Exhibit 10.1
RESIGNATION, CONSULTING,
NON-COMPETITION
AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION, CONSULTING,
NON-COMPETITION AND GENERAL RELEASE AGREEMENT
(“Agreement”) is made and entered into this 14
th day of October, 2004 (the “Effective
Date”), by and between Ballistic Recovery Systems, Inc., a
Minnesota corporation (the “Company”), and Mark B.
Thomas, a Minnesota resident (“Mr. Thomas”).
BACKGROUND
1.
The Company and Mr. Thomas entered into that certain Employment
Agreement effective as of January 1, 2004 (the “Employment
Agreement”) pursuant to which Mr. Thomas served as the
President, Chief Executive Officer, Chief Financial Officer and a
member of the Board of Directors of the Company.
2.
Mr. Thomas desires to resign all positions of officer, director and
employee of the Company, effective the Effective Date and the
Company desires to accept Mr. Thomas’ resignation effective
as of the Effective Date.
3.
The Company and Mr. Thomas, desire to amicably terminate the
Employment Agreement and their relationship and enter into a
transition consulting agreement pursuant to which Mr. Thomas will
supply certain consulting services to the Company and resolve all
potential disputes between them.
NOW, THEREFORE, in
consideration of the foregoing, the parties agree as follows:
1.
Thomas Resignation
. Mr. Thomas hereby resigns as Director, President, Chief
Executive Officer, Chief Financial Officer and as an employee of
the Company effective 4:00 p.m., October 14, 2004, and the Company
hereby accepts his resignation. The Company will provide Mr.
Thomas his regular base salary and benefits through his date of
resignation.
2.
Termination of Employment
Agreement . The Employment Agreement is hereby
terminated except that the provisions of Section 8 (Confidentiality
and Non-Competition) shall survive in the event that within fifteen
(15) days after executing this Agreement (the “Rescission
Date”) Mr. Thomas exercises his right to rescind or revoke
his release as more fully set forth below.
3.
Consulting
Services . Executive agrees to provide, for a
ninety-day period starting on the Effective Date
(“Transition Period”), an amount up to twenty-five (25)
hours per month as a consultant to the Company to assist in certain
transition matters as reasonably requested by the Company’s
Board of Directors or their designee including, but not limited to,
(i) assisting in introductions and calls to Company customers and
vendors; (ii) assisting in the transition of the Company’s
management; (iii) assisting in the Company’s ongoing
litigation; (iv) assisting in the timely submission and preparation
of SEC reports such as Forms 10-KSB; (v) assisting in accounting
and auditing matters; and (vi) providing, if requested, a written
memorandum setting forth in sufficient detail a description of
pending meetings, initiatives, and other pending matters related to
the Company’s business that Executive believes in good
faith
the Company
must know for a smooth and proper transition of Mr. Thomas’
duties and responsibilities. Mr. Thomas will cooperate in good
faith during the Transition Period with the Company to the extent
his cooperation is needed in the transition of his duties and
responsibilities to others in the Company. The
Company’s requests for consulting services shall be made in
good faith, upon reasonable notice, and shall take into
consideration Executive’s availability with the understanding
that Executive will be engaging in a job search and other personal
business activities during the Transition Period. For such
consulting services, the Company shall pay Mr. Thomas $5,000 on the
last day of each of the three 30-day periods for a total consulting
payment of $15,000, and the Company shall reimburse Mr. Thomas for
reasonable, documented out-of-pocket business expenses consistent
with Company reimbursement policies. The reimbursement of
business expenses shall be made within ten (10) business days of
the end of the 30-day period in which the expenses are
incurred. Subject to compliance with Section 5, the
consulting payment shall be made whether or not consulting services
are requested and performed in that period. Mr. Thomas is
obligated to keep reasonable records of his consulting time and
tasks accomplished and shall use his best efforts to accomplish the
assigned tasks. To the extent that a) the Board of Directors
requests and b) Mr. Thomas engages in consulting work hereunder in
excess of twenty-five (25) hours in any of the three 30-day
periods, Mr. Thomas will, in addition to the $5,000 consulting
payment for such period, be paid $200 per hour for consulting
services over and above 25 hours in that period. The
additional consulting fees shall be paid to Mr. Thomas within ten
business days of the end of 30-day period in which the services are
provided.
Mr.
Thomas understands that in performing consulting services under
this Agreement, Mr. Thomas is an independent contractor, therefore
the parties expressly agree that (a) their relationship is based on
the understanding that Mr. Thomas is an independent contractor and
not an employee of the Company and no employment relationship is
created hereby, (b) the Company shall not provide Mr. Thomas with
any fringe benefits in connection with the consulting services
provided hereunder, and (c) the Company has no responsibility for
withholding taxes, social security withholding, worker’s
compensation withholding, unemployment withholding or any similar
taxes or charges attributable to Mr. Thomas arising from
compensation for consulting services paid to Mr. Thomas pursuant
hereto. Mr. Thomas understands that he does not have
authority to bind or otherwise commit the Company.
4.
Payments and Benefits
Provided by the Company . Provided Mr. Thomas
does not (1) exercise his right to rescind or revoke his release
prior to the Rescission Date, or (2) violate the terms of his
non-competition or confidentiality provisions as provided in
Section 5 hereof, the Company will provide him with the following
additional payments and benefits in the time frames noted
below:
(a)
Confidentiality and Non-competition Payment . Specifically
as consideration for the Confidentiality and Non-Competition
Obligations set forth in Section 5, the Company will pay Mr. Thomas
an amount equal to Two Hundred Thirty Thousand and no/100 Dollars
($230,000) as follows: (1) Sixty Thousand ($60,000) payable within
two business days following the Rescission Date and (2) an
aggregate of One Hundred Seventy Thousand ($170,000) payable
monthly on the last day of each month in equal installments over a
24 month period. The first such payment under subpart (2)
will be made on November 30, 2004 and at the
2
end of each
month for the 24-month period thereafter. Payments under this
subparagraph (a) are payments for the Confidentiality and
Non-Competition Obligations and thus are not subject to withholding
for federal and state taxes and other required payroll
deductions.
(b)
Vacation Time/Expenses . Within two business days
following the Rescission Date, the Company shall also pay Mr.
Thomas an amount equal to (a) $ 19,058.27 (219.92 hours) for
accrued but unpaid time off (including, but not limited to
vacation), and (b) reimbursement for any documented expenses
incurred through the Effective Date consistent with Company
reimbursement policies.
(c)
Stock Options . The five-year term of each of the
stock options previously granted to Mr. Thomas as follows:
(i) options to acquire 15,000 shares of Common Stock at $1.25 per
share granted March 14, 2000; (ii) options to acquire 15,000 shares
of Common Stock at $.9063 per share granted March 20, 2001; (iii)
options to acquire 15,000 shares of Common Stock at $1.38 per share
granted March 18, 2002; and (iv) options to acquire 15,000 shares
of Common Stock at $1.05 per share granted March 18, 2003;
(collectively, the “Options”); shall all be extended by
one-year. No other term of the Options shall change pursuant
to this Agreement.
(d)
Legal Fees . After the Rescission Date, the Company shall
promptly reimburse Mr. Thomas up to a maximum of Five Thousand
($5,000) for reasonable and documented legal fees incurred by Mr.
Thomas in connection with Mr. Thomas’ resignation. For
purposes of documentation, a summation of hours performed and not a
description of services rendered shall be sufficient.
(e)
Bonuses/Profit Sharing . The Company shall, to the
extent earned under current bonus plans, (a) pay Mr. Thomas
on or before November 30, 2004 an amount not to exceed $15,000 for
bonuses earned by Mr. Thomas for the fiscal year ended September
30, 2004, and (b) shall make contributions under the
Company’s profit sharing plan for the period ended September
30, 2004 at the same time it makes contributions for other
employees.
(f)
Benefits . Mr. Thomas has the right under applicable
law to continue his coverage in the Company’s health
insurance program at his expense, however, as an additional benefit
of this Agreement, the Company shall timely make the COBRA payments
for individual coverage for Mr. Thomas for the period through April
30, 2006, provided Mr. Thomas executes the necessary
documents provided to him by the Company to elect such continued
coverage, and, further, the Company’s obligations in this
subparagraph will cease immediately upon Mr. Thomas obtaining
comparable replacement coverage. Should the Company for any
reason terminate its hea
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