Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (this "Agreement")
dated as of August 1, 2005, is between BE Aerospace, Inc., a Delaware
corporation (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive").
WHEREAS, Executive and the Company entered into that certain Employment
Agreement dated as of September 14, 2001 and thereafter amended said agreement
by two amendments (said Employment Agreement and amendments hereinafter
collectively the "Employment Agreement"); and
WHEREAS, Executive, having provided services to the Company since
August 1, 1987, agrees to provide services for an additional period as provided
herein, and the Company wishes to procure such services; and
WHEREAS, Executive and the Company wish to further amend and restate
the Employment Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties agree as follows:
1. REFERENCE TO EMPLOYMENT AGREEMENT.
The Employment Agreement is hereby restated, superseded and
replaced in its entirety by this Agreement.
2. ARRANGEMENT.
Executive shall provide to the Company, and the Company shall
accept from Executive, the services set forth in Section 4.2 below, subject to
the terms and conditions set forth in this Agreement.
3. TERM.
Executive shall provide to the Company services hereunder
during the term of this Agreement which, unless otherwise terminated pursuant to
the provisions of Article 7 hereof, shall be the period ending three (3) years
from any date as of which the term is being determined (the "Employment Term").
The date on which the Employment Term ends, including any extensions thereof, is
sometimes hereinafter referred to as the "Expiration Date."
4. CAPACITY, SERVICES AND PERFORMANCE.
4.1 Capacity. Executive shall serve the Company as its President and
Chief Executive Officer, or in such other executive capacity as the Board of
Directors (the "Board") may designate from time to time, but only upon agreement
with Executive.
1
4.2 ▇▇▇▇▇▇▇▇.▇▇ the capacity set forth in Section 4.1 above, Executive
shall be retained by the Company and shall perform such duties and
responsibilities on behalf of the Company as Executive and the Board shall by
mutual agreement from time to time determine.
4.3 Performance.During the Employment Term, Executive shall use his
business judgment, skill and knowledge to the advancement of the Company's
interests and to the discharge of his duties and responsibilities hereunder;
provided that Executive shall be required only to devote so much time as
Executive determines is reasonably necessary to discharge his duties as Chairman
of the Board, and, subject to the provisions of Section 6 below, Executive may
engage in other business activities during the Employment Term.
5. COMPENSATION AND BENEFITS.
5.1 Salary. Effective as of January 1, 2005 Executive shall receive an
annual salary (the "Salary") of $792,500 during each year of the Employment
Term. Such Salary shall be subject to adjustment from time to time by the Board;
provided, however, that it shall at no time be adjusted below the Salary for the
preceding year. Commencing on January 1, 2006, and on March 1 of each year
thereafter during the Employment Term, the Salary then in effect shall be
increased by an amount not less than the amount determined by applying to the
Salary then in effect the percentage increase in the U.S. Bureau of Labor
Statistics Consumer Price Index Revised - Urban Wage Earners and Clerical
Workers - National - All Items (1982-84 = 100) (the "Index") for the consecutive
twelve (12) month period (March through February) immediately preceding such
March 1. If the Index is no longer issued, the Board and Executive shall agree
upon a substitute index issued by such agency which most reasonably reflects the
criteria utilized in the most recent issue of the Index. Except as otherwise
provided in this Agreement, the Salary shall be payable biweekly or in
accordance with the Company's current payroll practices, and shall be pro-rated
for any period of service less than a full year.
5.2 Bonuses. Executive may receive bonuses from the Company when, as
and if determined from time to time by the Board. Any such bonuses paid to
Executive shall be in addition to the Salary then in effect.
2
5.3 Benefits. Executive shall be entitled to participate in all
employee benefit plans, life insurance plans, disability income plans, incentive
compensation plans and other benefit plans, other than retirement plans, as may
be from time to time in effect for executives of the Company generally. In
addition, Executive and his spouse, for as long as they each may live, shall be
entitled to all medical, dental and health benefits available from time to time
to the Company's executive officers and their spouses, respectively, and
Executive and his spouse, for as long as they each may live, shall be entitled
to the benefits available under the Company's executive medical reimbursement
plan in effect as of January 1, 2005.
5.4 Business Expenses. The Company shall pay or reimburse Executive
during the Employment Term for all reasonable business expenses incurred or paid
by him in the performance of his services, subject to reasonable substantiation
and documentation.
5.5 Automobile. During the Employment Term, Executive shall be
furnished either, as determined by the Company, an automobile owned or leased by
the Company or an automobile allowance, which automobile or allowance shall be
at least equivalent to that which the Company is providing to Executive as of
January 1, 2005.
5.6 Equity Incentive Compensation. Through the Employment Period,
Executive shall be entitled to participate in any applicable equity incentive
compensation program of the Company.
6. PROPRIETARY RIGHTS AND NON-COMPETITION.
Executive acknowledges that the Company is engaged in a
continuous program of research, development and production in connection with
its business, present and future, and hereby covenants as follows:
6.1 Confidentiality. Executive will maintain in confidence and will not
disclose or use, either during or after the Employment Term, any proprietary or
confidential information or know-how belonging to the Company ("Proprietary
Information" hereinafter defined), whether or not in written form, except to the
extent required to perform duties on behalf of the Company. For purposes of this
Agreement, "Proprietary Information" shall mean any information, not generally
known to the relevant trade or industry, which was obtained from the Company, or
which was learned, discovered, developed, conceived, originated or prepared by
Executive in connection with this Agreement. Such Proprietary Information
includes, without limitation, software, technical and business information
relating to the Company's inventions or products, research and development,
production processes, manufacturing and engineering processes, machines and
equipment, finances, customers, marketing and production and future business
plans, information belonging to customers or suppliers of the Company disclosed
incidental to Executive's performance under this Agreement, and any other
information which is identified as confidential by the Company, but only so long
as the same is not generally known in the relevant trade or industry.
6.2 Inventions.
6.2.1 Definition of Inventions. For purposes of this Agreement,
"Inventions" shall mean any new or useful art, discovery,
contribution, finding or improvement, whether or not
3
patentable, and all related know-how. Inventions shall
include, without limitation, all designs, discoveries,
formulae, processes, manufacturing techniques,
semiconductor designs, computer software, inventions,
improvements and ideas.
6.2.2 Disclosure and Assignment of Inventions. Executive will
promptly disclose and describe to the Company all
Inventions which he may solely or jointly conceive,
develop, or reduce to practice during the Employment Term
(i) which relate at the time of conception, development, or
reduction to practice of the Invention to the Company's
business or actual or demonstrably anticipated research or
development, (ii) which were developed, in whole or in
part, on the Company's time or with the use of any of the
Company's equipment, supplies, facilities or trade secret
information, or (iii) which resulted from any work
performed by Executive for the Company (the "Company's
Inventions"). Executive hereby assigns to the Company all
of his right, title and interest world-wide in and to the
Company's Inventions and in all intellectual property
rights based upon the Company's Inventions; provided,
however, that Executive does not assign or agree to assign
any Inventions, whether or not relating in any way to the
Company's business or demonstrably anticipated research and
development, which were made by him prior to the date of
this Agreement, or which were developed by him
independently during the Employment Term and not under the
conditions stated in subparagraph (ii) above.
6.3 Documents and Materials. Upon termination of this Agreement or at
any other time upon the Company's request, Executive will promptly deliver to
the Company, without retaining any copies, all documents and other materials
furnished to him by the Company, prepared by him for the Company or otherwise
relating to the Company's business, including, without limitation, all written
and tangible material in his possession incorporating any Proprietary
Information.
6.4 Competitive Employment. During the Employment Term and for a period
of two (2) years thereafter (collectively, the "Extended Term"), Executive will
not engage in any employment, consulting, or other activity in any business
competitive with the Company without the Company's written consent, which
consent shall not be unreasonably withheld; provided, however, that nothing in
this Section 6.4 shall preclude Executive from serving as a director of any
other corporation.
4
6.5 Non-Solicitation. During the Extended Term, Executive will not
solicit or encourage, or cause others to solicit or encourage, any employees of
the Company to terminate their employment with the Company.
6.6 Acts to Secure Proprietary Rights.
6.6.1 Further Acts. Executive agrees to perform, during and after
the Employment Term, all acts deemed necessary or desirable
by the Company to permit and assist it, at its expense, in
perfecting and enforcing the full benefits, enjoyment,
rights and title throughout the world in the Company's
Inventions. Such acts may include, without limitation,
execution of documents and assistance or co-operation in
the registration and enforcement of applicable patents and
copyrights or other legal proceedings.
6.6.2 Appointment of Attorney-In-Fact. In the event that the
Company is unable, for any reason whatsoever, to secure
Executive's signature to any lawful and necessary document
required to apply for or execute any patent, copyright or
other applications with respect to any of the Company's
Inventions (including improvements, renewals, extensions,
continuations, divisions or continuations in part thereof),
Executive hereby irrevocably appoints the Company and its
duly authorized officers and agents as his agents and
attorneys-in-fact to execute and file any such application
and to do all other lawfully permitted acts to further the
prosecution and issuance of patents, copyrights or other
rights thereon with the same legal force and effect as if
executed by him, intending hereby to create a so-called
"durable power" which will survive any subsequent
disability.
6.7 No Conflicting Obligations. Executive's performance of this
Agreement does not breach and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by him.
6.8 Corporate Opportunities. Executive agrees that he will first
present to the Board, for its acceptance or rejection on behalf of the Company,
any opportunity to create or invest in any company which is or will be involved
in equipping or furnishing airplane cabin interiors, which comes to his
attention and in which he, or any of his affiliates, might desire to
participate. If the Board rejects the same or fails to act thereon in a
reasonable time, Executive shall be free to invest in, participate or present
such opportunity to any other person or entity.
5
6.9 Specific Performance. Executive acknowledges that a breach of any
of the promises or agreements contained herein could result in irreparable and
continuing damage to the Company for which there may be no adequate remedy at
law, and the Company shall be entitled to seek injunctive relief and/or a decree
for specific performance.
7. TERMINATION AND CHANGE OF CONTROL.
7.1 Termination Date; Termination Prior to Change of Control or
Following Change of Control.
7.1.1 Termination Date. The term "Termination Date" shall mean
the date on which Executive's employment with the Company
terminates for any reason prior to the Expiration Date.
7.1.2 Termination by Executive Prior to or Following a Change of
Control. If Executive resigns prior to or more than three
years following the occurrence of a Change of Control, then
on the Termination Date, Executive shall receive payment of
(i) his unpaid Salary through the Termination Date, (ii)
the Retirement Compensation pursuant to Section 7.6 hereof,
determined as of the Termination Date, to the extent not
already paid pursuant to Section 7.4.1(i)(B), (iii) the
other retirement benefits pursuant to Section 7.6 hereof,
and (iv) the Severance Pay pursuant to Section 7.5 hereof.
In addition, Executive and his spouse shall be entitled to
a continuation of their medical, dental and health benefits
pursuant to Section 5.3 hereof.
7.1.3 Termination by Company Prior to or Following a Change of
Control. If the Company terminates the Executive's
employment hereunder prior to or more than three years
after the occurrence of a Change of Control for any reason
other than death pursuant to Section 7.2 or incapacity
pursuant to Section 7.3, then on the Termination Date,
Executive shall receive payment of (i) any accrued and
unpaid Salary through the Termination Date, (ii) bonuses
declared to be payable to Executive for any fiscal periods
of the Company ending prior to the Termination Date, (iii)
a lump sum equal to his Salary from the Termination Date
through the Expiration Date, (iv) the Retirement
Compensation pursuant to Section 7.6 hereof, determined as
of the Expiration Date, to the extent not already paid
pursuant to Section 7.4.1(i)(B), (v) the other retirement
benefits pursuant to Section 7.6 hereof, and (vi) the
Severance Pay pursuant to Section 7.5 hereof. In addition,
(A) Executive and his spouse shall be entitled to a
continuation of their medical, dental and health benefits
pursuant to Section 5.3 hereof, (B) any stock options (or
other equity awards) granted to Executive that would not
vest on or prior to the Termination Date shall vest and be
exercise immediately, and such stock options shall continue
to be exercisable until the later of their expiration date
or the date on which shares of the Company are no longer
traded as such and (C) for the period from Executive's
actual Termination Date until the Expiration Date, the
Company shall:
6
(1) provide Executive with continued life insurance
and disability insurance coverage in the same amounts and
upon the same terms and conditions as in effect on his
Termination Date;
(2) reimburse Executive for business expenses in the
same manner and to the same extent required pursuant to
Section 5.4 hereof prior to the Termination Date; and
(3) continue to provide Executive with the automobile
allowance provided pursuant to Section 5.5 hereof as of the
Termination Date.
If a Change of Control should occur prior to the
Expiration Date, the Company shall, in addition, make
the payment specified in Section 7.4.1(i)(A)(2).
7.2 Death.
7.2.1 Executive's employment hereunder shall terminate upon his
death. In such event, the Company shall, within thirty (30)
days following the Termination Date, pay to such person as
Executive shall, have designated in a notice filed with the
Company, or if no such person shall have been designated,
to his estate, a lump sum payment equal to the (i) Salary
that would have been due to Executive had this Agreement
been in effect from the date of his death until the
Expiration Date and the (ii) Retirement Compensation as
provided in Section 7.6 below.
7.2.2 Upon Executive's death, the Company shall, within thirty
(30) days following the Termination Date, also pay to such
person as Executive shall have designated in a notice filed
with the Company, or if no such person shall have been
designated, to his estate, a lump-sum death benefit in the
amount of $2 million.
7.2.3 Upon Executive's death, The Company shall, within thirty
(30) days following the Termination Date, also pay to such
person as Executive shall have designated in a notice filed
with the Company, or if no such person shall have been
designated, to his estate, a lump-sum equal to (A) any
accrued and unpaid Salary through the Termination Date, and
(B) any bonuses declared to be payable to Executive for any
fiscal periods of the Company ending prior to the
Termination Date. Executive's spouse shall be entitled to
continuation of medical, dental and health benefits
pursuant to Section 5.3 hereof.
7
7.3 Incapacity. If, in the reasonable judgment of the Board, as a
result of Executive's incapacity due to physical or mental illness or otherwise,
Executive shall for at least six (6) consecutive months during the Employment
Term have been unable to perform his duties under this Agreement on a full-time
basis, the Company may terminate Executive's employment as provided in this
Section 7.3. If the Company desires to so terminate Executive's employment, the
Company shall:
(i) give prompt notice to Executive of any such termination;
and
(ii) until the Expiration Date, (a) pay to Executive or in the
event of Executive's subsequent death, such person as
Executive shall have designated in a notice filed with the
Company, or if no such person shall have been designated,
to Executive's estate, two (2) times the highest annual
Salary paid to Executive prior to the Termination Date, (b)
continue to provide Executive with the disability insurance
and life insurance coverage, in the same amounts and upon
the same terms and conditions provided pursuant to Section
5.3 hereof immediately prior to the Termination Date, (c)
reimburse Executive for business expenses in the same
manner and to the same extent required pursuant to Section
5.4 hereof prior to the Termination Date, including without
limitation the reimbursement of travel expenses and other
travel benefits as were afforded to Executive under the
Company's Aircraft Travel Policy Authorization and
Limitation on Officer Travel as in effect on May 31, 2001,
and (d) continue to provide Executive with the automobile
allowance provided pursuant to Section 5.5 hereof
immediately prior to the Termination Date; and
(iii) pay to Executive (or in the event of Executive's subsequent
death, such person as Executive shall have designated in a
notice filed with the Company, or, if no such person shall
have been designated, to his estate) the entire Retirement
Compensation, or the remaining unpaid balance thereof if
payments of such Retirement Compensation have commenced, as
provided in Section 7.6 and below; and
(iv) pay to Executive a lump-sum equal to (A) any accrued and
unpaid Salary through the Termination Date, and (B) any
bonuses declared to be payable to Executive for any fiscal
periods of the Company ending prior to the Termination
Date; and
(v) continue to provide medical, dental and health benefits as
provided in Section 5.3 hereof.
Any dispute between the Board and Executive with respect to
Executive's incapacity shall be settled by reference to a competent medical
authority mutually agreed to by the Board and Executive or his personal
representative, whose decision shall be binding on all parties.
8
7.4 Change of Control; Definitions.
7.4.1 Change of Control. If a "Change of Control" of the Company
occurs, the Company will be obligated as provided in this
Section 7.4.1. For purposes of determining the Company's
obligations under this Section 7.4.1, the date on which a
Change of Control occurs shall be referred to as the
"Change of Control Date." If a "Change of Control" occurs
during the Employment Term, the Company or its successor in
interest shall:
(i) within five (5) business days after the Change of Control
Date, pay to Executive, (or in the event of Executive's
subsequent death, such person as Executive shall have
designated in a notice filed with the Company, or, if no
such person shall have been designated, Executive's
estate):
(A) a lump sum payment equal to the sum of: (1) the
unpaid amount of any bonuses declared to be payable to
Executive for any fiscal periods of the Company ending
prior to the Change of Control Date, and (2) an amount
equal to two (2) times the Salary, at the rate in effect on
the Change of Control Date, that would have been payable to
Executive through the third anniversary of the Change of
Control Date;
(B) in a single lump sum payment, the aggregate amount
of Retirement Compensation payable to Executive pursuant to
Section 7.6 hereof determined as if Executive had continued
to be employed by the Company until the third anniversary
of the Change of Control Date; and
(C) the amount of any Gross-Up Payment payable by the
Company to Executive under Section 7.8 hereof;
(ii) if, within three years following the Change of Control
Date, Executive's employment with the Company is terminated
by the Company for any reason other than death pursuant to
Section 7.2 or incapacity pursuant to Section 7.3, or if
Executive resigns during this period, the Company or its
successor shall pay to Executive (A) any accrued and unpaid
Salary through the Termination Date, (B) bonuses declared
to be payable to Executive for any fiscal periods of the
Company ending prior to the Termination Date and (C) for
the period from Executive's actual Termination Date until
the Expiration Date the Company shall:
9
(1) provide Executive with continued life insurance
and disability insurance coverage in the same amounts and
upon the same terms and conditions as in effect on his
Termination Date, or if greater, as those provided
immediately prior to the Change of Control Date;
(2) reimburse Executive for business expenses in the
same manner and to the same extent required pursuant to
Section 5.4 hereof prior to the Termination Date, or if
greater, to the extent provided immediately prior to the
Change of Control Date; and
(3) continue to provide Executive with the automobile
allowance provided pursuant to Section 5.5 hereof as of the
Termination Date, or if greater, as provided immediately
prior to the Change of Control Date;
(iii) continue to provide to Executive and his spouse, for their
respective lifetimes, medical, dental and health benefits
as provided in Section 5.3 hereof; provided, however, that
the terms and level of such benefits shall be substantially
similar as Executive and his spouse were receiving as of
the Termination Date, or if greater, as they were receiving
immediately prior to the Change of Control Date; and
(iv) provide that any stock options (or other equity awards)
granted to Executive that would not vest on or prior to the
Change of Control Date shall vest and, if applicable, be
exercisable immediately upon the execution of any agreement
that would constitute a Change of Control (regardless of
whether such agreement is consummated), and such stock
options shall continue to be exercisable until the later of
their expiration date or the date on which shares of the
Company are no longer traded as such.
7.4.2 Executive agrees that if, following a Change of Control of
the Company, his employment pursuant to this Agreement
continues or he enters into a new employment agreement with
a successor entity, he will not be entitled to receive any
additional change of control payments or benefits in
addition to those described herein.
7.4.3 Definitions. For purposes of this Agreement, a "Change of
Control" means:
(i) The effective time of any transaction or completion of a
series of transactions involving the ownership of the
Company that requires a shareholder vote for the
consummation of such transaction(s);
10
(ii) Individuals who, as of January 1, 2005 (the "Effective
Date") constitute the Board of Directors of the Company
(the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors of the
Company, provided that any person becoming a director
subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened
election contest relating to the election of the directors
of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange
Act) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board;
(iii) The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 25%
or more of either the then outstanding shares of the
Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to
vote generally in the election of directors (hereinafter
referred to as the ownership of a "Controlling Interest")
excluding, for this purpose, any acquisitions by (1) the
Company or its subsidiaries, (2) any person, entity or
"group" that as of the Effective Date owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act) of a Controlling
Interest or (3) any employee benefit plan of the Company or
its subsidiaries; or
(iv) The sale or other disposition by the Company of 25% or more
of the value of its assets to any person or entity that is
not controlled by the Company.
7.5 Severance Pay. If Executive's employment with the Company is
terminated for any reason, other than due to (i) Executive's death pursuant to
Section 7.2 hereof, or (ii) Executive's incapacity pursuant to Section 7.3
hereof, then within five (5) days after Executive's Termination Date, the
Company shall pay to Executive (or in the event of Executive's subsequent death,
such person as Executive shall have designated in a notice filed with the
Company, or, if no such person shall have been designated, to Executive's
estate), a lump sum amount equal to Executive's annual Salary in effect as of
the Termination Date, which lump sum shall not be pro-rated. The obligations of
the Company pursuant to this Section 7.5 is in addition to any other obligations
under Section 7 hereof.
11
7.6 Retirement Compensation.
7.6.1 Amount of Retirement Compensation. In recognition that
Executive will not be eligible for any retirement plan to
be offered by the Company to its executives (as provided in
Section 5.3 above), Executive shall be entitled to
retirement compensation ("Retirement Compensation") equal
to the product of (i) 100% times (ii) the highest annual
Salary paid to Executive during the Employment Period (the
"Highest Annual Salary") multiplied by (iii) the number of
years of service provided by Executive to the Company, such
service having commenced as of August 1, 1987
("Commencement Date"), with a ratable adjustment should
Executive's final period of service be less than a full
year. The Retirement Compensation as so determined shall be
paid to Executive (or in the event of Executive's
subsequent death, to such person as Executive shall have
designated in a notice filed with the Company or, if no
such person shall have been designated, to his estate) at
the times specified in Section 7.6.2 below, or contributed
to the Retirement Trust described in Section 7.6.3 below in
accordance with that Section. The amount of the Retirement
Compensation so due and payable shall not be present-valued
or otherwise reduced by use of any other discount or
discounting method.
7.6.2 Payment of Retirement Compensation.
(i) Within five business days after the date on which the BE
Aerospace, Inc. Executive Compensation Trust II dated April
April 21, 1999, as amended, is terminated (the
"Distribution Date"), the Company will distribute the
amount of Retirement Compensation that would have been
payable to Executive under Section 7.6.1 as of the
Distribution Date, based on his years of service through
the Distribution Date and his then Highest Annual Salary.
(ii) Within five (5) business days after Executive's actual
Termination Date, the Company shall pay to Executive an
amount equal to (x) the Retirement Compensation payable to
Executive as determined in Section 7.6.1 hereof less (y)
the sum of (1) the amount of Retirement Compensation
previously distributed to Executive pursuant to Section
7.6.2(i) and 7.4.1(ii) hereof, and (2) the amounts
previously distributed pursuant to Section 7.6.3(i) or
7.6.3(ii).
7.6.3 Retirement Trust.
(i) Within ninety days after the Distribution Date, the Company
shall establish a trust for the duration of the Employment
Term, and, commencing on such date and on a quarterly basis
thereafter, each a "Contribution Date" the Company shall
contribute to the trust (the "Retirement Trust") for the
benefit of Executive an amount equal to (a) the Retirement
Compensation that would be payable to Executive under
Section 7.6.2(ii) if the Contribution Date was his
Termination Date minus (b) the total of all contributions
made to the Retirement Trust by the Company as of such
Contribution Date. The Retirement Trust to which the
Company shall make these contributions shall be
irrevocable. The Retirement Trust shall provide that
12
Executive may withdraw from the Retirement Trust, within
the 30 day period beginning on the date on which he
receives notice from the Company that the Company has made
a contribution pursuant to this Section 7.6.3(i) an amount
up to but not to exceed the amount of that contribution. If
and to the extent that Executive fails to exercise this
withdrawal right within the 30 day period, such withdrawal
right shall lapse. The Retirement Trust also shall contain
such other provisions as the Company and Executive
reasonably agree are necessary in order for the Retirement
Trust to qualify as a grantor trust under Section 671 of
the Code with Executive as the grantor. The trust agreement
for the Retirement Trust shall provide that any assets
remaining in the Retirement Trust, after payment of all the
Retirement Compensation payable pursuant to this Section
7.6, shall be paid to Executive, and that the Retirement
Trust shall be exempt from the claims of the Company's
creditors.
(ii) As of the last day of each calendar quarter ending on or
after the Distribution Date, during the Employment Term,
the trustee of the Retirement Trust shall be required to
distribute to Executive 25% of the amount by which (x) the
Assumed Taxes that the Company reasonably estimates will be
assessed upon Executive for the calendar year for which the
distribution is being made as a result of his beneficial
interest in the Retirement Trust, exceeds (y) the amount
withdrawn by Executive in such calendar year pursuant to
Section 7.6.3(i). For this purpose, the term "Assumed
Taxes" shall mean the Federal, State and local income and
employment taxes that would be payable by Executive for the
year in question, assuming that the amount taxable would be
subject to the highest Federal and applicable State and
local income and employment taxes.
7.7 Other Retirement Benefits. In the event that Executive's employment
terminates for any reason other than death pursuant to Section 7.2 or incapacity
pursuant to Section 7.3, then for the period from the Termination Date until the
5th anniversary after the Termination Date, the Company shall: (a) reimburse
Executive for the reasonable costs of leasing and operating an office at a
location selected by Executive that is outside of the Company's office,
including without limitation, the cost of a full-time assistant, and (b) provide
Executive with up to 150 hours per year of corporate jet usage consistent with
the Company's Aircraft Travel Policy, "Authorization and Limitation on Officer
Travel", as in effect on May 31, 2001, or, in the event that the Company does
not own or control an aircraft of the type specified in such policy, or, at the
Company's option, the Company may provide Executive a quarter share of the same
aircraft type specified in such policy under a five year, executive jet party
share program. In the event the Company provides Executive with use of its
corporate jet, the corporate jet shall be available for use by Executive given
seventy-two hours advance notice by Executive to the Company of his intent to
use the aircraft. If and to the extent that the Company is required to withhold
any amounts for taxes with regard to the foregoing, then the provision of the
foregoing benefits shall be conditioned upon the Company and Executive's making
appropriate arrangements to ensure that those withholding requirements are
satisfied.
13
7.8 Certain Additional Payments by the Company.
7.8.1 Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment,
distribution, benefit, equity-based or other compensation
or other transfer or action by the Company to or for the
benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise and including without limitation any
additional payments required under this Section 7.8) (a
"Payment") would be subject to an excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to any such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), the Company shall make a payment to
Executive (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, Executive
retains (or has had paid to the Internal Revenue Service on
his behalf) an amount of the Gross-Up Payment equal to the
sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the
inclusion of the Gross-Up Payment in Executive's adjusted
gross income and the highest applicable marginal rate of
federal income taxation for the calendar year in which the
Gross-Up Payment is to be made. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be
deemed to (i) pay federal income taxes at the highest
marginal rates of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, and (ii)
pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained
from deduction of such state and local.
7.8.2 Subject to the provisions of Section 7.8.3, all
determinations required to be made under this Section 7.8,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP (the "Accounting Firm") which
shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving
as accountant or auditor for the individual, entity or
group effecting the Change of Control, Executive shall
appoint another nationally recognized accounting firm to
make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 7.8, shall
be paid by the Company to Executive within five days of the
14
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written
opinion that failure to report the Excise Tax on
Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 7.8 and
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or
for the benefit of Executive.
7.8.3 Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but
no later than ten business days after Executive is informed
in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim
is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on
15
the foregoing provisions of this Section 7.8.3, the Company
shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct Executive
to pay the tax claimed and ▇▇▇ for a refund or contest the
claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs
Executive to pay such claim and ▇▇▇ for a refund, the
Company shall advance the amount of such payment to
Executive, on an interest-free basis and shall indemnify
and hold Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
7.8.4 If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 7.8.3, Executive becomes
entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with
the requirements of Section 7.8.3 promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 7.8.3, a
determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
8. WITHHOLDING.
All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company
under applicable law.
16
9. INDEMNIFICATION.
To the maximum extent permitted under Florida law as from time
to time in effect, and subject to any mandatory exclusion of indemnification
under Delaware law applicable to the indemnification of Executive under this
Section 9, the Company hereby agrees to indemnify Executive and hold him
harmless from, against and in respect of any and all damages, deficiencies,
actions, suits, proceedings, demands, assessments, judgments, claims, losses,
costs, expenses, obligations and liabilities arising from or related to the
performance of the services under this Agreement by Executive.
10. LEGAL FEES.
In the event of a dispute between the parties with respect to
any payments due hereunder in connection with a Change of Control, the Company
will pay the costs of any legal fees and related expenses incurred in connection
with such dispute. Such costs and expenses shall be advanced to Executive
currently as reasonably required to continue such action or proceeding.
11. UNFUNDED STATUS
This Agreement is intended to constitute an unfunded plan for
incentive compensation. Except with respect to the Retirement Compensation,
nothing contained herein shall give any Participant any rights that are greater
than those of a general unsecured creditor of the Company. In its sole
discretion, the Stock Option and Compensation Committee of the Board may
authorize the creation of trusts, acquisition of life insurance policies or
other arrangements to meet the obligations created under this Agreement.
12. SECTION 409A.
12.1 Notwithstanding any provision of this Agreement to the contrary,
if Executive is a "specified employee" as defined in Section 409A of the Code he
shall not be entitled to any payments upon a termination of his employment until
the earlier of (i) the date which is six months after Executive's termination of
employment for any reason other than death or (ii) Executive's date of death.
The provisions of this Section 12.1 shall only apply if required to comply with
Section 409A of the Code.
12.2 If any provision of this Agreement contravenes any regulations or
Treasury guidance promulgated under Section 409A of the Code, or if any tax is
imposed under such Section 409A on any payment to be received by Executive
hereunder, this Agreement or any provision hereof may be reformed by Executive,
subject to the consent of the Company which consent shall not be unreasonably
withheld, to maintain, to the maximum extent practicable, the original intent of
the applicable provision without violating the provisions of Section 409A of the
Code. Executive agrees in good faith to consider any such reformation proposed
by the Company.
17
12.3 The provisions of Section 7.8 of this Agreement, mutatis mutandis,
shall apply to any imposition of taxes on Executive under Section 409A of the
Code so that Executive shall be fully grossed up for the amount of, and shall
not be adversely affected by, such taxes.
13. WAIVER.
Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right that Executive or the Company may have hereunder
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. Similarly, the waiver by any party hereto
of a breach of any provision of this Agreement by the other party will not
operate or be construed as a waiver of any other or subsequent breach by such
other party.
14. SEVERABILITY.
If any part of this Agreement is found to be invalid or
unenforceable, that part will be deemed amended to achieve as nearly as possible
the same economic effect as the original provision, and the remainder of this
Agreement will remain in full force and effect.
15. NOTICES.
Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing, addressed as provided
below (or to such other person or address as to which either party may notify
the other in accordance with this Section 15) and actually delivered at said
address:
If to Executive, to him at:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company, to it at:
BE Aerospace, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
16. SURVIVAL.
The provisions of Sections 5.3 and 6 through 17 inclusive
hereof shall each survive any termination or expiration of this Agreement.
18
17. MISCELLANEOUS.
This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof, and supersedes all prior and
contemporaneous understandings and agreements, whether oral or written,
regarding such subject matter. This Agreement may be amended or modified only by
a written instrument signed by Executive and by a duly authorized representative
of the Company. This Agreement may be executed in any number of counterparts,
which together shall constitute one and the same instrument. Except as otherwise
provided in this Agreement, this Agreement shall be governed by and construed in
accordance with the laws (other than the conflicts of law rules) of the State of
Florida.
19
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands,
as of the date first above written.
EXECUTIVE BE AEROSPACE, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------- -----------------------
President and Senior Vice President of
Chief Executive Officer Administration and Chief
Financial Officer
20