Employment Agreement - Armor Holdings Inc. and Stephen E. Croskrey
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 1, 2002,
is entered into between ARMOR HOLDINGS, INC., a Delaware corporation (the
"Company) and STEPHEN E. CROSKREY (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Employee and to be assured of
his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on such terms
and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Company and the Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee as the President and
Chief Executive Officer of its Armor Holdings Products Division, and the
Employee accepts such employment, upon the terms and subject to the conditions
set forth in this Agreement.
2. TERM. The term of this Agreement shall commence on the date hereof and
terminate on December 31, 2004 (the "Term"), subject to earlier termination
pursuant to the provisions of Section 10 hereof.
3. DUTIES. During the Term of this Agreement, the Employee shall serve as
the President and Chief Executive Officer of the Armor Holdings Products
Division and shall perform all duties commensurate with his position and as may
be assigned to him by the Chief Executive Officer of the Company. The Employee
shall devote his full business time and energies to the business and affairs of
the Company and shall use his best efforts, skills and abilities to promote the
interests of the Company and to diligently and competently perform the duties of
his position.
4. COMPENSATION AND BENEFITS. (a) During the term of this Agreement, the
Company shall pay to the Employee, and the Employee shall accept from the
Company, as compensation for the performance of services under this Agreement
and the Employee's observance and performance of all of the provisions hereof, a
salary of $300,000 per year (the "Base Compensation"). The Employee's salary
shall be payable in accordance with the normal payroll practices of the Company
and shall be subject to withholding for applicable taxes and other amounts. Upon
the occurrence of a "change in control" (as hereinafter defined), the
<PAGE>
Employee shall have the right to terminate this Agreement. Upon the termination
of this Agreement by the Employee due to the occurrence of a "change in
control", or upon the termination of this Agreement by the Company pursuant to
Section 10(d) hereof, the Employee shall be entitled to receive, in one lump
sum, within 5 business days of the occurrence of such "change in control" or
termination by the Company pursuant to Section 10(d), as the case may be, the
greater of (i) his Base Compensation to the end of the Term, or (ii) twice the
Employee's annual Base Compensation (any such payment is referred to as the
"Termination Payment"), and such Termination Payment shall be subject to
withholding for applicable taxes and other amounts. Notwithstanding anything to
the contrary contained herein, in the event that the Employee has breached his
obligations under Sections 7 or 8 hereof, then the Employee shall immediately
repay to the Company the full amount of the gross Termination Payment before
taking into account any withholdings for applicable taxes and other amounts.
(b) During the term of this Agreement, the Employee shall be entitled
to participate in or benefit from, in accordance with the eligibility and other
provisions thereof, the Company's medical insurance and other fringe benefit
plans or policies as the Company may make available to, or have in effect for,
its personnel with commensurate duties from time to time. The Company retains
the right to terminate or alter any such plans or policies from time to time.
The Employee shall also be entitled to four weeks paid vacation each year, sick
leave and other similar benefits in accordance with policies of the Company from
time to time in effect for personnel with commensurate duties.
(c) The Employee shall also be entitled to participate, at the sole and
absolute discretion of the Compensation Committee of the Board of Directors of
the Company, in the Company's incentive stock option plan. Such participation
shall be based upon, among other things, the Employee's performance and the
Company's performance. In addition, the Employee may be entitled, during the
term of this Agreement, to receive such additional options, at such exercise
prices and other terms, and/or to participate in such other bonus plans, whether
during the term of this Agreement or upon termination pursuant to Section 10
hereof, as the Compensation Committee of the Board of Directors of the Company
may, in its sole and absolute discretion, determine. In addition to the
foregoing, the Employee shall be entitled to receive (i) options to purchase up
to 150,000 shares of the Company's Common Stock, at an exercise price of $23.93
per share, of which 50,000 shares shall vest on each of December 31, 2002,
December 31, 2003 and December 31, 2004, and (ii) options to purchase up to
50,000 shares of the Company's Common Stock, at an exercise price of $23.93 per
share, all of which shall vest on December 31, 2004, all such awards to be upon
the terms and conditions as more fully set forth in a separate agreement between
the Company and the Employee. Upon termination of this Agreement pursuant to
Section 10(a) or Section 10(b) hereof, the options herein described shall vest
ratably as herein described, or the vesting thereof may be accelerated as the
Board of Directors may, in its sole discretion, determine.
5. REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this Agreement,
upon submission of proper invoices, receipts or other supporting documentation
satisfactory to the Company and in specific accordance with such guidelines as
may be established from time to time by the Company's Board of Directors, the
Employee shall be reimbursed by the Company for all reasonable business expenses
actually and necessarily
2
<PAGE>
incurred by the Employee on behalf of the Company in connection with the
performance of services under this Agreement.
6. REPRESENTATION OF EMPLOYEE; RESTRICTIONS ON SALE. (a) The Employee
represents and warrants that he is not party to, or bound by, any agreement or
commitment, or subject to any restriction, including but not limited to
agreements related to previous employment containing confidentiality or
noncompete covenants, which in the future may have a possibility of adversely
affecting the business of the Company or the performance by the Employee of his
duties under this Agreement.
(b) The Employee further covenants and agrees that except as herein
provided, he will not sell, transfer, assign, pledge or otherwise dispose of any
shares of capital stock or securities convertible into capital stock of the
Company granted pursuant to this Agreement until December 31, 2004 and such
restrictions on dispositions shall apply upon a termination of this Agreement
for cause as described in Section 10(c) hereof; provided, however, that the
restrictions with respect to such dispositions as set forth in this sentence
shall not apply to the Employee in the event of a "change in control" of the
Company or in the event of a termination of this Agreement pursuant to Sections
10(a), 10(b) or 10(d) hereof. With respect to any shares of capital stock or
securities convertible into capital stock of the Company that are owned by
Employee other than those granted to Employee pursuant to this Agreement, the
Employee shall give to the Company's Chairman of the Board five business days
advance written notice of any intent to sell such securities. In addition, upon
a termination of this Agreement for cause as set forth in Section 10(c) hereof,
all such shares of capital stock or securities convertible into capital stock of
the Company granted pursuant to this Agreement shall be subject to the
restrictions on disposition set forth in the first sentence of this Section 6(b)
for a period of 90 days from and after any such termination and thereafter the
Employee will not be subject to the restrictions with respect to the disposition
of such shares as set forth in this Section 6(b); provided that such restriction
upon such termination for cause shall only be applicable to the Employee if the
period for the exercise of any option owned by him is extended from the current
period of 90 days following such termination to a period of 120 days following
such termination. Such restrictions on disposition may also be waived from time
to time in the sole and absolute discretion of the Company's Board of Directors.
Notwithstanding the foregoing, Employee shall, to the extent permitted under
applicable law, rule or regulation, be permitted to transfer shares of capital
stock or securities convertible into capital stock of the Company to his
immediate family members or trusts for the benefit of his immediate family
members for estate planning purposes; provided that any such transferees shall
be subject to the restrictions applicable to Employee set forth herein. In the
event that Warren B. Kanders is not Chairman of the Company's Board of Directors
and the Employee determines to terminate this Agreement as a result thereof,
then the restrictions contained in this Section 6(b) shall be applicable to
Employee for a period of six months from the date of termination of this
Agreement by Employee, and during such period, Employee will use its best
efforts to assist in an orderly transition of management of the Company. The
Company further agrees that Employee shall be entitled to receive any shares of
Common Stock or options that vest during such six-month period.
3
<PAGE>
(c) For purposes hereof, a "change in control" of the Company shall be
deemed to have occurred in the event that: (i) individuals who, as of the date
hereof, constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to the
date hereof 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 Board of Directors shall be considered as though such
individual was a member of the Board of Directors of the Company as of the date
hereof, or (ii) the Company shall have been sold by either (A) a sale of all or
substantially all its assets, or (B) a merger or consolidation, other than any
merger or consolidation pursuant to which the Company acquires another entity,
or (C) a tender offer, whether solicited or unsolicited.
(d) In addition, in the event that this Agreement is terminated by the
Company without cause pursuant to Section 10(d) hereof prior to the expiration
of the Term or upon the occurrence of a change in control, all options for the
purchase of Common Stock of the Company granted to the Employee pursuant to the
terms of this Agreement shall vest and become immediately exercisable and
saleable, and the restrictions set forth in Section 6(b) hereof shall not be
applicable, on the date of such termination or the effective date of such change
in control, as the case may be. In the event that this Agreement is terminated
by the Company with cause pursuant to Section 10(c) hereof prior to the
expiration of the Term, all unvested options granted to the Employee pursuant to
the terms of this Agreement shall terminate. In the event that this Agreement is
terminated by the Employee, other than due to a change in control or as
described in the penultimate sentence of Section 6(b), (i) all vested options
for the purchase of Common Stock of the Company granted to the Employee pursuant
to the terms of this Agreement shall remain subject to the lock-up restrictions
contained in Section 6(b) of this Agreement, and the unvested portion of such
options shall terminate, and (ii) all of the Employee's other shares of Common
Stock of the Company or vested options for the purchase of Common Stock other
than the options described in clause (i) of this sentence shall not be subject
to the lock-up restrictions of Section 6(b) of this Agreement.
7. CONFIDENTIALITY. For purposes of this Section 7, all references to the
Company shall be deemed to include all of the Company's affiliates and
subsidiaries.
(a) Confidential Information. The Employee acknowledges that as a
result of his employment with the Company, the Employee has and will continue to
have knowledge of, and access to, proprietary and confidential information of
the Company, including, without limitation, inventions, trade secrets, technical
information, know-how, plans, specifications, methods of operations, financial
and marketing information and the identity of customers and suppliers
(collectively, the "Confidential Information"), and that such information, even
though it may be contributed, developed or acquired by the Employee, constitutes
valuable, special and unique assets of the Company developed at great expense
which are the exclusive property of the Company. Accordingly, the Employee shall
not, at any time, either during or subsequent to the term of this Agreement,
use, reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, any of the Confidential Information without the
prior written consent of the Company, except to responsible officers and
employees of the Company and other responsible persons who are in a contractual
or fiduciary relationship
4
<PAGE>
with the Company and who have a need for such information for purposes in the
best interests of the Company, and except for such information which is or
becomes of general public knowledge from authorized sources other than the
Employee. The Employee acknowledges that the Company would not enter into this
Agreement without the assurance that all such Confidential Information will be
used for the exclusive benefit of the Company.
(b) Return of Confidential Information. Upon the termination of
Employee's employment with the Company, the Employee shall promptly deliver to
the Company all drawings, manuals, letters, notes, notebooks, reports and copies
thereof and all other materials relating to the Company's business, including
without limitation any materials incorporating Confidential Information, which
are in the Employee's possession or control.
(c) Inventions, etc. The Employee will promptly disclose to the Company
all designs, processes, inventions, improvements, discoveries and other
information related to the business of the Company (collectively "developments")
conceived, developed or acquired by him alone or with others during the term of
this Employment Agreement, whether or not conceived during regular working
hours, through the use of Company time, material or facilities or otherwise. All
such developments shall be the sole and exclusive property of the Company, and
upon request the Employee shall deliver to the Company all drawings, models and
other data and records relating to such developments. In the event any such
developments shall be deemed by the Company to be patentable or copyrightable,
the Employee shall, at the expense of the Company, assist the Company in
obtaining any patents or copyrights thereon and execute all documents and do all
other things necessary or proper to obtain letters patent and copyrights and to
vest the Company with full title thereto.
8. NON-COMPETITION. For purposes of this Section 8, all references to the
Company shall be deemed to include all of the Company's affiliates and
subsidiaries. The Employee will not utilize his special knowledge of the
business of the Company and his relationships with customers, suppliers of the
Company and others to compete with the Company. During the Term of this
Agreement and for a period of two (2) years after the expiration or termination
of this Agreement, the Employee shall not engage, directly or indirectly, or
have an interest, directly or indirectly, anywhere in the United States of
America or any other geographic area where the Company does business or in which
its products or services are marketed, alone or in association with others, as
principal, officer, agent, employee, director, partner or stockholder (except
with respect to his employment by the Company), or through the investment of
capital, lending of money or property, rendering of services or otherwise, in
any business competitive with or substantially similar to that engaged in by the
Company during the Term of this Agreement, or any line of business or
acquisition that the Company either (i) contemplates entering into, whether or
not actually entered into, or (ii) has obtained due diligence or other
information on during Employee's employment with the Company (it being
understood hereby, that the ownership by the Employee of five percent (5%) or
less of the stock of any company listed on a national securities exchange shall
not be deemed a violation of this Section 8). During the same period, the
Employee shall not, and shall not permit any of his employees, agents or others
under his control to, directly or indirectly, on behalf of himself or any other
person, (i) call upon, accept business from, or solicit the business of any
person who is, or who had been at any time during the preceding two (2) years, a
customer of the Company or
5
<PAGE>
any successor to the business of the Company, or otherwise divert or attempt to
divert any business from the Company or any such successor, or (ii) directly or
indirectly recruit or otherwise solicit or induce any person who is an employee
of, or otherwise engaged by, the Company or any successor to the business of the
Company to terminate his or her employment or other relationship with the
Company or such successor, or hire any person who has left the employ of the
Company or any such successor during the preceding two (2) years. The Employee
shall not at any time, directly or indirectly, use or purport to authorize any
person to use any name, mark, logo, trade dress or other identifying words or
images which are the same as or similar to those used at any time by the Company
in connection with any product or service, whether or not such use would be in a
business competitive with that of the Company. Any breach or violation by the
Employee of the provisions of this Section 8 shall toll the running of any time
periods set forth in this Section 8 for the duration of any such breach or
violation.
9. REMEDIES. The restrictions set forth in Sections 7 and 8 are considered
by the parties to be fair and reasonable. The Employee acknowledges that the
restrictions contained in Section 7 and 8 will not prevent him from earning a
livelihood. The Employee further acknowledges that the Company would be
irreparably harmed and that monetary damages would not provide an adequate
remedy in the event of a breach of the provisions of Sections 7 or 8.
Accordingly, the Employee agrees that, in addition to any other remedies
available to the Company, the Company (i) shall be entitled to specific
performance, injunction, and other equitable relief to secure the enforcement of
such provisions, (ii) shall not be required to post bond in connection with
seeking any such equitable remedies, and (iii) shall be entitled to receive
reimbursement from the Employee for all attorneys' fees and expenses incurred by
the Company in enforcing such provisions. If any provisions of Sections 7, 8, or
9 relating to the time period, scope of activities or geographic area of
restrictions is declared by a court of competent jurisdiction to exceed the
maximum permissible time period, scope of activities or geographic area, the
maximum time period, scope of activities or geographic area, as the case may be,
shall be reduced to the maximum which such court deems enforceable. If any
provisions of Sections 7, 8, or 9 other than those described in the preceding
sentence are adjudicated to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which adjudication is made) in such manner as to render them
enforceable and to effectuate as nearly as possible the original intentions and
agreement of the parties.
10. TERMINATION. This Agreement may be terminated prior to the expiration
of the Term set forth in Section 2 upon the occurrence of any of the events set
forth in, and subject to the terms of, this Section 10.
(a) Death. This Agreement will terminate immediately and automatically
upon the death of the Employee.
(b) Disability. This Agreement may be terminated at the Company's
option, immediately upon notice to the Employee, if the Employee shall suffer a
permanent disability. For the purposes of this Agreement, the term "permanent
disability" shall mean the Employee's inability to perform his duties under this
Agreement for a period of ninety (90) consecutive days or for an aggregate of
one hundred twenty (120) days, whether or not
6
<PAGE>
consecutive, in any twelve (12) month period, due to illness, accident or any
other physical or mental incapacity, as reasonably determined by the Board of
Directors of the Company. In the event that a dispute arises with respect to the
disability of the Employee, the parties shall each select a physician licensed
to practice in the State of Florida to make such a determination. If the two (2)
physicians selected cannot agree on a determination, they will mutually select a
third physician and the decision of the majority of the three (3) physicians
will be binding.
(c) Cause. This Agreement may be terminated at the Company's option,
immediately upon notice to the Employee, upon: (i) breach by the Employee of any
material provision of this Agreement and the expiration of a 10-day cure period
for such breach after written notice thereof has been given to the Employee
(which cure period shall not be applicable to clauses (ii) through (v) of this
Section 10(c)); (ii) gross negligence or willful misconduct of the Employee in
connection with the performance of his duties under this Agreement; (iii)
Employee's failure to perform any reasonable directive of the Board of Directors
of the Company; (iv) fraud, criminal conduct, dishonesty or embezzlement by the
Employee; or (v) Employee's misappropriation for personal use of any assets
(having in excess of nominal value) or business opportunities of the Company.
(d) Without Cause. This Agreement may be terminated at any time by the
Company without cause immediately upon giving written notice to the Employee of
such termination. In such event, the Employee shall be entitled to receive his
Base Compensation for a period of six (6) months from the date of such
termination in accordance with the provisions of Section 4(a) hereof.
11. MISCELLANEOUS.
(a) Survival. The provisions of Sections 7, 8, and 9 shall survive the
termination of this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and merges and supersedes any prior or
contemporaneous agreements between the parties pertaining to the subject matter
hereof.
(c) Modification. This Agreement may not be modified or terminated
orally, and no modification or waiver of any of the provisions hereof shall be
binding unless in writing and signed by the party against whom the same is
sought to be enforced.
(d) Waiver. Failure of a party to enforce one or more of the provisions
of this Agreement or to require at any time performance of any of the
obligations hereof shall not be construed to be a waiver of such provisions by
such party nor to in any way affect the validity of this Agreement or such
party's right thereafter to enforce any provision of this Agreement, nor to
preclude such party from taking any other action at any time which it would
legally be entitled to take.
(e) Successors and Assigns. Neither party shall have the right to
assign this Agreement, or any rights or obligations hereunder, without the
consent of the other
7
<PAGE>
party; provided, however, that upon the sale of all or
substantially all of the assets, business and goodwill of the Company to another
company, or upon the merger or consolidation of the Company with another
company, this Agreement shall inure to the benefit of, and be binding upon, both
Employee and the company purchasing such assets, business and goodwill, or
surviving such merger or consolidation, as the case may be, in the same manner
and to the same extent as though such other company were the Company; and
provided, further, that the Company shall have the right to assign this
Agreement to any affiliate or subsidiary of the Company. Subject to the
foregoing, this Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
(f) Communications. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given at the time personally delivered or when mailed in any United
States post office enclosed in a registered or certified postage prepaid
envelope and addressed to the addresses set forth below, or to such other
address as any party may specify by notice to the other party; provided,
however, that any notice of change of address shall be effective only upon
receipt.
TO THE COMPANY: Armor Holdings, Inc.
1400 Marsh Landing Parkway
Jacksonville, Florida 32250
Attention: Warren B. Kanders
WITH A COPY TO: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
TO THE EMPLOYEE: Stephen E. Croskrey
10010 Belle Rive Blvd. East, #909
Jacksonville, Florida 32256
(g) Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, such invalidity
or unenforceability shall not affect the validity and enforceability of the
other provisions of this Agreement and the provision held to be invalid or
unenforceable shall be enforced as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
(h) Jurisdiction; Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts located in New York County, New York. Any
breach of any provisions of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York, and the parties irrevocably
and expressly agree to submit to the jurisdiction of the courts located in New
York County, New York for the purpose of resolving any disputes among them
relating to this Agreement or the transactions contemplated by this Agreement
and waive any objections on the grounds of forum non conveniens or otherwise.
The parties hereto agree to service of
8
<PAGE>
process by certified or registered United States mail, postage prepaid,
addressed to the party in question.
(i) Governing Law. This Agreement is made and executed and shall be
governed by the laws of the State of New York, without regard to the conflicts
of law principles thereof.
(j) No Third-Party Beneficiaries. Each of the provisions of this
Agreement is for the sole and exclusive benefit of the parties hereto and shall
not be deemed for the benefit of any other person or entity.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date set forth above.
ARMOR HOLDINGS, INC.
By:
--------------------------------------
Jonathan M. Spiller
President and Chief Executive Officer
-----------------------------------------
Stephen E. Croskrey
9