EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Agreement is made as of May 29, 1998 between MONITOR AEROSPACE
CORPORATION, a New York corporation ("Monitor"), located at 0000 Xxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 and R. XXXXX XXXXXXX ("Executive").
RECITALS:
A. Monitor is engaged in the manufacture and sale of metal components to
the aircraft industry. Executive has served as its President and Chief Operating
Officer since September 28, 1995.
B. Monitor now desires to retain Executive's services as its President and
Chief Executive Officer ("CEO").
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual promises herein, it is
agreed as follows:
1. Employment and Duties.
(a) During the term of this Agreement, Executive shall serve as
Monitor's President and CEO reporting to Monitor's Chairman of the Board of
Directors ("Chairman") and the Board of Directors (the "Board") or its
designee. Executive shall serve as a member of the Board, and shall serve
on such committees of the Board to which he is nominated and elected.
However, any determinations by the Board under this Agreement affecting the
Executive may be made by the Board excluding the Executive.
(b) Executive shall devote substantially his full working time, skill,
diligence and loyalty to Monitor's business. Executive shall be responsible
for the daily management of Monitor and such other duties as are generally
commensurate with the position
of President and CEO of comparable companies and as are assigned by the
Chairman or the Board. Executive shall comply with all federal, state and
local laws applicable to his duties.
(c) Executive's place of employment shall be at Monitor's
headquarters, presently in Amityville, New York. However, Executive shall
perform such travel as is reasonably necessary for the performance of his
duties.
2. Term. This Agreement shall be effective as of May 29, 1998 and shall
expire at the close of business on December 31, 2002.
3. Compensation. During the term of this Agreement, Monitor shall
compensate Executive as follows:
(a) Base Salary. Monitor shall pay to Executive a base salary in equal
monthly installments at the annual rate of $450,000, subject to adjustment
as provided in subsection (d) of this Section.
(b) Deferred Compensation. Monitor shall also pay to Executive an
annual supplemental payment toward his retirement of $60,000 on each
November 1 pursuant to the terms and conditions of that certain Salary
Continuation Agreement, dated November 17, 1997, between Monitor and
Executive.
(c) Annual Cash Bonus. Monitor shall pay to Executive an annual cash
bonus, if applicable, in which the amount of such bonus is based on the
attainment of a stated applicable percentage of the Management Plan EBITDA
Target for each fiscal year, as set forth below.
% of Management Plan EBITDA
Bonus Amount Target Attained
------------ ---------------
$0 Less than 110%
$150,000 110%
$500,000 125% or more
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If the applicable percentage of the Management Plan EBITDA Target attained by
Monitor for a fiscal year is greater than 110% but less than 125%, then
Executive's annual cash bonus for such fiscal year shall be equal to $150,000
plus $350,000 multiplied by a ratio whose numerator is the number difference
between the actual percentage of the Management Plan EBITDA Target attained by
Monitor for such fiscal year and 110%, and whose denominator is 15.
The bonus amount shall be prorated for fiscal year 1998 and such amount shall
equal seven twelfths (7/12) of the actual bonus amount attained for such fiscal
year.
Fiscal Year Ended Management Plan EBITDA Target
1998 $11,314,000 (for June 1 through December 31, 1998)
1999 }
2000 }
2001 } To be determined as set forth below
2002 }
For fiscal years ending 1999 through 2002, the applicable Management Plan EBITDA
Target for the relevant fiscal year shall be determined by the Board no later
than 30 days after approval by the Board of the budget, annual business plan,
and plan and financial forecast for such fiscal year.
As used herein, "EBITDA" shall mean, for any period, determined for Monitor
and its direct and indirect subsidiaries on a consolidated basis in conformity
with United States generally accepted accounting principles ("GAAP")
consistently applied (i) the sum of the amounts for such period of (A) net
income (i.e., the net earnings or loss after taxes), (B) depreciation and
amortization expense, (C) interest expense, (D) federal, state, local and
foreign income taxes, and (E) the management fees (exclusive of expenses) of
Mentmore
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Holdings Corporation paid by or allocated to the Corporation in excess of $1
million annually (for the fiscal year ending December 31, 1998 such $1,000,000
amount shall be deemed to be $583,333 for purposes of these calculations), minus
(ii) extraordinary items or non-recurring gains plus (iii) non-recurring losses.
EBITDA shall be determined after full accrual for all incentive and bonus
program amounts. The Board of Directors may, in its sole discretion, consider
other appropriate adjustments to EBITDA.
The Board shall review the amount of each annual cash bonus and, in its
sole discretion, may add to the bonus such discretionary amount as it may deem
appropriate.
The annual cash bonus shall be paid to Executive within 30 days after the
filing of the Stellex Industries, Inc. Form 10-K, but not later than 120 days
after the end of the applicable fiscal year.
(d) Review. Executive shall be entitled to annual progress reviews and a
compensation review prior to the end of each calendar year during the term of
this Agreement. Each increase in base salary, if granted, at the sole discretion
of Monitor, shall be substituted for the base salary provided in subsection (a)
of this Section. Executive's base salary shall not be reduced during the term of
this Agreement below the amount provided in subsection (a) of this Section, as
so adjusted, without Executive's written consent.
(e) Benefits and Perquisites. Executive shall be entitled to the general
employee benefits and perquisites furnished by Monitor to all of its officers
which shall include, without limitation, an office, secretarial services, and
professional association membership dues. Executive shall also be entitled to
participate in the retirement, insurance and other employee benefit programs
generally available to salaried employees of Monitor, provided that he meets the
general eligibility requirements for such programs. A schedule of such employee
benefit programs currently in effect is attached as Exhibit A to this Agreement.
Monitor agrees that the schedule of benefits will not be materially reduced as
to Executive during the term of this Agreement unless similar reductions are
made for Monitor's other
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executive officers generally. An executive officer shall mean the CEO,
President, any Executive Vice Presidents, and any Vice Presidents or other
officers having significant policy making functions.
(f) Vacation. Executive shall be entitled to paid vacation of four weeks
during each calendar year. Such vacation shall be taken at times consistent with
the proper performance by the Executive of his duties and responsibilities.
Vacation not taken in any calendar year shall not carry forward to any future
year unless such vacation is not taken due to Monitor's business needs.
(g) Travel. Monitor shall reimburse Executive for his ordinary and
necessary business class travel, entertainment and other business expenses upon
presentation of proper vouchers and receipts.
(h) Club Membership. Monitor shall reimburse Executive for his membership
dues in one golf club or similar athletic or social organization.
(i) Automobile. Executive is currently provided an automobile for business
use with a selling price under $100,000. Upon expiration of three (3) years from
the date of receipt of such automobile for business use by Executive, Executive
will be permitted at the termination of the lease at his cost to purchase the
automobile from the lessor, and to select a replacement automobile for business
use which has a selling price under $100,000. Monitor will lease same for
Executive's business use and shall pay all lease payments as well as expenses
for fuel, repairs and insurance. After three years of use, Executive will select
a similar replacement automobile.
(j) It is understood and agreed that certain benefits and the payment or
reimbursement of certain expenses by Monitor under this Section may constitute
additional compensation income to Executive subject to income tax, including
withholding tax, and that he will include any such income in his gross income
for income tax purposes without reimbursement from Monitor for the resulting
tax.
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4. Termination.
(a) Termination by Executive. Executive's employment shall terminate upon
voluntary resignation (including retirement) by Executive, or the Executive may
terminate his employment for Good Reason. "Good Reason" shall mean any of the
following: (1) the assignment of duties to the Executive inconsistent with that
of Chief Executive Officer and President of Monitor, (2) the changing of the
Executive's reporting responsibility from the Chairman of the Board of Monitor
to anyone other than a Senior Executive of another corporation controlled by or
affiliated with Monitor's parent corporation, (3) a material and permanent
increase or decrease in the Executive's duties and responsibilities from those
at the date hereof, (4) the change of the Executive's principal place of
business to a location other than in New York State, Connecticut or New Jersey
or (5) the Corporation's material breach of any of its obligations under this
Agreement.
(b) Death or Disability. Executive's employment shall terminate
automatically upon Executive's death. If the Board determines that the
Disability of Executive has occurred (pursuant to the definition of Disability
set forth below), it may terminate Executive's employment by giving written
notice. For purposes of this Agreement, "Disability" shall mean the disability
of the Executive such that he is, in the opinion of Monitor, as determined by a
resolution of the Board based upon the report of an independent medical expert
retained by the Board, physically or mentally incapacitated and thereby rendered
incapable of adequately performing the duties of his position with Monitor or
its direct or indirect subsidiaries, as applicable, for a period of 180
consecutive days.
(c) Cause. Monitor may terminate Executive's employment for Cause. For
purposes of this Agreement, "Cause" shall be determined by the Board based upon
the information then known to Monitor, and shall mean any of the following: (i)
Executive's material breach of any of his obligations under this Agreement; (ii)
Executive's development or pursuit of interests adverse to Monitor or any of its
direct or indirect subsidiaries;
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(iii) Executive's refusal to obey lawful written instructions given by Monitor's
Chairman of the Board or Monitor's Board as to the performance of Executive's
duties as CEO and President; (iv) Executive's willful misconduct, dishonesty,
gross negligence, theft, fraud or other illegal conduct; or (v) Executive's
violation of any fiduciary duty or duty of loyalty to Monitor; provided,
however, in the case of purported termination of the Executive's employment for
the reasons set forth in (i) or (iii) above, such termination shall not become
effective until the Executive has been given fifteen (15) days notice of such
termination and during such period be given an opportunity to cure the acts
giving rise to such termination.
(d) Other than Cause or Death or Disability. Monitor may terminate
Executive's employment at any time without cause.
(e) Obligations of Monitor Upon Termination.
(i) Termination by Executive. If Executive's employment is terminated by
Executive, other than for termination by the Executive for Good Reason this
Agreement shall terminate without further obligations to Executive other than
for (A) payment of the sum of (1) Executive's annual base salary through the
date of termination to the extent not theretofore paid and (2) any compensation
previously deferred by Executive (together with any accrued interest or earnings
thereon) and any accrued and unused vacation pay during the calendar year of
Executive's termination, in each case to the extent not theretofore paid, which
shall be paid to Executive or his estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the date of termination; and (B) payment of
benefits to Executive or his estate or beneficiary, if applicable, as may be
provided by the terms and conditions of Monitor's retirement, life insurance and
other programs in which Executive is participating on the date of his
termination and which have accrued and vested on or before such date and which
shall terminate on the date of such termination (the sum of the amounts
described in clauses (A) and (B) shall be hereinafter referred to as the
"Accrued Obligations").
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(ii) Death or Disability. If Executive's employment is terminated by reason
of Executive's death or Disability, this Agreement shall terminate without
further obligations to Executive or his legal representatives under this
Agreement, other than for timely payment of Accrued Obligations.
(iii) Cause. If Executive's employment is terminated by the Monitor for
Cause, this Agreement shall terminate without further obligations to Executive
other than for the timely payment of Accrued Obligations. If it is subsequently
determined that Monitor did not have Cause for termination under this Section,
then Monitor's decision to terminate shall be deemed to have been made under
Section 4(e)(iv) and the amounts payable thereunder shall be the only amounts
Executive may receive for his termination.
(iv) Other than Cause or Death or Disability or for Good Reason. If Monitor
terminates Executive's employment other than for Cause or for death or
Disability or if the Executive terminates his employment for Good Reason, this
Agreement shall terminate without further obligations to Executive other than
(A) the timely payment of Accrued Obligations; (B) continuation of Executive's
base salary for six (6) months; (C) continuation of coverage under Monitor's
life, health and other insurance programs in which he is participating on the
date of termination for six (6) months, but in no case beyond age 60; and (D)
the reimbursement of any out-of-pocket relocation costs which Executive may
incur up to a total of $5,000 if it should be necessary to relocate to obtain
new employment.
(v) Exclusive Remedy. Executive agrees that the payments contemplated by
this Agreement shall constitute the exclusive and sole remedy for any
termination of his employment and Executive covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any termination of
employment.
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5. Confidentiality and Proprietary Information.
(a) Executive shall not disclose the existence or terms of this Agreement
to any persons except the Chairman and the Board and its chief financial
officer, auditors and counsel and to Executive's own personal financial advisor,
accountant, counsel and family.
(b) Executive, in the performance of Executive's duties on behalf of
Monitor, shall have access to, receive and be entrusted with confidential,
proprietary information, including but in no way limited to inventions,
improvements, technical developments, trademarks, designs, formulae, processes,
computer programs, know-how, techniques, data, trade secrets, discoveries,
copyrightable works, financial data, and other information or documents
regarding the business or technology of Monitor, including but not limited to
drawings, computer programs or portions thereof, computer data, blueprints,
process specifications, customer lists, price data, relationships with
employees, manner of operations, business plans, and other company documents
owned or at any time in the future developed, by Monitor or its agents or
consultants, or used presently or at any time in the future in the course of its
business that is not otherwise part of the public domain (collectively, the
"Proprietary Information"). All such Proprietary Information is considered
secret and will be available to Executive in confidence. Except in the
performance of duties on behalf of Monitor, Executive shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Proprietary
Information, unless such Proprietary Information ceases (through no fault of
Employee's) to be confidential because it has become part of the public domain.
All records, files, drawings, documents, equipment and other tangible items,
wherever located, relating in any way to the Proprietary Information or
otherwise to Monitor's business, which Executive prepares, uses or encounters,
shall be and remain Monitor's sole and exclusive property and shall be included
in the Proprietary Information; provided, however, nothing herein shall be
deemed to prevent Executive from using his general experience and skills nor
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from using any information in the public domain after termination of his
employment. Upon termination of this Agreement by any means, or whenever
requested by Monitor, Executive shall promptly deliver to Monitor any and all of
the Proprietary Information, not previously delivered to Monitor, that may be or
at any previous time has been in Executive's possession or under Executive's
control.
(c) Executive hereby acknowledges that the sale or unauthorized use or
disclosure of any of Monitor's Proprietary Information by any means whatsoever
and any time before, during or after Executive's employment with Monitor shall
constitute "Unfair Competition." Executive agrees that Executive shall not
engage in Unfair Competition either during the time employed by Monitor or any
time thereafter.
6. Ownership and Assignment of Proprietary Information. The Proprietary
Information and any specific business opportunity, invention, improvement,
design, development or discovery conceived or developed during the term of this
Agreement by Executive, alone or with others, which is directly related to the
business or planned business of Monitor, whether or not patentable or
registrable and whether or not conceived or developed during normal working
hours or while using the facilities of Monitor shall, to the extent of
Executive's interest therein, be the sole and exclusive property of Monitor.
Executive shall disclose the same promptly and completely to Monitor and shall,
during the period of his employment and at any time and from time to time
thereafter (a) execute all documents required by Monitor for vesting in Monitor,
Executive's entire right, title and interest in and to the same, (b) execute all
documents requested by Monitor for filing and prosecuting such applications for
patents, trademarks and/or copyrights as Monitor may desire to prosecute, and
(c) give Monitor all assistance it reasonably requires, including the giving of
testimony in any suit, action or proceeding, in order to obtain, maintain and
protect Monitor's rights thereto.
7. Noncompetition. During the term of Executive's employment with Monitor,
Executive shall not engage directly or indirectly in any business in competition
with
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any business in which Monitor, or its subsidiaries or affiliates is engaged or
is planning to engage 1i and which business relates to the manufacture, design,
or assembly of structural or electronic components used by the
telecommunications, space, aerospace or defense industries (collectively, the
"Prohibited Business"). In addition, for one year after he ceases to be employed
by Monitor, Executive shall not engage directly or indirectly in any Prohibited
Business. Direct competition shall include, without limitation, any role as a
sponsor, consultant, employee or partner which aids or abets any Prohibited
Business. Executive further acknowledges that competitive activities in
violation of this Section could cause irreparable injury to Monitor, its
subsidiaries, or affiliates and that such injury would be difficult or
impossible to measure. Accordingly, Monitor shall be entitled to an injunction
and other equitable remedies for any violation, as further set forth in Section
9.
8. Antisolicitation.
(a) Executive promises and agrees that during the term of this Agreement,
and for a period of one (1) year after the termination of this Agreement, he
will not solicit or attempt to solicit customers of Monitor or any of its
present or future subsidiaries, affiliates or parent companies, either directly
or indirectly, to divert their business to any individual, partnership, firm,
corporation or other entity engaged in any Prohibited Business.
(b) Executive promises and agrees that he will not, for a period of one (1)
year following termination of his employment or the expiration of this
Agreement, directly or indirectly solicit any of Monitor's employees who earned
annually $50,000 or more as a Monitor employee during the last six months of his
or her own employment to work for any business, individual, partnership, firm,
corporation, or other entity engaged in any Prohibited Business.
9. Remedies. It is expressly agreed that Monitor will or would suffer
irreparable injury if Executive were to engage in any conduct or commit any act
in violation of
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Sections 5, 6, 7 and/or 8, and Monitor would by reason of such violation be
entitled to injunctive relief in a court of appropriate jurisdiction. Executive
consents and stipulates to the entry of such injunctive relief in such a court
prohibiting him from engaging in any action in violation of this Agreement,
which relief shall be cumulative to other remedies at law or in equity and shall
not be construed as an exclusive remedy.
10. Indemnification. Monitor shall indemnify the Executive against all
liability, costs and expenses actually and necessarily incurred by the Executive
in connection with any suit, action or claim in which the Executive is a party
or otherwise involved in any capacity (other than a suit, action or claim by or
in the right of Monitor and approved by its Board) by reason of his employment
or service as a director, officer or agent of Monitor, provided that (a)
Executive was not grossly negligent or reckless; (b) Executive had reasonable
cause to believe his conduct was lawful and in the best interests of Monitor;
and (c) Executive's actions were performed in the course of his employment
duties. Expenses incurred in appearing at or participating in any such suit,
action or claim, whether civil, criminal, administrative or investigative, shall
be paid or reimbursed by Monitor as incurred in advance of final disposition of
such suit, upon receipt of an unsecured written contractual undertaking by the
Executive to reimburse or repay such amount if it is determined that Executive
is not entitled to be indemnified by the terms of this Section.
11. Entire Agreement. This Agreement constitutes the entire agreement
between Monitor and Executive respecting the subject matter hereof and
supersedes any prior employment agreements respecting the subject matter hereof.
By execution of this Agreement, any and all prior employment agreements between
Executive and Monitor and its direct or indirect subsidiaries and affiliates, as
applicable, shall immediately be terminated, and Monitor and its direct and
indirect subsidiaries and affiliates, as applicable, shall have no further
obligations or liabilities under such prior employment agreements. No amendment
or
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modification hereof shall be valid or binding unless made in writing signed by
Monitor and Executive.
12. Notices. Any notice required, permitted or desired to be given pursuant
to this Agreement shall be deemed sufficiently given if delivered in person or
sent by certified mail, return receipt requested, postage and fees prepaid to
any party at their addresses stated in this Agreement. Notwithstanding the
above, notice to Monitor shall be sent c/o Mentmore Holdings Corporation, 0000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; and a copy of notice to the
Executive shall be sent to Xxxxxx X. Xxxxxx, Esq. c/x Xxxxxx & Xxxxx, 0 Xxxxxxxx
Xxxxxx, Xxxxxxxx X, Xxxxxxxxx Xxxx, X.X. 00000. Any of the parties may change
the address to which notice shall be sent by notice to the other parties given
under this Section. The date of the giving of any notice sent by mail shall be
two days after the date of the posting in the mail.
13. Assignment. This Agreement calls for personal performance by Executive.
Neither this Agreement nor the right to receive any payments hereunder may be
assigned by Executive without the prior written consent of Monitor and any
attempted assignment shall be void. This Agreement shall be binding upon
Executive and his heirs, successors, executors and administrators and upon
Monitor and successors and assigns.
14. Waiver. No course of dealing nor any delay in exercising any rights
hereunder shall operate as a waiver of any such rights. No waiver of any default
or breach shall be deemed a continuing waiver or a waiver of any other breach or
default.
15. Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the internal law of the State
of New York, with the counties of Nassau and New York having exclusive
jurisdiction hereof.
16. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions of this
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Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. In the event that a court of competent jurisdiction
determines that any provision or portion of this Agreement is unreasonable,
arbitrary, against public policy or otherwise unenforceable, such court shall
enforce such provision to the extent the court determines reasonable or in
accordance with public policy and to the maximum extent enforceable by law.
17. Survival. The provisions of Sections 4(e)(iv) and (v), 5, 6, 7, 8, 9
and 10 shall survive the termination of this Agreement regardless of the reason
or reasons therefor.
18. Nothing herein shall affect or otherwise limit Executive's rights and
duties under the Agreement and Plan of Merger dated April 28, 1998 among Monitor
Aerospace Corporation, Stellex Aerospace Holdings, Inc. and Soze Corp. and the
agreements related thereto.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and
year first above written.
MONITOR AEROSPACE CORPORATION
R. Xxxxx Xxxxxxx By: Xxxxxxx X. Xxxxxx
---------------------------- ---------------------------------
R. Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman
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EXHIBIT A
SCHEDULE OF EMPLOYEE BENEFITS PROGRAMS
Executive Benefit Package:
Medical coverage: CIGNA Medical Executive Plan (MERPS)
100% medical/dental coverage
Group Life Insurance: $75,000
KeyMan Life Insurance: $600,000
Special Life Benefit: 2 years base salary payable over 5 years
(company funded) according to the Plan
adopted by the board of directors
Salary Continuance Income: Yes (6 mos. S.T. D.B. - company funded)
Group LTD: $3,500/MO
Individual LTD Policy: 40% of base compensation, less amounts
provided by social security benefits
401(k) Plan: To the extent available to other employees
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