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Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (including Attachment A) (the “2007 Employment
Agreement” or the “Agreement”) is entered into as
of June 7, 2007 (the “Effective Date”), by and
between General Dynamics Corporation (the
“Corporation”) and Nicholas D. Chabraja (the
“Executive” or “Mr. Chabraja”)
(collectively the “Parties”).
Recitals
WHEREAS, Mr. Chabraja is
currently the Corporation’s Chief Executive Officer and the
Chairman of its Board of Directors (the “Board”) and
has been since June 1, 1997; and
WHEREAS, the Corporation entered
into an employment agreement with Mr. Chabraja on
August 7, 2002, providing for his employment through
December 31, 2005 and entered into an amended employment
agreement on June 3, 2004 providing for his employment through
April 30, 2008 and for certain compensation if he continued
his employment until such date (the “2004 Employment
Agreement”); and
WHEREAS, the Board, on behalf of
the Corporation’s shareholders, in recognition of
Mr. Chabraja’s continued exceptional performance and
superb leadership, strongly desires to extend
Mr. Chabraja’s tenure as its Chairman and Chief
Executive Officer through June 30, 2009; and
WHEREAS, Mr. Chabraja agrees
to continue his employment in only this capacity; and
WHEREAS , the parties wish to
amend and restate the Agreement as set forth below.
Terms &
Conditions
NOW THEREFORE, the Parties agree
as follows:
| 1. |
Position and Term . The Corporation desires that
Mr. Chabraja continue his employment as Chairman and Chief
Executive Officer, and Mr. Chabraja agrees to continue his
employment, from the Effective Date through June 30,
2009. |
| 2. |
Annual Salary . Mr. Chabraja will continue to
receive an annual salary of not less than his current annual
salary. During this Agreement, the Compensation Committee of the
Board may from time to time increase Mr. Chabraja’s
annual salary as it, in its sole discretion, deems
appropriate. |
| 3. |
Incentive Compensation . Mr. Chabraja will continue
to be eligible for annual bonuses and incentive compensation
awards. In making this determination, the Compensation Committee of
the Board will annually review the Corporation’s actual
performance as compared to its strategic and operational plans. The
Compensation Committee of the Board will also consider
Mr. Chabraja’s total compensation in relationship to the
performance pay levels of other chief executive officers of
industrial concerns and in the aerospace and defense
industry. |
| 4. |
Other Benefits and Perquisites . Mr. Chabraja will
be eligible for all other benefits and perquisites the Corporation
provides to its senior executive officers. These benefits include
participation in the Corporation’s qualified and
non-qualified retirement plans, the Corporation’s qualified
and non-qualified 401(k) Savings and Stock Incentive plans, and
group health, life and disability coverage. Additionally,
Mr. Chabraja will continue to have use of the
Corporation’s aircraft, consistent in all cases with the
resolutions of the Board and the Corporation’s policies
regarding the use of aircraft. |
| 5. |
Termination of Employment between the Effective Date and
June 30, 2009 . |
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a. |
If Mr. Chabraja’s employment ends prior to
June 30, 2009, by reason of his Voluntary Resignation or
death, the Corporation agrees to provide him the following amounts
and benefits: |
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i. |
The Corporation will pay Mr. Chabraja or his designated
beneficiary, as the case may be, his annual salary earned through
his last day of Active Employment (including unused vacation and
personal days); and |
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ii. |
The Corporation will pay Mr. Chabraja or his designated
beneficiary, as the case may be, a pro rated payment equal to his
immediately prior year’s annual bonus or 100% of the current
year’s target bonus, whichever is greater. The pro-ration of
such amount will be from the first day of the year in which he
Voluntarily Resigns or dies through his last day of Active
Employment (i.e., not including any period attributable to the
payment of unused vacation and/or personal days). Any such payments
to Mr. Chabraja, or his designated beneficiary, as the case
may be, will be made at the same time and manner as the Corporation
makes similar payments to its other senior executive officers in
the year following such termination of employment, but in no event
later than March 15 of such year. |
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iii. |
The Corporation will provide Mr. Chabraja (or his
survivors, as appropriate) with the benefits enumerated in
Section 6(d) and 6(e) listed below. |
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b. |
Termination due to Disability, by the Corporation Without
Cause or as a Result of Breach by the Corporation of Its
Obligations . In the event Mr. Chabraja’s employment
is terminated: (i) due to his Disability; (ii) by the
Corporation, without Cause, or (iii) by Mr. Chabraja due
to the Corporation’s breach of its obligations hereunder and
its failure to cure such breach within thirty (30) days of
written notice thereof, the Corporation agrees to provide
Mr. Chabraja the following: |
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i. |
The Corporation will continue to pay Mr. Chabraja an
amount equal to the annual salary he is earning at the time of his
termination for the remaining term of this Agreement;
and |
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ii. |
The
Corporation will continue to pay Mr. Chabraja an amount equal
to the annual bonus and incentive compensation he would have earned
had he
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continued his employment
for the remaining term of this Agreement. Such amounts must be the
greater of his prior year’s annual bonus or 100% of the
current year’s target bonus. Payments to Mr. Chabraja
will be made at the same time and manner as the Corporation makes
similar payments to its other senior executive officers in the year
following the year with respect to which the amount is paid, but in
no event later than March 15 of the year following the year
with respect to which the amount is paid; and
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iii. |
The Corporation will provide Mr. Chabraja with the
benefits enumerated in Section 6 (c) through
(e) listed below. |
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c. |
Termination due to a Change in Control . In the event
that Mr. Chabraja’s employment is terminated (either in
fact or constructively) as a result of a “Change in
Control”, the Corporation agrees that Mr. Chabraja will
be treated for purposes of this Agreement as having terminated
employment under Section 5(b) above. Where the Severance
Protection Agreement between the Corporation and Mr. Chabraja
dated April 12, 1999, as may be hereafter amended from time to
time, and this Agreement provide for payment covering the same
benefit, the Corporation will provide Mr. Chabraja with the
benefit most favorable to him, otherwise, Mr. Chabraja is
entitled to retain the benefits under both agreements. |
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d. |
Termination “For Cause” . In the event
Mr. Chabraja’s employment by the Corporation is
terminated for Cause, in full satisfaction of its obligations
hereunder, the Corporation will: |
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i. |
pay Mr. Chabraja his annual salary earned through his last
day of Active Employment (including unused vacation and personal
days); |
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ii. |
provide to Mr. Chabraja the benefits enumerated in
Section 6(d) and 6(e) below; and |
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iii. |
provide to Mr. Chabraja such other benefits as are
required by law. |
| 6. |
Termination on or after June 30, 2009 . If
Mr. Chabraja maintains his Active Employment through
June 30, 2009, the Corporation, at its sole expense,
will: |
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a. |
pay Mr. Chabraja as soon as practicable following
Mr. Chabraja’s termination of employment for any reason
any remaining earned but unpaid annual salary (including any earned
but unpaid vacation and/or personal days); and |
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b. |
pay Mr. Chabraja a bonus for the 2009 calendar year in an
amount not less than 100% of the bonus paid to Mr. Chabraja in
respect of the 2008 calendar year, which shall be paid to
Mr. Chabraja at the time 2009 bonuses are paid to other
executives of the Corporation in 2010, but in no event later than
March 15, 2010; and |
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c. |
notwithstanding any other provision of the Corporation’s
Equity Compensation Plan, cause any equity award Mr. Chabraja
received from the Corporation that has not yet vested to vest in
full, without proration; and |
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d. |
in lieu of the following benefits which Mr. Chabraja was
entitled to receive pursuant to the 2004 Employment Agreement:
(i) use of the corporate aircraft following retirement,
(ii) reimbursement for the cost of executive office space and
administrative support for two (2) years and
(iii) reimbursement for the cost of transporting and storing
his household furnishings and personal effects, pay to
Mr. Chabraja a lump-sum cash payment equal to $7,993,120, plus
interest at an annual rate of 5.50% from the date hereof until the
actual date of payment, such amount to be paid on the earlier of
June 30, 2009 or as soon as practicable (but in no event more
than 30 days) following his termination of employment;
and |
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e. |
provide to Mr. Chabraja the retirement benefits enumerated
in Attachment A, the Retirement Benefits Agreement. |
| 7. |
Definitions . For purposes of this Agreement, the terms
below will have the following definitions: |
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a. |
“Active Employment” means a period of employment
during which services are required to be performed. The continued
payment of amounts in lieu of annual salary, annual bonuses, unused
vacation, unused personal days will not be considered a period of
Active Employment. |
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b. |
“Cause” for termination of
Mr. Chabraja’s employment with the Corporation will be
deemed to exist if Mr. Chabraja has been convicted of a felony
or if the Board determines by a resolution adopted in good faith by
at least two-thirds of the Board that Mr. Chabraja has
(a) intentionally and continually failed to perform in all
material respects his reasonably assigned duties with the
Corporation (other than a failure resulting from
Mr. Chabraja’s incapacity due to physical or mental
disability or illness or from the assignment to Mr. Chabraja
of duties that would constitute a breach by the Corporation of its
obligations hereunder that, if uncured, would allow
Mr. Chabraja to terminate his employment pursuant to
Section 5(b)) which failure has continued for a period of at
least 30 days after a written notice of demand for performance has
been delivered to Mr. Chabraja specifying the manner in which
he has failed in all material respects to so perform or
(b) intentionally engaged in conduc
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