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EXHIBIT 10.33
SIMULA, INC.
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
Name of Employee (herein "Employee"): Xxxxx X. Xxxx
Position: Executive Vice President
Date: Xxxxx 0, 0000
Xxxxxxxxxxx Date: Termination of Employment
THIS AGREEMENT is entered into between Simula, Inc. and its controlled
affiliates ("Company" or "Employer"), and Employee for the following purposes
and upon the following conditions:
1. PURPOSE. In order to attract and retain key employees, the Company
believes it is necessary to provide for the fulfillment of the expectation of
long-term employment with the Company (i) by providing a financial benefit to
Employee in the case of employment termination after a Change of Control of the
Company, and to (ii) protect against employees' distraction or departure, to the
detriment of the Company, in the event of a proposed or pending Change of
Control transaction.
2. TERM. This Agreement shall be effective as of the date stated above and
shall terminate concurrently with the Employee's termination from employment
with the Company. This Agreement creates no obligation on behalf of the Company
other than as specified herein. In the event Employee terminates voluntarily or
involuntarily from the Company under any circumstances other than a Change of
Control, this Agreement shall confer no rights upon Employee.
3. CHANGE OF CONTROL. For purposes of this Agreement "Change of Control"
shall be deemed to have occurred when any of the following events occur:
(i) the direct or indirect acquisition by any person or related
group of persons (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company) of beneficial
ownership (within the meaning of Rule 13-d-3 of the Securities Exchange
Act of 1934, as amended) of securities possessing in excess of 20% of the
total combined voting power of the Company's outstanding securities
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pursuant to a tender or exchange offer made directly to the Company's
stockholders or other transaction; (provided, however, during the one year
period from the date of this Agreement until March 2, 2000, this "in
excess of 20%" provision shall not pertain, nor be triggered by a sale or
other disposition of stock to a third party made by the Company's majority
shareholder, Xxxxxxx Xxxxxxxxxx. As of March 2, 2000, and thereafter, this
limitation shall be terminated and the acquisition of shares "in excess of
20%" shall apply as to any disposition whether by Desjardins, any other
holder(s), or the Company); or
(ii) a change in the composition of the Board of Directors over a
period of 36 consecutive months or less, such that a majority of the Board
members (rounded up to the next whole numbers) ceases, by reason of one or
more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period, or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (A) who were still in office at the time
such election or nomination was approved by the Board; or
(iii) a merger or consolidation approved by the stockholders of the
Company, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80% of
the total voting power represented by voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iv) The sale, transfer, or other disposition (in one transaction or
a series of transactions) of all or substantially all of the assets of the
Company approved by the stockholders or the complete liquidation or
dissolution of the Company approved by the stockholders.
4. COMPENSATION. Severance compensation ("Compensation") will be paid to
Employee in the event of a Change of Control where:
(i) Employee is terminated by the acquiring person or surviving
entity within one year of the effective date of the Change of Control; or
(ii) Employee voluntarily resigns from his position within a period
of 180 days after the effective date of the Change of Control.
Compensation shall be calculated and paid as follows:
(i) Employee's then current annual base salary, plus the equivalent
dollar value for one year of all benefits (including insurance, defined
benefit plan contributions by the Company in qualified and unqualified
plans, and similar benefits) multiplied by four (4);
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(ii) the dollar amount necessary for payment of all taxes on such
Compensation including, without limitation, all employment taxes, income
taxes and alternative minimum income taxes, if any, payable with respect
to a lump sum payment in that year, grossed up by an amount necessary to
pay all such taxes on the amounts paid under this subparagraph (ii), and
as further provided in Section 7; and
(iii) the Compensation shall be paid in a lump sum within ten (10)
days of the termination of employment.
5. STOCK OPTIONS. In the event of a Change of Control, in addition to the
Compensation set forth above:
(i) all unexercised stock purchase options in the name of Employee
on the effective date of the Change of Control shall be subject to
accelerated vesting and shall thereupon be deemed fully exercisable and
shall be exercised and paid for by the Employer, acquiring person, or
surviving entity, on behalf of Employee and the total number of shares of
Common Stock represented by the total number of options shall be fully
paid, nonassessable, and validly issued to Employee, without payment of
monetary consideration by Employee. Alternatively, the optionee may elect
in lieu of the receipt of shares, to relinquish his options with respect
to all or any of such shares and receive a payment equal to the price paid
for common share in such merger, tender offer, or similar transaction
multiplied by the number of common shares the optionee could have
purchased with the options;
(ii) in connection with Employee's receipt of the foregoing option
shares or consideration, Employer will pay full tax assistance to keep
Employee whole due to this immediate income, including payment of all
relevant employment taxes, income taxes, capital gains taxes, and
alternative minimum income taxes, grossed up by an amount necessary to pay
all such taxes on the amounts paid under this subparagraph (ii), and as
further provided in Section 7; and
(iii) in the event of a Change of Control of the Company by the
exchange of securities or issuance of stock in a merger or otherwise,
Employer and the acquiring person or surviving entity shall extend to
Employee the opportunity to sell or exchange the option shares issued
under provisions (i) and (ii) in a manner and at a time that will allow
Employee to benefit, at his election, from the exchange or issuance of
stock in the merger, exchange, or other transaction.
6. CONDITION. Notwithstanding any other provision in this Agreement, or
unless the operation of this paragraph shall expressly and voluntarily be waived
or modified by the Employee in a written instrument signed by the Employee
specifically for that purpose, the remuneration under Sections 4 and 5 required
to be paid by Employer to Employee under this Agreement shall be paid by the
Employer or by the acquiring person or surviving entity as a condition to the
acquisition, merger, exchange, or other transaction.
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7. EXCISE TAXES. The Internal Revenue Code of 1986, as amended (the
"Code), will impose significant tax on Employee and the Company if the total
amounts received by the Employee due to a Change of Control exceed prescribed
limits. This includes a 20% excise tax on certain amounts received in excess of
the prescribed limits and a loss of deduction for the Company. If, as a result
of these Code provisions, the Employee is required to pay such excise tax, then
upon written notice from the Employee to the Company, the Company shall pay the
Employee an amount equal to the total excise tax imposed on the Employee
(including the excise taxes on any excise tax reimbursements due pursuant to
this sentence and the excise taxes on any income tax reimbursements due pursuant
to the next sentence). If the Company is obligated to pay taxes for the Employee
pursuant to the preceding sections, the Company also shall pay the Employee an
amount equal to the "total presumed federal and state taxes" that could be
imposed on the Employee with respect to the excise tax reimbursements due to the
Employee pursuant to the preceding sentence and the income tax reimbursements
due to the Employee pursuant to this sentence. For purposes of the preceding
sentence, the "total presumed federal and state taxes" that could be imposed on
the Employee shall be conclusively calculated using a combined tax rate equal to
the sum of the then prevailing maximum marginal federal and state income tax
rates. No adjustments will be made in this combined rate for the deduction of
state taxes on the federal return, the loss of itemized deductions or
exemptions, or for any other purpose. The Employee shall be responsible for
paying the actual taxes. The amounts payable to the Employee pursuant to this or
any other agreement or arrangement with Company shall not be limited in any way
by the amount that may be paid pursuant to the Code without the imposition of an
excise tax or the loss of Company deductions.
8. EFFECT ON OTHER AGREEMENTS. This Change of Control Agreement shall be
supplemental to and will modify a written employment contract between Employer
and Employee, if any. Except as otherwise provided by written contract, Employee
shall remain "at will," and this Change of Control Agreement shall not confer
upon Employee any contractual rights to employment, except as described in an
employment agreement, if any, and as provided in this Change of Control
Agreement. To the extent of any inconsistency between this Agreement and any
other agreements with the employee, the Agreement shall be interpreted and
applied in the way to confer upon Employee the greatest benefit. The agreements
shall be read and applied consistent with each other, but in the event of a
conflict, the terms most favorable to the Employee will be applied from the
various provisions of the agreements in the aggregate.
9. RETURN OF BOOKS AND PAPERS. Upon the termination of Employee's
employment with Employer for any reason, Employee shall deliver promptly to
Employer all manuals and memoranda; all cost, pricing and other financial data;
all customer information; all other written or printed materials which are the
property of the Company (and any copies of them); and all other materials which
may contain confidential information relating to the business of Employer, which
Employee may then have in his possession whether prepared by Employee or not.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
his residence in the case of Employee, or to its principal office in the case of
Employer.
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11. WAIVER OF BREACH. The waiver of Employer of a breach of any provision
of this Agreement by Employee shall not operate or be construed as a waiver of
any subsequent breach by Employee.
12. ASSIGNMENT. The rights and obligations of Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Employer. Employee may not sell, assign, transfer, or delegate
any duties, rights or interests created under this Agreement without the express
written consent of the Employer.
13. ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties. It may not be changed orally but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the 2nd day of March, 1999.
SIMULA, INC.
By /s/ Xxxxxx X. Xxxxxxxx
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"EMPLOYER"
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
"EMPLOYEE"
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