EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 20, 2005, is
entered into between ARMOR HOLDINGS, INC., a Delaware corporation (the
"Company") and XXXXX X. X'XXXXX (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Employee and to be assured of
his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on such terms
and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Company and the Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee as President of its
Products Division, and the Employee accepts such employment, upon the terms and
subject to the conditions set forth in this Agreement.
2. TERM. The term of this Agreement shall commence on the date hereof and
terminate on May 20, 2008 (the "Term"), subject to earlier termination pursuant
to the provisions of Section 9 hereof.
3. DUTIES. During the Term of this Agreement, the Employee shall serve as
the President of the Company's Products Division and shall perform all duties
commensurate with his position and as may be assigned to him by the Chief
Executive Officer of the Company. The Employee shall devote his full business
time and energies to the business and affairs of the Company and shall use his
best efforts, skills and abilities to promote the interests of the Company and
to diligently and competently perform the duties of his position.
4. COMPENSATION AND BENEFITS. (a) During the term of this Agreement, the
Company shall pay to the Employee, and the Employee shall accept from the
Company, as compensation for the performance of services under this Agreement
and the Employee's observance and performance of all of the provisions hereof, a
salary of $350,000 per year (the "Base Compensation"). The Compensation
Committee and the Board of Directors shall review Employee's Base Compensation
annually and, based on a number of factors, including, without limitation, the
Company's performance and the Employee's performance, may in their sole and
absolute discretion, increase such Base Compensation. The Employee's salary
shall be payable in accordance with the normal payroll practices of the Company
and shall be subject to
withholding for applicable taxes and other amounts. Upon the occurrence of a
"change in control" (as hereinafter defined), the Employee shall have the right
to terminate this Agreement. Upon (i) the termination of this Agreement by the
Company without cause, or (ii) if the Company does not offer to renew this
Agreement upon expiration of the Term on substantially similar terms, and
provided that the Employee is no longer employed by the Company, then in either
such case, the Employee shall be entitled to receive a severance payment from
the Company equal to one year's Base Compensation, which shall be payable over a
period of one year in accordance with the normal payroll practices of the
Company and shall be subject to withholding for applicable taxes and other
amounts; provided, however, that if any such payments would be payable 2 1/2
months after the beginning of the next calendar year after such termination or
non-renewal, such payments shall not commence until six months have elapsed from
the effective date of such termination without cause or non-renewal; and
provided, further, that the first payment that is payable after such six month
period shall include all amounts that would have been payable during such six
month period but were withheld due to the provisions hereof (such payment is
referred to as the "Termination Payment"). Notwithstanding anything to the
contrary contained herein, in the event that the Employee has breached his
obligations under Sections 7 or 8 hereof, then the Employee shall immediately
repay to the Company the full amount of the gross Termination Payment before
taking into account any withholdings for applicable taxes and other amounts. For
purposes of this Agreement, a non-renewal of this Agreement shall not be deemed
to have occurred if the Company offers the Employee to renew this Agreement upon
substantially the same terms and conditions set forth herein and the Employee
rejects such offer.
(b) During the Term, the Employee shall be entitled to participate in
or benefit from, in accordance with the eligibility and other provisions
thereof, the Company's medical insurance and other fringe benefit plans or
policies as the Company may make available to, or have in effect for, its
personnel with commensurate duties from time to time, including, without
limitation, any Supplemental Executive Retirement Plan. The Company retains the
right to terminate or alter any such plans or policies from time to time. The
Employee shall also be entitled to four weeks paid vacation each year, sick
leave and other similar benefits in accordance with policies of the Company from
time to time in effect for personnel with commensurate duties. Subject to the
terms of this Section 4(b), the Employee will be entitled to receive at no cost
to the Employee, (i) one year of coverage for medical benefits described above
if this Agreement is terminated pursuant to Section 10(a) or (b) hereof, or if
the Company does not offer to renew this Agreement upon expiration of the Term
on substantially similar terms and provided that Employee is no longer employed
by the Company, and (ii) one year of coverage for medical benefits described
above if this Agreement is terminated by the Company without cause or there
occurs a change in control and the Employee terminates this Agreement; provided,
however, that in each such case, such coverage need not be provided by the
Company if the Employee is eligible for commensurate coverage for medical and
other fringe benefits described above through another employer.
(c) The Employee shall also be entitled to participate, at the sole and
absolute discretion of the Compensation Committee of the Board of Directors of
the Company, (i) in the Company's incentive stock option plan, and (ii) in the
Company's bonus plan. Such participation shall be based upon, among other
things, the Employee's performance and the
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Company's performance. In addition, the Employee may be entitled, during the
term of this Agreement, to receive such additional options, at such exercise
prices and other terms, and/or to participate in such other bonus plans, whether
during the term of this Agreement or upon termination pursuant to Section 9
hereof, as the Compensation Committee of the Board of Directors of the Company
may, in its sole and absolute discretion, determine. In addition to the
foregoing, the Employee shall be entitled to receive the stock bonus award and
options set forth on Schedule A attached hereto.
5. REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this Agreement,
upon submission of proper invoices, receipts or other supporting documentation
satisfactory to the Company and in specific accordance with such guidelines as
may be established from time to time by the Company's Board of Directors, the
Employee shall be reimbursed by the Company for all reasonable business expenses
actually and necessarily incurred by the Employee on behalf of the Company in
connection with the performance of services under this Agreement. In addition,
the Company shall provide the Employee with a non-accountable supplemental
expense reimbursement allowance of $30,000 per year for each year during the
Term.
6. REPRESENTATION OF EMPLOYEE; RESTRICTIONS ON SALE. (a) The Employee
represents and warrants that he is not party to, or bound by, any agreement or
commitment, or subject to any restriction, including but not limited to
agreements related to previous employment containing confidentiality or
noncompete covenants, which in the future may have a possibility of adversely
affecting the business of the Company or the performance by the Employee of his
duties under this Agreement. The Employee further represents and warrants that
he is not aware of any criminal activity or a violation of Company policy by any
employee or agent of the Company that has not been disclosed to the Company, and
covenants and agrees that upon his obtaining any such information, the Employee
shall promptly disclose such information to a responsible officer of the Company
and to the Company's outside counsel as set forth in Section 11(f)(ii) hereof.
(b) The Employee further covenants and agrees that he will not sell,
transfer, hypothecate, grant a security interest in, pledge or otherwise dispose
of until May 20, 2008 any of the shares of Common Stock underlying the options
to purchase 100,000 shares of Common Stock (the "Newly Granted Stock Options")
and the options to purchase 50,000 shares of Common Stock (the "Accelerated
Stock Options"), and such restriction on dispositions shall apply upon a
termination of this Agreement for cause as described in Section 10(c) hereof;
provided, however, that the restriction with respect to such dispositions as set
forth in this sentence shall not apply to the Employee in the event of a change
in control of the Company or in the event of a termination of this Agreement
pursuant to Sections 10(a), 10(b) or 10(d) hereof. With respect to any shares of
Common Stock issuable to Employee upon the exercise of previously granted
options or any shares of Common Stock owned by the Employee, all as more fully
set forth on Schedule B attached hereto, other than those shares underlying the
Newly Granted Stock Options and the Accelerated Stock Options, the Employee
shall give the Company's Chairman of the Board and President five business days
advance written notice of any intent to sell such Common Stock. In addition, in
the event of a termination of this Agreement by the Company for cause, or a
termination of this Agreement by the Employee other
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than due to a change in control, any existing lock-up restrictions still
applicable on the date of termination to any shares of Common Stock underlying
the Newly Granted Stock Options and the shares of Common Stock underlying the
Accelerated Stock Options shall be extended for a period of five years from the
date such lock-up restriction is initially scheduled to terminate. The grants of
stock bonus awards and options identified herein shall be evidenced by separate
stock bonus award agreements and stock option award agreements, as applicable,
between the Company and the Employee. The lock-up provisions contemplated herein
that are applicable to the Accelerated Stock Options shall be evidenced by an
amendment to the stock option award agreement between the Company and the
Employee with respect to the Accelerated Stock Options.
(c) For purposes hereof, a "change in control" of the Company shall be
deemed to have occurred in the event that: (i) individuals who, as of the date
hereof, constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising the Board of
Directors shall be considered as though such individual was a member of the
Board of Directors as of the date hereof; (ii) the Company shall have been sold
by either (A) a sale of all or substantially all its assets, or (B) a merger or
consolidation, other than any merger or consolidation pursuant to which the
Company acquires another entity, or (C) a tender offer, whether solicited or
unsolicited; or (iii) any party, other than the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended), directly or indirectly, of voting securities of the
Company representing 40% or more of the total voting power of all of the
then-outstanding voting securities of the Company.
(d) In addition, upon the occurrence of a change in control, all stock
bonus awards of the Company granted to the Employee shall vest and become
immediately exercisable and saleable, and any lock-up restrictions applicable to
any stock bonus awards or options awarded to the Employee shall terminate, on
the effective date of such change in control. In the event that this Agreement
is terminated by the Company with cause pursuant to Section 10(c) hereof prior
to the expiration of the Term, all unvested stock bonus awards granted to the
Employee shall terminate. In the event that this Agreement is terminated by the
Company without cause pursuant to Section 10(d) hereof prior to the expiration
of the Term, all unvested stock bonus awards granted to the Employee in respect
of a change in control shall terminate except for the stock bonus awards granted
to the Employee as bonus compensation (the "Bonus Stock"); provided, that (i)
the vesting schedule for the Bonus Stock shall not be modified; and (ii) in the
event the Employee breaches any of his obligations set forth in Sections 7 and 8
hereof, the Company shall be permitted to offset from any unvested Bonus Stock
an amount equal to the damages incurred by the Company due to the Employee's
breach(es) of Sections 7 and/or 8 hereof. In the event that this Agreement is
terminated by the Employee, other than due to a change in control, all vested
options for the purchase of Common Stock and stock bonus awards of the Company
granted to the Employee shall remain subject to the lock-up restrictions
contained in Section 6(b) of this Agreement or any other lock-up agreements, as
applicable, and the unvested portion of such stock bonus awards shall terminate.
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7. CONFIDENTIALITY; INTELLECTUAL PROPERTY. For purposes of this Section
7, all references to the Company shall be deemed to include all of the Company's
affiliates and subsidiaries.
(a) Confidential Information. The Employee acknowledges that as a
result of his/her employment with the Company, the Employee has and will
continue to have knowledge of, and access to, proprietary and confidential
information of the Company (in written, graphic, oral and/or other forms, and in
electronic, magnetic, paper and other media), including, without limitation,
information regarding the Company's assets, properties, business, plans,
strategies, operations, business and product development, including without
limitation, acquisitions and new lines of business, trade secrets, novel ideas,
inventions, know-how, customers, business affiliates, techniques, training
materials, algorithms, computer programs (including source code and object
code), designs, formulas, test plans, data, analyses and results, services,
costs, finances, financial statements and projections, financial and marketing
information, markets, sales, vendors, suppliers, personnel, pricing policies,
plans for future developments, acquisition or disposition strategies,
specifications, technology, research and development, and other similar
information in respect of the Company (collectively, the "Confidential
Information"), and that such information, even though it may be contributed to,
developed or acquired by the Employee, constitutes valuable, special and unique
assets of the Company developed at great expense, which are the exclusive
property of the Company. Accordingly, the Employee shall not, at any time,
either during or subsequent to the term of his employment with the Company, use
(whether for personal gain or otherwise), reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior written consent of the Company,
except to responsible officers and employees of the Company and other
responsible persons who are in a contractual or fiduciary relationship with the
Company who have a need for such information for purposes in the best interests
of the Company, and except (i) for such information which is or becomes of
general public knowledge from authorized sources other than the Employee, or
(ii) as may be required by law, regulation, legal proceeding or court order. The
Employee acknowledges that the Company would not enter into this Agreement
without the assurance that all such Confidential Information will be used for
the exclusive benefit of the Company.
(b) Return of Confidential Information. Confidential Information or
other information relating to the Company's business or products which come into
the possession of the Employee shall remain the sole property of the Company,
and shall not be copied, photocopied, reprinted or otherwise reproduced or
disseminated by the Employee except in the performance of his duties as an
employee of the Company and then only at the direction of the Company. Upon the
earlier of the Company's request therefor, or the termination of the Employee's
employment by the Company, the Employee shall return to the Company all such
information, and all copies, facsimiles, replicas, photocopies, and
reproductions of them.
(c) Intellectual Property. (i) Employee expressly agrees that any
products, works of authorship, deliverables, designs, processes, drawings or
inventions produced by him at the request or on behalf of the Company (the
"Materials") shall be the property of the Company. The Company shall own all
right, title and interest in and to the Materials, and all additions to,
deletions from, alterations of or revisions to, and each part thereof, including
all tools and work
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in progress with respect thereto, and all other materials provided to Employee
by or at the expense of the Company. Without limiting the foregoing, Employee
hereby acknowledges that his work and services for the Company and all results
thereof are "works made for hire" for the Company as that term is defined by the
Copyright Act of 1976, as amended (the "Copyright Act"), and the Company shall
own all right, title and interest therein. The Company shall be considered the
author of the Materials for purposes of copyright and shall own all the rights
in and to the copyright to the Materials, and, as between Employee and the
Company, only the Company shall have the right to obtain copyright registration
of the Materials which the Company may do in its name, its trade name or the
name of its nominee. The Company shall have the sole and exclusive rights to do
and authorize any and all of the acts set forth in Section 106 of the Copyright
Act with respect to the Materials and any derivatives thereof, and to secure any
extensions or renewals of such copyrights. Employee retains no rights to the
Materials and agrees not to challenge the validity of the Company's ownership of
the Materials.
(ii) To the extent that the Materials are determined by a court of
competent jurisdiction or the Register of Copyrights not to be a work made for
hire and/or for purposes of ownership of any inventions or patent rights in and
to the Materials, Employee hereby irrevocably assigns, transfers, releases and
conveys to the Company all right, title and interest (including all patent,
copyright, trade secret and trademark rights) of Employee in and to the
Materials. The rights hereby conveyed to the Company hereunder include without
limitation all rights to any and all inventions relating to or described in the
Materials. Employee further agrees to execute (and to cause its principals,
employees and agents to execute) any and all documents deemed necessary or
appropriate by the Company to effectuate a complete transfer of ownership of all
rights in the Materials to the Company throughout the world.
(iii) The Employee will promptly disclose to the Company all Materials
conceived, developed or acquired by him alone or with others during the term of
his employment with the Company, whether or not conceived during regular working
hours, through the use of Company time, material or facilities or otherwise.
Without limiting the scope of this Section 7, all such Materials shall be the
sole and exclusive property of the Company, and upon the Company's request, the
Employee shall deliver to the Company all drawings, models and other data and
records relating to such Materials. In the event any such Materials shall be
deemed by the Company to be patentable or copyrightable, the Employee shall, at
the expense of the Company, assist the Company in obtaining any patents or
copyrights thereon and execute all documents and do all other things necessary
or proper to obtain letters patent and copyright registrations and to vest the
Company with full title thereto.
(iv) The Employee irrevocably designates and appoints the Company and
each of its duly authorized officers or agents, individually, as his agent and
attorney-in-fact, to act for and in his behalf and stead to execute and file any
such document and to do all other lawfully permitted acts to further the
prosecution, issuance, and enforcement of patents, copyrights, or other rights
or protection with the same force and effect as if executed and delivered by the
Employee.
8. REMEDIES. The restrictions set forth in Section 7 are considered by the
parties to be fair and reasonable. The Employee acknowledges that the
restrictions contained in
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Section 7 will not prevent him from earning a livelihood. The Employee further
acknowledges that the Company would be irreparably harmed and that monetary
damages would not provide an adequate remedy in the event of a breach of the
provisions of Section 7. Accordingly, the Employee agrees that, in addition to
any other remedies available to the Company, the Company (i) shall be entitled
to specific performance, injunction, and other equitable relief to secure the
enforcement of such provisions, (ii) shall not be required to post bond in
connection with seeking any such equitable remedies, and (iii) shall be entitled
to receive reimbursement from the Employee for all attorneys' fees and expenses
incurred by the Company in enforcing such provisions. If any provisions of
Sections 7 or 8 relating to the time period, scope of activities or geographic
area of restrictions is declared by a court of competent jurisdiction to exceed
the maximum permissible time period, scope of activities or geographic area, the
maximum time period, scope of activities or geographic area, as the case may be,
shall be reduced to the maximum which such court deems enforceable. If any
provisions of Sections 7 or 8 other than those described in the preceding
sentence are adjudicated to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which adjudication is made) in such manner as to render them
enforceable and to effectuate as nearly as possible the original intentions and
agreement of the parties.
9. TERMINATION. This Agreement may be terminated prior to the expiration of
the Term set forth in Section 2 upon the occurrence of any of the events set
forth in, and subject to the terms of, this Section 9.
(a) Death. This Agreement will terminate immediately and automatically
upon the death of the Employee.
(b) Disability. This Agreement may be terminated at the Company's
option, immediately upon notice to the Employee, if the Employee shall suffer a
permanent disability. For the purposes of this Agreement, the term "permanent
disability" shall mean the Employee's inability to perform his duties under this
Agreement for a period of ninety (90) consecutive days or for an aggregate of
one hundred twenty (120) days, whether or not consecutive, in any twelve (12)
month period, due to illness, accident or any other physical or mental
incapacity, as reasonably determined by the Board of Directors of the Company.
In the event that a dispute arises with respect to the disability of the
Employee, the parties shall each select a physician licensed to practice in the
State of Florida to make such a determination. If the two (2) physicians
selected cannot agree on a determination, they will mutually select a third
physician and the decision of the majority of the three (3) physicians will be
binding.
(c) Cause. This Agreement may be terminated at the Company's option,
immediately upon notice to the Employee, upon: (i) breach by the Employee of any
material provision of this Agreement and the expiration of a 10-day cure period
for such breach after written notice thereof has been given to the Employee
(which cure period shall not be applicable to clauses (ii) through (v) of this
Section 9(c)); (ii) gross negligence or willful misconduct of the Employee in
connection with the performance of his duties under this Agreement; (iii)
Employee's failure to perform any reasonable directive of the Board of Directors
of the Company; (iv) fraud, criminal conduct, dishonesty or embezzlement by the
Employee; or
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(v) Employee's misappropriation for personal use of any assets (having in excess
of nominal value) or business opportunities of the Company.
(d) Without Cause. This Agreement may be terminated at any time by the
Company without cause immediately upon giving written notice to the Employee of
such termination. In such event, the Employee shall be entitled to receive the
Termination Payment in accordance with the provisions of Section 4(a) hereof.
10. MISCELLANEOUS.
(a) Survival. The provisions of Sections 6(b), 7, 8 and 10 shall
survive the termination of this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire
understanding of the parties pertaining to the subject matter hereof.
(c) Modification. This Agreement may not be modified or terminated
orally, and no modification or waiver of any of the provisions hereof shall be
binding unless in writing and signed by the party against whom the same is
sought to be enforced.
(d) Waiver. Failure of a party to enforce one or more of the provisions
of this Agreement or to require at any time performance of any of the
obligations hereof shall not be construed to be a waiver of such provisions by
such party nor to in any way affect the validity of this Agreement or such
party's right thereafter to enforce any provision of this Agreement, nor to
preclude such party from taking any other action at any time which it would
legally be entitled to take.
(e) Successors and Assigns. Neither party shall have the right to
assign this Agreement, or any rights or obligations hereunder, without the
written consent of the other party; provided, however, that upon the sale of all
or substantially all of the assets, business and goodwill of the Company to
another company, or upon the merger or consolidation of the Company with another
company, this Agreement shall inure to the benefit of, and be binding upon, both
Employee and the company purchasing such assets, business and goodwill, or
surviving such merger or consolidation, as the case may be, in the same manner
and to the same extent as though such other company were the Company; and
provided, further, that the Company shall have the right to assign this
Agreement to any affiliate or subsidiary of the Company. Subject to the
foregoing, this Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
(f) Communications. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given at the time personally delivered or when mailed in any United
States post office enclosed in a registered or certified postage prepaid
envelope and addressed to the addresses set forth below, or to such other
address as any party may specify by notice to the other party; provided,
however, that any notice of change of address shall be effective only upon
receipt:
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(i) TO THE COMPANY: Armor Holdings, Inc.
00000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
(ii) WITH A COPY TO: Xxxx Xxxxxxx, P.C.
1350 Avenue of the Xxxxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(iii) TO THE EMPLOYEE: Xxxxx X. X'Xxxxx
00000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(g) Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, such invalidity
or unenforceability shall not affect the validity and enforceability of the
other provisions of this Agreement and the provision held to be invalid or
unenforceable shall be enforced as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
(h) Jurisdiction; Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts located in New York County, New York. Any
breach of any provisions of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York, and the parties irrevocably
and expressly agree to submit to the jurisdiction of the courts located in New
York County, New York for the purpose of resolving any disputes among them
relating to this Agreement or the transactions contemplated by this Agreement
and waive any objections on the grounds of forum non conveniens or otherwise.
The parties hereto agree to service of process by certified or registered United
States mail, postage prepaid, addressed to the party in question.
(i) Governing Law. This Agreement is made and executed and shall be
governed by the laws of the State of New York, without regard to the conflicts
of law principles thereof.
(j) No Third-Party Beneficiaries. Each of the provisions of this
Agreement is for the sole and exclusive benefit of the parties hereto and shall
not be deemed for the benefit of any other person or entity.
(k) Code Section 409A. The parties to this Agreement intend that the
Agreement complies with Section 409A of the Internal Revenue Code of 1986, as
amended (the "Code"), where applicable, and this Agreement shall be interpreted
in a manner consistent with that intention. To the extent not otherwise provided
by this Agreement, and solely to the extent required by Section 409A of the
Code, no payment or other distribution required to be made to the Employee
hereunder (including any payment of cash, any transfer of property and any
9
provision of taxable benefits) as a result of his termination of employment with
the Company shall be made earlier than the date that is six (6) months and one
day following the date on which the Employee separates from service with the
Company and its affiliates (within the meaning of Section 409A of the Code).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date set forth above.
ARMOR HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
President and Chief Operating Officer
/s/ Xxxxx X. X'Xxxxx
------------------------------------------
Xxxxx X. X'Xxxxx
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