EXHIBIT 2
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") dated as of September 14, 2001, is
between BE Aerospace, Inc., a Delaware corporation (the "Company") and Xxxxxx X.
Xxxxxx ("Executive").
WHEREAS, Executive and the Company entered into an employment
agreement in 1992 which was revised and amended several times thereafter and
whereas Executive and the Company entered into that certain Agreement dated as
of May 29, 1998, and thereafter amended said Agreement by two amendments (said
Agreement and amendments hereinafter collectively the "Employment Agreement");
and
WHEREAS, Executive, having provided services to the Company since
August 1, 1987, agrees to provide services for an additional period as provided
herein, and the Company wishes to procure such services; and
WHEREAS, Executive and the Company wish to further amend and restate
the Employment Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, the parties agree as follows:
1. REFERENCE TO EMPLOYMENT AGREEMENT. The Employment Agreement is
hereby restated, superseded and replaced in its entirety by this Agreement.
2. ARRANGEMENT. Executive shall provide to the Company, and the
Company shall accept from Executive, the services set forth in Section 4.2
below, subject to the terms and conditions set forth in this Agreement.
3. TERM. Executive shall provide to the Company services hereunder
during the term of this Agreement which, unless otherwise terminated pursuant to
the provisions of Article 7 hereof, shall be the period ending three (3) years
from any date as of which the term is being determined (the "Employment Term").
The date on which the Employment Term ends, including any extensions thereof, is
sometimes hereinafter referred to as the "Expiration Date."
4. CAPACITY, SERVICES AND PERFORMANCE.
4.1. Capacity. Executive shall serve the Company as its President and
Chief Executive Officer or in such other executive capacity as the Board of
Directors (the "Board") may designate from time to time, but only upon agreement
with Executive.
4.2. Services. In the capacity set forth in Section 4.1 above,
Executive shall be retained by the Company and shall perform such duties and
responsibilities on behalf of the Company as Executive and the Board shall by
mutual agreement from time to time determine.
4.3. Performance. During the Employment Term, Executive shall use his
business judgment, skill and knowledge to the advancement of the Company's
interests and to the discharge of his duties and responsibilities hereunder;
provided that Executive shall be required only to devote so much time as
Executive determines is reasonably necessary to discharge his duties as Chairman
of the Board, and, subject to the provisions of Section 6 below, Executive may
engage in other business activities during the Employment Term.
5. COMPENSATION AND BENEFITS.
5.1. Salary. Effective as of March 1, 2001 Executive shall receive an
annual salary (the "Salary") of $710,000 during each year of the Employment
Term. Such Salary shall be subject to adjustment from time to time by the Board;
provided, however, that it shall at no time be adjusted below the Salary for the
preceding year. Commencing on March 1, 2002, and on March 1 of each year
thereafter during the Employment Term, the Salary then in effect shall be
increased by an amount not less than the amount determined by applying to the
Salary then in effect the percentage increase in the U.S. Bureau of Labor
Statistics Consumer Price Index Revised - Urban Wage Earners and Clerical
Workers - National - All Items (1982-84 = 100) (the "Index") for the consecutive
twelve (12) month period (March through February) immediately preceding such
March 1. If the Index is no longer issued, the Board and Executive shall agree
upon a substitute index issued by such agency which most reasonably reflects the
criteria utilized in the most recent issue of the Index. Except as otherwise
provided in this Agreement, the Salary shall be payable biweekly or in
accordance with the Company's current payroll practices, and shall be pro-rated
for any period of service less than a full year.
5.2. Bonuses. Executive may receive bonuses from the Company when, as
and if determined from time to time by the Board. Any such bonuses paid to
Executive shall be in addition to the Salary then in effect.
5.3. Benefits. Executive shall be entitled to participate in all
employee benefit plans, life insurance plans, disability income plans, incentive
compensation plans and other benefit plans, other than retirement plans, as may
be from time to time in effect for executives of the Company generally. In
addition, Executive and his spouse, for as long as they each may live, shall be
entitled to all medical, dental and health benefits available from time to time
to the Company's executive officers and their spouses, respectively, and the
Executive and his spouse, for as long as they each may live, shall be entitled
to the benefits available under the Company's executive medical reimbursement
plan in effect as of March 1, 2001 and this provision shall survive the
termination or expiration of this Agreement for any reason.
5.4. Business Expenses. The Company shall pay or reimburse Executive
during the Employment Term for all reasonable business expenses incurred or paid
by him in the performance of his services, subject to reasonable substantiation
and documentation.
5.5. Automobile. During the Employment Term, Executive shall be
furnished either, as determined by the Company, an automobile owned or leased by
the Company or an automobile allowance, which automobile or allowance shall be
at least equivalent to that which the Company is providing to Executive as of
March 1, 2001.
5.6 Stock Option Grants. Through the Employment Period the Executive
shall be entitled to participate in any applicable option grant program of the
Company.
6. PROPRIETARY RIGHTS AND NON-COMPETITION.
Executive acknowledges that the Company is engaged in a continuous
program of research, development and production in connection with its business,
present and future, and hereby covenants as follows:
6.1. Confidentiality. Executive will maintain in confidence and will
not disclose or use, either during or after the Employment Term, any proprietary
or confidential information or know-how belonging to the Company ("Proprietary
Information" hereinafter defined), whether or not in written form, except to the
extent required to perform duties on behalf of the Company. For purposes of this
Agreement, "Proprietary Information" shall mean any information, not generally
known to the relevant trade or industry, which was obtained from the Company, or
which was learned, discovered, developed, conceived, originated or prepared by
Executive in connection with this Agreement. Such Proprietary Information
includes, without limitation, software, technical and business information
relating to the Company's inventions or products, research and development,
production processes, manufacturing and engineering processes, machines and
equipment, finances, customers, marketing and production and future business
plans, information belonging to customers or suppliers of the Company disclosed
incidental to Executive's performance under this Agreement, and any other
information which is identified as confidential by the Company, but only so long
as the same is not generally known in the relevant trade or industry.
6.2. Inventions.
6.2.1. Definition of Inventions. For purposes of this
Agreement, "Inventions" shall mean any new or useful art, discovery,
contribution, finding or improvement, whether or not patentable, and
all related know-how. Inventions shall include, without limitation,
all designs, discoveries, formulae, processes, manufacturing
techniques, semiconductor designs, computer software, inventions,
improvements and ideas.
6.2.2. Disclosure and Assignment of Inventions. Executive
will promptly disclose and describe to the Company all Inventions
which he may solely or jointly conceive, develop, or reduce to
practice during the Employment Term (i) which relate at the time of
conception, development, or reduction to practice of the Invention to
the Company's business or actual or demonstrably anticipated research
or development, (ii) which were developed, in whole or in part, on the
Company's time or with the use of any of the Company's equipment,
supplies, facilities or trade secret information, or (iii) which
resulted from any work performed by Executive for the Company (the
"Company's Inventions"). Executive hereby assigns all of his right,
title and interest world-wide in the Company's Inventions and in all
intellectual property rights based upon the Company's Inventions;
provided, however, that Executive does not assign or agree to assign
any Inventions, whether or not relating in any way to the Company's
business or demonstrably anticipated research and development, which
were made by him prior to the date of this Agreement, or which were
developed by him independently during the term of this Agreement and
not under the conditions stated in subparagraph (ii) above.
6.3. Documents and Materials. Upon termination of this Agreement or at
any other time upon the Company's request, Executive will promptly deliver to
the Company, without retaining any copies, all documents and other materials
furnished to him by the Company, prepared by him for the Company or otherwise
relating to the Company's business, including, without limitation, all written
and tangible material in his possession incorporating any Proprietary
Information.
6.4. Competitive Employment. During the Employment Term and for a
period of two (2) years thereafter (collectively, the "Extended Term"),
Executive will not engage in any employment, consulting, or other activity in
any business competitive with the Company without the Company's written consent,
which consent shall not be unreasonably withheld; provided, however, that
nothing in this Section 6.4 shall preclude Executive from serving as a director
of any other corporation.
6.5. Non-solicitation. During the Extended Term, Executive will not
solicit or encourage, or cause others to solicit or encourage, any employees of
the Company to terminate their employment with the Company.
6.6. Acts to Secure Proprietary Rights.
6.6.1. Further Acts. Executive agrees to perform, during and
after the Employment Term, all acts deemed necessary or desirable by
the Company to permit and assist it, at its expense, in perfecting and
enforcing the full benefits, enjoyment, rights and title throughout
the world in the Company's Inventions. Such acts may include, without
limitation, execution of documents and assistance or co-operation in
the registration and enforcement of applicable patents and copyrights
or other legal proceedings.
6.6.2. Appointment of Attorney-In-Fact. In the event that the
Company is unable, for any reason whatsoever, to secure Executive's
signature to any lawful and necessary document required to apply for
or execute any patent, copyright or other applications with respect to
any of the Company's Inventions (including improvements, renewals,
extensions, continuations, divisions or continuations in part
thereof), Executive hereby irrevocably appoints the Company and its
duly authorized officers and agents as his agents and
attorneys-in-fact to execute and file any such application and to do
all other lawfully permitted acts to further the prosecution and
issuance of patents, copyrights or other rights thereon with the same
legal force and effect as if executed by him, intending hereby to
create a so-called "durable power" which will survive any subsequent
disability.
6.7. No Conflicting Obligations. Executive's performance of this
Agreement does not breach and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by him.
6.8. Corporate Opportunities. Executive agrees that he will first
present to the Board, for its acceptance or rejection on behalf of the Company,
any opportunity to create or invest in any company which is or will be involved
in equipping or furnishing airplane cabin interiors, which comes to his
attention and in which he, or any affiliate, might desire to participate. If the
Board rejects the same or fails to act thereon in a reasonable time, Executive
shall be free to invest in, participate or present such opportunity to any other
person or entity.
6.9. Specific Performance. Executive acknowledges that a breach of any
of the promises or agreements contained herein could result in irreparable and
continuing damage to the Company for which there may be no adequate remedy at
law, and the Company shall be entitled to seek injunctive relief and/or a decree
for specific performance.
7. TERMINATION AND CHANGE OF CONTROL.
7.1 Termination Date/Voluntary Termination Prior to Change of Control.
(i) The term "Termination Date" shall mean the date on which
the Executive's employment with the Company terminates for any reason prior to
the Expiration Date.
(ii) If the Executive voluntarily resigns prior to the
occurrence of a Change of Control, then the Executive shall receive payment of
his unpaid Salary through the Termination Date, the Retirement Compensation
shall become due pursuant to Sections 7.6 and 7.7 hereof, and the Severance Pay
shall become due pursuant to Section 7.5 hereof. In addition, the Executive and
his spouse shall be entitled to a continuation of their medical, dental and
health benefits pursuant to the last sentence of Section 5.3 hereof.
7.2. Death. The Executive's employment hereunder shall terminate upon
his death. In such event, the Company shall pay to such person as the Executive
shall have designated in a notice filed with the Company, or if no such person
shall have been designated, to his estate, a lump sum payment equal to the
Salary that would have been due to the Executive had this Agreement been in
effect from the date of his death until the Expiration Date and the Retirement
Compensation as provided in Section 7.6 below, however, in no event will the
aggregate amount payable to Executive pursuant to this Section 7.2 (including
the amount payable pursuant to Section 7.6 below) be less than twenty (20) times
the maximum annual Salary paid Executive during his employment by the Company.
7.3. Incapacity. If in the reasonable judgment of the Board, as a
result of Executive's incapacity due to physical or mental illness or otherwise,
Executive shall for at least six (6) consecutive months during the term of this
Agreement have been unable to perform his duties under this Agreement on a
full-time basis, the Company may terminate Executive's employment as provided in
this Section 7.3. If the Company desires to so terminate Executive's employment,
the Company shall:
(i) give prompt notice to Executive of any such termination;
and
(ii) until the Expiration Date, (a) pay to Executive or in
the event of Executive's subsequent death, such person as Executive shall have
designated in a notice filed with the Company, or if no such person shall have
been designated, to Executive's estate, two (2) times the highest annual Salary
paid to the Executive prior to the Termination Date, (b) continue to provide
Executive with the disability insurance and life insurance coverage, in the same
amounts and upon the same terms and conditions provided pursuant to Section 5.3
hereof immediately prior to the Termination Date, (c) reimburse the Executive
for business expenses in the same manner and to the same extent required
pursuant to Section 5.4 hereof prior to the Termination Date, including without
limitation the reimbursement of travel expenses and other travel benefits as
were afforded to Executive under the Company's Aircraft Travel Policy
Authorization and Limitation on Officer Travel as in effect on May 31, 2001, and
(d) continue to provide the Executive with the automobile allowance provided
pursuant to Section 5.5 hereof immediately prior to the Termination Date.
(iii) pay to Executive (or in the event of Executive's
subsequent death, such person as Executive shall have designated in a notice
filed with the Company, or, if no such person shall have been designated, to his
estate) the entire Retirement Compensation, or the remaining unpaid balance
thereof if payments of such Retirement Compensation have commenced, as provided
in Section 7.6 below, however, in no event will the aggregate benefit payable to
Executive pursuant to this Section 7.3 (iii) (including the amounts provided in
Section 7.6 below) be less than twenty (20) times the maximum annual Salary paid
Executive during his employment by the Company; and
(iv) continue to provide medical benefits as provided in
Section 5.3 above.
Any dispute between the Board and Executive with respect to
Executive's incapacity shall be settled by reference to a competent medical
authority mutually agreed to by the Board and Executive or his personal
representative, whose decision shall be binding on all parties.
7.4 Change of Control.
(a) If a "Change of Control" of the Company occurs, the
Company will be obligated as provided in Sections 7.4 and 7.5 of this Agreement.
The Company's obligations under Sections 7.4 and 7.5 of this Agreement are the
same whether the Executive's employment with the Company is terminated or
continues following a Change of Control. For purposes of determining the
Company's obligations under this Section 7.4 and 7.5, the date on which a Change
of Control occurs hereinafter is referred to as the "Change of Control Date." If
a "Change of Control" occurs during the Employment Term, the Company or its
successors in interest shall:
(i) within five (5) business days after the Change of Control
Date, pay to the Executive, (or in the event of Executive's subsequent death,
such person as Executive shall have designated in a notice filed with the
Company, or, if no such person shall have been designated, the Executive's
estate) a lump sum payment equal to the sum of: (a) the Salary, at the rate in
effect on the Change of Control Date, that would have been payable to the
Executive through the Expiration Date, (b) the unpaid amount of any bonuses
declared to be payable to the Executive for any fiscal periods of the Company
ending prior to the Change of Control Date, (c) an amount equal to two (2) times
the Salary, determined at the highest rate annualized that was in effect at any
time from the 180 day period preceding the Change of Control until the Change of
Control Date (the "Highest Salary"), that would have been payable for the period
from the Change of Control Date through the Expiration Date, and (d) an amount
equal to two (2) times the Executive's Highest Salary, which lump sum shall not
be prorated and shall be paid in addition to the Retirement Compensation payable
under (ii) of this Section 7.4, the Salary and benefits payable under (iii) of
this Section 7.4, and any Severance Pay payable pursuant to Section 7.5 hereof;
(ii) within five (5) business days after the Change of
Control Date, pay to Executive (or in the event of Executive's subsequent death,
such person as Executive shall have designated in a notice filed with the
Company, or, if no such person shall have been designated, to Executive's
estate), in a single lump sum payment, the aggregate amount of Retirement
Compensation payable to Executive pursuant to Section 7.6 hereof determined as
of the Change of Control Date; provided, however, that if the Change of Control
Date is prior to May 28, 2003, the Retirement Compensation shall be determined
as if the Executive had continued to be employed by the Company until, and the
Change of Control Date occurred on, May 28, 2003;
(iii) until the Expiration Date, (a) pay to Executive (or in
the event of Executive's subsequent death, such person as Executive shall have
designated in a notice filed with the Company, or, if no such person shall have
been designated, to Executive's estate) two (2) times Executive's Highest
Salary, (b) provide Executive with continued life insurance and disability
insurance coverage in the same amounts and upon the same terms and conditions as
in effect on his Termination Date, or if greater, as those provided immediately
prior to the Change of Control, (c) reimburse Executive for business expenses in
the same manner and to the same extent required pursuant to Section 5.4 hereof
prior to the Termination Date, or if greater, to the extent provided immediately
prior to the Change of Control, and (d) continue to provide Executive with the
automobile allowance provided pursuant to Section 5.5 hereof as of the
Termination Date, or if greater, as provided immediately prior to the Change in
Control;
(iv) during the balance of the Employment Term and
thereafter, continue to provide to Executive and his spouse, for their
respective lifetimes, substantially the same medical, dental and health
benefits, and on substantially similar terms, as the Executive and his spouse
were receiving as of the Termination Date, or if greater, as they were receiving
immediately prior to the Change of Control;
(v) provide that any stock options granted Executive that
would not vest on or prior to the effective date of the Change of Control shall
be exercisable immediately upon the execution of any agreement that would
constitute a Change in Control (regardless of whether such agreement is
consummated), and such stock options shall continue to be exercisable until the
later of their expiration date or the date on which shares of the Company are no
longer traded as such;
(vi) pay to Executive the amount of any Gross-Up Payment
payable by the Company to the Executive under Section 7.8 hereof; and
(vii) if the Executive's employment terminates after the
Change of Control Date for any reason other than death pursuant to Section 7.2
or incapacity pursuant to Section 7.3, for the period from the Executive's
actual Termination Date until the 5th anniversary after the date on which the
Change of Control occurs, (a) reimburse Executive for the reasonable costs of
leasing and operating an office at a location selected by Executive that is
outside of the Company's office, including without limitation, the cost of a
full-time assistant, and (b) provide Executive with up to 200 hours per year of
corporate jet usage consistent with the Company's Aircraft Travel Policy,
"Authorization and Limitation on Officer Travel", as in effect on May 31, 2001,
or, in the event that the Company does not own or control an aircraft of the
type specified in such policy or, at the Company's option, the Company may
provide Executive with a quarter share of the same aircraft type specified in
such policy under a five year, executive jet part share program. In the event
the Company provides Executive with use of its corporate jet, the corporate jet
shall be available for use by the Executive given seventy-two hours advance
notice by Executive to the Company of his intent to use the aircraft.
(b) For purposes of this Agreement, a "Change of Control" means:
(i) The entering into of any agreement relating to a
transaction or series of related transactions involving the ownership of the
Company that requires a shareholder vote for the consummation of such
transaction;
(ii) Individuals who, as of March 1, 2001 (the "Effective
Date") constitute the Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of Directors
of the Company, provided that any person becoming a director subsequent to the
Effective Date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board;
(iii) The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act, of 25% or more of either the then outstanding
shares of the Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by (1) the
Company or its subsidiaries, (2) any person, entity or "group" that as of the
Effective Date owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest or (3)
any employee benefit plan of the Company or its subsidiaries; or
(iv) The sale or other disposition by the Company of 25% or
more of the value of its assets to any person or entity that is not controlled
by the Company.
7.5 Severance Pay. If the Executive's employment with the Company is
terminated for any reason, other than the Executive's death pursuant to Section
7.2 hereof, or the Executive's incapacity pursuant to Section 7.3 hereof, then
within five (5) days after the Executive's Termination Date, the Company shall
pay to the Executive (or in the event of the Executive's subsequent death, such
person as the Executive shall have designated in a notice filed with the
Company, or, if no such person shall have been designated, to Executive's
estate) a lump sum amount equal to the Executive's annual Salary in effect as of
the Termination Date, which lump sum shall not be pro-rated. The obligations of
the Company pursuant to this Section 7.5 shall survive any termination of this
Agreement or the Executive's employment as aforesaid, and shall be in addition
to any amounts payable to the Executive pursuant to Section 7.4 hereof in the
event of a Change of Control of the Company.
7.6 Retirement Compensation.
(a) Amount of Retirement Compensation. In recognition that
Executive will not be eligible for any retirement plan to be offered by the
Company to its executives (as provided in Section 5.3 above), Executive shall be
entitled to retirement compensation ("Retirement Compensation") equal to the
product of (a) 100% times (b) the highest annual Salary paid to the Executive
during his employment by the Company multiplied by (c) the number of years of
service provided by Executive to the Company, such service having commenced as
of August 1, 1987 ("Commencement Date"), with a ratable adjustment should
Executive's final period of service be less than a full year. The Retirement
Compensation as so determined shall be paid to Executive (or in the event of
Executive's subsequent death, to such person as Executive shall have designated
in a notice filed with the Company or, if no such person shall have been
designated, to his estate, at the times specified in Section 7.6(b)(ii) hereof
within five (5) business days after the Termination Date. The amount of the
Retirement Compensation so due and payable shall not be present-valued or
otherwise reduced by use of any other discount or discounting method.
(b) Payment of Retirement Compensation.
(i) Within five business days after the date on with the BE
Aerospace, Inc. Executive Compensation Trust II dated April 21, 1999, as
amended, is terminated (the "Distribution Date", the Company will distribute the
amount of Retirement Compensation that would have been payable to the Executive
under Section 7.6(a) as of the Distribution Date, based on his years of service
through the Distribution Date and his then Highest Annual Salary.
(ii) Within five (5) business days after the Executive's
actual Termination Date, the Company shall pay to the Executive an amount equal
to (x) the Retirement Compensation payable to the Executive as determined in
Section 7.6(a)(i) hereof less (y) the sum of (1) the amount of Retirement
Compensation previously distributed to the Executive pursuant to Section
7.6(b)(i) and 7.4(a)(ii) hereof, and (2) the amounts previously distributed
pursuant to Section 7.6(c)(i) or 7.6(c)(ii),
(c) Retirement Trust.
(i) Within ninety days after the Distribution Date, the
Company shall establish a trust for the duration of the Employment Term, and,
commencing on such date and on a quarterly basis thereafter, each a
"Contribution Date" the Company shall contribute to the trust (the "Retirement
Trust") for the benefit of the Executive an amount equal to (a) Retirement
Compensation that would be payable to the Executive under Section 7.6(b)(ii) if
the Contribution Date was his Termination Date minus (b) the assets in the
Retirement Trust as of the Contribution Date The Retirement Trust to which the
Company shall make these contributions shall be irrevocable. The Retirement
Trust shall provide that the Executive may withdraw from the Retirement Trust,
within the 30 day period beginning on the date on which he receives notice from
the Company that the Company has made a contribution pursuant to this Section
7.6(c)(i) an amount up to but not to exceed the amount of that contribution. If
and to the extent that the Executive fails to exercise this withdrawal right
within the 30 day period, such withdrawal right shall lapse. The Retirement
Trust also shall contain such other provisions as the Company and the Executive
reasonably agree are necessary in order for the Retirement Trust to qualify as a
grantor trust under Section 671 of the Code with the Executive as the grantor.
The trust agreement for the Retirement Trust shall provide that any assets
remaining in the Retirement Trust, after payment of all the retirement
compensation payable pursuant to this Section 7.6, shall be paid to the
Executive, and that the Retirement Trust shall be exempt from the claims of the
Company's creditors.
(ii) As of the last day of each calendar quarter ending on or
after the Distribution Date, during the Employment Term, the trustee of the
Retirement Trust shall be required to distribute to the Executive 25% of the
amount by which (x) the Assumed Taxes that the Company reasonably estimates will
be assessed upon the Executive for the calendar year for which the distribution
is being made as a result of his beneficial interest in the Retirement
Trust, exceeds (y) the amount withdrawn by the Executive in such calendar year
pursuant to Section 7.6(i). For this purpose, the term "Assumed Taxes" shall
mean the Federal, State and local income taxes that would be payable by the
Executive for the year in question, assuming that the amount taxable would be
subject to the highest Federal and applicable State and local income taxes.
7.7 Other Retirement Benefits. In the event that the Executive's
employment terminates for any reason other than death pursuant to Section 7.2 or
incapacity pursuant to Section 7.3, then for the period from the Termination
Date until the 5th anniversary after the Termination Date, the Company shall:
(a) reimburse Executive for the reasonable costs of leasing and operating an
office at a location selected by Executive that is outside of the Company's
office, including without limitation, the cost of a full-time assistant, and (b)
provide Executive with up to 200 hours per year of corporate jet usage
consistent with the Company's Aircraft Travel Policy, "Authorization and
Limitation on Officer Travel", as in effect on May 31, 2001, or, in the event
that the Company does not own or control an aircraft of the type specified in
such policy, or, at the Company's option, the Company may provide the Executive
a quarter share of the same aircraft type specified in such policy under a five
year, executive jet party share program. In the event the Company provides
Executive with use of its corporate jet, the corporate jet shall be available
for use by the Executive given seventy-two hours advance notice by Executive to
the Company of his intent to use the aircraft. If and to the extent that the
Company is required to withhold any amounts for taxes with regard to the
foregoing, then the provision of the foregoing benefits shall be conditioned
upon the Company and the Executive's making appropriate arrangements to ensure
that those withholding requirements are satisfied.
7.8 Certain Additional Payments by the Company.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution or other action by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (including without limitation any
additional payments required under this Section 7.8) (a "Payment") would be
subject to an excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are incurred by the
Executive with respect to any such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), the Company shall make a payment to the Executive (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment, the Executive
retains (or has had paid to the Internal Revenue Service on his behalf) an
amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments and (y) the product of any deductions disallowed because of
the inclusion of the Gross-Up Payment in the Executive's adjusted gross income
and the highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
(i) pay federal income taxes at the highest marginal rates of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made, and
(ii) pay applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local.
(ii) Subject to the provisions of paragraph (iii) of this
Section 7.8, all determinations required to be made under this Section 7.8,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Deloitte & Touche LLP (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 7.8, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 7.8 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(iii) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(A) give the Company any information reasonably requested by
the Company relating to such claim,
(B) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 7.8(iii), the Company shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7.8(iii), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 7.8(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7.8(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
8. WITHHOLDING. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
9. INDEMNIFICATION. To the maximum extent permitted under Florida law
as from time to time in effect, the Company hereby agrees to indemnify Executive
and hold him harmless from, against and in respect of any and all damages,
deficiencies, actions, suits, proceedings, demands, assessments, judgments,
claims, losses, costs, expenses, obligations and liabilities arising from or
related to the performance of this Agreement by Executive.
10. WAIVER. The waiver by any party hereto of a breach of any
provision of this Agreement by the other party will not operate or be construed
as a waiver of any other or subsequent breach by such other party.
11. SEVERABILITY. If any part of this Agreement is found to be invalid
or unenforceable, that part will be deemed amended to achieve as nearly as
possible the same economic effect as the original provision, and the remainder
of this Agreement will remain in full force and effect.
12. NOTICES. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing, addressed as provided
below (or to such other person or address as to which either party may notify
the other in accordance with this Section 13) and actually delivered at said
address:
If to Executive, to him at:
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company, to it at:
BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
13. SURVIVAL. The obligations of Executive pursuant to Section 6
hereof and the obligations of the Company pursuant to Section 7 hereof shall
each survive any termination or expiration of this Agreement, or any resignation
of employment by Executive under Section 7.4 above, as the case may be.
14. MISCELLANEOUS. This Agreement constitutes the entire understanding
of the parties with respect to the subject matter hereof, and supersedes all
prior and contemporaneous understandings and agreements, whether oral or
written, regarding such subject matter. This Agreement may be amended or
modified only by a written instrument signed by Executive and by a duly
authorized representative of the Company. This Agreement may be executed in any
number of counterparts, which together shall constitute one and the same
instrument. Except as otherwise provided in Section 10 above, this Agreement
shall be governed by and construed in accordance with the laws (other than the
conflicts of law rules) of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands,
as of the date first above written.
EXECUTIVE BE AEROSPACE, INC.
___________________________ By:___________________________
Title:__________________________
By:___________________________
Title:__________________________
