Employment Agreement - American Body Armor & Equipment Inc. and J. Michael Elliott
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 18, 1996,
between AMERICAN BODY ARMOR & EQUIPMENT, INC., a Florida corporation (the
"Company"); and J. MICHAEL ELLIOTT (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; and
WHEREAS, the parties desire to terminate the Employment Agreement,
dated as of January 1, 1994, between the Company and the Employee, as amended
(the "1994 Employment Agreement"), and to have the terms and provisions of
this Agreement govern their respective rights and obligations.
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. Termination of 1994 Employment Agreement; Employment. The 1994
Employment Agreement is hereby terminated in all respects and shall be of no
further force or effect, and from and after the date hereof, the terms and
provisions of this Agreement shall govern the respective rights and obligations
of the parties hereto with respect to the subject matter hereof. The Company
hereby employs the Employee as a Vice President of the Company, 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 be one (1) year, commencing
on the date hereof and ending on January 17, 1997 (the "Initial Term"),
subject to earlier termination pursuant to the provisions of Section 10
herein. At the Company's option, the employment of the Employee shall
automatically continue hereunder following the Initial Term for a two (2)
year period (the "First Renewal Term") on the same terms and conditions as
herein set forth; provided, that if the Company elects not to renew this
Agreement at the expiration of the Initial Term, the Company shall give
the Employee written notice at least thirty (30) days prior to the
expiration of the Initial Term of its election not to renew this
Agreement. The employment of the Employee shall automatically continue
hereunder following the First Renewal Term for successive one (1) year
periods (the "Further Renewal Terms") (on terms to be mutually agreed
upon by the parties), unless the Company or the Employee gives notice to
the other at least sixty (60) days prior to the end of the First Renewal
Term of its or his election to terminate this Agreement at the end of
the First Renewal Term. Subsequent to the First Renewal Term, the
employment of the Employee hereunder may be terminated at the end of any
Further Renewal Term by delivery by either the Employee or the Company
of a written notice to the other party at least sixty (60) days prior to
the end of any Further Renewal Term.
3. Duties. During the term of this Agreement, the Employee shall
serve as the a Vice President of the Company and shall perform all duties
commensurate with his position and as may be assigned to him by an 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 $100,000 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.
(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 be entitled to receive non-qualified options
to purchase 8,500 shares of the Company's common stock and incentive stock
options to purchase 11,500 shares of the Company's common stock, in each case
at an exercise price of $.97 per share of common stock. Such options shall be
exercisable for a period of eight (8) years from the date of grant, and all
of such options shall vest on January 18, 1999; provided, however, that in
the event that the Company elects not to renew this Agreement upon expiration
of the Initial Term, or in the event that this Agreement is terminated by the
Company without cause prior to the expiration of the Initial Term or the
First Renewal Term, or a "change in control" (as hereinafter defined) occurs,
then a pro-rata number of such options shall vest on the date of such
termination, non-renewal or change in control, as the case may be, based
upon the number of months elapsed under this Agreement in relation to the
total number of months during the Initial Term and the First Renewal Term of
this Agreement, and the balance of such options shall no longer be exercisable
by the Employee, and shall terminate; and, provided, further, that upon a
breach by the Employee of the provisions of Sections 7 or 8 hereof, the
Employee shall have no right to exercise any such options granted hereunder
or otherwise held by the Employee. 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.
(d) The Company shall reimburse the Employee for gasoline, routine
maintenance and certain other reasonable automobile expenses (to be determined
by the Company) in connection with the Employee's business use of his personal
automobile. In addition, the Company shall reimburse the Employee for the
Employee's monthly dock rental at Pablo Creek Marina.
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 incurred by the Employee on behalf of
the Company in connection with the performance of services under this Agreement.
6. Representation of Employee. 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. 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 until (i)
January 18, 1997, in the case that the Company chooses not to renew this
Agreement for the First Renewal Term, or (ii) January 18, 1999 if the
Employee chooses not to renew this Agreement, or if this Agreement is
renewed for the First Renewal Term; 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. For purposes hereof, a "change in control" of
the Company shall be deemed to have occurred in the event that: (i) (A)
Warren B. Kanders ("Kanders") is no longer Chairman of the Board of
Directors of the Company, or (B) Kanders and entities controlled by
Kanders do not, through the ownership of voting securities or otherwise,
control the election of the Board of Directors of the Company, and (ii)
Kanders and entities controlled by Kanders own in the aggregate less
than 25% of the issued and outstanding shares of common stock of the Company.
7. Confidentiality. For purposes of this Section 7, all references
to the Company shall be deemed to include 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,
research and development plans and results, software, data bases,
technology, inventions, trade secrets, technical information, know-how,
plans, specifications, methods of operations, product information,
product availability, pricing information, financial, business and
marketing information and plans 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 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 and proprietary
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.
8. Noncompetition. For purposes of this Section 8, all references to
the Company shall be deemed to include 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 six (6) months (in the case of expiration or
termination after the Initial Term), or one (1) year (in the case of expiration
or termination after the First Renewal Term or any Further Renewal Term) 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 are marketed, alone or in association with
others, as principal, officer, agent, employee, director, partner, stockholder
or lender (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, including without limitation, the development,
manufacture and distribution of bullet and projectile resistant garments,
including bullet resistant and sharp instrument penetration resistant vests,
bullet resistant blankets, bomb disposal suits and helmets, bomb protection and
disposal equipment and load bearing vests, and other ballistic protection and
security equipment, including explosive ordnance device (EOD) handling and
detection equipment, EOD suppression and disposal equipment, helmets, face
masks, shields, hard armor ballistic plates, customized armor for vehicles and
other custom armored products, and related products, or any other business
engaged in by the Company at the time in question for which the Employee is
directly or indirectly responsible (it being understood hereby, that the
ownership by the Employee of 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);
provided, however, that in the event the Employee is terminated without cause,
then the provisions of this Section 8 will continue to be applicable to the
Employee, except that, in the event that Base Compensation is not paid to the
Employee pursuant to Section 10(d) hereof, then the restrictions on sale of the
Company's securities contained in Section 6 hereof shall not be applicable to
the extent necessary to allow the Employee to sell a sufficient number of shares
of common stock of the Company as will result in gross proceeds to the Employee
equal to his Base Compensation during such six (6) month or one (1) year period,
as the case may be, as described in this Section 8, less any salary,
commissions, wages or other income received by the Employee from any other
source during such period. In the event that this Agreement is not renewed by
the Company after the Initial Term, then the Company shall, upon each payroll
period of the Company, for a period of six (6) months or, if sooner, the
date on which gross proceeds of $50,000 are realized by the Employee from
a sale of his shares of common stock of the Company as hereinafter described,
loan to the Employee an amount equal to his Base Compensation for such
period, bearing interest at a rate per annum equal to the base rate as
established by Citibank, N.A., and the Employee shall repay such loan
from the proceeds of the sale of his shares of common stock of the
Company. The restrictions on sale of the Company's securities contained
in Section 6 hereof shall not be applicable to the extent necessary to
permit the sale hereinabove described. During the same six (6) month or
one (1) year non-competition period, as the case may be, 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 years, a customer of the Company or 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 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 shall be entitled to injunctive and other
equitable relief to secure the enforcement of these provisions, and shall be
entitled to receive reimbursement from the Employee for all attorneys' fees and
expenses incurred by the Company in enforcing these 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 such 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. In the event that this
Agreement is terminated upon the death of the Employee, then a pro-rata
number of options for the purchase of common stock of the Company
granted to the Employee, based upon the number of months elapsed under
this Agreement in relation to the total number of months during the
Initial Term and the First Renewal Term of this Agreement, shall accrue
to the estate of the Employee (the "Accrued Death Options"), and such
Accrued Death Options shall vest on January 18, 1999, and the balance of
any options shall no longer be exercisable by the Employee or his
estate, and shall terminate.
(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 90 consecutive days or for an
aggregate of 120 days, whether or not consecutive, in any twelve month period,
due to illness, accident or any other physical or mental incapacity, as solely
determined by the Board of Directors of the Company. In the event that this
Agreement is terminated upon the permanent disability of the Employee, then
a pro-rata number of options for the purchase of common stock of the Company
granted to the Employee, based upon the number of months elapsed under this
Agreement in relation to the total number of months during the Initial Term and
the First Renewal Term of this Agreement, shall accrue to the Employee (the
"Accrued Disability Options"), and such Accrued Disability Options shall vest on
January 18, 1999, and the balance of any options shall no longer be exercisable
by the Employee, and shall terminate.
(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; (ii) gross negligence or willful
misconduct of the Employee in connection with the performance of his duties
under this Agreement, or Employee's willful refusal to perform any of his
duties or responsibilities required pursuant to this Agreement; (iii) fraud,
criminal conduct, dishonesty or embezzlement by the Employee; or (iv)
Employee's misappropriation for personal use of assets or business
opportunities of the Company.
(d) Without Cause. This Agreement may be terminated at any time by
the Company without cause upon giving the Employee three (3) days prior
written notice of such termination. In such event, the Employee shall be
entitled to receive his Base Compensation in accordance with the provisions
of Section 4(a) hereof throughout the balance of the term of this Agreement,
reduced, dollar for dollar, with any salary, commissions, wages or other
income received by him from any other source during such period.
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, termination or attempted 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; provided, however, that
Employee's compensation may be increased at any time by the Company without in
any way affecting any of the other terms and conditions of this Agreement,
which in all other respects shall remain in full force and effect.
(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 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
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: American Body Armor &
Equipment, Inc.
85 Nassau Place
Yulee, Florida 32097
Attn.: Jonathan M. Spiller
With a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn.: Robert L. Lawrence, Esq.
To the Employee: J. Michael Elliott
4025 Shoal Creek Lane E.
Jacksonville, FL 32225
(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 of New York County, New York. Any breach
of any provision 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 of 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.
(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.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date set forth above.
AMERICAN BODY ARMOR & EQUIPMENT, INC.
By:/s/ Jonathan M. Spiller
Name: Jonathan M. Spiller
Title: President and
Chief Executive Officer
/s/ J. Michael Elliott
J. Michael Elliott