EXHIBIT 10.46
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into November 12, 2001, effective
October 1, 2000, by and between Simula, Inc., an Arizona corporation (the
"Company") and Xxxxxxx X. Xxxxx (the "Executive"):
WITNESSETH :
WHEREAS, the Company desires to establish its right to the services of
the Executive, in the capacity described below, on the terms and conditions set
forth, and the Executive is to accept such employment on such terms and
conditions; and
WHEREAS, the Company desires to insure, insofar as possible, that it
will continue to have the benefit of the Executive's services over the
employment term and to protect its confidential information and goodwill; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
SECTION ONE
1.1 Employment as President and Chief Executive Officer of the Company.
The Company does hereby employ, engage and hire the Executive as President and
Chief Executive Officer of the Company, and the Executive does hereby accept and
agree to such hiring, engagement and employment. The Executive's duties during
the employment period shall be such executive, managerial and board of director
duties as are set forth hereunder, as the Board of Directors of the Company (the
"Board") shall from time to time prescribe, and as shall be provided in the
Bylaws of the Company. The Executive will devote the preponderance of his time,
energy and skill to the performance of his duties for the Company and for the
benefit of the Company, subject to reasonable vacations and absences due to
illness. Furthermore, the Executive will exercise due diligence and care in the
performance of his duties for the Company under this Agreement.
SECTION TWO
2.1 Employment Term.
(a) The Executive shall be employed by the Company for the duties as
set forth in Section 1 for the three (3) year period commencing on October 1,
2000, and ending on March 31, 2003, (the "Employment Term"), unless the
employment of the Executive is extended pursuant to subparagraph (b) below or
terminates earlier in accordance with the provisions of this Agreement.
(b) This Agreement will automatically renew for an additional three (3)
year period on the terms and conditions then existing, unless either party
notifies the other in writing of its decision not to renew the Agreement no less
than one (1) year prior to the end of the Employment Term; provided that in no
event shall the Employment Term exceed three (3) years from the date either
party notifies the other of its decision not to renew the Agreement. To the
degree this Agreement is in effect in any renewal of the Employment Term, the
total period under which the Executive renders services shall be referred to as
the "Employment Term."
(c) Notwithstanding the foregoing, if a Change of Control (as defined
in Section 5.2(g)) occurs when the Executive is employed by the Company, the
Company will continue thereafter to employ the Executive, and the Executive will
remain in the employ of the Company, in accordance with the terms and provisions
of this Agreement, during the Employment Period (as defined in Section 5.2(j)).
SECTION THREE
3.1 Compensation.
(a) The Company shall pay the Executive and the Executive agrees to
accept from the Company during the Employment Term compensation for his services
at an initial base salary rate of Two Hundred Fifty Thousand Dollars ($250,000)
per year, payable in equal bi-weekly installments or at such other time or times
as the Executive and the Company shall agree and as otherwise provided by law.
(b) During the Employment Term, the Compensation Committee of the Board
of Directors of the Company or the appropriate committee of the Board, whichever
is appropriate, shall consider and appraise periodically, but not less
frequently than annually, the Executive's compensation. In determining such
compensation, the Board or the appropriate committee thereof, whichever is
appropriate, shall consider the commensurate increases given to other corporate
officers and key employees generally both in the Company and in other similarly
situated companies, the scope and success of the Company's operations, the
expansion of Executive's duties and the Executive's performance of his duties.
3.2 Bonus. The Executive shall also receive such bonuses as may be
declared from time to time by the Board in its sole and absolute discretion.
3.3 Fringe Benefits. The Executive shall be entitled to the following
fringe benefits:
(a) The Executive shall be entitled to participate in such employee
pension benefit plans and employee welfare benefit plans (as such terms are
defined in Sections 3(2) and 3(1), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) as are sponsored by the
Company and generally available to salaried employee participation. Such
participation shall be in accordance with the terms and provisions of the
respective employee pension benefit and employee welfare benefit plans.
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(b) The Executive shall also be entitled to participate in the
Supplement Employee Retirement Plan, as well as all Simula Stock Option and
Incentive Plans, in accordance with the terms and conditions of said plans.
(c) The Executive shall also be entitled to any benefits under the
Death Benefit Plan Agreement between the Executive and the Company dated April
1, 1997.
(d) The Executive shall also be entitled to all paid vacation and
holidays available to all employees at the Simula corporate office.
3.4 Expenses. The Company will reimburse the Executive for any and all
necessary, customary and usual expenses incurred on behalf of the Company in
accordance with Company policies, including a reasonable car allowance. The
Executive shall be responsible for additional income taxes, if any, resulting
from expenses under this Section 3.4 constituting taxable income under Section
132 of the Code (or any successor provision).
SECTION FOUR
4.1 Death or Disability. If the Executive becomes physically or
mentally disabled while employed by the Company, and as a result thereof becomes
unable to continue the proper performance of his duties for the Company, or if
the Executive dies while employed by the Company, the Executive's employment
shall automatically cease and terminate. The Company's obligation to pay the
Executive's base salary and bonuses pursuant to Sections 3.1 and 3.2 shall end
as of the date of the Executive's death or, in the case of disability, the
Executive's last day of active employment.
The Executive shall be considered to be "disabled" for purposes of this
Section 4.1, if, in the judgment of a licensed physician selected by the Board
of Directors of the Company, the Executive is "disabled" for purposes of the
Company's Long Term Disability Plan.
4.2 Normal Termination. This Agreement shall automatically renew on the
expiration of the initial Employment Term described in Section 2.1(a) without
any notice from either party, unless either party gives notice of termination
pursuant to Section 2.1(b). Unless this Agreement is terminated pursuant to
Section 4.3, the Company's obligation to pay compensation and benefits pursuant
to SECTION THREE shall continue during the Employment Term.
4.3 Termination by the Executive. Notwithstanding Section 2.1(b), the
Executive shall have the right to terminate this Agreement at any time. The
Executive agrees to provide the Company with one hundred twenty (120) days prior
written notice of any such termination. The Company's obligation to pay the
Executive's base salary and any bonuses or other compensation pursuant to
SECTION THREE shall cease as of the Executive's last day of work, subject to the
remaining provisions of this Section 4.3. Notwithstanding anything to the
contrary in this Section 4.3, if the Executive gives written notice that the
Company has materially breached any of its commitments under
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this Agreement, whether with or without resigning from employment, unless the
Company rectifies the breach within one hundred twenty (120) days of the notice
or disputes the occurrence of the alleged breach in writing within such one
hundred twenty (120) day period, the Company's obligation to pay compensation
and benefits pursuant to SECTION THREE shall continue during the Employment Term
then in effect under Section 2.1(a) or (b), even though the Executive may
thereafter resign. The Company shall be deemed conclusively to have committed
the breach if it does not dispute the occurrence of the alleged breach within
the one hundred twenty (120) day period. If the Executive resigns from the
Company pursuant to such charge of breach and there has been no determination
that the Company did not breach this Agreement, the Executive will be entitled
to receipt of compensation and benefits pursuant to SECTION THREE during the
Employment Term then in effect under Section 2.1(a) or (b). Any determination of
breach pursuant to this Section 4.3 shall be made in accordance with Section
6.1. Compensation and benefits shall remain payable during the period described
in this Section 4.3, provided that if the arbitrator determines that Company has
not materially breached this Agreement, the Executive shall be obligated to
repay to the Company the compensation and benefits paid to the Executive during
such period.
SECTION FIVE
5.1 General. In the event of a Change of Control as defined in Section
5.2(g), the provisions of this SECTION FIVE shall govern the terms and
conditions of the Executive's employment with the Company, notwithstanding any
other provision in this Agreement to the contrary. In the event of a conflict
between the provisions of this SECTION FIVE and any other provision of this
Agreement, the provisions of this SECTION FIVE shall control.
5.2 Definitions. For purposes of this SECTION FIVE, the following terms
have the meaning set forth below:
(a) "Accrued Benefits" shall mean the following amounts: (i) all salary
earned or accrued through the Termination Date; (ii) reimbursement for any and
all monies advanced in connection with the Executive's employment for reasonable
and necessary expenses incurred by the Executive through the Termination Date;
(iii) any and all other cash benefits previously earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plans then in effect; (iv) a lump sum payment of the bonus or
incentive compensation otherwise payable to the Executive with respect to the
year in which termination occurs under any bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other payments and
benefits to which the Executive may be entitled under the terms of this
Agreement and any benefit plan of the Company. Payment of Accrued Benefits shall
be made promptly in accordance with the Company's prevailing practice and the
terms of any applicable benefit plans, contracts or arrangements.
(b) "Act" shall mean the Securities Exchange Act of 1934.
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(c) "Affiliate" shall mean (i) Xxxxxxx X. Xxxxxxxxxx; (ii) a
corporation other than the Company that is a member of a "controlled group of
corporations" (within the meaning of Section 414(b) of the Code as modified by
Section 415(h) of the Code); or (iii) a group of trades or businesses under
common control (within the meaning of Section 414(c) of the Code as modified by
Section 415(h) of the Code) that also includes the Company as a member. For
purposes of determining whether a transaction or event constitutes a Change of
Control within the meaning of Section 5.2(g), "Affiliate" status shall be
determined on the day immediately preceding the date of the transaction or
event.
(d) "Base Period Income" shall be an amount equal to the Executive's
"annualized includible compensation" for the "base period" as defined in Section
280G(d)(1) and (2) of the Code.
(e) "Beneficial Owner" shall have the same meaning as given to that
term in Rule 13d-3 of the General Rules and Regulations of the Act, provided
that any pledgee of the voting securities of the Company shall not be deemed to
be the Beneficial Owner thereof prior to its disposition of, or acquisition of
voting rights with respect to, such securities.
(f) "Cause" shall be limited to (i) the engaging by the Executive in
conduct which has caused demonstrable and serious injury to the Company,
monetary or otherwise, as evidenced by a determination in a binding and final
judgment, order or decree of a court or administrative agency of competent
jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an
action, suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent jurisdiction, in effect after
exhaustion or lapse of all rights of appeal, which the Company determines has a
significant adverse impact on it in the conduct of its business; (iii)
unreasonable neglect or refusal by the Executive to perform the Executive's
duties or responsibilities (unless significantly changed without the Executive's
consent); or (iv) a significant violation by the Executive of the Company's
established policies and procedures as in effect on the date of the Change of
Control which could subject the Executive to disciplinary action by the Company.
(g) "Change of Control" shall mean one (1) or more of the following
events:
(i) Any Person, other than an Affiliate, through a transaction
or series of transactions, is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the then outstanding
securities of the Company;
(ii) A merger or consolidation of the Company with any other
corporation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation
continuing
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to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof),
in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or an
Affiliate, less than sixty percent (60%) of the combined voting power
of the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation;
provided that, for purposes of this subparagraph (ii), a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power
of the then outstanding securities of the Company (excluding any
securities acquired by that Person directly from the Company or an
Affiliate) shall not result in a Change of Control;
(iii) The shareholders of either the Company approve a sale,
transfer or other disposition of all or substantially all of the assets
of either the Company to a Person other than the Company or an
Affiliate; or
(iv) Individuals who, as of April 1, 2001, constitute the
board of directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least two-thirds (2/3) of the members of the
Company board of directors, as the case may be; provided, however, that
for purposes of this subparagraph (iv), (A) any person becoming a
member of the Company board of directors after April 1, 2001 whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least two-thirds (2/3) of the members then
comprising the Incumbent Board will be, considered as though such
person were a member of the Incumbent Board and (B) the Incumbent Board
shall not include a director whose initial assumption of office as a
director was in connection with an actual or threatened election
contest relating to the election of directors.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Disability" shall have the same meaning as given to that term in
the Company's long-term disability plan for employees.
(j) "Employment Period" shall mean a period commencing on the date of a
Change of Control, and ending on the earlier (i) of the third anniversary of
such date, or (ii) the date on which the Executive attains the age of sixty-five
(65) provided that the Executive meets the criteria of the "bona fide executive"
exception to the requirements of the Age Discrimination in Employment Act,
codified at 29 U.S.C. Section631(c).
(k) "Good Reason" shall mean:
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(i) Executive's voluntary resignation from his position within
180 days after a Change of Control;
(ii) the required relocation of the Executive, without the
Executive's consent, to an employment location which is more than
twenty-five (25) miles from the Executive's employment location on the
date of a Change of Control;
(iii) a significant reduction by the Company in the
compensation and/or benefits provided to the Executive as in effect on
the date of the Change of Control as the same may be increased from
time to time during the Employment Period which reduction is not
generally effective for all executives employed by the Company (or its
successor) in the Executive's class or category;
(iv) the removal of the Executive from or any failure to
reappoint the Executive to any of the positions held by the Executive
on the date of a Change of Control or any other positions to which the
Executive shall thereafter be elected or assigned except in the event
that such removal or failure to reappoint relates to the termination by
the Company of the Executive's employment for Cause or by reason of
death, disability or voluntary retirement;
(v) a significant adverse change, without the Executive's
written consent, in the nature or scope of the Executive's authority,
powers, functions, duties or responsibilities, or a material reduction
in the level of support services, staff, secretarial and other
assistance, office space and accoutrements available to a level below
that which was provided to the Executive on the date of the Change of
Control and that which is necessary to perform any additional duties
assigned to the Executive following the Change of Control, which change
or reduction is not generally effective for all executives employed by
the Company (or its successor) in the Executive's class or category; or
(vi) breach of any material provision of this Agreement by the
Company.
(l) "Notice of Termination" shall mean the written notice described in
Section 5.11.
(m) "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity (including a "group" as defined
in Section 13(d)(3) of the Act), other than an employee benefit plan of the
Company or an Affiliate or an entity organized, appointed or established
pursuant to the terms of any such benefit plan.
(n) "Termination Date" shall mean, except as otherwise provided in
Section 5.11, (i) the Executive's date of death; (ii) the date of the
Executive's voluntary
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early retirement as agreed upon in writing by the Company and the Executive;
(iii) sixty (60) days after the delivery of the Notice of Termination
terminating the Executive's employment on account of Disability pursuant to
Section 5.7, unless the Executive returns full-time to the performance of his
duties prior to the expiration of such period; (iv) the date of the Notice of
Termination if the Executive's employment is terminated by the Executive
voluntarily other than for Good Reason; and (v) sixty (60) days after the
delivery of the Notice of Termination if the Executive's employment is
terminated by the Company (other than by reason of Disability) or by the
Executive for Good Reason.
(o) "Termination Payment," subject to the limits set forth in Section
5.12(c) hereof, shall be an amount equal to (i) plus (ii), multiplied by (iii),
where
(i) Equals the Executive's rate of annual salary, as in effect
on the date of the Change of Control and as adjusted thereafter from
time to time pursuant to Section 3.1;
(ii) Equals the amount of the average annual dollar award paid
to the Executive pursuant to the Company's regular bonus plan or
arrangement with respect to the four (4) years (or the number of years
of the Executive's employment if less than four (4) years) preceding
the Termination Date which shall be determined by dividing the total
dollar amount paid to the Executive under such plan or arrangement with
respect to such number of years by four (4) (or the number of years of
the Executive's employment if less than four (4) years); and
(iii) Equals three (3).
(p) "Total Payments" shall mean the sum of the Termination Payment and
any other payments or benefits provided to or for the benefit of the Executive
in the nature of compensation, receipt of which is contingent on the Change of
Control and to which Section 280G of the Code applies.
5.3 Duties. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of such Change
of Control or in such other capacities and positions as may be agreed to by the
Company and the Executive in writing, devote the Executive's best efforts,
attention and skill to the business and affairs of the Company, as such business
and affairs now exist and as they may hereafter be conducted. The services which
are to be performed by the Executive hereunder are to be rendered at an
employment location which is not more than twenty-five (25) miles from the
Executive's employment location on the date of the Change of Control, or in such
other place or places as shall be mutually agreed upon in writing by the
Executive and the Company from time to time. The Executive shall not be required
to be absent from such employment location for more than forty-five (45)
consecutive days in any fiscal year without the Executive's consent.
5.4 Compensation and Benefits. During the Employment Period, the
Executive shall be compensated as follows:
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(a) The Executive shall receive, at such intervals and in accordance
with such standard policies as may be in effect on the date of the Change of
Control, an annual salary not less than the Executive's annual salary as in
effect as of the date of the Change of Control, subject to adjustment as
provided in Section 3.1(b);
(b) The Executive shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect on the date of the
Change of Control, for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, including travel expenses;
(c) The Executive shall be included to the extent eligible thereunder
in any and all plans providing general benefits for the Company's employees,
including but not limited to, group life insurance, hospitalization, disability,
medical, dental, pension, profit sharing, savings and stock bonus plans and be
provided any and all other benefits and perquisites made available to other
employees of comparable status and position, on the same terms and conditions as
generally provided to employees of comparable status and position;
(d) The Executive shall receive annually not less than the amount of
paid vacation and not fewer than the number of paid holidays received annually
immediately prior to the Change of Control or such greater amount of paid
vacation and number of paid holidays as may be made available annually to other
employees of comparable status and position with the Company; and
(e) The Executive shall be included in all plans providing special
benefits to corporate officers, including but not limited to bonus, deferred
compensation, incentive compensation, supplemental pension, stock option, stock
appreciation, stock bonus and similar or comparable plans extended by the
Company from time to time to senior corporate officers, key employees and other
employees of comparable status, including a reasonable car allowance.
5.5 Death. If the Executive shall die during the Employment Period, but
after delivery of a Notice of Termination by the Company for reasons other than
Cause or Disability or by the Executive for Good Reason, the Executive's
employment shall terminate on his date of death and the Executive's estate,
heirs and beneficiaries shall be entitled to the Executive's Accrued Benefits as
of the Termination Date, and, subject to the provisions of this Agreement, to
such Termination Payment as the Executive would have been entitled to had the
Executive survived. All benefits payable on account of the Executive's
employment or death under the Company's employee benefits plans, programs or
arrangements shall be paid or distributed in accordance with the terms of such
plans, programs or arrangements. The Executive's death following delivery of the
Notice of Termination shall not affect his or her Termination Date which shall
be determined without regard to the Executive's death, subject to the provisions
of Section 5.11.
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If the Executive shall die during the Employment Period, but prior to
the delivery of a Notice of Termination, the Executive's employment shall
terminate and the Executive's estate, heirs and beneficiaries shall receive all
the Executive's Accrued Benefits through the Termination Date and all benefits
available to them under the Company's benefit plans as in effect on the
Termination Date on account of the Executive's death.
5.6 Retirement. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the voluntary retirement of the
Executive from the Company, the Executive shall receive only his Accrued
Benefits through the Termination Date.
5.7 Termination for Disability. If the Executive has been absent from
his duties hereunder on a full-time basis for five (5) consecutive months during
the Employment Period on account of a Disability, the Company may provide a
Notice of Termination, which satisfies the requirements of Section 5.11, and the
Executive's employment shall, for purposes of this Agreement, terminate sixty
(60) days thereafter, unless the Executive returns to the performance of his or
her duties on a full-time basis prior to the end of the sixty (60) day period.
During the term of the Executive's Disability prior to his or her Termination
Date, the Executive shall continue to participate in all compensation and
benefit plans, programs and arrangements in which the Executive was entitled to
participate immediately prior to his or her Disability in accordance with the
terms and provisions of such plans, programs and arrangements. If the
Executive's employment is terminated on account of the Executive's Disability,
the Executive shall receive his or her Accrued Benefits, provided that the
Executive's termination for purposes of this Agreement under this Section 5.7
shall not affect his or her entitlement to benefits on account of his or her
Disability under any long-term disability programs of the Company in effect at
the time of such termination and in which the Executive participated immediately
prior to his or her Disability.
5.8 Termination Not Giving Rise to a Termination Payment. If, during
the Employment Period, the Executive's employment is terminated for Cause, or if
the Executive voluntarily terminates his employment other than for Good Reason,
subject to the procedures set forth in Section 5.11, the Executive shall be
entitled to receive only his Accrued Benefits.
5.9 Termination Giving Rise to a Termination Payment. If, during the
Employment Period, the Executive's employment is terminated by the Executive for
Good Reason or by the Company other than by reason of death or Disability
pursuant to Section 5.7 or for Cause, subject to the procedures set forth in
Section 5.11,
(a) the Executive shall be entitled to receive, and the Company shall
pay, the Executive's Accrued Benefits and, in lieu of further salary payments
for periods following the Termination Date, as severance pay, a Termination
Payment;
(b) the Executive and his eligible dependents shall continue to be
covered for three (3) years, under the same terms and conditions, by the medical
plan,
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dental plan and/or group life insurance plan maintained by the Company which
covered that Executive and his eligible dependents prior to the Executive's
Termination Date. Notwithstanding the foregoing, if the Company's medical plan,
dental plan and/or group life insurance plan covering the Executive on his or
her Termination Date was amended, replaced or terminated on or after the Change
of Control and such action would constitute Good Reason within the meaning of
Section 5.2(k), the Executive and his or her eligible dependents shall be
entitled to continued coverage for purposes of this Section 5.9(b) under the
terms of the medical plan, dental plan and/or group life insurance plan which
they participated in immediately prior to the Change of Control. If the affected
plan is no longer available, the Company shall make arrangements to provide
equivalent coverage to the Executive and his or her eligible dependents. For
this purpose, "equivalent coverage" shall mean medical, dental and/or life
insurance coverage, which, when added to the coverage provided to the Executive
and his or her eligible dependents under the Company's medical plan, dental plan
and/or group life insurance plan in effect on the Executive's Termination Date,
equals or exceeds the level of benefits provided under the medical plan, dental
plan and/or group life insurance plan to the Executive and his or her eligible
dependents on the day immediately preceding the Change of Control. The Executive
and the Company shall share the cost of the continued coverage under this
Section 5.9(b) in the same proportions as the Company and similarly situated
active employees shared the cost of such coverage on the day preceding the
Executive's Termination Date. For purposes of satisfying the Company's or
obligation under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") to
continue group health care coverage to the Executive and his eligible dependents
as a result of the Executive's termination of employment, the period during
which the Executive is permitted to continue to participate in the Company's
medical plans and/or dental plans under this Section 5.9(b) shall not be taken
into account and treated as part of the period during which the Executive and
his eligible dependents are entitled to continued coverage under the Company's
group health plans under COBRA. Following the end of the continuation period
specified in this Section 5.9(b), the Executive and his eligible dependents
shall be covered under such plans and arrangements only as required under the
provisions of COBRA;
(c) any stock options owned by or granted to the Executive shall be
deemed immediately vested, not forfeitable, and shall be the property of the
Executive, exercisable according to their terms for the balance of the term of
years of such options; and
(d) "out-placement" services in an amount not to exceed Fifty Thousand
Dollars ($50,000) will be provided by the Company to the Executive for a period
beginning on the Executive's Termination Date. Such services shall be provided
for a period beginning on the Executive's Termination Date and ending on the
earlier of the date on which the Executive becomes employed in a position
commensurate with his or her current salary and responsibilities or the last day
of the twelve (12) month period which began on the Executive's Termination Date.
The "out-placement" services shall be provided by an out-placement company
selected by the Company.
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5.10 Additional Change of Control Payments. In the event of a Change of
Control not approved or endorsed in a resolution by the Incumbent Board, unless
and until the Company adopts and implements an anti-takeover rights plan
approved by a majority of the Incumbent Board, in addition to the compensation
set forth above in Section 5.9:
(a) all unexercised stock purchase options in the name of the Executive
on the effective date of the Change of Control shall be deemed fully exercisable
and shall be exercised and paid for by the Company, or the Company's successor
in interest, on behalf of the Executive and the total number of shares of Common
Stock represented by the total number of options shall be fully paid,
nonassessable, and validly issued to the Executive, without payment of monetary
consideration by the Executive. Alternatively, the Executive may elect in lieu
of the receipt of shares, to relinquish his options with respect to all or any
of such shares and receive a payment equal to the price paid for common share in
such merger, tender offer, or similar transaction multiplied by the number of
common shares the Executive could have purchased with the options;
(b) in connection with the Executive's receipt of the foregoing option
shares or consideration, the Company will pay full tax assistance to keep the
Executive whole due to this immediate income, including payment of all relevant
employment taxes, income taxes, capital gains taxes, and alternative minimum
income taxes, grossed up by an amount necessary to pay all such taxes on the
amounts paid under this subparagraph (b); and
(c) in the event of a Change of Control of the Company by the exchange
of securities or issuance of stock in a merger or otherwise, the Company and its
successor in interest shall extend to the Executive the opportunity to sell or
exchange the option shares issued under provisions (a) and (b) above in a manner
and at a time that will allow the Executive to benefit, at his election, from
the exchange or issuance of stock in the merger, exchange, or other transaction.
5.11 Termination Notice and Procedure. Any termination by the Company
or the Executive of the Executive's employment during the Employment Period
shall be communicated by written Notice of Termination to the Executive if such
notice is delivered by the Company and to the Company if such notice is
delivered by the Executive, all in accordance with the following procedures:
(a) The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances alleged to provide a basis for termination.
(b) Any Notice of Termination by the Company shall be approved by a
resolution duly adopted by a majority of the directors of the Company then in
office.
(c) If the Company shall give a Notice of Termination for Cause or by
reason of Disability and the Executive in good faith notifies the Company that a
dispute
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exists concerning such termination within the fifteen (15) day period following
the Executive's receipt of such notice, the Executive may elect to continue his
or her employment during such dispute. If it is thereafter determined that (i)
the reason given by the Company for termination did exist, the Executive's
Termination Date shall be the earlier of (A) the date on which the dispute is
finally determined, either by mutual written agreement of the parties or
pursuant to Section 6.1, (B) the date of the Company's Notice of Termination for
Cause, (C) the date of the Executive's death, or (D) one day prior to the end of
the Employment Period, and the Executive shall not be entitled to a Termination
Payment based on events occurring after the Company delivered its Notice of
Termination; or (ii) the reason given by the Company for termination did not
exist, the employment of the Executive shall continue as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Executive shall in good faith give a Notice of Termination
for Good Reason and the Company notifies the Executive that a dispute exists
concerning the termination within the fifteen (15) day period following the
Company's receipt of such notice, the Executive may elect to continue his or her
employment during such dispute. If it is thereafter determined that (i) Good
Reason did exist, the Executive's Termination Date shall be the earlier of (A)
the date on which the dispute is finally determined, either by mutual written
agreement of the parties or pursuant to Section 6.1, (B) the date of the
Executive's death, or (C) one day prior to the end of the Employment Period, and
the Executive's Termination Payment shall reflect events occurring after the
Executive delivered his Notice of Termination; or (ii) Good Reason did not
exist, the employment of the Executive shall continue after such determination
as if the Executive had not delivered the Notice of Termination asserting Good
Reason.
(e) If the Executive does not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination under Sections 5.11(c)
and (d), and it is finally determined that the reason for termination set forth
in such Notice of Termination did not exist, if such notice was delivered by the
Executive, the Executive will be deemed to have voluntarily terminated his
employment and if delivered by the Company, the Company will be deemed to have
terminated the Executive other than by reason of death, Disability or Cause.
(f) If the opinion required to be delivered pursuant to Section 5.11(c)
shall not have been delivered on or before the date that would otherwise
constitute the Termination Date, the Termination Date shall be delayed to the
earlier of the date on which such opinion is delivered or one (1) day prior to
the end of the Employment Period.
5.12 Payment of Termination Benefits.
(a) Payment of Accrued Benefits shall be made promptly in accordance
with the Company's prevailing practice and the terms of any applicable benefit
plans, contracts or arrangements.
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(b) The Termination Payment shall be payable in a lump sum on the
Executive's Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor. The Executive shall not be required to mitigate
the amount of such payment by securing other employment or otherwise and such
payment shall not be reduced by reason of the Executive securing other
employment or for any other reason.
(c) The Internal Revenue Code of 1986, as amended (the "Code), will
impose a significant tax on the Executive and the Company if the total amounts
received by the Executive due to a Change of Control exceed prescribed limits.
This includes a 20% excise tax on certain amounts received in excess of the
prescribed limits and a loss of deduction for the Company. If, as a result of
these Code provisions, the Executive is required to pay such excise tax, then
upon written notice from the Executive to the Company, the Company shall pay the
Executive an amount equal to the total excise tax imposed on the Executive
(including the excise taxes on any excise tax reimbursements due pursuant to
this sentence and the excise taxes on any income tax reimbursements due pursuant
to the next sentence). If the Company is obligated to pay taxes for the
Executive pursuant to the preceding sections, the Company also shall pay the
Executive an amount equal to the "total presumed federal and state taxes" that
could be imposed on the Executive with respect to the excise tax reimbursements
due to the Executive pursuant to the preceding sentence and the income tax
reimbursements due to the Executive pursuant to this sentence. For purposes of
the preceding sentence, the "total presumed federal and state taxes" that could
be imposed on the Executive shall be conclusively calculated using a combined
tax rate equal to the sum of the then prevailing maximum marginal federal and
state income tax rates. No adjustments will be made in this combined rate for
the deduction of state taxes on the federal return, the loss of itemized
deductions or exemptions, or for any other purpose. The Executive shall be
responsible for paying the actual taxes. The amounts payable to the Executive
pursuant to this or any other agreement or arrangement with Company shall not be
limited in any way by the amount that may be paid pursuant to the Code without
the imposition of an excise tax or the loss of Company deductions.
5.13 Obligations of the Executive.
(a) The Executive agrees that if, during the Employment Period, the
Executive's employment is terminated in a manner entitling the Executive to a
Termination Payment or the Executive has voluntarily terminated his employment,
the Executive shall not, for a period commencing on the Termination Date and
ending after one (1) year, (i) act in a similar capacity for any safety
technology company which competes to a substantial degree with the Company in
the aerospace and defense or automotive safety industry; or (ii) engage in any
activity involving substantial competition with the Company in the aerospace and
defense or automotive safety industries without the prior written approval of
the Company's Board of Directors; provided, however, that nothing in this
Section 5.13(a) shall prohibit the Executive from owning stock or other
securities of a competitor amounting to less than five percent (5%) of the
stated capital of such competitor.
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(b) The Executive covenants and agrees, during the Executive's
employment by the Company and following his Termination Date, to hold in strict
confidence any and all information in the Executive's possession as a result of
the Executive's employment with the Company.
SECTION SIX
6.1 Enforcement.
(a) All claims, disputes and other matters in question between the
parties arising under this Agreement, other than disputes arising under SECTION
FIVE after a Change of Control, shall be decided by arbitration in accordance
with the commercial rules of the American Arbitration Association, unless the
parties mutually agree otherwise. Any arbitration shall be held in Phoenix,
Arizona, unless the parties mutually agree otherwise. The Company shall pay the
costs of any such arbitration. The award by the arbitrator shall be final, and
judgment may be entered upon it in accordance with applicable law in any state
or Federal court having jurisdiction thereof.
(b) If, after a Change of Control a good faith dispute arises with
respect to the enforcement of the Executive's rights under this Agreement or if
any arbitration or legal proceeding shall be brought in good faith to enforce or
interpret any provision contained herein, or to recover damages for breach
hereof and the Executive is the prevailing party, the Executive shall recover
from the Company any reasonable attorney's fees and necessary costs and
disbursements incurred as a result of such dispute or legal proceeding, and
prejudgment interest on any money judgment obtained by the Executive calculated
at the rate of interest announced by Bank One Trust Company, N. A. (or any
successor thereto) from time to time as its prime rate from the date that
payments to the Executive should have been made under this Agreement.
6.2 Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to insure that the compensation and arrangements
provided herein are provided to the Executive shall be absolute and
unconditional and shall not be affected by any circumstances, provided that the
Company may apply amounts payable under this Agreement to any loan or other
debts then owed to the Company or an Affiliate by the Executive, the terms of
which are reflected in a written document signed by the Executive. The amounts
payable under this Agreement shall be in lieu of any amounts payable to the
Executive under a separate severance plan, agreement or arrangement established
by the Company. All amounts payable by the Company under this Agreement shall be
paid without notice or demand. Each and every payment made under this Agreement
by the Company shall be final. Notwithstanding the foregoing, in the event that
the Company has paid an Executive more than the amount to which the Executive is
entitled under this Agreement, the Company shall have the right to recover all
or any part of such overpayment from the Executive or from whomsoever has
received such amount.
6.3 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public
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policy, then only the portions of this Agreement which violate such
statute or public policy shall be stricken. All portions of this Agreement
which do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Agreement
shall modify the stricken terms as narrowly as possible to give as much effect
as possible to the intentions of the parties under this Agreement.
6.4 Governing Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance, or otherwise, by
the laws of the State of Arizona, and no action involving this Agreement may be
brought except in the Superior Court for the State of Arizona or the Federal
District Court for the District of Arizona, subject to Section 6.1.
SECTION SEVEN
7.1 Amendment or Termination.
(a) This Agreement sets forth the entire agreement between the
Executive and the Company with respect to the subject matter hereof, and
supersedes all prior oral or written negotiations, commitments, understandings
and writings with respect thereto. This Agreement may not be terminated, amended
or modified during its term as specified above except by written instrument
executed by the Company and the Executive.
(b) Upon the proper termination of this Agreement by the Company for
any reason whatsoever, or upon the termination of this Agreement by the
Executive, this Agreement shall thereupon be and become void and of no further
force or effect, except that the arbitration provisions of Section 6.1 shall
continue to govern any disputes arising hereunder. Any payments due pursuant to
the terms of this Agreement for services rendered prior to the termination shall
be made as provided in this Agreement.
(c) Consistent with Section 2.1(b), the provisions of SECTION FIVE of
this Agreement shall be effective until September 30, 2003, and shall continue
for additional three (3) year periods thereafter, unless the Company notifies
the Executive in writing one (1) year prior to September 30, 2003 (or the third
anniversary of that date, or the date of notification of termination, in the
event the Agreement continues beyond that date pursuant to the provisions of
this Section 7.1(c)) that it does not intend to continue those provisions of the
Agreement. Notwithstanding the foregoing, (i) if a Change of Control has
occurred on or before the date on which the Agreement would be terminated by the
Company in accordance with this Section 7.1, the Agreement shall not terminate
with respect to that Change of Control until the end of the Employment Period,
and (ii) this Agreement shall terminate if, prior to a Change in Control, the
Executive ceases to be employed by the Company as a corporate officer.
SECTION EIGHT
8.1 Assignment and Successors.
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(a) Except as otherwise provided in this Section 8.1, this Agreement is
personal in its nature and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder.
(b) If all or substantially all of the Company's business and assets
are sold, assigned or transferred to any Person, or if the Company merges into
or consolidates or otherwise combines with any Person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the Person which is
either the acquiring or successor corporation, and such Person shall assume and
perform from and after the date of such assignment the terms, conditions and
provisions imposed by this Agreement upon the Company. Failure of the Company to
obtain such assignment shall be a breach of this Agreement. In case of such
assignment by the Company and of assumption and agreement by such Person, all
further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such Person(s).
(c) This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estate, executors, administrators, heirs and beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's estate. This Agreement shall
inure to the benefit of, be binding upon and be enforceable by, any successor,
surviving or resulting corporation or other entity to which all or substantially
all of the Company's business and assets shall be transferred whether by merger,
consolidation, transfer or sale. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.
SECTION NINE
9.1 Notice. Notices given pursuant to this Agreement shall be in
writing and (a) if hand delivered, shall be deemed given when delivered, and (b)
if mailed, shall be deemed delivered when placed in the United States mail,
postage prepaid, addressed,
If to the Executive, to:
Xxxxxxx X. Xxxxx
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
If to the Company, to:
Simula, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
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or to such other addresses as the parties may provide written notice of to each
other, from time to time, in accordance with this Section 9.1
SECTION TEN
10.1 Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of, or failure to
insist upon strict compliance with, any right or power hereunder at any one or
more times be deemed a waiver or relinquishment of such right or power at any
other time or times.
10.2 Withholding. Subject to Section 5.12(c), the Company shall be
entitled to withhold from amounts to be paid to the Executive under this
Agreement any federal, state or local withholding or other taxes or charges
which it is from time to time required to withhold. The Company shall be
entitled to rely on an opinion of counsel if any question as to the amount or
requirement of any such withholding shall arise.
10.3 Funding. Amounts payable under this Agreement shall constitute an
unfunded general obligation of the Company payable from its general assets, and
the Company shall not be required to establish any special fund or trust for
purposes of paying benefits under this Agreement. The Executive shall not have
any vested right to any particular assets of the Company as a result of
execution of this Agreement and shall be a general creditor of the Company.
10.4 Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has executed this
Agreement effective as of the date and year designated above.
SIMULA, INC.
By /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Its General Counsel & Secretary
ATTEST:
By /s/ J. Xxxxxxx Xxxxxx
------------------------------------
Its Executive Vice President and COO
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Executive
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