EXHIBIT 10.1
XXXXXXX X. XXXXXXXX, XX.
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day
of November, 2004, by and between ENGINEERED SUPPORT SYSTEMS, INC., a Missouri
corporation (hereinafter called "Employer"), and XXXXXXX X. XXXXXXXX, XX.
(hereinafter called "Employee").
WHEREAS, Employee desires to continue to be employed by Employer
and Employer desires to continue the employment of Employee under the terms
and conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee upon the
terms and conditions herein, which recognize and compensate Employee for the
obligations of Employee undertaken hereunder, including specifically, but
not by way of limitation, the agreement of Employee not to compete with the
business of Employer, as provided in Paragraph 7, for the period provided in
Paragraph 7 upon the cessation of Employee's employment by Employer for any
reason, and which further recognize that the possibility exists that a
Change in Control (as hereinafter defined) of Employer could occur during
the term hereof.
NOW, THEREFORE, in consideration of the foregoing and the promises
and agreements herein contained, the parties agree as follows:
1. Employment. Employer hereby employs Employee in the capacity of
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Chairman of the Board and Employee hereby accepts such employment from
Employer upon the terms and conditions hereinafter set forth. This Agreement
replaces any and all other employment agreements by and between Employee and
Employer dated prior to the date of this Employment Agreement.
2. Term of Employment. The term of Employee's employment under this
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Agreement shall be for the period commencing November 1, 2004 and ending on
October 31, 2007. This Agreement shall be automatically renewed for
successive one (1) year periods on the last day of the initial term and any
renewal term thereafter upon the same terms and conditions provided for
herein unless terminated by either party upon the giving of written notice
of termination to the other party at least thirty (30) days prior to the
expiration of the initial term or any renewal term, as the case may be.
Employee's employment hereunder may be terminated prior to the expiration of
the initial term or any renewal term of this Agreement upon the occurrence
of any of the following events:
(a) Upon the death of Employee, if Employee is actively employed by
Employer at the time of death.
(b) By Employee, upon not less than ninety (90) days nor more than
one hundred twenty (120) days written notice to Employer.
(c) In the event of Employee's "disability," which for purposes
hereof shall mean Employee's failure substantially to discharge Employee's
duties under this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days in any calendar year, whether or not consecutive, as a
result of an injury, disease, sickness or other physical or mental
incapacity. A determination of Employee's disability shall be made by a
qualified licensed physician chosen by Employer subject to Employee's
approval, which approval shall not be unreasonably withheld. In the event
Employer and Employee cannot agree on the choice of a physician, then such
physician shall be chosen by the xxxx of the St. Louis University School of
Medicine, St. Louis, Missouri, or if said xxxx is unwilling or unable to do
so, by the xxxx of another medical school of recognized national repute. The
cost of such determination shall be borne by Employer, and in the absence of
fraud or bad faith, shall be binding on all parties hereto.
(d) By Employer, for "cause," immediately upon written notice to
Employee. For purposes of this Agreement, "cause" shall mean (i) Employee's
breach or violation of or failure to perform any of the material terms and
conditions of this Agreement or such other conduct or action by Employee
which materially and adversely affects the business or reputation of
Employer as determined by Employer's Board of Directors, which shall include
specifically, but not by way of limitation, intentional or negligent conduct
or activity inconsistent with or proscribed by federal or state criminal
statute or regulation or express Employer policy pertaining to a contract
with the United States Government or the violation of any other ethics or
other corporate policy of Employer, or (ii) any act of dishonesty or
disloyalty or breach of trust against Employer.
(e) By Employer, without cause, by written notice to Employee at
any time.
Upon termination of this Agreement for any of the reasons specified
in subparagraphs (a) through (d), above, Employee shall be entitled to
receive all compensation and benefits hereunder through the effective date
of termination and such other consideration as expressly provided in this
Agreement. Upon termination of this Agreement by Employer without cause as
provided in subparagraph (e), above, Employee shall be entitled to the
severance allowance and benefit participation specified in Paragraph 20
hereof.
3. Duties of Employee. During Employee's employment by Employer,
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Employee shall serve Employer to the best of Employee's ability and shall
perform such duties and in such capacities as are assigned to Employee from
time to time by the Chairman of the Board of Directors of Employer. Employee
agrees during such period to devote substantial time and efforts to the
business of Employer, and to be loyal and faithful at all times, constantly
endeavoring to improve Employee's ability and knowledge of the business of
Employer in an effort to increase the value of Employee's services for the
mutual benefit of Employee and Employer. Employee will devote such time,
attention and energy to the business of Employer as is reasonably necessary
to perform his duties hereunder and to protect, preserve, enhance and
promote the best interests of the Employer during the term of his employment
with Employer.
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4. Base Salary. Subject to the other provisions of this Agreement
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and in consideration of services rendered hereunder, Employer agrees to pay
Employee, for Employee's service during the term of Employee's employment, a
base salary ("Base Salary") as follows:
For the period of November 1, 2004 through October 31,
2007, annual compensation of One Million Dollars ($1,000,000),
payable in accordance with Employer's regular payroll schedule.
5. Bonus Deferred and Other Compensation.
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(a) In addition to the Base Salary provided in Paragraph 4 hereof,
Employee shall be entitled to earn an annual cash bonus under the Engineered
Support Systems, Inc. Executive Incentive Performance Plan dated July 28,
2004, adopted by Employer's Board of Directors and approved by Employer's
shareholders, as from time to time amended. The amount of such bonus and
performance criteria for earning same shall be determined by the
Compensation Committee of Employer's Board of Directors and may be based on
a performance payment matrix as from time to time established by such
Compensation Committee. Such bonus amounts shall be payable on, or before,
October 31 for each fiscal year during the term of this Agreement (subject
to the right of Employee to defer his cash bonus until the month of January
of the next calendar year with Employer's consent, which consent shall not
be unreasonably withheld). Employee's target bonus for Employer's fiscal
years ending October 31, 2005, October 31, 2006, and October 31, 2007 shall
be One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00).
(b) In addition to the cash bonus, above, for Employer's fiscal
years ending October 31, 2005, October 31, 2006, and October 31, 2007,
Employee shall be entitled to an annual award of stock options with a strike
price equal to the closing price of Employer's stock on the date of the
award. Option awards, if any, shall be determined by the Compensation
Committee of Employer's Board of Directors.
(c) In the event of the death or retirement of Employee, Employer
agrees to pay to Employee, or his designated beneficiary, as applicable,
twenty-four (24) consecutive equal monthly installments of Fifty-Two
Thousand Five Hundred Dollars ($52,500.00) each, commencing on the first day
of the first month following the death or retirement of Employee and on the
first day of each month thereafter for twenty-three (23) months.
(d) In the event of the disability of Employee as hereinbefore
provided, Employer agrees to pay to Employee consecutive equal monthly
installments of Fifty-Two Thousand Five Hundred Dollars ($52,500.00) each,
commencing on the first day of the first month following the month in which
Employee becomes disabled, and on the first day of each month thereafter
until Employee returns to work (if at all) as hereinafter provided, but in
no event shall such payments continue for more than sixty (60) consecutive
months. If Employee returns to the service of Employer within said sixty
(60) consecutive months and receives a written opinion of a physician
selected in the manner as provided in subparagraph 2(c) hereof that Employee
is capable of performing his duties hereunder, then the sixty-month period
will commence to run again in the event Employee shall later become
disabled.
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(e) Employee shall be entitled to such other salary, bonuses or
deferred compensation pay as from time to time determined by the Board of
Directors of Employer.
6. Securities Compliance. Employee agrees to comply fully and
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faithfully with regulations of the Securities and Exchange Commission
pertaining to insider transaction and Employer's securities and
specifically, to report to Employer all intended, contemplated and
consumated transactions involving Employer's securities.
7. Covenants of Employee.
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(a) So long as Employee shall remain employed with Employer and at
all times after the termination of his employment, for whatever reason,
Employee covenants, warrants and agrees that Employee will not (except as
required in Employee's duties to Employer hereunder), in any manner,
directly or indirectly, actually or attempt to:
Disclose or divulge to any person, entity, firm or company
whatsoever, or use for Employee's own benefit or for the benefit of
any third person or concern, or for any reason inconsistent with
the purpose of this Agreement or inconsistent with Employee's
confidential and fiduciary relationship with Employer, any trade
secrets, formulae, devices, know-how, management and business
methods, techniques, opportunities, customer information, supplier
information, business or financial plans or other information or
data of Employer, without regard to whether all of the foregoing
matters will otherwise be deemed confidential, material or
important, the parties hereto stipulating that as between them, the
same are important, material and confidential and greatly affect
the effective and successful conduct of the business and the
goodwill of Employer, and the parties further stipulate that any
beach or evasion of the terms of this subparagraph (a) shall be a
material breach of this Agreement, provided that the foregoing
restrictions shall not apply (x) with respect to matters that are
or become generally known to the public without breach of this
Agreement or any other agreement or instrument by which Employee is
bound, or (y) where Employee is required by law, governmental
regulation, or court order to disclose such matters.
(b) During the term of Employee's employment with the Employer, and
during such period of time after the termination of such employment that the
Employee is receiving compensation from Employer hereunder, Employee
covenants, warrants, and agrees that Employee will not (except as required
in Employee's duties to Employer), in any manner, directly or indirectly,
actually or attempt to:
(i) Solicit, divert, take away or interfere with any of
the customers, trade, business, patronage, employees or agents of Employer,
or in any manner engage in any conduct or activity, including but not
limited to, verbal representations or declarations that would or could be
construed or intended as a disparagement of Employer's interests;
(ii) Engage within the United States or anywhere outside
of the United States where the Emloyer conducts business, directly or
indirectly, either personally or as an owner,
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employee, partner, associate, officer, manager, agent, advisor, consultant
or otherwise, or by means of any corporate or other entity or device, in any
business which is "competitive" (as hereinafter defined) with the business
of Employer.
(c) For purposes hereof, a business will be deemed competitive if
it involves the manufacture or sale of high-tech integrated military
electronics, support equipment for government or commercial use, logistics
services for all branches of the United States armed forces and foreign
militaries that do business with Employer, homeland security forces and
other governmental and intelligence agencies, or any other business which is
in any manner competitive, during or as of the date of cessation of
Employee's employment, with any business then being conducted by Employer or
as to which Employer has then formulated definitive plans to enter.
Notwithstanding the foregoing, Employee may own up to one percent (1%) of
the outstanding securities of a corporation or other business entity that is
"competitive" with the business of Employer if such entity's securities are
traded on a national securities exchange or on the over-the-counter market.
Employee agrees that during the term of his employment with Employer and for
the term of the restrictive covenants set forth herein, he will promptly
communicate to Employer the identity of all companies, persons or concerns
with whom Employee is considering employment, association or other
relationship along with other information as to the products and services of
such company, person or concern sufficient in detail to permit Employer to
make a determination as to whether or not competition exists. In order to
preserve its rights under this Agreement, Employer may advise any third
party with whom Employee may consider, establish or contract a relationship
of the existence in terms of this Agreement, and Employee authorizes and
consents to such disclosure, and Employer shall have no liability for so
acting.
(d) All of the covenants on behalf 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 Employer, whether predicted on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Employer of these
covenants.
(e) It is the intention of the parties to restrict the activities
of Employee under this Paragraph 7 to the extent necessary for the
protection of the legitimate business interests of Employer, and the parties
specifically covenant and agree that should any of the clauses or provisions
set forth herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be illegal, invalid
or unenforceable under present or future laws effective during the term of
this Agreement, then and in that event, it is the intention of the parties
hereto that, in lieu of each such clause or provision there shall be
substituted or added, and there is hereby substituted or added, as a part of
this Agreement a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be legal, valid and
enforceable.
8. Expenses.
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(a) Employer shall pay to Employee Three Thousand Dollars
($3,000.00) per month as an expense allowance.
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(b) Employer agrees to pay for the monthly dues and charges for
Employee's business related country club memberships at clubs. To the extent
that any such payments are not deductible as ordinary and necessary business
expenses, in accordance with the Internal Revenue Code, such expenditures
will be treated as additional salary to Employee.
(c) During the period of Employee's employment, Employer will pay
directly, or reimburse Employee, for reasonable and necessary expenses as
from time to time authorized by the Board of Directors of Employer and
incurred by Employee in the interest of the business of Employer. All such
expenses paid by Employee, will be reimbursed by Employer upon presentation
by Employee, from time to time, of an itemized account of such expenditures,
to the extent necessary to permit the deductibility thereof for Federal
income tax purposes in accordance with the from time to time policy(ies) of
Employer.
9. Automobile. During the period of this Agreement, Employer shall
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pay to or on behalf of Employee a car allowance as from time to time adopted
by the Board of Directors, but in no event less than One Thousand Eight
Hundred Dollars ($1,800.00) per month.
10. Documents. Employee agrees that all documents, instruments,
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drawings, plans, contracts, proposals, records, notebooks, invoices,
statements and correspondence, whether in print or electronic form or
otherwise and including all copies thereof, relating to the business of
Employer shall be the property of Employer, and upon the cessation of
Employee's employment with Employer, for whatever reason, all of the same
then in Employee's possession, whether prepared by Employee of others, will
be left with or immediately delivered to Employer.
11. Additional Employee Benefits. For the duration of the
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Employee's life and the life of the Employee's Spouse, Employee (or Spouse,
as the case may be) shall be entitled to participate, in accordance with the
eligibility requirements thereof, in Employer's medical, life insurance,
accidental death, disability income, profit sharing trust and 401(k)
programs and other employee benefits which now exist or that may be
established hereafter by Employer on the same basis as other employees of
Employer.
12. Vacation. Employee shall be entitled to ten (10) weeks paid
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vacation each calendar year, which vacation time shall be taken during such
periods as may be mutually agreed upon by Employer and Employee.
13. Remedies. It is agreed that any breach or violation of any of
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the terms of Paragraphs 6 and 7 of this Agreement by Employee will result in
immediate and irreparable injury to Employer and will authorize recourse to
injunction and/or specific performance as well as to all other legal or
equitable remedies to which Employer may be entitled. Employee represents
and admits that in the event of the termination of Employee's employment for
any reason, Employee's experience and capabilities are such that Employee
can obtain employment in businesses engaged in other lines or of a different
nature, and that the enforcement of a remedy by way of injunction will not
prevent Employee from earning a livelihood. No remedy conferred by and of
the specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity. The election of
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any one or more remedies by Employer shall not constitute a waiver of the
right to pursue other available remedies at any time or cumulatively from
time to time.
14. Severability. All agreements and covenants herein contained are
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severable, and in the event any of them shall be held to be invalid or
unenforceable by any court of competent jurisdiction, this Agreement shall
continue in full force and effect and shall be interpreted as if such
invalid agreement or covenant were not contained herein.
15. Waiver or Modification. No amendment, waiver or modification of
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this Agreement or of any covenant, condition or limitation herein contained
shall be valid unless in writing and duly executed by the party to be
charged therewith, and no evidence of any amendment, 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 amendment, 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 or modified except as herein set forth. Failure
of Employee or Employer to exercise or otherwise act with respect to any
rights granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a waiver of
such breach, nor prevent Employee or Employer from thereafter enforcing
strict compliance with any and all of the terms and conditions hereof.
16. Notices. All notices, requests, demands or other communication
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hereunder ("Notice") shall be in writing and shall be deemed given if
personally delivered or mailed by registered or certified mail, return
receipt requested, as follows:
If to Employer, to:
Engineered Support Systems, Inc.
Attention: Xxxxx X. Xxxxxxx
000 Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
If to Employee, to:
Xxxxxxx X. Xxxxxxxx, Xx.
00 Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
and
Xxxxxxx X. Xxxxxxxx, Xx.
0000 Xxxx Xxxx Xxxx
Xxxxxx, Xxxxxxx 00000
or to such other addresses as to which the parties hereto give Notice in
accordance with this Paragraph 16.
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17. Construction. This Agreement shall be governed by and construed
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and interpreted according to the laws of the State of Missouri,
notwithstanding the place of execution hereof, nor the performance of any
acts in connection herewith or hereunder in any other jurisdiction. For all
purposes hereof, reference to Employer shall include each and every direct
or indirect subsidiary and affiliated entity of Employer and shall further
include the surviving or continuing entity as a result of any merger,
combination, consolidation or reorganization to which Employer is a party.
18. Assignability. The services to be performed by Employee
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hereunder are personal in nature and Employee shall not assign his rights or
delegate his obligations under this Agreement, and any attempted or
purported assignment or delegation not herein permitted shall be null and
void.
19. Successors. Subject to the provisions of Paragraph 18, this
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Agreement shall be binding upon and shall inure to the benefit of Employer
and Employee and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
20. Severance Allowance and Benefit Participation. In the event
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that Employer terminates Employee's employment without cause as provided in
subparagraph (e) of Paragraph 2 hereof, then in such event, Employee shall
be entitled to the severance allowance and benefit participation as
hereinafter set forth. Employee will be paid severance in the total amount
of two hundred percent (200%) of the annual compensation (determined in the
manner provided in Paragraph 21 hereof) paid to Employee during Employer's
fiscal year immediately preceeding the fiscal year in which the termination
occurs. The severance allowance will be paid over a twenty-four (24) month
period in equal installments in accordance with Employer's regular payroll
schedule. In addition, during such twenty-four (24) month period, (i)
Employee (and eligible family members of Employee) shall be entitled to
continue to participate in and receive the standard employee benefits
described in Paragraph 11 hereof (excluding, however, life and accidental
death insurance, short term and long term disability programs and profit
sharing and 401(k) programs) provided Employee continues to pay for such
benefits received on the same basis as other senior executive employees of
Employer, and (ii) Employer shall continue to pay for the expenses provided
for in subparagraphs (a) and (b) of Paragraph 8 hereof and the car allowance
provided for in Paragraph 9 hereof. As a condition to Employee receiving the
above severance allowance and benefits, Employee shall execute a general
release agreement developed for use by Employer.
21. Change in Control. In the event there shall be a Change in
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Control of Employer (as defined below), Employee will be entitled to receive
from Employer a lump sum cash payment in an amount equal to two and
ninety-nine hundredths (2.99) times Employee's average annual compensation
for the prior five (5) fiscal years of employment with Employer or any
corporation(s) acquired by Employer during such five (5) year period (the
"Change in Control Payment"). In the event Employee has been employed by
Employer or any such corporation(s) acquired by Employer for less than said
five (5) years, then Employee's average annual compensation will be
calculated using the average of the full fiscal years and annualized partial
year(s) of his employment. For purposes of Paragraphs 20 and 21 hereof,
Employee's annual
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compensation shall include Employee's Base Salary and the amount of any cash
bonuses payable to Employee pursuant to Paragraph 5 hereof (or similar base
salary and bonus compensation paid by Employer-acquired corporations, if
applicable). The Change in Control Payment shall be payable within five (5)
business days after the Change in Control occurs. The Change in Control
Payment shall not be subject to any deferment, reduction or offset of any
kind (other than customary withholding) and shall be in addition to any
other amounts or benefits that Employee may be entitled to under the
Agreement. For purposes of this Agreement, a "Change in Control" shall mean
a change in control of Employer of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") provided that, without limitation, such a Change in Control
shall be deemed to have occurred if (A) any "person" (as such term is used
in Section 13(d) and 14(d) of the Exchange Act), other than a trustee or
fiduciary holding securities under an employee benefit plan of Employer, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Employer
representing twenty-five percent (25%) or more of the combined voting power
of Employer's then outstanding voting securities; (B) there is consummated a
merger or consolidation of Employer in which Employer is not the surviving
or continuing entity or pursuant to which Employer's voting securities are
converted into or exchanged for cash, securities or other property other
than any such transaction where the holders of Employer's voting securities
outstanding immediately prior to such transaction have the same
proportionate ownership of the voting securities of the surviving entity
immediately after the transaction; (C) there is consummated any sale, lease,
exchange or other transfer or disposition (in one transaction or a series
related transactions) of all, or substantially all, of the assets of
Employer; (D) the shareholders of Employer approve any plan or proposal for
the liquidation or dissolution of Employer; (E) during any period of two (2)
consecutive years during the term of this Agreement, individuals, who at the
beginning of such period constitute the Board of Directors of Employer cease
for any reason to constitute at least a majority thereof, unless the
election or the nomination for election, by Employer's shareholders of each
new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period; or (F) there is consummated any consolidation or merger of Employer
in which Employer is the continuing or surviving corporation and in which
the holders of the voting securities of Employer immediately prior to the
merger do not own seventy percent (70%) or more of the voting securities of
the surviving entity immediately after the merger.
22. Attorney's Fees and Costs. If any action at law or in equity is
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brought to enforce or interpret any of the terms of this Agreement, the
prevailing party in such action shall be entitled to recover from the other
party the reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
[Remainder of Page Intentionally Left Blank - Signatures on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
"EMPLOYEE" "EMPLOYER"
ENGINEERED SUPPORT SYSTEMS, INC.
___________________________ By:________________________________
Xxxxxxx X. Xxxxxxxx, Xx. Xxxxx X. Xxxxxxx, Secretary
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