Exhibit 10.1
Execution Copy
EMPLOYMENT AGREEMENT
This
Employment Agreement (the “Agreement”) is hereby
entered into effective as of May 19, 2008, between DynCorp
International LLC, a Delaware limited liability company (the
“Company”), and William L. Ballhaus
(“Executive”).
In
consideration of the mutual promises and covenants contained
herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Employment.
1.1. Title and Duties. During the Term (as hereinafter
defined) of this Agreement, and subject to the terms and conditions
set forth herein, the Company agrees to employ Executive as its
President and Chief Executive Officer reporting directly to the
Chairman of the Board of Directors of DynCorp International Inc.
(the “Board”), the Company’s parent company. The
Executive shall have such authority and responsibilities as are
customarily performed by chief executive officers of businesses
similar to those of the Company or as may be specified from time to
time by the Board.
1.2. Election to Office. During the Term of this Agreement,
the Company shall use its reasonable efforts to cause the Executive
to be nominated as a member of the Board.
1.3. Fulfillment of Duties. During the Term of this
Agreement, Executive shall (i) devote his full business time
and best efforts to the performance of his services hereunder,
excluding vacation periods and periods of illness or incapacity,
and (ii) perform his services hereunder faithfully, diligently
and to the best of his skill and ability.
1.4. Location. During the Term of this Agreement, Executive
will perform his duties and services in the greater Washington,
D.C. metropolitan area and Executive agrees to make such business
trips to the Company’s other locations as may be reasonable
and necessary in the performance of his services hereunder.
2. Compensation and Benefits.
2.1. Salary. In consideration of and as compensation for the
services agreed to be performed by Executive hereunder, the Company
agrees to pay Executive during the Term of this Agreement a base
annual salary (the “Base Salary”) of not less than
$650,000 per year, less standard deductions and withholdings,
payable bi- monthly in accordance with the Company’s regular
payroll practices. The Company will review Executive’s Base
Salary and other compensation from time to time during the Term of
this Agreement and, at the recommendation of the Compensation
Committee (the “Committee”) of the Board, may increase
his Base Salary or other compensation from time to time. Any
increase in Base Salary or other compensation shall in no way limit
or reduce any other obligation of the Company hereunder and, once
established at an increased rate, Executive’s Base Salary
hereunder shall not be reduced, except in connection with an across
the board salary reduction for all executives.
2.2. Incentive Compensation. During the Term of this
Agreement, the Executive shall be eligible to receive an annual
bonus (“Bonus”) pursuant to the terms of the DynCorp
International LLC Executive Incentive Plan (the “Executive
Incentive Plan”) or any successor plan. The Executive’s
target bonus shall be 100% of his Base Salary (“Target
Bonus”), with the actual amount of each Bonus being
determined by the Board or the Committee in accordance with the
terms of the Executive Incentive Plan. The Bonus shall be paid no
later than June 15th of the year following the year in which
such compensation is awarded. Notwithstanding the foregoing, the
Executive’s Bonus for the fiscal year 2009 shall be no less
than $625,000 (the “Guaranteed Bonus”) provided he
continues to be employed by the Company at the time of the Bonus
payout.
2.3. Signing Bonus. The Executive shall receive a one-time
signing bonus (“Signing Bonus”) in the amount of
$350,000 payable on September 30, 2008, provided the Executive
continues to be employed by the Company on September 30,
2008.
2.4. Equity. During the Term of this Agreement, the
Executive shall be eligible to participate in the DynCorp
International 2007 Omnibus Incentive Plan (“OIP”) or
any successor plan. The Executive shall receive a grant of 100,000
restricted stock units (“RSUs”), subject to the terms
and conditions of the OIP. Fifty percent (50%) of the RSUs shall
vest with respect to one-third of the award on the first
anniversary of the Commencement Date (as defined in
Section 3.1) and with respect to an additional one-third on
each of the next two anniversaries of the Commencement Date
thereafter, subject to the Executive’s continued employment
with the Company. The remaining fifty percent (50%) of the RSUs
shall be earned at the end of fiscal year 2009 upon the achievement
of performance goals established by the Committee for the fiscal
year 2009, and if earned, shall vest with respect to one-third of
the award on the first anniversary of the Commencement Date and
with respect to an additional one-third on each of the next two
anniversaries of the Commencement Date thereafter, subject to the
Executive’s continued employment with the Company. If the
performance goals are not achieved, the Executive shall forfeit his
rights in such RSUs. It is the intent of the Company to provide the
Executive with annual grants during the Term that are at least
equivalent in value to the 100,000 RSUs referred to above;
provided, however, that any future grants will be subject to the
achievement of performance goals established by the Board or the
Committee and the grant of any awards shall be determined by the
Board or the Committee in its sole discretion; further provided,
that nothing contained in this Section 2.4 shall create any
obligation on the part of the Company to make any such future
grants to the Executive.
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In
the event of a Change in Control (as defined below), any
outstanding and unvested RSUs (other than RSUs that have not been
earned or vested because performance conditions have not been
achieved) shall fully and immediately vest. “Change in
Control” shall mean (x) the acquisition by any person or
group of persons (as defined in Section 13(d) of the Securities
Exchange Act of 1934), other than by The Veritas Capital Fund II,
L.P., or any affiliates thereof of 51% or more of either
(i) the then outstanding common shares of DynCorp
International Inc. or (ii) the combined voting power of the
outstanding voting securities of DynCorp International Inc.
entitled to vote generally in the election of the Board, whether by
acquisition, consolidation, merger or otherwise;
(y) individuals who, as of the Commencement Date, constitute
the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual who becomes a director of DynCorp International
Inc. subsequent to the Commencement Date whose election, or
nomination for election by DynCorp International Inc. stockholders,
was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board or any committee of the Board,
shall be deemed a member of the Incumbent Board; or (z) the
sale of all or substantially all of the assets of the
Company.
2.5. Other Benefits. During the Term of this Agreement,
Executive shall be entitled to participate in all of the applicable
employee benefit plans, programs and/or arrangements of the Company
which may be available to the other senior executives of the
Company on the same terms as such other executives.
3. Term.
3.1. Term. The Term of employment under this Agreement means
the period that commenced on May 19, 2008 (the
“Commencement Date”) and expiring at midnight on
May 18, 2011; provided, that this Agreement will automatically
renew for additional periods of one (1) year each commencing
on May 19 of each successive year following the initial Term
unless written notice of intent not to renew is delivered by the
Company or the Executive to the other party at least 90 days
prior to the effective date of any renewal hereof.
3.2. Termination of Employment
Executive’s employment with the Company may be terminated
under the following conditions:
3.2.1.
Retirement, Resignation without Good Cause, Death or Disability
. Executive’s employment with the Company shall terminate
effective upon the date of Executive’s Retirement from the
Company (as defined in Section 5.4), resignation from the
Company without Good Cause, death or “Complete
Disability” (as defined in Section 5.1).
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3.2.2. For
Cause . The Company may terminate Executive’s employment
under this Agreement for Cause (as defined in Section 5.2) by
delivery of written notice to Executive specifying the Cause or
Causes relied upon for such termination. Any notice of termination
given pursuant to this Section 3.2.2 shall effect termination
as of the date specified in such notice or, in the event no such
date is specified, on the last day of the month in which such
notice is delivered or deemed delivered as provided in
Section 8.4 below.
3.2.3.
Without Cause . The Company may terminate Executive’s
employment under this Agreement at any time and for any reason by
delivery of written notice of such termination to Executive. Any
notice of termination given pursuant to this Section 3.2.3
shall take effect as of the date specified in such written
notice.
3.2.4
Termination due to the Expiration of the Term.
Executive’s employment with the Company shall terminate
effective upon the last day of the Term, to the extent that either
the Executive or the Company elects not to renew the Term pursuant
to Section 3.1.
3.2.5.
Termination by Executive for Good Cause . Executive may
terminate Executive’s employment with the Company for Good
Cause (as defined in Section 5.3) upon thirty (30) days
written notice to the Company.
3.2.6.
Termination by Mutual Agreement of the Parties .
Executive’s employment pursuant to this Agreement may be
terminated at any time upon the mutual written agreement of the
parties. Any such termination of employment shall have the
consequences specified in such mutual agreement.
3.2.7.
Board/Committee Resignation . Upon termination of
Executive’s employment for any reason, Executive agrees to
resign, as of the date of such termination and to the extent
applicable, from the Board (and any committees thereof) and the
Board of Directors (and any committees thereof) of any of the
Company’s affiliates.
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4. Compensation upon Termination .
4.1. Retirement, Death or Complete Disability . If
Executive’s employment is terminated by his Retirement, death
or Complete Disability, the Company shall pay to the Executive (or
his heirs or legal representative), within 30 days following
termination of employment, Executive’s accrued but unpaid
Base Salary to the day of termination and any employee benefits
that the Executive is entitled to receive pursuant to the employee
benefit plans of the Company and its subsidiaries in accordance
with the terms of such employee benefit plans. In addition, upon
Executive’s (or his heirs or legal representative) furnishing
to the Company an executed waiver and release of claims (a form of
which is attached hereto as Exhibit A, which will be revised
for signature by Executive’s heirs or legal representative if
applicable), which is not revoked, the Company shall pay to the
Executive (or his heirs or legal representative), within
30 days following termination of employment, a pro rated
portion of Executive’s Bonus that would be payable to the
Executive based on projected Company performance through the
termination date, less standard deductions and withholdings.
4.2. Termination for Cause by the Company, Resignation by
Executive, or Nonrenewal of the Term . If Executive’s
employment is terminated by the Company for Cause, if Executive
resigns other than for Good Cause, or either the Executive or the
Company elects not to renew the Term pursuant to Section 3.1,
the Company shall pay, within 30 days following termination of
employment, Executive’s accrued but unpaid Base Salary to the
day of termination and any employee benefits that the Executive is
entitled to receive pursuant to the employee benefit plans of the
Company and its subsidiaries in accordance with the terms of such
employee benefit plans. In addition, if the Term expires and the
Executive’s employment terminates at the election of the
Company pursuant to Section 3.1, the Executive shall receive
the following:
4.2.1. A
payment equivalent to the sum of: (x) the Executive’s
Base Salary plus (y) the average of (A) the Bonus earned
by the Executive for the fiscal year prior to the year of such
termination and (B) the Executive’s Target Bonus,
payable in two equal installments. The first payment shall be made
on the first payroll date that is six (6) months following the
Executive’s termination of employment due to the expiration
of the Term at the election of the Company pursuant
Section 3.1 and the second payment shall be made on the first
payroll date that is twelve (12) months following such
termination.
4.2.2. A
payment equal to the Executive’s Bonus, if any, that would
have been paid during the 90 days following such termination
of employment if the Executive’s employment had continued
during such 90 days, payable when such Bonus is paid to other
executives of the Company.
4.2.3. Full
vesting of any RSUs that would have vested during the 90 days
following such termination of employment if the Executive’s
employment had continued during such 90 days.
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4.3. Termination without Cause by the Company or Termination by
the Executive for Good Cause . If the Company terminates
Executive’s employment without Cause (except under any
circumstance in which Section 4.1 is applicable to Executive,
in which case this Section 4.3 shall not apply), or if the
Executive terminates this Agreement for Good Cause, the Company
shall pay to the Executive, within 30 days following
termination of employment, (x) Executive’s accrued but
unpaid Base Salary to the day of termination and any employee
benefits that the Executive is entitled to receive pursuant to the
employee benefit plans of the Company and its subsidiaries in
accordance with the terms of such employee benefit plans and
(y) a pro rated portion of his Bonus that would be payable to
the Executive based on projected Company performance through the
termination date, less standard deductions and withholdings. In
addition, upon Executive’s furnishing to the Company an
executed copy of the waiver and release of claims (a form of which
is attached hereto as Exhibit A), which is not revoked,
Executive (or his heirs or legal representative) shall be entitled
to a payment equivalent to two times (x) the Executive’s
Base Salary plus (y) the average of (A) the Bonus earned
by the Executive for the fiscal year prior to the year of such
termination and (B) the Executive’s Target Bonus, or if
such termination occurs during fiscal year 2009, the
Executive’s Guaranteed Bonus, payable in two equal
installments. The first payment shall be made on the first payroll
date that is twelve (12) months following such termination,
and the second payment shall be made on the first payroll date that
is twenty-four (24) months following such termination.
5. Definitions . For purposes of this Agreement, the
following terms shall have the following meanings:
5.1 Complete Disability . “Complete Disability”
shall mean the inability of Executive to perform Executive’s
duties under this Agreement because Executive has become
permanently disabled within the meaning of any policy of disability
income insurance covering e
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