Exhibit 10.31
EMPLOYMENT AGREEMENT
LMI AEROSPACE, INC., a Missouri corporation (the "Corporation"), and
Xxxxxxx X. Xxxxxxxxxx ("Employee") hereby agree as follows:
1. Employment. The Corporation hereby employs Employee, and Employee
accepts employment from the Corporation, upon the terms and conditions
hereinafter set forth. Any and all employment agreements heretofore entered into
between the Corporation and Employee are hereby terminated and cancelled, and
each of the parties hereto mutually releases and discharges the other from any
and all obligations and liabilities heretofore or now existing under or by
virtue of any such employment agreements, it being the intention of the parties
hereto that this Agreement, effective immediately, shall supersede and be in
lieu of any and all prior employment agreements between them.
2. Term of Employment. The initial term of Employee's employment under
this Agreement shall commence on January 1, 2002 and shall terminate on December
31, 2003; provided, however, that this Agreement shall be automatically extended
for additional terms of one year each unless not later than October 31 of any
year beginning in 2003, either party has given written notice to the other party
of its or his intention not to extend the term of this Agreement; and provided,
further, that the term of employment may be terminated upon the earlier
occurrence of any of the following events:
(a) Upon the termination of the business or corporate existence
of the Corporation;
(b) At the Corporation's option, in the event the Corporation
determines that Employee is not performing the duties required of him
hereunder to the satisfaction of the Corporation;
(c) Upon the death of the Employee;
(d) At the Corporation's option, if Employee shall suffer a
permanent disability; (For the purposes of this Agreement, "permanent
disability" means any physical or mental impairment that renders the
Employee unable for a period of six (6) months or more to perform the
essential job functions of his position, even with reasonable
accommodation, as determined by a physician selected by the
Corporation. The Employee acknowledges and agrees that he shall
voluntarily submit to a medical or psychological examination for the
purpose of determining his continued fitness to perform the essential
functions of his position whenever requested to do so by the
Corporation. If the Corporation elects to terminate the employment
relationship on this basis, the Corporation shall notify the Employee
or his representative in writing and the termination shall become
effective on the date that such notification is given;
(e) At the Corporation's option, upon ten (10) calendar days'
written notice to Employee, in the event of any breach or default by
Employee of any of the terms of this Agreement or of any of Employee's
duties or obligations hereunder. In lieu of providing ten (10) calendar
days' advance written notice, the Corporation, at its sole option, may
terminate the Employee's services immediately and pay him an amount
that is equivalent to ten (10) calendar days of his salary, less any
deductions required by law;
(f) At the Corporation's option, without any advance notice, in
the event that the Employee engages in conduct which, in the opinion of
the Corporation, (1) constitutes dishonesty of any kind (including, but
not limited to, any misrepresentation of facts or falsification of
records) in Employee's relations, interactions or dealings with the
Corporation or its customers; (2) constitutes a felony; (3) potentially
may or will expose the Corporation to public disrepute or disgrace, or
potentially may or will cause harm to the customer relations,
operations or business prospects of the Corporation; (4) constitutes
harassment or discrimination towards any person associated with the
Corporation, whether an employee, agent or customer, based upon that
person's race, color, national origin, sex, age, disability, religion,
or other protected status; (5) reflects disruptive or disorderly
conduct, including but not limited to, acts of violence, fighting,
intimidation or threats of violence against any person associated with
the Corporation, whether an employee, agent or customer, or possessing
a weapon while on the Corporation's premises or while acting on behalf
of the Corporation; (6) is indicative of abusive or illegal drug use
while on the Corporation's premises or while acting on the
Corporation's behalf; or (7) constitutes a willful violation of any
governmental rules or regulations; or
(g) At the Employee's option, after providing the Corporation
with at least thirty (30) calendar days advance written notice of his
intention to terminate the employment relationship.
If employment is terminated for any of the reasons set forth in
paragraphs (c) through (g) of this section, Employee shall be entitled to
receive only the Base Salary (as that term is hereinafter defined) accrued but
unpaid as of the date of the termination and shall be ineligible to receive any
additional compensation or severance pay. If, on the other hand, employment is
terminated by the Corporation during the term of this Agreement for any reason
other than those set forth in paragraphs (c) through (g) of this section and for
any reason unrelated to a change in the control of or the sale of the
Corporation, the Corporation shall provide severance pay to Employee in an
amount based upon his length of service with the Corporation. Specifically, the
Corporation shall provide Employee with six (6) months of Base Salary if he has
less than five (5) years of service with the Corporation as of the date of his
termination and with twelve (12) months of Base Salary if he has five (5) or
more years of service with the Corporation as of the date of his termination.
Such severance pay shall be paid in equal monthly installments, unless the
Corporation, within its sole discretion, elects to pay the present value of the
severance pay in a lump sum within thirty (30) calendar days of the termination.
If employment is terminated in conjunction with a change in the control
of the Corporation or in conjunction with the sale of substantially all of the
operating assets of the Corporation, the Corporation will provide Employee with
severance pay under the circumstances specified within this paragraph. For the
purposes of this Agreement, a change in control is defined as the acquisition of
more than fifty percent (50%) of the stock of the Corporation by a group of
shareholders or an entity which acquires control of the Corporation (a
"Purchaser"). If the change in control or the sale results in the involuntary
termination of Employee or results in the Employee electing to terminate his
employment for a good reason as determined by the Corporation (such as the
Purchaser refusing to offer full time employment to Employee on terms comparable
to those provided by the Corporation prior to the acquisition or the Purchaser
requiring Employee to move to a new location), the Corporation shall provide
Employee with severance pay in an amount that is equal to two times his annual
Base Salary and shall pay Employee any reasonably anticipated Performance Bonus
for the fiscal year in which he was terminated on a prorated basis. If Employee
voluntarily terminates his employment without a good reason (as determined by
the Corporation) within thirty (30) days after the change in control or the
sale, the Corporation shall provide Employee with six (6) months of Base Salary
if he has less than five (5) years of service with the Corporation as of the
date of his termination and with twelve (12) months of Base Salary if he has
five (5) or more years of service with the Corporation as of the date of his
termination. The severance pay provided for in this paragraph shall be paid in
equal monthly installments, unless the Corporation, within its sole discretion,
elects to pay the present value of the severance pay in a lump sum within thirty
(30) calendar days of the termination.
Notwithstanding anything to the contrary, the amount of severance pay
provided under this Agreement shall not under any circumstances exceed the
limitations set forth in ss. 280G of the Internal Revenue Code of 1986.
3. Compensation.
(A) During the period from January 1, 2002 to December 31, 2002,
the Corporation shall compensate Employee for Employee's services rendered
hereunder by paying to Employee an annual salary (the "Base Salary") of One
Hundred Fifty Thousand Dollars ($150,000.00), less any authorized or required
payroll deductions. Thereafter, as long as this Agreement remains in effect, the
annual Base Salary that the Corporation shall pay to the Employee for his
services rendered hereunder will be One Hundred Fifty-Five Thousand Dolalrs
($155,000.00), less any authorized or required payroll deductions. Payment of
this salary will be made in accordance with the payroll policies of the
Corporation in effect from time to time.
(B) With respect to each complete fiscal year of the Corporation
during which (i) the Employee is employed under the terms of this Agreement as
of the last day of such fiscal year, and (ii) the Corporation's "Annual Net
Income" (as that term is hereinafter defined) is more than Two Million Dollars
($2,000,000.00), the Corporation shall pay to Employee, in addition to the Base
Salary, an annual "Performance Bonus". The amount of the annual Performance
Bonus (if any) shall be equal to:
(1) seven-tenths of one percent (0.7%) of the Corporation's Annual
Net Income that is between Two Million Dollars ($2,000,000.00)
and Four Million, Four Hundred Ninety-Nine Thousand, Nine Hundred
Ninety-Nine Dollars and Ninety-Nine Cents ($4,499,999.99); plus
(2) one percent (1.0%) of the Corporation's Annual Net Income that is
between Four Million Five Hundred Thousand Dollars
($4,500,000.00) and Six Million, Nine Hundred Ninety-Nine
Thousand, Nine Hundred Ninety-Nine Dollars and Ninety-Nine Cents
($6,999,999.99); plus
(3) three-tenths of one percent (0.3%) of the Corporation's Net
Income that is between Seven Million Dollars ($7,000,000.00) and
Ten Million Dollars ($10,000,000.00), inclusive.
In the event the Corporation's Annual Net Income for any given fiscal
year is less than Two Million Dollars ($2,000,000.00), the Employee shall not be
entitled to a Performance Bonus with respect to such fiscal year.
Notwithstanding anything contained herein to the contrary, in the event the sum
of the Employee's Performance Bonus with respect to a fiscal year plus the
Employee's benefit under all performance/production incentive programs of the
Corporation in which the Employee is entitled to a bonus ("Incentive Benefit")
for such fiscal year exceeds Fifty Thousand Dollars ($50,000.00), the amount of
the Employee's Performance Bonus for such year shall be reduced so that the sum
of the Performance Bonus and the Incentive Benefit equals Fifty Thousand Dollars
($50,000.00).
For purposes of the calculation of the Performance Bonus, the
Corporation's "Annual Net Income" means the consolidated net profit of the
Corporation and its subsidiaries, for a given fiscal year, as determined by the
firm of independent certified public accountants providing auditing services to
the Corporation, using generally accepted accounting principles consistently
applied, and calculated without regard to (a) any bonus paid to the
Corporation's Chairman of the Board and any formula bonuses paid pursuant to
employment contracts, (b) federal and state income tax, and (c) any income or
loss attributable to any other corporation or entity (including the assets of a
corporation or entity that constitute an operating business) acquired by or
merged into the Corporation subsequent to the effective date of this Agreement.
The Corporation shall pay to Employee any Performance Bonus due the Employee
hereunder not later than fifteen (15) days after the receipt by the Corporation
of its annual audited financial statements, which the Corporation expects to
receive within ninety (90) days after the end of each fiscal year of the
Corporation.
(C) The Corporation retains the right to modify or adjust the
manner in which the Performance Bonus is calculated in the event that the
Corporation either acquires the assets of another entity, or any portion
thereof, or sells its assets, or any portion thereof, to another entity.
(D) In addition to the Base salary and Performance Bonus (if
any), Employee shall be entitled to receive such bonus compensation as the Board
of Directors of the Corporation may authorize from time to time.
4. Duties of Employee.
(A) Employee shall serve as Chief Information Officer for the
Corporation, or in such other positions as may be determined by the Board of
Directors of the Corporation, and Employee shall perform such duties (comparable
to those normally performed by individuals who serve as such officers of
comparable companies) on behalf of the Corporation and its subsidiaries by such
means, at such locations, and in such manner as may be specified from time to
time by the officers or Board of Directors of the Corporation.
(B) Employee agrees to abide by and conform to all rules
established by the Corporation applicable to its employees.
(C) Employee acknowledges that he is being employed as a
full-time employee, and Employee agrees to devote so much of Employee's entire
time, attention and energies to the business of the Corporation as is necessary
for the successful operation of the Corporation and shall endeavor at all times
to improve the business of the Corporation. Employee shall not accept any
business commitments other than with the Corporation without the advance written
consent of the Corporation's President.
5. Expenses. During the period of Employee's employment, except as
otherwise specifically provided in this Agreement, the Corporation will pay
directly, or reimburse Employee for, all items of reasonable and necessary
business expenses approved in advance by the Corporation if such expenses are
incurred by Employee in the interest of the business of the Corporation. The
Corporation shall also reimburse Employee for automobile expenses incurred by
Employee in the performance of Employee's duties hereunder. The amount of such
reimbursement shall be in accordance with the automobile expense reimbursement
policy adopted (and as it may be modified from time to time) by the
Corporation's Board of Directors. All such expenses paid by Employee will be
reimbursed by the Corporation upon presentation by Employee, from time to time
(but not less than quarterly), of an itemized account of such expenditures in
accordance with the Corporation's policy for verifying such expenditures.
6. Fringe Benefits.
(A) Employee shall be entitled to participate in any health,
accident and life insurance program and other benefits which have been or may be
established by the Corporation for salaried employees of the Corporation.
(B) Employee shall be entitled to an annual vacation without loss
of compensation for such period as may be determined by the Board of Directors
of the Corporation.
(C) The Corporation shall furnish to the Employee during the term
of his employment an automobile selected by the Corporation to aid the Employee
in the performance of his duties.
7. Covenants of Employee.
(A) During the term of Employee's employment with the Corporation
and for all time thereafter Employee covenants and agrees that Employee will not
in any manner directly or indirectly, except as required in Employee's duties to
the Corporation, disclose or divulge to any person, entity, firm or company
whatsoever, or use for Employee's own benefit or the benefit of any other
person, entity, firm or company, directly or indirectly, any knowledge, devices,
information, techniques, customer lists, business plans or other data belonging
to the Corporation or developed by Employee on behalf of the Corporation during
his employment with the Corporation, without regard to whether all of the
foregoing matters will be deemed confidential, material or important, the
parties hereto stipulating, as between them, that the same are important,
material, confidential and the property of the Corporation, that disclosure of
the same to or use of the same by third parties would greatly affect the
effective and successful conduct of the business of the Corporation and the
goodwill of the Corporation, and that any breach of the terms of this
subparagraph (A) shall be a material breach of this Agreement.
(B) During the term of Employee's employment with the Corporation
and for a period of two (2) years (the "Covenant Term") after cessation for
whatever reason of such employment (except as hereinafter provided in
subparagraph (C) of this paragraph 7), Employee covenants and agrees that
Employee will not in any manner directly or indirectly:
(i) solicit, divert, take away or interfere with any of the
customers (or their respective affiliates or successors) of the
Corporation;
(ii) engage directly or indirectly, either personally or as
an employee, partner, associate partner, officer, manager, agent,
advisor, consultant or otherwise, or by means of any corporate or other
entity or device, in any business which is competitive with the
business of the Corporation. For purposes of this covenant a business
will be deemed competitive if it is conducted in whole or in part
within any geographic area wherein the Corporation is engaged in
marketing its products, and if it involves the manufacture of component
parts for the aerospace industry or any other business which is in any
manner competitive, as of the date of cessation of Employee's
employment, with any business then being conducted by the Corporation
or as to which the Corporation has then formulated definitive plans to
enter;
(iii) induce any salesman, distributor, supplier,
manufacturer, representative, agent, jobber or other person transacting
business with the Corporation to terminate their relationship with the
Corporation, or to represent, distribute or sell products in
competition with products of the Corporation; or
(iv) induce or cause any employee of the Corporation to
leave the employ of the Corporation.
(C) The parties agree that the Covenant Term provided for in the
preceding subparagraph (B) shall be:
(i) reduced to six (6) months in the event all of the
operating assets or all of the common stock of the Corporation is sold
to any entity or individuals unaffiliated with the Corporation, its
successors or assigns; or
(ii) eliminated if the business currently operated by the
Corporation is terminated and the assets of the Corporation are
liquidated.
(D) All the covenants of Employee contained in this paragraph 7
shall be construed as agreements independent of any other provision of this
Agreement, and the existence of any claim or cause of action against the
Corporation, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Corporation of these covenants.
(E) It is the intention of the parties to restrict the activities
of Employee under this paragraph 7 only to the extent necessary for the
protection of legitimate business interests of the Corporation, and the parties
specifically covenant and agree that should any of the provisions set forth
therein, under any set of circumstances not now foreseen by the parties, be
deemed too broad for such purpose, said provisions will nevertheless be valid
and enforceable to the extent necessary for such protection.
8. Documents. Upon cessation of Employee's employment with the
Corporation, for whatever reason, all documents, records (including without
limitation, customer records), notebooks, invoices, statements or
correspondence, including copies thereof, relating to the business of the
Corporation then in Employee's possession, whether prepared by Employee or
others, will be delivered to and left with the Corporation, and Employee agrees
not to retain copies of the foregoing documents without the written consent of
the Corporation.
9. Remedies. In the event of the breach by Employee of any of the terms
of this Agreement, notwithstanding anything to the contrary contained in this
Agreement, the Corporation may terminate the employment of Employee in
accordance with the provisions of paragraph 2 of this Agreement. It is further
agreed that any breach or evasion of any of the terms of this Agreement by
Employee will result in immediate and irreparable injury to the Corporation and
will authorize recourse to injunction and/or specific performance as well as to
other legal or equitable remedies to which the Corporation may be entitled. In
addition to any other remedies that it may have in law or equity, the
Corporation also may require an accounting and repayment of all profits,
compensation, remuneration or other benefits realized, directly or indirectly,
as a result of such breaches by the Employee or by a competitor's business
controlled, directly or indirectly, by the Employee. No remedy conferred by any
of the specific provisions of this Agreement is intended to be exclusive of any
other remedy and each and every remedy given hereunder or now or hereafter
existing at law or in equity by statute or otherwise. The election of any one or
more remedies by the Corporation shall not constitute a waiver of the right to
pursue other available remedies. Employee expressly agrees to pay all reasonable
costs and attorneys' fees incurred by the Corporation in order to enforce the
Employee's obligations under this Agreement, regardless of whether litigation is
commenced or prosecuted to a judgment.
10. Severability. All agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by any court
of competent jurisdiction, this Agreement, subject to subparagraph 7(E) hereof,
shall continue in full force and effect and shall be interpreted as if such
invalid agreements or covenants were not contained herein.
11. Waiver or Modification. No waiver or modification of this Agreement
or of any covenant, condition or limitation herein shall be valid unless in
writing and duly executed by the party to be charged therewith, and no evidence
of any waiver or modification shall be offered or received in evidence in any
proceeding, arbitration or litigation between the parties hereto arising out of
or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid, and the parties further agree that the provisions of this Paragraph
may not be waived except as herein set forth. Failure of the Corporation to
exercise or otherwise act with respect to any of its rights hereunder in the
event of a breach of any of the terms or conditions hereof by Employee shall not
be construed as a waiver of such breach nor prevent the Corporation from
thereafter enforcing strict compliance with any and all of the terms and
conditions hereof.
12. Assignability. The services to be performed by Employee hereunder
are personal in nature and, therefore, Employee shall not assign Employee's
rights or delegate Employee's obligations under this Agreement, and any
attempted or purported assignment or delegation not herein permitted shall be
null and void.
13. Successors. Subject to the provisions of paragraph 12, this
Agreement shall be binding upon and shall inure to the benefit of the
Corporation and Employee and their respective heirs, executors, administrators,
legal administrators, successors and assigns.
14. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or mailed by certified or registered mail, return receipt
requested, if to the Corporation, to:
Xxxxxx X. Xxxx, President
LMI AEROSPACE, INC.
X.X. Xxx 000
Xx. Xxxxxxx, XX 00000-000
and, if to Employee, to:
Xxxxxxx X. Xxxxxxxxxx
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or to such other address as may be specified by either of the parties in the
manner provided under this paragraph 14.
15. Construction. This Agreement shall be deemed for all purposes to
have been made in the State of Missouri and shall be governed by and construed
in accordance with the laws of the State of Missouri, notwithstanding either the
place of execution hereof, nor the performance of any acts in connection
herewith or hereunder in any other jurisdiction.
16. Venue. The parties hereto agree that any suit filed arising out of
or in connection with this Agreement shall be brought only in the United States
District Court for the Eastern District of Missouri, unless that court lacks
jurisdiction, in which case such action shall be brought only in the Circuit
Court for St. Louis County, Missouri.
17. Disclosure of Existence of Agreement. To preserve the Corporation's
rights under this Agreement, the Corporation may advise any third party of the
existence of this Agreement and its terms, and the Employee specifically
releases and agrees to indemnify and hold the Corporation harmless from any
liability for doing so.
18. Opportunity to Review. Employee hereby represents and warrants that
he has had an opportunity to review this Agreement and ask the Corporation
questions about the Agreement, and understands the meaning and effect of each
paragraph of this Agreement.
The parties have executed this Agreement as of January 1, 2002.
LMI AEROSPACE, INC.
("Corporation")
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx, President
/s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
("Employee")
