Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made as of August 1, 2005 by and between BE Aerospace, Inc., a Delaware
corporation (the "Company"), and Thomas P. McCaffrey (the "Executive").
RECITALS
WHEREAS, Executive and the Company entered into that certain Employment
Agreement dated as of September 14, 2001 and thereafter amended said Employment
Agreement by five amendments (said Employment Agreement and amendments
hereinafter collectively the "Employment Agreement"); and
WHEREAS, Executive, having provided services to the Company since May
1, 1993, 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hereby restated, superseded and replaced in its entirety by this Agreement.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. Term. Unless otherwise terminated pursuant to the provisions of
Section 5 hereof, Executive shall provide to the Company services hereunder
during the term of his employment under this Agreement, which 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."
3. Position and Duties. Executive shall serve the Company in the
capacity of Senior Vice President of Administration and Chief Financial Officer,
or in such other position as the Chief Executive Officer of the Company, his
designee or the Board of Directors of the Company may designate from time to
time, and shall be accountable to, and shall have such other powers, duties and
responsibilities, consistent with this capacity, as the Chief Executive Officer
of the Company, his designee or the Board of Directors of the Company shall
determine. Executive shall perform and discharge, faithfully, diligently and to
the best of his ability, such duties and responsibilities. Executive shall
devote substantially all of his working time and efforts to the business and
affairs of the Company.
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4. Compensation.
(a) Salary. Effective as of January 1, 2005, Executive shall receive an
annual salary (the "Salary") payable at the rate of $415,000 per annum. Such
rate shall be subject to adjustment from time to time by the Board of Directors
as hereinafter provided; provided, however, that it shall at no time be adjusted
below the Salary for the preceding year. On January 1st of each year during the
Employment Term, the Salary 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 twelve month period (January through December) immediately
preceding such January 1. If the Index is no longer issued, the Board of
Directors and Executive shall agree upon a substitute adjustment index issued by
such agency that 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, less all required deductions.
(b) Incentive Bonus. During the Employment Term, Executive may receive
an incentive bonus for each fiscal year or portion thereof during which
Executive has been employed hereunder as determined by the Board of Directors of
the Company at the end of the applicable fiscal year.
(c) Expenses. During the Employment Term, Executive shall be entitled
to receive prompt reimbursement for all reasonable business expenses incurred by
him on behalf of the Company in accordance with the Company policy.
(d) 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
accordance with the Company policy, Executive shall also be entitled to paid
vacation in any fiscal year during the Employment Term as well as all paid
holidays given by the Company to its employees. In addition, for a period of
five (5) years commencing on the Expiration Date, Executive and/or his spouse,
should she survive him, shall be entitled to participate in all medical, dental,
and health benefit plans available to the Company's executive officers on
similar terms and conditions as any actively employed executive.
(e) Automobile. During the Employment Term, Executive shall be
furnished with an automobile either owned or leased by the Company or an
automobile allowance of $900 per month, at the discretion of the Company.
(f) Equity Compensation. During the Employment Term Executive shall be
entitled to participate in any applicable equity compensation program of the
Company in effect from time to time.
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5. Termination and Compensation Thereon.
(a) Termination Date. The term "Termination Date" shall mean the date
on which Executive's employment with the Company is terminated for any reason.
(b) Death.
(i) 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) the Retirement Compensation as provided in Section 5(g)
below, and (B) a lump sum payment amount equal to the Salary that would have
been due to Executive had this Agreement been in effect from the date of his
death until the Expiration Date.
(ii) 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
$1 million.
(iii) 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 4(d) hereof.
(c) Incapacity. If, in the reasonable judgment of the Board of
Directors of the Company, 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 5(c). If the Company desires to so
terminate Executive's employment with the Company, the Company shall:
(i) give prompt notice to Executive of any such termination;
(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, the highest Salary paid to Executive
prior to the Termination Date, (B) continue to provide Executive and/or
Executive's spouse with the medical, dental, disability and life insurance
coverage, in the same amounts and upon the same terms and conditions provided
pursuant to Section 4(d) hereof immediately prior to the Termination Date, and
(C) continue to provide Executive with the automobile allowance provided
pursuant to Section 4(e) hereof immediately prior to the Termination Date; and
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(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 has been designated, to Executive's estate the
Retirement Compensation as provided in Section 5(g) below.
(d) Termination by the Company or Executive.
(i) The Company may terminate Executive's employment hereunder with
"Cause." For purposes of this Agreement, "Cause" shall mean (i) Executive's
material failure, refusal or neglect to perform and discharge his duties and
responsibilities hereunder, any other material breach of the terms hereof, or
breach of any fiduciary duties he may have because of any position he holds with
the Company or any subsidiary or affiliate thereof; or (ii) a felony conviction
or a conviction for any crime involving Executive's personal dishonesty or moral
turpitude. If Executive's employment is terminated by the Company for Cause
pursuant to this Section 5(d), the Company shall have no further obligations to
Executive hereunder after the Termination Date, except for the payment of any
unpaid Salary and benefits accrued through the Termination Date.
(ii) The Company may terminate Executive's employment hereunder
without Cause and the Executive may terminate Executive's employment hereunder
with "Sufficient Reason" (as defined below). If Executive's employment is
terminated by the Company without Cause or by the Executive with Sufficient
Reason prior to or more than three years after the occurrence of a Change of
Control, then on the Termination Date, Executive shall receive payment of (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, (C) a lump sum equal to his Salary from the Termination
Date through the Expiration Date, (D) the Retirement Compensation pursuant to
Section 5(g) hereof, determined as of the Expiration Date, (E) the other
retirement benefits pursuant to Section 5(g) hereof, and (F) the Severance Pay
pursuant to Section 5(f) hereof. In addition, (x) 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 exercisable 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 (y) the Company shall (I) provide Executive and or his spouse, should she
survive him, with continued life, disability, medical and dental insurance
coverage in the same amounts and upon the same terms and conditions as in effect
on the Termination Date, or if greater, as those provided immediately prior to
the Change of Control Date for a period of eight (8) years from the Termination
Date; and (II) until the Expiration Date continue to provide Executive with the
automobile allowance provided pursuant to Section 4(e) 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
5(e)(A)(2). For purposes of this provision, "Sufficient Reason" means: (v) a
decrease in Executive's Salary or a failure by the Company to pay material
compensation due and payable to Executive in connection with his employment; (w)
a change in Executive's responsibilities, positions, duties, status, title or
reporting relationships; (x) Executive ceasing to be the Senior Vice President
of Administration and Chief Financial Officer (or such other positions Executive
holds thirty (30) days prior to the Termination Date) of a publicly traded
company pursuant to this Agreement; (y) the Company's requiring Executive to be
based at any office or location that is anywhere other than Executive's
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principal place of employment thirty (30) days prior to the Termination Date; or
(z) a material breach by the Company of any term or provisions of this
Agreement; in each case if Executive has given notice thereof to the Company and
the Company has not cured the Sufficient Reason within 30 days after receiving
such notice.
(iii) The Executive may terminate his employment hereunder without
Sufficient Reason. If Executive's employment is terminated by the Executive
without Sufficient Reason, then, on the Termination Date, Executive shall
receive (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) the Retirement Compensation
pursuant to Section 5(g) hereof, determined as of the Termination Date.
(e) Change of Control.
(i) If a "Change of Control" (as defined in Section 5(e)(iii)) of
the Company occurs, the Company will be obligated as provided in this Section
5(e). For purposes of determining the Company's obligations under this Section
5(e), 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:
(A) 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 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; (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 Expiration Date; and (3) the amount of any Gross-Up Payment payable
by the Company to Executive under Section 5(h) hereof.
(B) if, within three (3) years following the Change of Control
Date, Executive's employment with the Company is terminated by the Company
without Cause or by Executive for "Good Reason" (as defined in Section
5(e)(iv)), the Company or its successor shall pay to Executive (1) any accrued
and unpaid Salary through the Termination Date, (2) bonuses declared to be
payable to Executive for any fiscal periods of the Company ending prior to the
Termination Date and (3) the Company shall:
(I) provide Executive and or his spouse, should she survive him,
with continued life, disability, medical and dental insurance
coverage in the same amounts and upon the same terms and conditions
as in effect on the Termination Date, or if greater, as those
provided immediately prior to the Change of Control Date for a
period of eight (8) years from the Termination Date; and
(II) until the Expiration Date continue to provide Executive with
the automobile allowance provided pursuant to Section 4(e) hereof
as of the Termination Date, or if greater, as provided immediately
prior to the Change of Control Date; and
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(C) 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 their expiration date.
(ii) 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.
(iii) For purposes of this provision, a "Change of Control" means:
(A) 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);
(B) 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;
(C) 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
(D) 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.
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(iv) For purposes of this provision, "Good Reason" means:
(A) a decrease in Executive's Salary or a failure by the Company to
pay material compensation due and payable to Executive in connection with his
employment;
(B) a change in Executive's responsibilities, positions, duties,
status, title or reporting relationships;
(C) Executive ceasing to be the Senior Vice President of
Administration and Chief Financial Officer (or such other positions Executive
holds immediately prior to the Change of Control Date) of a publicly traded
company pursuant to this Agreement;
(D) the Company's requiring Executive to be based at any office or
location that is anywhere other than Executive's principal place of employment
immediately prior to the Change of Control Date; or
(E) a material breach by the Company of any term or provisions of
this Agreement.
(f) Severance Pay. If Executive's employment hereunder is terminated
for any reason, other than (i) for Cause, (ii) due to Executive's death pursuant
to Section 5(b) hereof, (iii) for Executive's incapacity pursuant to Section
5(c) hereof, or (iv) by the Executive without Good Reason or Sufficient Reason
(as applicable), then within five (5) business 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
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 5(f) shall be
in addition to any amounts payable to Executive pursuant to Section 5 hereof in
the event of a Change of Control of the Company.
(g) Retirement Compensation.
(i) If Executive's employment is terminated for any reason except
Cause as defined in Section 5(d) above, the Company shall pay to Executive (or
in the event of Executive's death after such termination, to such person as
Executive has designated in a notice filed with the Company, or if no such
person shall have been designated, to his estate), a lump sum amount equal to
the amount by which (A) the product of (1) one-half multiplied by Executive's
average annual salary for the three (3) year period preceding the Termination
Date times (2) the number of years (including any partial year) since May 1,
1993 (the "Retirement Compensation") exceeds (B) the sum of any amounts
previously distributed to Executive pursuant to Sections 5(g)(ii), 5(g)(iii) and
5(g)(iv). The lump sum amount to be paid shall not be present-valued or
otherwise reduced by use of any other discount or discounting method. The
payment will be made to Executive within five (5) business days of the
Termination Date.
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(ii) Within five (5) business days after the date on which the BE
Aerospace, Inc. Executive Compensation Trust II dated April 21, 1999, as amended
is terminated (the "Distribution Date"), the Company will distribute in a lump
sum the amount of Retirement Compensation that would have been payable to
Executive under Section 5(g)(i) as of the Distribution Date.
(iii) Within ninety (90) business days of the Distribution Date,
the Company shall establish a trust for the duration of the Employment Term,
and, commencing on the Distribution 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
5(g)(ii) if the Contribution Date was his Termination Date minus (B) the assets
in the Retirement Trust as of the Contribution Date. The Retirement Trust to
which the Company shall make these contributions shall be irrevocable. The
Retirement Trust shall provide that Executive may withdraw from the Retirement
Trust, within the thirty (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 5(g)(iii) 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 thirty (30) -day periods, 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 Internal
Revenue Code of 1986, as amended (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 5g(iii), shall be payable to Executive, and
that prior to payment of such retirement compensation, the assets of the
Retirement Trust shall be exempt from the claims of the Company's creditors.
(iv) 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 of the
Assumed Taxes that the Company reasonably estimates will be payable by Executive
for the calendar year for which the distribution is being made and as a result
of his beneficial interest in the Retirement Trust. 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 tax rates.
(h) Certain Additional Payments by the Company.
(i) 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 5(h)) (a "Payment") would be subject to an excise tax imposed by Section
4999 of 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
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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 at the
highest marginal rate of 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 rates 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.
(ii) Subject to the provisions of paragraph (iii) of this Section
5(h) all determinations required to be made under this Section 5(h), 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 fifteen (15) 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 5(h), shall be paid by the Company to Executive within five (5)
days of the 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 5(h) 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.
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(iii) 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 (10) 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 thirty (30)-day period following
the date on which Executive 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:
(A) give the Company any information reasonably requested by the
Company relating to such claim,
(B) 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,
(C) cooperate with the Company in good faith in order effectively
to contest such claim, and
(D) 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 the foregoing provisions of
this Section 5(h)(iii), 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 sue 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 sue 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.
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(iv) If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 5(h)(iii), 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 5(h)(iii)) 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 5(h)(iii), 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 thirty (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.
6. Amendments. No amendment to this Agreement or any schedule hereto shall
be effective unless it shall be in writing and signed by each party hereto.
7. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or sent by telecopy
or three (3) days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to the Company, to it at:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, FL 33414
Attention: President
with a copy to:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, FL 33414
Attention: General Counsel
If to Executive, to him at:
Thomas P. McCaffrey
4821 South Flagler Drive
West Palm Beach Fl 33405
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8. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties; provided, however, that
this Agreement shall not supersede the Proprietary Rights Agreement dated as of
the date hereof between Executive and the Company attached as Exhibit A which is
incorporated herein by reference.
9. 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.
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.
(a) 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 shall only apply if required to comply with
Section 409A of the Code.
(b) 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.
(c) The provisions of Section 5(h) of this Agreement, mutatis mutandis,
shall apply to any imposition of taxes on Executive under said Section 409A so
that Executive shall be fully grossed up for the amount of, and shall not be
adversely affected by, such taxes.
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13. Miscellaneous.
(a) Enforceability. The invalidity and unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument and shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of the State of Florida.
(b) Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement may be assigned by the Company. Executive may
not assign or delegate Executive's duties under this Agreement without the
Company's prior written approval.
(c) 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, including, without limitation, the right of Executive to terminate
employment for Good Reason pursuant to Section 5(e) of this Agreement, 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.
(d) Survival. The provisions of Sections 4, 5 and 7 through 13
inclusive hereof shall each survive any termination or expiration of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the
date first written above.
EXECUTIVE BE AEROSPACE, INC.
/s/ Thomas P. McCaffrey By: /s/ Amin J. Khoury
------------------- ------------------
Senior Vice President of Chairman of the Board
Administration and Chief
Financial Officer
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