AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is made
as of July 31, 2006 by and between BE Aerospace, Inc., a Delaware corporation
(the "Company"), and Thomas P. McCaffrey ("Executive").
RECITALS
WHEREAS, Executive and the Company entered into an Amended and Restated
Employment Agreement dated as of August 1, 2005 (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 in the manner set forth herein;
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hereby restated, superseded and replaced in its entirety by this Agreement.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.
4. Compensation.
(a) Salary. Effective as of January 1, 2006, Executive shall receive
an annual salary (the "Salary") payable at the rate of $440,000 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. So long as employed, 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. The
incentive bonus, if any, shall be paid in accordance with Company policy,
but in any event, no later than March 15th of the year following the year
in which it shall accrue.
(c) Expenses. So long as employed, Executive shall be entitled to
receive prompt payment of, or reimbursement for, all reasonable business
expenses incurred by him on behalf of the Company. Any reimbursement shall
be paid in accordance with Company policy, but in any event, no later than
March 15th of the year following the year in which it shall accrue.
(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 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, upon termination of Executive's employment with the Company
due to his death or Incapacity, the Executive and his eligible dependents
shall be entitled on similar terms and conditions as active executives,
for a period of two (2) years, to participate in all medical, dental and
health benefit plans available to the Company's executive officers from
time to time to the extent the Company plans constitute welfare plans for
purposes of Section 409A of the Internal Revenue Code of 1986, as amended
and the regulations and guidance promulgated thereunder (the "Code").
(e) Automobile. So long as employed, Executive shall receive an
automobile either owned or leased by the Company or a monthly automobile
allowance of $1,100 per month, at the discretion of the Company. The
automobile allowance, if applicable, shall be paid in accordance with
Company policy, but in any event, no later than March 15th of the year
following the year in which it shall accrue.
(f) Equity Compensation. So long as employed, Executive shall be
entitled to participate in any applicable equity compensation program of
the Company in effect from time to time.
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 date of death, pay to such natural person, trust,
corporation, limited liability company, limited or general
partnership, or any other entity (each a "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 during or after the Employment Term,
the Company shall, within thirty (30) days following the date of
death, 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 in accordance with the Death Benefit Agreement
attached as Exhibit A hereto.
(iii) Upon Executive's death, the Company shall, within thirty
(30) days following the date of death, 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 date
of death, and (B) any bonuses declared to be payable to Executive
for any fiscal periods of the Company ending prior to the date of
death.
(iv) Following the Executive's death, his eligible dependents
shall be entitled to continuation of medical, dental and health
benefits for two (2) years pursuant to Section 4(d) hereof.
(c) Incapacity. If the Executive shall for at least six (6)
consecutive months during the Employment Term have been unable to perform
his material duties under this Agreement by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less
than 12 months, the Company may terminate Executive's employment as
provided in this Section 5(c). If the Company desires to so terminate
Executive's employment, the Company shall:
(i) give prompt notice to Executive of any such termination;
(ii) until the Expiration Date, (A) pay to Executive the Salary
in effect on the Termination Date, and (B) continue to provide
Executive with the automobile allowance provided pursuant to Section
4(e) hereof immediately prior to the Termination Date;
(iii) provide the Executive and his eligible dependents with
continuation of medical, dental and health benefits for two (2)
years pursuant to Section 4(d) hereof; and
(iv) pay to Executive, the Retirement Compensation as provided
in Section 5(g) below.
(d) Termination by the Company or the Executive.
(i) Termination by the Company for Cause. The Company may
terminate Executive's employment hereunder with "Cause." For
purposes of this Agreement, "Cause" shall mean any of the of the
following:
(A) the willful and continued (after a reasonable
period following such demand) failure by the Executive to
substantially perform his duties hereunder (other than (1)
any such willful or continued failure resulting from his
incapacity due to physical or mental illness or physical
injury or (2) any such actual or anticipated failure after
the issuance of a notice of termination by the Executive for
Good Reason (as defined below)), after written demand for
substantial performance is delivered by the Company to the
Executive that specifically identifies the manner in which
the Company believes the Executive has not substantially
performed his duties;
(B) the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or
otherwise; or
(C) the conviction of the Executive of a felony by a
court of competent jurisdiction in a judgment which has
become final and nonappealable if such conviction would
render it impossible for the Executive to perform his
obligations hereunder or if the reputation of the Company
would be materially damaged by the continuance of the
Executive's employment hereunder.
For purposes of this Section 5(d)(i) no act, or failure
to act, on the part of the Executive shall be considered
"willful" unless done or omitted to be done by him in bad
faith and without reasonable belief that his action or
omission was in the best interest of the Company. If
Executive's employment is terminated by the Company for Cause
pursuant to this Section 5(d)(i), 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) Termination without Cause or for Good Reason.
(A) The Company may terminate Executive's employment
hereunder without Cause and Executive may terminate
Executive's employment hereunder with "Good Reason" (as
defined below).
(B) If Executive's employment is terminated by the
Company without Cause or by Executive with Good Reason prior
to or more than three years after
the occurrence of a Change of Control (as defined below),
then, on the Termination Date, Executive shall receive
payment of:
(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;
(3) a lump sum equal to his Salary from the
Termination Date through the Expiration Date;
(4) the Retirement Compensation pursuant to Section
5(g) hereof, determined as of the Expiration Date;
and
(5) the Severance Pay pursuant to Section 5(f) hereof.
(C) In addition, upon a termination without Cause or
for Good Reason, any stock options or restricted stock awards
(or other equity awards) ("Equity Awards") granted to
Executive that would not vest on or prior to the Termination
Date shall vest and be exercisable immediately and,
notwithstanding any termination of employment provisions set
forth in the applicable agreement, such stock options shall
continue to be exercisable until their original stated
expiration date.
(iii) Termination by Executive without Good Reason. Executive
may terminate his employment hereunder without Good Reason. If
Executive's employment is terminated by Executive without Good
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)(ii)) 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, the amount of any Gross-Up
Payment payable by the Company to Executive under Section
5(h) hereof;
(B) provide that any 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 upon the
earlier of (i) the Change of Control Date and (ii) the
execution of an agreement, if any, that would constitute a Change of
Control (regardless of whether such agreement is consummated), and,
notwithstanding any termination of employment provisions set forth
in the applicable agreement, such Equity Awards shall continue to be
exercisable until their original stated expiration date.
(ii) For purposes of this provision, a "Change of Control"
means:
(A) 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;
(B) a transaction or other event occurs such that any
Person or Persons acting as a group acquires ownership of
stock of the Company that, together with stock held by such
Person or group, constitutes more than 50% of the total fair
market value or total voting power of the stock of the
Company;
(C) a transaction or other event occurs such that any
one Person or group acquires (or has acquired during the
12-month period ending on the date of the most recent
acquisition by such Person or group) ownership of stock of
the Company possessing 35% or more of the total voting power
of the stock of the Company; or
(D) a transaction or other event occurs such that any
one Person or group acquires (or has acquired during the
12-month period ending on the date of the most recent
acquisition by such Person or group) ownership of assets of
the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of
all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however, that no
acquisition of ownership of the assets of the Company shall
be deemed a Change of Control if the acquiring Person or
group is:
(1) A shareholder of the Company in exchange for or
with respect to its stock;
(2) Any Majority Owned Entity, as defined below, of
the Company;
(3) A Person or group of which the Company is a
Majority Owned Entity; or
(4) A Majority Owned Entity of any Person or group
described by (3), above.
(iii) For the purposes of this Section 5(e), Persons will not be
considered to be acting as a group solely because they purchase or
own stock of the same corporation at the same time, or as the result
of the same public offering. However, Persons will be considered to
be acting as a group if they are owners of a Person that enters into
a merger, consolidation, purchase or acquisition of stock or assets
or similar business transaction with the Company.
(iv) For the purposes of this Section 5(e), a "Majority Owned
Entity" of any Person is any entity, 50% or more of the total value
or voting power of which is owned, directly or indirectly, by such
Person.
(v) A Change of Control shall occur on the effective date of any
event specified in Section 5(e)(i) above. In connection with any
determination of ownership for purposes of Section 5(e)(i) above,
the attribution rules of Section 318(a) of the Code shall apply.
(vi) For purposes of this Agreement, "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 of a publicly
traded company pursuant to this Agreement (or such other
positions Executive holds (1) immediately prior to the Change
of Control Date, if applicable, or (2), solely for purposes
of Section 5(d), thirty (30) days prior to the Termination
Date);
(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 (1) immediately
prior to the Change of Control Date, if applicable, or (2),
solely for purposes of Section 5(d), thirty (30) days prior
to the Termination Date; or
(E) a material breach by the Company of any term or
provisions of this Agreement
; provided that Executive has given notice thereof to the
Company and the Company has not cured the Good Reason within
thirty (30) days after receiving such notice.
(f) Severance Pay.
(i) If Executive's employment hereunder is terminated (A) by the
Company without Cause or (B) by the Executive for Good Reason, then
within five (5) business days after Executive's Termination Date,
the Company shall pay to Executive a lump sum amount equal to two
(2) times the Salary (at the rate in effect as of the Termination
Date), which lump sum shall not be pro-rated.
(ii) If Executive's employment hereunder is terminated by
Executive without Good Reason, then within five (5) business days
after Executive's Termination Date, the Company shall pay to
Executive a lump sum amount equal to one (1) times the Salary (at
the rate in effect as of the Termination Date), which lump sum
shall not be pro-rated. For the avoidance of doubt, the severance
payment pursuant to this Section 5(f)(ii) shall be payable upon the
Executive's retirement in accordance with Company policy.
(g) Retirement Compensation.
(i) If Executive's employment is terminated for any reason other
than Cause, the Company shall pay to Executive 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 following the Termination Date.
(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)(i) if the Contribution Date was his Termination Date minus (B)
the total of all contributions made to the Retirement Trust by the
Company as of such Contribution Date. The Retirement Trust to which
the Company shall make these contributions shall be irrevocable.
The Retirement Trust shall provide that 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 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
5(g)(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 and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Company shall
make a payment to Executive (a "Gross-Up Payment") in an amount
such that after payment by Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, Executive retains
(or has had paid to the Internal Revenue Service on his behalf) an
amount of the Gross-Up Payment equal to the sum of (x) the Excise
Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-Up Payment in
Executive's adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be
deemed to (i) pay federal income taxes at the highest marginal 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 income taxes.
(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.
(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 forgo 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 provided
further 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.
(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.
(i) Restricted Stock Award. On July 31, 2006, the Company granted to
the Executive, without payment by the Executive, 107,070 shares of
restricted common stock
of the Company (the "Restricted Stock"). The Restricted Stock was granted
pursuant to and on the terms provided in the Company's 2005 Long-Term
Incentive Plan, as amended (the "Plan"), and, to the extent not
inconsistent with the terms hereof, the applicable restricted stock Award
Document (as defined in the Plan). The Restricted Stock granted to the
Executive pursuant to this Section 5(i) will immediately become fully
vested and unrestricted on the earliest of: (i) the fourth anniversary of
the date hereof provided that the Executive is employed by the Company on
such anniversary date, (ii) immediately prior to a Change of Control,
(iii) the Executive's death or incapacity, (iv) termination of the
Executive's employment by the Company without Cause, or (iv) termination
by the Executive with Good Reason. For the avoidance of doubt, all vesting
of the Restricted Stock pursuant to this Section 5(i) shall be subject to
the provisions of Sections 5(h) and 12 of this Agreement.
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: General Counsel
If to Executive, to him at:
Thomas P. McCaffrey
4821 South Flagler Drive
West Palm Beach, FL 33405
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 B which is
incorporated herein by reference.
9. Withholding. Without limiting the effect of Sections 5(h) and 12,
all payments made by the Company under this Agreement shall be reduced by any
amounts in respect of income, social security, FICA and other similar taxes at
the then-prevailing rates 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 the Executive 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 first business day following 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 Company
shall establish a trust pursuant to Rev. Proc. 92-64, promulgated under
subpart E, part I, subchapter J, chapter 1, subtitle A of the Code, as
modified by Notice 200-56, and fund any such payments that are deferred
pursuant to this Section 12 that otherwise would be immediately payable to
Executive. 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.
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, 6 and 7 through 13
inclusive hereof shall each survive any termination or expiration of this
Agreement.
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the
date first written above.
EXECUTIVE
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BE AEROSPACE, INC.
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Exhibit A
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Death Benefit Agreement
A-1
Exhibit B
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Proprietary Rights Agreement
B-1