EMPLOYMENT AGREEMENT
AGREEMENT, dated as of January 1, 2000, by and between Precision
Standard, Inc., a Colorado corporation (the "Company"), and Xxxxxx X.
Xxxxxxx ("Executive").
RECITALS
The Company desires to exclusively contract for the managerial and
business skills possessed by Executive, on the terms and conditions set
forth in this Agreement, and Executive desires to be so employed.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties hereby agree as follows:
1 EMPLOYMENT. The Company hereby agrees to employ Executive as
President and Chief Executive Officer, and Executive hereby accepts such
employment, on the terms and conditions hereinafter set forth.
2 TERM. The period of employment of Executive by the Company
hereunder (the "Employment Period") shall commence on January 1, 2000 and
shall terminate on December 31, 2004, unless extended in writing by the
parties. The Employment Period may be sooner terminated by either party
in accordance with Section 6 of this Agreement.
3 POSITION AND DUTIES. During the Employment Period, Executive
shall serve as President and Chief Executive Officer of the Company.
Executive shall have those powers and duties normally associated with the
position of President and Chief Executive Officer and such other powers
and duties as may be prescribed by the Board of Directors of the Company
(the "Board").
4 OUTSIDE BUSINESS ACTIVITIES PRECLUDED. During the Employment
Period, Executive shall devote his full energies, interest, abilities and
productive time to the performance of this Agreement. Executive shall
not, without the prior written consent of the Company, perform other
competitive services of any kind or engage in any other business activity,
with or without compensation. Executive shall not, without the prior
written consent of the Company, engage in any activity adverse to the
Company's interests.
5 COMPENSATION AND RELATED MATTERS.
(a) SALARY. The Company shall pay Executive an annual base
salary of $250,000 ("Base Salary") during each calendar year of the
Employment Period, prorated for any year in which this Agreement is in
effect for only a portion of the calendar year. Executive's Base Salary
shall be payable in approximately equal installments in accordance with
the Company's customary payroll practices. Executive's Base Salary shall
be reviewed by the Company from time to time at its discretion, and
Executive shall receive such salary increases, if any, as the Company, in
its sole discretion, shall determine. If Executive's Base Salary is
increased by the Company, such increased Base Salary shall then constitute
the Base Salary for all purposes of this Agreement.
(b) BONUS. The Board's compensation committee (the
"Compensation Committee") shall establish an executive bonus pool which
will permit Executive to earn a cash bonus of up to 100% of his Base
Salary in each year of the Employment Period depending upon the operating
profits of the Company and the performance of Executive. The amount of
Executive's cash bonus shall be determined in the sole discretion of the
Compensation Committee and shall be dependent upon, among other things,
the achievement of the performance targets set forth on Exhibit A hereto.
(c) STOCK OPTIONS. On the date of this Agreement, Executive
shall receive stock options to purchase 100,000 shares of the Company's
common stock at an exercise price equal to the fair market value per share
of the common stock on the date of this Agreement. Such options shall
vest as follows: 20% shall vest immediately and the remainder shall vest
at the rate of 20% per year over four years. Such options shall be
evidenced by a stock option agreement between the Company and Executive
containing customary terms and conditions consistent with the Company's
stock option plan. In the event of a Change of Control of the Company as
defined in Exhibit B hereto, any unvested options provided for under this
Section or any agreement between the Company and Executive shall
immediately vest.
(d) ALLOWANCE. The Company shall pay Executive a household
improvement allowance of $30,000 in the aggregate, payable within ten (10)
days following the earlier to occur of (i) September 1, 2000 or (ii) the
closing of the lease or purchase of Executive's new residence in the
Birmingham, Alabama area. In addition, the Company shall promptly
reimburse Executive in an amount not to exceed $3,200 per month for all
reasonable expenses incurred by Executive for housing, rental car, per
diem and similar expenses in the Birmingham, Alabama area between the date
of this Agreement and the earlier to occur of (A) September 1, 2000 or (B)
the closing of the lease or purchase of Executive's new residence in such
area.
The Company shall also reimburse Executive for all reasonable
expenses incurred by Executive for airfare, hotel, per diem, car rental
and similar expenses for one trip for Executive and his spouse to travel
to Birmingham, Alabama to search for a new residence in the area.
Executive may take such trip before or after the commencement of the
Employment Period.
The foregoing notwithstanding, the amount of any expenses
payable to Executive pursuant to this Section 5(d) shall be "grossed up"
to the extent necessary (on an after-tax basis) to compensate Executive
for any additional taxes owing as a result of the Company's payment of
such expenses.
(e) EXPENSES. The Company shall promptly reimburse Executive
for all reasonable business expenses upon the presentation of reasonably
itemized statements of such expenses in accordance with the Company's
policies and procedures now in force or as such policies and procedures
may be modified with respect to all executive officers of the Company.
(f) VACATION. Executive shall be entitled to the number of
weeks of vacation per year provided to the Company's executive officers
under a to-be-established executive vacation policy; provided, however,
that Executive's vacation shall not be less than three weeks per calendar
year.
(g) PENSION AND INCENTIVE BENEFIT PLANS. During the Employment
Period, Executive (and his spouse and dependents to the extent provided
therein) shall be entitled to participate in and be covered under all
welfare benefit plans or programs maintained by the Company from time to
time for the benefit of its executive officers including, without
limitation, all medical, dental, vision, life insurance and long-term
disability plans and programs. In addition, during the Employment Period,
Executive shall be eligible to participate in all pension, retirement,
401(k) and other employee benefit plans and programs maintained from time
to time by the Company for the benefit of its executive officers.
Promptly after the date of this Agreement, the Company shall undertake a
study of executive benefits and modify existing Company plans or create
new plans as it deems appropriate to compensate Executive and to assist in
the recruitment and retention of additional executives.
(h) DISABILITY BENEFITS. Until such time as the Company
institutes an executive disability benefits plan reasonably acceptable to
Executive, in the event of Executive's Disability (as defined below)
during the Employment Period, the Company shall pay to Executive 66 2/3%
of Executive's Base Salary for the greater of eighteen (18) months or the
remainder of the Employment Period following the Date of Termination (as
defined below). In addition, in the event of payments to Executive under
this Section, the Company shall maintain in full force and effect for the
continued benefit of Executive, his spouse and his dependents (as
applicable) the medical, dental, vision and life insurance plans and
programs in which Executive, his spouse or his dependents were
participating immediately prior to the Date of Termination at the level in
effect and upon substantially the same terms and conditions (including
without limitation contributions required by Executive for such benefits)
as existed prior to the Date of Termination.
For purposes of this Agreement, "Disability" shall mean a
physical or mental condition of Executive that, in the good faith judgment
of the Company, based upon certification of a licensed physician
reasonably acceptable to Executive and the Company, (i) prevents Executive
from being able to perform the services required by his position with the
Company, (ii) has continued for a period of at least three (3) months
during any period of twelve consecutive months, and (iii) is reasonably
expected to continue.
(i) LIFE INSURANCE. Until such time as the Company institutes
an executive life insurance policy substantially similar to Executive's
current policy, the Company shall pay for the actual cost of premiums for
Executive's life insurance policy that he has assumed from his former
employer, which is a $400,000 term life insurance policy issued by
Metropolitan Life Insurance Company with a current premium of $4,600 per
year.
(j) AUTOMOBILE ALLOWANCE. Commencing upon the earlier of (A)
the arrival of Executive's automobile in Birmingham, Alabama or (B) the
termination of the monthly expense reimbursement payments to Executive
under Section 5(d), and continuing through the remainder of the Employment
Period, Executive shall be entitled to an automobile allowance not to
exceed $1,000 per month. The amount of the allowance shall cover all
expenses related to the maintenance of a business use automobile,
including maintenance, depreciation, insurance and business-related
mileage.
6 TERMINATION. Executive's employment hereunder may be terminated
during the Employment Period under the following circumstances:
(a) DEATH. Executive's employment hereunder shall terminate
upon his death.
(b) DISABILITY. The Company shall have the right to terminate
Executive's employment hereunder upon his Disability.
(c) WITH OR WITHOUT CAUSE. The Company shall have the right to
terminate Executive's employment hereunder at any time with or without
Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate Executive's employment if, in the good faith judgment of the
Company, it is determined that Executive has engaged in:
(i) willful misconduct, or breach of fiduciary duty
involving personal profit;
(ii) willful or repeated failure to substantially perform
his duties or obligations hereunder (other than due to physical or mental
impairment); or
(iii) conviction of, or plea of guilty or nolo contendere
to, a felony.
(d) VOLUNTARY. Executive shall have the right to terminate his
employment hereunder at any time by providing the Company with a Notice of
Termination.
7 TERMINATION PROCEDURE.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive during the Employment Period
(other than termination pursuant to Section 6(a)) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 11. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
(b) DATE OF TERMINATION. "Date of Termination" shall mean (i)
if Executive's employment is terminated by his death, the date of his
death, (ii) if Executive's employment is terminated pursuant to Section
6(b) or 6(c), immediately upon delivery of a Notice of Termination to
Executive (unless a later date is set forth in the Notice of Termination),
and (iii) if Executive's employment is terminated pursuant to Section
6(d), ninety (90) days following the delivery of a Notice of Termination
to the Company; provided that, in the case of this clause (iii), the
Company may determine upon receipt of the Notice of Termination that
Executive's Date of Termination shall be immediate or some time prior to
the expiration of the ninety-day notice period.
8 COMPENSATION UPON TERMINATION. In the event Executive's
employment terminates during the Employment Period, the Company shall
provide Executive with the payments and benefits set forth below.
Executive acknowledges and agrees that the payments set forth in this
Section 8 constitute liquidated damages for termination of his employment
during the Employment Period.
(a) DEATH. If Executive's employment is terminated by his
death:
(i) the Company shall pay to Executive's beneficiary,
legal representative or estate, as the case may be, Executive's Base
Salary and accrued vacation pay through the Date of Termination, as soon
as practicable following the Date of Termination, but in any event not
later than sixty (60) days thereafter;
(ii) the Company shall reimburse Executive's beneficiary,
legal representative or estate, as the case may be, pursuant to Section
5(e) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive's beneficiary, legal representative or
estate, as the case may be, shall be entitled to any other rights,
compensation and/or benefits as may be due to any such persons or estate
in accordance with the terms and provisions of any agreements, plans or
programs of the Company.
(b) DISABILITY. If Executive's employment is terminated for
Disability pursuant to Section 6(b):
(i) the Company shall provide Executive the benefits set
forth in Section 5(h) to the extent applicable;
(ii) the Company shall pay to Executive his Base Salary and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination;
(iii) the Company shall reimburse Executive pursuant to
Section 5(e) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(c) WITHOUT CAUSE. If Executive's employment is terminated by
the Company without Cause:
(i) the Company shall continue paying Executive his Base
Salary in accordance with the Company's customary payroll practices (and
shall pay Executive his accrued vacation) through the earliest of (A)
twenty-four (24) months following the Date of Termination, (B) the
expiration of the Employment Period or (C) the date on which Executive
becomes eligible to receive compensation from some other source;
(ii) to the extent permitted by applicable law, the Company
shall maintain in full force and effect, for the continued benefit of
Executive, his spouse and his dependents (as applicable) through the
earliest of (A) twenty-four (24) months following the Date of Termination,
(B) the expiration of the Employment Period or (C) the date or dates on
which Executive becomes eligible to receive coverage and benefits from
some other source (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis), the medical, dental,
vision and long-term disability plans and programs in which Executive, his
spouse and his dependents (as applicable) were participating immediately
prior to the Date of Termination at the level in effect and upon
substantially the same terms and conditions (including without limitation
contributions required by Executive for such benefits) as existed
immediately prior to the Date of Termination;
(iii) the Company shall reimburse Executive pursuant to
Section 5(e) for reasonable expenses incurred, but not paid prior to such
termination of employment;
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company; and
(v) any unvested stock options held by Executive shall
immediately vest and Executive shall be entitled to exercise the stock
options pursuant to the terms and conditions of any Company agreement or
plan then in effect.
The foregoing notwithstanding, the total of the severance
payments payable under this Section 8 and/or Section 5(c) shall be reduced
to the extent the payment of such amounts would cause Executive's total
termination benefits (as determined in good faith by the Company's public
accountants) to constitute an "excess" parachute payment under Section
280G of the Internal Revenue Code of 1986, as amended.
(d) CAUSE; VOLUNTARY. If Executive's employment is terminated
by the Company for Cause pursuant to Section 6(c) or by Executive for any
reason:
(i) the Company shall pay Executive his Base Salary and,
to the extent required by applicable law, his accrued vacation pay through
the Date of Termination, as soon as practicable following the Date of
Termination;
(ii) the Company shall reimburse Executive pursuant to
Section 5(e) for reasonable expenses incurred, but not paid prior to such
termination of employment, unless such termination resulted from a
misappropriation of Company funds; and
(iii) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
9 CONFIDENTIAL INFORMATION OWNERSHIP OF DOCUMENTS; NON-
COMPETITION.
(a) CONFIDENTIAL INFORMATION. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company and
its businesses and investments, which shall have been obtained by
Executive during Executive's employment by the Company and which is not
generally available public knowledge (other than by acts of Executive in
violation of this Agreement). Except as may be required or appropriate in
connection with carrying out his duties under this Agreement, Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law, or as is necessary in connection with any
adversarial proceeding against the Company (in which case Executive shall
use his reasonable best efforts in cooperating with the Company in
obtaining a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by
the Company or on behalf of the Company in the furtherance of its business
or to perform duties hereunder.
(b) REMOVAL OF DOCUMENTS; RIGHTS TO PRODUCTS. All records,
files, drawings, documents, models, equipment, and the like relating to
the Company's business which Executive has control over shall not be
removed from the Company's premises without its written consent, unless
such removal is in the furtherance of the Company's business or is in
connection with Executive's carrying out his duties under this Agreement
and, if so removed, shall be returned to the Company promptly after
termination of Executive's employment hereunder, or otherwise promptly
after removal if such removal occurs following termination of employment.
Executive shall assign to the Company all rights to trade secrets and
other products relating to the Company's business developed by him alone
or in conjunction with others at any time while employed by the Company.
(c) PROTECTION OF BUSINESS. During the Employment Period and
until the second anniversary of Executive's Date of Termination (but only
in the event Executive is terminated by the Company for Cause or Executive
terminates his employment), Executive shall not (i) engage, anywhere
within the geographical areas in which the Company or any of its
affiliates (the "Designated Entities") are conducting their business
operations or providing services as of the Date of Termination, in any
business which is being engaged in by the Designated Entities as of the
Date of Termination, directly or indirectly, alone, in association with or
as a shareholder, principal, agent, partner, officer, director, employee
or consultant of any other organization, (ii) divert to any entity which
is engaged in any business conducted by the Designated Entities in the
same geographic area as the Designated Entities, any customer of any of
the Designated Entities, or (iii) solicit any officer, employee or
consultant of any of the Designated Entities to leave the employ of any of
the Designated Entities. If, at any time, the provisions of this Section
9(c) shall be determined to be invalid or unenforceable, by reason of
being vague or unreasonable as to area, duration or scope of activity,
this Section 9(c) shall be considered divisible and shall become and be
immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other
body having jurisdiction over the matter; and Executive agrees that this
Section 9(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
(d) INJUNCTIVE RELIEF. In the event of a breach or threatened
breach of this Section 9, Executive agrees that the Company shall be
entitled to seek injunctive relief in a court of appropriate jurisdiction
to remedy any such breach or threatened breach, Executive acknowledging
that damages would be inadequate and insufficient.
(e) CONTINUING OPERATION. Except as specifically provided in
this Section 9, the termination of Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section
9.
10 SUCCESSORS; BINDING AGREEMENT. Neither this Agreement nor the
rights or obligations hereunder shall be assignable by Executive. The
Company may assign this Agreement to any successor of the Company, and
upon such assignment any such successor shall be deemed substituted for
the Company upon the terms and subject to the conditions hereof.
11 NOTICE. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally, or sent by nationally-recognized, overnight courier or by
registered or certified mail, return receipt requested and postage
prepaid, addressed as follows:
If to Executive:
Xxxxxx X. Xxxxxxx
00000 Xxxx Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to the Company:
Precision Standard, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chairman of the Board
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other in
writing in accordance herewith. All such notices and other communications
shall be deemed to have been received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of a telecopy,
when the party receiving such telecopy shall have confirmed receipt of the
communication, (c) in the case of delivery by nationally-recognized,
overnight courier, on the business day following dispatch and (d) in the
case of mailing, on the third business day following such mailing.
12 MISCELLANEOUS. No provisions of this Agreement may be amended,
modified or waived unless such amendment or modification is agreed to in
writing signed by Executive and by a duly authorized officer of the
Company, and such waiver is set forth in writing and signed by the party
to be charged. No waiver by either party hereto at any time of any breach
by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this Agreement.
The respective rights and obligations of the parties hereunder of this
Agreement shall survive Executive's termination of employment and the
termination of this Agreement to the extent necessary for the intended
preservation of such rights and obligations.
13 VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
15 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto
in respect of such subject matter. Any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby
terminated and canceled.
16 WITHHOLDING. All payments hereunder shall be subject to any
required withholding of federal, state and local taxes pursuant to any
applicable law or regulation.
17 SECTION HEADINGS. The section headings in this Agreement are
for convenience of reference only, and they form no part of this Agreement
and shall not affect its interpretation.
18 PUBLIC DISCLOSURE. No press release or other public disclosure,
either written or oral, of this Agreement or its terms shall be made by
Executive without the prior written consent of the Company.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.
Company:
PRECISION STANDARD, INC.,
a Colorado corporation
By:/s/Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman of the Board
Executive:
/s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
EXHIBIT A
PERFORMANCE TARGETS
-------------------
Within six (6) months from the commencement of employment, Executive
and the Board will establish mutually acceptable performance criteria for
determining Executive's bonus under Section 5(b).
EXHIBIT B
CHANGE OF CONTROL
-----------------
A "Change of Control" shall occur if:
(a) the individuals who, as of December 1, 1999, constitute the
Board (the "Incumbent Board"), cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a
director subsequent to December 1, 1999 whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such an individual were a member of the Incumbent
Board; or
(b) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than any such individual, entity or group which includes a
member of the Incumbent Board, acquires (directly or indirectly) the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
such Act) of more than 50% of the voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors ("Voting Power"); or
(c) the Company's stockholders approve a merger or
consolidation involving the Company, or a sale or disposition of all or
substantially all of the Company's assets, or a plan of liquidation or
dissolution of the Company, other than (i) a merger or consolidation in
which the holders of the voting securities of the Company outstanding
immediately prior to the merger or consolidation hold at least a majority
of the Voting Power of the surviving corporation immediately after such
merger or consolidation, (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) by
which no person, other than any individual, entity or group which includes
a member of the Incumbent Board, acquires more than 50% of the Voting
Power of the Company, or (iii) a merger or consolidation in which the
Company is the surviving corporation and such transaction was determined
not to be a Change of Control, which transaction and determination was
approved by a majority of the Board in actions taken prior to, and with
respect to, such transaction.
