s
employment an automobile selected by the Corporation to aid the Employee in the
performance of Employee’s duties. Upon agreement of the Corporation and the
Employee, the Corporation may, in lieu of the automobile, provide the Employee
with a Six Thousand Dollar ($6,000.00) annual automobile allowance.
7. Covenants of
Employee.
(A) 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 knowledge, devices,
information, trade secrets, techniques, customer lists, business plans or other
data belonging to the Corporation or developed by Employee on behalf of the
Corporation during Employee’s employment with the Corporation, without regard to
whether all of the foregoing matters will be deemed confidential, material or
important, the parties hereto stipulating, as between them, that the same are
important, material, confidential and the property of the Corporation
(hereinafter “Confidential Information”), 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 (A) shall be a material
breach of this Agreement.
(B) During
the term of Employee’s employment with the Corporation and for a period of two
(2) years or one (1) year with respect to subparagraph (4) below (the “Covenant
Term”) after cessation for whatever reason of such employment (except as
hereinafter provided in subparagraph (C) of this paragraph 7, Employee covenants
and agrees that Employee will not in any manner directly or
indirectly:
(1) solicit,
divert, take away or interfere with any of the customers (or their respective
affiliates or successors) of the Corporation;
(2) engage
directly or indirectly, either personally or as an employee, partner, associate
partner, officer, manager, agent, advisor, consultant or otherwise, or by means
of any corporate or other entity or device, in any business which is competitive
with the business of the Corporation. For purposes of this covenant a business
will be deemed competitive if it is conducted in whole or in part within any
geographic area wherein the Corporation is engaged in marketing its products,
and if it involves the manufacture of component parts for the aerospace industry
or any other business which is in any manner competitive, as of the date of
cessation of Employee’s employment, with any business then being conducted by
the Corporation or as to which the Corporation has then formulated definitive
plans to enter;
(3) induce
any salesman, distributor, supplier, manufacturer, representative, agent, jobber
or other person transacting business with the Corporation to terminate their
relationship with the Corporation, or to represent, distribute or sell products
in competition with products of the Corporation; or
(4) induce
or cause any employee of the Corporation to leave the employ of the
Corporation.
(C) The
parties agree that the Covenant Term provided for in the preceding subparagraph
(B) shall be:
(1) reduced
to six (6) months in the event all of the operating assets or all of the common
stock of the Corporation is sold to any entity or individuals unaffiliated with
the Corporation, its successors or assigns; or
(2) eliminated
if the business currently operated by the Corporation is terminated and the
assets of the Corporation are liquidated.
(D) 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.
(E) 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 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 documents, records (including without limitation, customer records),
notebooks, invoices, statements or correspondence, including copies thereof,
relating to the business of the Corporation 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 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 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(E) 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, arbitration 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 the Corporation 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 Employee shall not
be construed as a waiver of such breach nor prevent the Corporation 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 acquires a
majority of the stock of the Corporation. 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 13, 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, by
over-night courier, or by certified or registered mail, return receipt
requested, if to the Corporation, to:
Xxxxxx
Xxxxxxxx
LMI
AEROSPACE, INC.
X.X. Xxx
000
Xx.
Xxxxxxx, XX 00000-0000
and, if
to Employee, to:
Xxxxxx X.
Xxxx, President
LMI
AEROSPACE, INC.
X.X. Xxx
000
Xx.
Xxxxxxx, XX 00000-0000
or to
such other address as may be specified by either of the parties in the manner
provided under this paragraph 14.
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 Corporation’s rights under this
Agreement, the Corporation may advise any third party of the existence of this
Agreement and its terms, and the Employee specifically releases and agrees to
indemnify and hold the Corporation harmless from any liability for doing
so.
19. Opportunity to
Review. Employee hereby represents and warrants that Employee has had an
opportunity to review this Agreement and ask the Corporation questions about the
Agreement, and understands the meaning and effect of each paragraph of this
Agreement.
The
parties have executed this Agreement as of January 1, 2008.
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LMI
AEROSPACE, INC.
(“Corporation”)
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By:
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Xxxxxx
Xxxxxxxx
Chairman
of the Board of Directors
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Xxxxxx
X. Xxxx
(“Employee”)
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