EMPLOYMENT AGREEMENT
Exhibit
10.12
LMI
AEROSPACE, INC., a
Missouri corporation (the "Corporation"), and
XXXXXXXX X. XXXXXXXXX ("Employee")
hereby agree as follows:
1. Employment. The
Corporation hereby employs Employee, and Employee accepts employment from the
Corporation, upon the terms and conditions hereinafter set forth. Any and all
employment agreements heretofore entered into between the Corporation and
Employee are hereby terminated and cancelled, and each of the parties hereto
mutually releases and discharges the other from any and all obligations and
liabilities heretofore or now existing under or by virtue of any such employment
agreements, it being the intention of the parties hereto that this Agreement,
effective immediately, shall supersede and be in lieu of any and all prior
employment agreements between them.
2. Term
of Employment.
(A) The
initial term of Employee's employment under this Agreement shall commence on
January 1, 2004 and shall terminate on December 31, 2005; provided, however,
that this Agreement shall be automatically extended for additional terms of one
year each unless not later than October 31 of any year beginning in 2005, either
party has given written notice to the other party of its or his intention not to
extend the term of this Agreement; and provided, further, that the term of
employment may be terminated upon the earlier occurrence of any of the following
events:
(1) Upon the
termination of the business or corporate existence of the
Corporation;
(2) At the
Corporation’s option, in the event the Corporation determines that Employee is
not performing the duties required of him hereunder to the satisfaction of the
Corporation;
(3) Upon the
death of the Employee;
(4) At the
Corporation's option, if Employee shall suffer a permanent disability; (For the
purposes of this Agreement, "permanent disability" means any physical or mental
impairment that renders the Employee unable for a period of six (6) months or
more to perform the essential job functions of his position, even with
reasonable accommodation, as determined by a physician selected by the
Corporation. The Employee acknowledges and agrees that he shall voluntarily
submit to a medical or psychological examination for the purpose of determining
his continued fitness to perform the essential functions of his position
whenever requested to do so by the Corporation. If the Corporation elects to
terminate the employment relationship on this basis, the Corporation shall
notify the Employee or his representative in writing and the termination shall
become effective on the date that such notification is given;
(5) At the
Corporation's option, upon ten (10) calendar days’ written notice to Employee,
in the event of any breach or default by Employee of any of the terms of this
Agreement or of any of Employee's duties or obligations hereunder. In lieu of
providing ten (10) calendar days’ advance written notice, the Corporation, at
its sole option, may terminate the Employee’s services immediately and pay him
an amount that is equivalent to ten (10) calendar days of his salary, less any
deductions required by law;
(6) At the
Corporation’s option, without any advance notice, in the event that the Employee
engages in conduct which, in the opinion of the Corporation, (1) constitutes
dishonesty of any kind (including, but not limited to, any misrepresentation of
facts or falsification of records) in Employee’s relations, interactions or
dealings with the Corporation or its customers; (2) constitutes a felony; (3)
potentially may or will expose the Corporation to public disrepute or disgrace,
or potentially may or will cause harm to the customer relations, operations or
business prospects of the Corporation; (4) constitutes harassment or
discrimination towards any person associated with the Corporation, whether an
employee, agent or customer, based upon that person’s race, color, national
origin, sex, age, disability, religion, or other protected status; (5) reflects
disruptive or disorderly conduct, including but not limited to, acts of
violence, fighting, intimidation or threats of violence against any person
associated with the Corporation, whether an employee, agent or customer, or
possessing a weapon while on the Corporation’s premises or while acting on
behalf of the Corporation; (6) is indicative of abusive or illegal drug use
while on the Corporation’s premises or while acting on the Corporation’s behalf;
or (7) constitutes a willful violation of any governmental rules or regulations;
or
(7) At the
Employee’s option, after providing the Corporation with at least thirty (30)
calendar days advance written notice of his intention to terminate the
employment relationship.
If
employment is terminated for any of the reasons set forth in subparagraphs (3)
through (7) of this section 2(A), Employee shall be entitled to receive only the
Base Salary (as that term is hereinafter defined) accrued but unpaid as of the
date of the termination and shall be ineligible to receive any additional
compensation or severance pay. If, on the other hand, employment is terminated
by the Corporation during the term of this Agreement for any reason other than
those set forth in paragraphs (3) through (7) of this section 2(A), subject to
the conditions set forth in paragraphs 2(C) and (D) of this Agreement, the
Corporation shall provide severance pay to Employee in an amount based upon his
length of service with the Corporation. Specifically, the Corporation shall
provide Employee with six (6) months of Base Salary if he has less than five (5)
years of service with the Corporation as of the date of his termination and with
twelve (12) months of Base Salary if he has five (5) or more years of service
with the Corporation as of the date of his termination. Such severance pay shall
be paid in equal monthly installments, unless the Corporation, within its sole
discretion, elects to pay the present value of the severance pay in a lump sum
within thirty (30) calendar days of the termination.
(B) If
employment is terminated in conjunction with a change in the control of the
Corporation or in conjunction with the sale of substantially all of the
operating assets of the Corporation, the Corporation will provide Employee with
severance pay under the circumstances specified in subparagraphs (1) and (2) of
this paragraph (B), and the conditions set forth in paragraphs 2(C) and (D) of
this Agreement. For the purposes of this Agreement, a “change in control” is
defined as the sale of substantially all of the operating assets of the
Corporation or the acquisition of more than fifty percent (50%) of the stock of
the Corporation by a group of shareholders or an entity which acquires control
of the Corporation (a “Purchaser”).
(1) If the
change in control or the sale results in the involuntary termination of Employee
or results in the Employee electing to terminate his employment for a good
reason as determined by the Corporation (such as the Purchaser refusing to offer
full time employment to Employee on terms comparable to those provided by the
Corporation prior to the acquisition or the Purchaser requiring Employee to move
to a new location), the Corporation shall provide Employee with severance pay in
an amount that is equal to two times his annual Base Salary and shall pay
Employee any reasonably anticipated Performance Bonus for the fiscal year in
which he was terminated on a prorated basis.
(2) If
Employee voluntarily terminates his employment without a good reason (as
determined by the Corporation) within ninety (90) days after the change in
control or the sale, the Corporation shall provide Employee with six (6) months
of Base Salary if he has less than five (5) years of service with the
Corporation as of the date of his termination and with twelve (12) months of
Base Salary if he has five (5) or more years of service with the Corporation as
of the date of his termination.
(3) For
purposes of this paragraph 2(B), in the event a change of control occurs after
April 1, 2005, Employee may take up to nine (9) months from the date of change
of control to claim severance pay, as provided in paragraph 2(B)(1) and
(2).
(C) The
severance pay provided for in section 2(A) of this Agreement shall be paid in
equal monthly installments, unless the Corporation, within its sole discretion,
elects to pay the present value of the severance pay in a lump sum within thirty
(30) calendar days of the termination. For purposes of calculating the present
value of the severance pay, the discount rate shall be the prime rate quoted in
the Wall
Street Journal on the
day the Corporation elects to pay the present value of the severance pay in a
lump sum.
(D) Notwithstanding
anything to the contrary, (i) the amount of severance pay provided under this
Agreement shall not under any circumstances exceed the limitations set forth in
§ 280G of the Code, and (ii) the Corporation’s obligation to pay the severance
pay provided for in this section 2 shall be conditioned on Employee’s execution
of a written release satisfactory to the Corporation.
3. Compensation.
(A) During
the period from January 1, 2004 to December 31, 2004, the Corporation shall
compensate Employee for Employee's services rendered hereunder by paying to
Employee an annual salary (the "Base Salary") of One Hundred Thirty Thousand
Dollars ($130,000.00), less any authorized or required payroll deductions.
Thereafter, as long as this Agreement remains in effect, the annual Base Salary
that the Corporation shall pay to the Employee for his services rendered
hereunder will be One Hundred Seventy-two Thousand, Five Hundred Dollars
($172,500.00), less any authorized or required payroll deductions. The annual
Base Salary of Employee shall be increased by Three Thousand Two Hundred
Seventy-nine Dollars ($3,279.00), representing the sum of (i) the annual payment
previously made by the Corporation for premiums on a certain life insurance
policy issued on Employee’s life in conjunction with an assignment of benefits
agreement with the Corporation, and (ii) the income tax attributable to the
payment described in the preceding clause (i) of this paragraph. Payment of this
salary will be made in accordance with the payroll policies of the Corporation
in effect from time to time.
(B) With
respect to each complete fiscal year of the Corporation during which (i) the
Employee is employed under the terms of this Agreement as of the last day of
such fiscal year, and (ii) the Corporation's "Annual Net Income" (as that term
is hereinafter defined) is more than One Million Dollars ($1,000,000.00), the
Corporation shall pay to Employee, in addition to the Base Salary, an annual
"Performance Bonus". The amount of the annual Performance Bonus (if any) shall
be equal to:
(1) seven
tenths of one percent (0.70%) of the Corporation’s Annual Net Income that is
between One Million Dollars ($1,000,000.00) and One Million, Nine Hundred
Ninety-Nine Thousand, Nine Hundred Ninety-Nine Dollars and Ninety-Nine Cents
($1,999,999.99); plus
(2) one
percent (1.00%) of the Corporation’s Net Income that is between Two Million
Dollars ($2,000,000.00) and Eight Million Dollars ($8,000,000.00),
inclusive.
In the
event the Corporation's Annual Net Income for any given fiscal year is less than
One Million Dollars ($1,000,000.00), the Employee shall not be entitled to a
Performance Bonus with respect to such fiscal year. Notwithstanding anything
contained herein to the contrary, in the event the sum of the Employee's
Performance Bonus with respect to a fiscal year plus the Employee's benefit
under all performance/production incentive programs of the Corporation in which
the Employee is entitled to a bonus ("Incentive Benefit") for such fiscal year
exceeds Sixty-seven Thousand Dollars ($67,000.00), the amount of the Employee's
Performance Bonus for such year shall be reduced so that the sum of the
Performance Bonus and the Incentive Benefit equals Sixty-seven Thousand Dollars
($67,000.00).
For
purposes of the calculation of the Performance Bonus, the Corporation's "Annual
Net Income" means the consolidated net profit of the Corporation and its
subsidiaries, for a given fiscal year, as determined by the firm of independent
certified public accountants providing auditing services to the Corporation,
using generally accepted accounting principles consistently applied, and
calculated without regard to (a) any bonus paid to the Corporation’s Chairman of
the Board and any formula bonuses paid pursuant to employment contracts, (b)
federal and state income tax, and (c) any income or loss attributable to any
other corporation or entity (including the assets of a corporation or entity
that constitute an operating business) acquired by or merged into the
Corporation subsequent to the effective date of this Agreement. The Corporation
shall pay to Employee any Performance Bonus due the Employee hereunder not later
than fifteen (15) days after the receipt by the Corporation of its annual
audited financial statements, which the Corporation expects to receive within
ninety (90) days after the end of each fiscal year of the
Corporation.
(C) In
addition to the Base salary and Performance Bonus (if any), Employee shall be
entitled to receive such bonus compensation as the Board of Directors of the
Corporation may authorize from time to time.
(D) The
Corporation retains the right to modify or adjust the manner in which the
Performance Bonus is calculated in the event that the Corporation either
acquires the assets of another entity, or any portion thereof, or sells its
assets, or any portion thereof, to another entity.
4. Duties
of Employee.
(A) Employee
shall serve as Chief Financial Officer of the Corporation or in such other
positions as may be determined by the Board of Directors of the Corporation, and
Employee shall perform such duties on behalf of the Corporation and its
subsidiaries by such means, at such locations, and in such manner as may be
specified from time to time by the officers or Board of Directors of the
Corporation.
(B) Employee
agrees to abide by and conform to all rules established by the Corporation
applicable to its employees.
(C) Employee
acknowledges that he is being employed as a full-time employee, and Employee
agrees to devote so much of Employee's entire time, attention and energies to
the business of the Corporation as is necessary for the successful operation of
the Corporation and shall endeavor at all times to improve the business of the
Corporation. Employee shall not accept any business commitments other than with
the Corporation without the advance written consent of the Corporation’s
President.
5. Expenses. During
the period of Employee's employment, except as otherwise specifically provided
in this Agreement, the Corporation will pay directly, or reimburse Employee for,
all items of reasonable and necessary business expenses approved in advance by
the Corporation if such expenses are incurred by Employee in the interest of the
business of the Corporation. The Corporation shall also reimburse Employee for
automobile expenses incurred by Employee in the performance of Employee's duties
hereunder. The amount of such reimbursement shall be in accordance with the
automobile expense reimbursement policy adopted (and as it may be modified from
time to time) by the Corporation's Board of Directors. All such expenses paid by
Employee will be reimbursed by the Corporation upon presentation by Employee,
from time to time (but not less than quarterly), of an itemized account of such
expenditures in accordance with the Corporation's policy for verifying such
expenditures.
6. Fringe
Benefits.
(A) Employee
shall be entitled to participate in any health, accident and life insurance
program and other benefits which have been or may be established by the
Corporation for salaried employees of the Corporation.
(B) Employee
shall be entitled to an annual vacation without loss of compensation for such
period as may be determined by the Board of Directors of the
Corporation.
(C) The
Corporation shall furnish to the Employee during the term of his employment an
automobile selected by the Corporation to aid the Employee in the performance of
his duties. Upon agreement of the Corporation and the Employee, the Corporation
may, in lieu of the automobile, provide the Employee with a Five Thousand Dollar
($5,000.00) annual automobile allowance.
7. Covenants
of Employee.
(A) During
the term of Employee's employment with the Corporation and for all time
thereafter Employee covenants and agrees that Employee will not in any manner
directly or indirectly, except as required in Employee's duties to the
Corporation, disclose or divulge to any person, entity, firm or company
whatsoever, or use for Employee's own benefit or the benefit of any other
person, entity, firm or company, directly or indirectly, any knowledge, devices,
information, techniques, customer lists, business plans or other data belonging
to the Corporation or developed by Employee on behalf of the Corporation during
his employment with the Corporation, without regard to whether all of the
foregoing matters will be deemed confidential, material or important, the
parties hereto stipulating, as between them, that the same are important,
material, confidential and the property of the Corporation, that disclosure of
the same to or use of the same by third parties would greatly affect the
effective and successful conduct of the business of the Corporation and the
goodwill of the Corporation, and that any breach of the terms of this
subparagraph (A) shall be a material breach of this Agreement.
(B) During
the term of Employee's employment with the Corporation and for a period of two
(2) years or one (1) year with respect to subparagraph (iv) below (the "Covenant
Term") after cessation for whatever reason of such employment (except as
hereinafter provided in subparagraph (C) of this paragraph 7), Employee
covenants and agrees that Employee will not in any manner directly or
indirectly:
(1) solicit,
divert, take away or interfere with any of the customers (or their respective
affiliates or successors) of the Corporation;
(2) engage
directly or indirectly, either personally or as an employee, partner, associate
partner, officer, manager, agent, advisor, consultant or otherwise, or by means
of any corporate or other entity or device, in any business which is competitive
with the business of the Corporation. For purposes of this covenant a business
will be deemed competitive if it is conducted in whole or in part within any
geographic area wherein the Corporation is engaged in marketing its products,
and if it involves the manufacture of component parts for the aerospace industry
or any other business which is in any manner competitive, as of the date of
cessation of Employee's employment, with any business then being conducted by
the Corporation or as to which the Corporation has then formulated definitive
plans to enter;
(3) induce
any salesman, distributor, supplier, manufacturer, representative, agent, jobber
or other person transacting business with the Corporation to terminate their
relationship with the Corporation, or to represent, distribute or sell products
in competition with products of the Corporation; or
(4) induce or
cause any employee of the Corporation to leave the employ of the
Corporation.
(C) The
parties agree that the Covenant Term provided for in the preceding subparagraph
(B) shall be:
(1) reduced
to six (6) months in the event all of the operating assets or all of the common
stock of the Corporation is sold to any entity or individuals unaffiliated with
the Corporation, its successors or assigns; or
(2) eliminated
if the business currently operated by the Corporation is terminated and the
assets of the Corporation are liquidated.
(D) All the
covenants of Employee contained in this paragraph 7 shall be construed as
agreements independent of any other provision of this Agreement, and the
existence of any claim or cause of action against the Corporation, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of these covenants.
(E) It is the
intention of the parties to restrict the activities of Employee under this
paragraph 7 only to the extent necessary for the protection of legitimate
business interests of the Corporation, and the parties specifically covenant and
agree that should any of the provisions set forth therein, under any set of
circumstances not now foreseen by the parties, be deemed too broad for such
purpose, said provisions will nevertheless be valid and enforceable to the
extent necessary for such protection.
8. Documents. Upon
cessation of Employee's employment with the Corporation, for whatever reason,
all documents, records (including without limitation, customer records),
notebooks, invoices, statements or correspondence, including copies thereof,
relating to the business of the Corporation then in Employee's possession,
whether prepared by Employee or others, will be delivered to and left with the
Corporation, and Employee agrees not to retain copies of the foregoing documents
without the written consent of the Corporation.
9. Remedies. In the
event of the breach by Employee of any of the terms of this Agreement,
notwithstanding anything to the contrary contained in this Agreement, the
Corporation may terminate the employment of Employee in accordance with the
provisions of paragraph 2 of this Agreement. It is further agreed that any
breach or evasion of any of the terms of this Agreement by Employee will result
in immediate and irreparable injury to the Corporation and will authorize
recourse to injunction and/or specific performance as well as to other legal or
equitable remedies to which the Corporation may be entitled. In addition to any
other remedies that it may have in law or equity, the Corporation also may
require an accounting and repayment of all profits, compensation, remuneration
or other benefits realized, directly or indirectly, as a result of such breaches
by the Employee or by a competitor’s business controlled, directly or
indirectly, by the Employee. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy and
each and every remedy given hereunder or now or hereafter existing at law or in
equity by statute or otherwise. The election of any one or more remedies by the
Corporation shall not constitute a waiver of the right to pursue other available
remedies. Employee expressly agrees to pay all reasonable costs and attorneys’
fees incurred by the Corporation in order to enforce the Employee’s obligations
under this Agreement, regardless of whether litigation is commenced or
prosecuted to a judgment.
10. Severability. All
agreements and covenants contained herein are severable, and in the event any of
them shall be held to be invalid by any court of competent jurisdiction, this
Agreement, subject to subparagraph 7(E) hereof, shall continue in full force and
effect and shall be interpreted as if such invalid agreements or covenants were
not contained herein.
11. Waiver
or Modification. No
waiver or modification of this Agreement or of any covenant, condition or
limitation herein shall be valid unless in writing and duly executed by the
party to be charged therewith, and no evidence of any waiver or modification
shall be offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid, and the
parties further agree that the provisions of this Paragraph may not be waived
except as herein set forth. Failure of the Corporation to exercise or otherwise
act with respect to any of its rights hereunder in the event of a breach of any
of the terms or conditions hereof by Employee shall not be construed as a waiver
of such breach nor prevent the Corporation from thereafter enforcing strict
compliance with any and all of the terms and conditions hereof.
12. Assignability. This
Agreement may be assigned by the Corporation to another entity which purchases
substantially all of the assets of the Corporation or acquires a majority of the
stock of the Corporation. The services to be performed by Employee hereunder are
personal in nature and, therefore, Employee shall not assign Employee's rights
or delegate Employee's obligations under this Agreement, and any attempted or
purported assignment or delegation not herein permitted shall be null and
void.
13. Successors. Subject
to the provisions of paragraph 12, this Agreement shall be binding upon and
shall inure to the benefit of the Corporation and Employee and their respective
heirs, executors, administrators, legal administrators, successors and
assigns.
14. Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given if delivered personally, by
over-night courier, or by certified or registered mail, return receipt
requested, if to the Corporation, to:
Xxxxxx X.
Xxxx, President
LMI
AEROSPACE, INC.
X.X. Xxx
000
Xx.
Xxxxxxx, XX 00000-0000
and, if
to Employee, to:
Xxxxxxxx
X. Xxxxxxxxx
000
Xxxxxxxx Xxxxx
Xx.
Xxxxxxx, XX 00000
or to
such other address as may be specified by either of the parties in the manner
provided under this paragraph 14.
15. Construction. This
Agreement shall be deemed for all purposes to have been made in the State of
Missouri and shall be governed by and construed in accordance with the laws of
the State of Missouri, notwithstanding either the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder in any other
jurisdiction.
16. Venue. The
parties hereto agree that any suit filed arising out of or in connection with
this Agreement shall be brought only in the United States District Court for the
Eastern District of Missouri, unless that court lacks jurisdiction, in which
case such action shall be brought only in the Circuit Court for St. Louis
County, Missouri.
17. Disclosure
of Existence of Agreement. To
preserve the Corporation’s rights under this Agreement, the Corporation may
advise any third party of the existence of this Agreement and its terms, and the
Employee specifically releases and agrees to indemnify and hold the Corporation
harmless from any liability for doing so.
18. Opportunity
to Review. Employee
hereby represents and warrants that he has had an opportunity to review this
Agreement and ask the Corporation questions about the Agreement, and understands
the meaning and effect of each paragraph of this Agreement.
The
parties have executed this Agreement as of January 1, 2004.
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LMI
AEROSPACE, INC. | ||
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(“Corporation”) | ||
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By:
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||
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Xxxxxx
X. Xxxx, President | ||
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Xxxxxxxx
X. Xxxxxxxxx | ||
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(“Employee”) | ||
