EXHIBIT 3
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of September
14, 2001 by and between BE Aerospace, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. XxXxxxxxx (the "Executive").
RECITALS
WHEREAS, Executive and the Company entered into that certain
Employment Agreement dated as of May 29, 1998 and thereafter amended said
Agreement by two amendments (said Employment Agreement and amendments
hereinafter collectively the "Employment Agreement"); and
WHEREAS, Executive having provided services to the Company since May
1, 1993 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hereby restated, superseded and replaced in its entirety by this Agreement.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. 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 5 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."
3. Position and Duties. The Executive shall serve the Company in the
capacity of Corporate Senior Vice President of Administration and Chief
Financial Officer, or in such other position as the Chief Executive Officer of
the Company, his designee or the Board of Directors of the Company may designate
from time to time, and shall be accountable to, and shall have such other
powers, duties and responsibilities, consistent with this capacity, as the Chief
Executive Officer of the Company, his designee or the Board of Directors of the
Company shall determine. The Executive shall perform and discharge, faithfully,
diligently and to the best of his ability, such duties and responsibilities. The
Executive shall devote substantially all of his working time and efforts to the
business and affairs of the Company.
4. Compensation.
(a) Salary. Effective as of March 1, 2001, the Executive shall receive
an annual salary (the "Salary") payable at the rate of $345,000 per annum. Such
rate shall be subject to adjustment from time to time by the Board of Directors
as hereinafter provided; provided, however, that it shall at no time be adjusted
below the Salary for the preceding year. Commencing March 1, 2002, and of each
year thereafter during the Employment Period, the Salary 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 twelve month period (March through
February) immediately preceding such March 1. If the Index is no longer issued,
the Board of Directors and Executive shall agree upon a substitute adjustment
index issued by such agency which most reasonable 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, less all required deductions.
(b) Incentive Bonus. During the Employment Period, the
Executive may receive an incentive bonus (the "Bonus") for each fiscal
year or portion thereof during which the Executive has been employed
hereunder as determined by the Board of Directors of the Company at
the end of the applicable fiscal year.
(c) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by him on behalf of the Company in
accordance with the Company policy.
(d) 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 the
executives of the Company generally. In accordance with the Company
policy, the Executive shall also be entitled to paid vacation in any
fiscal year during the Employment period as well as all paid holidays
given by the Company to its employees. In addition, Executive and/or
his spouse, should she survive him, for a period of up to five (5)
years commencing on the Expiration Date, shall be entitled to
participate in all medical, dental, and health benefit plans available
to the Company's executive officers on similar terms and conditions as
any actively employed executive. The preceding sentence shall survive
the termination or expiration of this Agreement for any reason.
(e) Automobile. During the Employment Period, the Executive
shall be furnished with an automobile either owned or leased by the
Company or an automobile allowance of $900 per month, at the
discretion of the Company.
(f) Stock Option Grants. Through the Employment Period the
Executive shall be entitled to participate in any applicable option
grant program of the Company.
5. Termination and Compensation Thereon.
(a) Termination Date. The term "Termination Date" shall mean
the date on which the Executive's employment with the Company is
terminated for any reason.
(b) 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, (i) the Retirement Compensation as provided in Section 5(g)
below, and (ii)a lump sum payment amount 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.
(c) Incapacity. If in the reasonable judgment of the Board of
Directors of the Company, as a result of the Executive's incapacity
due to physical or mental illness or otherwise, the 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 the Executive's
employment as provided in this Section 5(c). If the Company desires to
so terminate the Executive, the Company shall:
(i) give prompt notice to the Executive of any such
termination;
(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, the highest annual Salary paid to the
Executive prior to the Termination Date, (b) continue to provide Executive with
the medical, dental, disability and life insurance coverage, in the same amounts
and upon the same terms and conditions provided pursuant to Section 4(d) hereof
immediately prior to the Termination Date, and (c) continue to provide the
Executive with the automobile allowance provided pursuant to Section 4(e) hereof
immediately prior to the Termination Date; and
(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 has been designated, to the
Executive's estate the Retirement Compensation as provided in Section 5(g)
below.
(d) Termination by the Company. The Company may terminate the
Executive's employment hereunder for "cause". For purposes of this
Agreement, "cause" shall mean (i) the Executive's material failure,
refusal or neglect to perform and discharge his duties and
responsibilities hereunder, other material breach of the terms hereof,
or breach of any fiduciary duties he may have because of any position
he holds with the Company or any subsidiary or affiliate thereof; or
(ii) a felony conviction or a conviction for any crime involving the
Executive's personal dishonesty or moral turpitude. If the Executive's
employment is terminated pursuant to this Section 5(d), the Company
shall have no further obligations to the Executive hereunder after the
Termination Date, except for unpaid Salary and benefits accrued
through the Termination Date.
(e) Change of Control.
(i) If a "Change of Control" of the Company occurs, the
Company will be obligated as provided in Section 5 of this Agreement. The
Company's obligations under Section 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 5, the date on which a Change in Control occurs hereafter 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:
(a) 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: (1) the Salary that would have been payable from the Change of
Control Date through the Expiration Date, (2) 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, (3) two (2)
times the Salary, determined at the highest rate that was in effect at
any time from the 180 day period preceding the Change of Control until
the Termination Date (the "Highest Salary"), (4) an amount equal to
the aggregate amount of Salary, determined based upon the Highest
Salary, that would have been payable for the period from the Change of
Control Date through the Expiration Date, and (5) by the amount equal
to (x) one-half of the Executive's Highest Salary multiplied (y) by
the number of months from May 1, 1993 to the Change of Control Date
divided by twelve (12), which lump sum shall not be prorated and shall
be paid in addition to the Severance Pay payable pursuant to Section
5(f), hereof.
(b) during the balance of the Employment Term and thereafter
until the Expiration Date, provide Executive with continued life
insurance and disability and medical and dental 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, and (d) continue to provide Executive
with the automobile allowance provided pursuant to Section 4(e) hereof
as of the Termination Date, or if greater, as provided immediately
prior to the Change in Control;
(c) 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;
and
(d) pay Executive the amount of any Gross-Up Payment payable
by the Company to the Executive under Section 5(h) hereof.
(ii) For purposes of this provision, "Change of Control" means:
(a) 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;
(b) 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;
(c) 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
(d) 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.
(iii) The obligations of the Company pursuant to this Section
5(e) shall survive any termination of this Agreement or the Executive's
employment or any resignation of such employment by the Executive pursuant to
this Section 5(e).
(f) Severance Pay. If the Executive's employment hereunder is
terminated for any reason, other than the Executive's death pursuant
to Section 5(b) hereof, or the Executive's incapacity pursuant to
Section 5(c) hereof, then within five (5) business 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
5(f) 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 5(e) hereof in
the event of a Change of Control of the Company.
(g) Retirement.
(i) If the employment of the Executive is terminated for any
reason except cause as defined in Section 5(d) above, the Company shall pay to
the Executive (or in the event of the Executive's death after such termination,
to such person as the Executive has designated in a notice filed with the
Company, or if no such person shall have been designated, to his estate), a lump
sum amount equal to the amount by which (x) the product of (a) one-half
multiplied by the Executive's average annual salary for the three year period
preceding the Termination Date times (b) the number of years (including any
partial year) since May 1, 1993 (the "Retirement Compensation") exceeds (y) the
sum of (a) any amounts previously distributed to the Executive pursuant to
Section 5(g)(ii), and (b) any amounts previously distributed pursuant to
Sections 5(g)(iii) and 5(g)(iv). The lump sum amount to be paid shall not be
present-valued or otherwise reduced by use of any other discount or discounting
method. The payment will be made to the Executive within five business days of
the Termination Date.
(ii) Within five business days after the date on which the BE
Aerospace, Inc. Executive Compensation Trust II dated April 21, 1999, as amended
is terminated (the "Distribution Date"), the Company will distribute in a lump
sum the amount of Retirement Compensation that would have been payable to the
Executive under Section 5(g)(i) as of the Distribution Date.
(iii) Within ninety days of the Distribution Date, the
Company shall establish a trust for the duration of the Employment Term, and,
commencing on the Distribution 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) the Retirement
Compensation that would be payable to the Executive under Section 5(g)(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
5(g)(iii) 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
reasonable 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 5g(iii), shall be payable to the
Executive, and that prior to payment of such retirement compensation, the assets
of the Retirement Trust shall be exempt from the claims of the Company's
creditors.
(iv) 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 of the Assumed Taxes that the Company reasonably estimates will be
payable by the Executive for the calendar year for which the distribution is
being made as a result of his beneficial interest in the Retirement Trust.
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.
(v) The obligations of the Company pursuant to this Section
5(g) shall survive any termination of this Agreement or the Executive's
employment as aforesaid.
(h) 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 5(h)) (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 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 5(h) all determinations required to be made under this Section 5(h),
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 5(h), 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 5(h) 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 5(h)(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 5(h)(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 5(h)(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 5(h)(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.
6. Amendments. No amendment to this Agreement or any schedule hereto
shall be effective unless it shall be in writing and signed by each party
hereto.
7. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or sent by telecopy
or three days after being mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to the Company, to it at:
BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: President
with a copy to:
BE Aerospace, Inc.
0000 Xxxxxxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
If to the Executive, to him at:
0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
8. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties.
9. Miscellaneous.
(a) Enforceability. The invalidity and unenforceability of any
term or provision hereof shall not affect the validity or enforceability of any
other term or provision hereof. The headings in this Agreement are for
convenience of reference only and shall not alter or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts
which together shall constitute one instrument and shall be governed by and
construed in accordance with the laws (other than the conflict of laws rules) of
the State of Florida.
(b) Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement may be assigned by the Company. Executive may
not assign or delegate Executive's duties under this Agreement without the
Company's prior written approval.
IN WITNESS WHEREOF, the parties hereto execute this Agreement
as of the date first written above.
EXECUTIVE
____________________________________
Xxxxxx X. XxXxxxxxx
BE AEROSPACE, INC.
____________________________________
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
