**Exhibit 10.10**

 

**EMPLOYMENT AGREEMENT**

** **

THIS EMPLOYMENT AGREEMENT, by and between Ballistic Recovery Systems,Inc., a Minnesota corporation (the “**Company**”),and Larry Williams (the “**Executive**”)is entered into on this 6th day of May, 2005 (the “**Effective Date**”).

 

**INTRODUCTION**

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A.                                   TheCompany is a Minnesota corporation that desires to employ Executive inaccordance with the terms and conditions stated in this employment agreement(the “**Agreement**”), and wishes toobtain reasonable protection against unfair competition from Executivefollowing a termination of employment and to further protect against unfair useof its confidential business and technical information; and Executive iswilling to grant the Company the benefits of a covenant not to compete for thesesame purposes.

 

B.                                     Executivewishes to receive compensation from the Company for Executive’s continuedservices and desires to accept continued employment pursuant to the terms andconditions of this Agreement.

 

**AGREEMENT**

** **

NOW, THEREFORE, in consideration of the foregoing, and for other goodand valuable consideration the receipt and sufficiency of which is herebyacknowledged, the Company and Executive, each intending to be legally bound,hereby agree as follows:

 

# **1.****                                     ****Employment**.  Subjectto all of the terms and conditions of this Agreement, the Company hereby agreesto employ Executive as the Company’s Chief Executive Officer, President andChief Operating Officer and Executive hereby accepts such employment, andagrees to serve the Company with undivided loyalty and to the best of hisability.  Executive shall report to andtake direction from the Company’s Board of Directors.

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# **2.****                                     ****Term**.  Unlessterminated earlier according to the provisions of Section 5, Executive’semployment shall commence as of the Effective Date and shall continue for aperiod of three (3) years from the Effective Date (the “**Term**”).

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# **3.****                                     ****Duties**.  Executivewill devote substantially all of his business hours to and, during such time,make the best use of his energy, knowledge, and training in advancing theCompany’s interests.  In addition,Executive may: (i) devote a reasonable amount of time and attention to civic,charitable, or social organizations; (ii) engage in such other activities asare specifically approved in writing by the Company’s Board of Directors (the “**Board**”); and (iii) make passive personal investments whichdo not conflict with the Company’s business nor require Executive to devote anysignificant amount of business time to such investment activity.  Executive’s duties and responsibilities shallinclude, without limitation, assisting in the management of the Company’sroutine day-to-day business operations, business development and servicing ofclient accounts, and such other duties and responsibilities as may be assignedby the Board or set forth in the Company’s Bylaws.

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# **4.****                                     ****Compensation**.

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## **(a)****                                 ****BaseSalary**.  In consideration forExecutive’s services under this Agreement, the Company hereby agrees to payExecutive an annual salary of One Hundred Fifty-Five

 

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## Thousand Dollars ($155,000.00) (the “**BaseSalary**”).  The Base Salaryshall be paid on an at least monthly basis in accordance with the Company’sstandard payroll procedures.

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## **(b)****                                  Bonus**.  During each year of the Term, Executive iseligible for an annual bonus of up to 100% of the Base Salary for such fiscalyear of the Company (the “**Bonus**”).  The Bonus will be broken down into twocomponents:  a non-discretionary bonus(the “**Non-Discretionary Bonus**”) and adiscretionary bonus (the “**Discretionary Bonus**”)as set forth below.  The Bonuscompensation is a gross bonus subject to withholding for federal and stateincome taxes and all other required deductions.

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### **(i)****                                   ****Non-Discretionary Bonus**. Executive shall be eligible for a Non-Discretionary Bonus not to exceed75% of the Executive’s Base Salary for such fiscal year if Executive meetscertain performance goals of the Company as determined by the Board’sCompensation Committee.  TheNon-Discretionary Bonus shall be paid to Executive within 75 days of fiscalyear-end; provided that the Company has received its audited financialstatements for such fiscal year within such 75-day period.  The Board’s Compensation Committee, in itssole discretion, shall set performance goals for each year of the Term, andshall provide a copy of such performance goals in writing to Executive at least30 days prior to the commencement of the time period to which the performancegoals apply.  The performance goals relatingto the Non-Discretionary Bonus for the fiscal year ending September 30, 2005 (“FiscalYear 2005”) are set forth on Appendix A hereto.  Thereafter, the Board shall establish theperformance goals relating to the Non-Discretionary Bonus in its solediscretion.  The Board’s CompensationCommittee shall retain the right, in its sole discretion, to alter theperformance goals during any fiscal year of the Term; provided that, promptlyupon such alteration, the Board’s Compensation Committee shall notify Executivein writing of such alteration.  

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### **(ii)****                               ****Discretionary Bonus**. Executive shall be eligible for a Discretionary Bonus not to exceed 25%of Executive’s Base Salary for such fiscal year.  The Discretionary Bonus shall be determinedin the sole discretion of the Board’s Compensation Committee based uponExecutive’s performance, and shall be paid to Executive within 75 days offiscal year-end; provided that the Company has received its audited financialstatements for such fiscal year within such 75-day period.  Terms and conditions applicable to theDiscretionary Bonus for Fiscal Year 2005 are set forth on Appendix Ahereto.  Thereafter, the Board’sCompensation Committee shall establish the terms and conditions applicable tothe Discretionary Bonus as determined in the Board’s Compensation Committee’ssole discretion.

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### **(iii)****                            Formof Bonus.**  The aggregate Bonus,including both Discretionary and Non-Discretionary Bonuses, to be paid toExecutive for any fiscal year during the Term shall be subject to thefollowing:

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#### **a.****              **25%of the aggregate Bonus shall be paid to Executive in the form of unrestrictedand unregistered shares of common stock of the Company.  The number of shares of common stockExecutive shall receive pursuant to this Section 4(b) shall be equal to thequotient of (i) 25% of the aggregate Bonus to be paid to Executive for suchfiscal year, (ii) divided by the average value of the Company’s common stockover the proceeding twelve (12) months, as determined based on the average ofthe closing bid and asked prices reported during such twelve-month period, lessten percent (10%) (the “Bonus Conversion Ratio”).  Executive understands that the Company has noobligation to register

 

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#### such shares and, accordingly, such sharesmust be sold in compliance with applicable federal and state securities lawsand Company policy, including Rule 144 of the Securities Act of 1933, asamended, in addition; federal and state insider trading laws and the Company’sInsider Trading Policy.

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#### **b.****              **Atthe option of Executive, up to an additional 50% of the aggregate Bonus to bepaid to Executive for such fiscal year shall be paid in the form ofunrestricted and unregistered shares of common stock of the Company, asdetermined by the Bonus Conversion Ratio. 

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## **(c)****                                 ****Benefits**.  Executive shall be entitled to the employeebenefits as provided by the Company to its management team.  The Company reserves the right, in its solediscretion, to alter the terms of such benefits at any time and from time totime.

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## **(d)****                                 ****Reimbursement**.  The Company shall reimburse Executive for allreasonable out-of-pocket business expenses incurred by Executive on the Company’sbehalf; *provided*, *however*,that Executive properly accounts to the Company for all such expenses inaccordance with the rules and regulations of the Internal Revenue Service underthe Internal Revenue Code of 1986, as amended, and in accordance with anystandard policies of the Company relating to reimbursement of business expensesas such policies exist or may be implemented in the future.

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# **5.****                                     ****Termination**.  Prior tothe expiration of the Term, this Agreement may be terminated under theprovisions of this Section 5.

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## **(a)****                                 ****VoluntaryTermination**.  Executive mayvoluntarily terminate his employment hereunder for any reason and at any timeafter giving at least 30 days’ prior written notice thereof to the Board.

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Upon such a voluntary termination, Executive shallhave no further rights against the Company hereunder, except for the right toreceive: (i) any unpaid Base Salary with respect to the period prior to theeffective date of termination; (ii) any declared but unpaid Bonus with respectto the period prior to the effective date of termination; and (iii)reimbursement of expenses to which Executive is entitled under Section 4(d).

 

## **(b)****                                 ****TerminationWithout Cause**.  If the Companyterminates this Agreement without cause, Executive shall have the right toreceive:  (i) any unpaid Base Salary withrespect to the period prior to the effective date of termination; (ii)reimbursement of expenses to which Executive is entitled under Section 4(d);and (iii) Executive’s then-current Base Salary for an 18-month period after thedate of such termination (the “**SeverancePayment**”), payable over an 18-month period in the same manner asBase Salary is paid.  The right toreceive (iii) above shall be conditioned upon the Company receiving a fullrelease from Executive in a form reasonably acceptable to the Company.  

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For purposes ofthis Agreement, a reduction in Executive’s Base Salary by the Company duringthe Term occurring within twelve (12) months after a Change of Control ofthe Company shall constitute a Termination Without Cause under this Section5(b).  “Change of Control” shall mean the occurrence of any ofthe following:  (i)  ****t****he acquisition (other than from the Companydirectly) by any person, entity or group, within the meaning of § 13(d) or14(d) of the Securities Exchange Act of 1934, of beneficial ownership oftwenty-five (25%) percent or more of the outstanding shares of the Company’s commonstock; (ii)  ****a**** merger, reorganization or consolidationwhereby the shareholders of the Company immediately prior to such merger,

 

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reorganization or consolidation do not,immediately after consummation of such merger, reorganization orconsolidation own more than fifty (50%) of the voting stock of the survivingentity; or (iii) the liquidation or dissolution of the Companyor the sale of all or substantially all of the assets of the Company.

 

## **(c)****                                 ****TerminationFor Cause**.  The Company mayterminate Executive’s employment and all of the Company’s obligations underthis Agreement at any time “For Cause” (as defined below) by giving notice toExecutive stating the basis for such termination.  Any Termination under this Section 5(c) shallbe effective immediately upon delivery of the above-described notice or at suchother time thereafter as the Company may designate in the notice.  “For Cause” shall mean any of the following:(i) dishonesty, fraud, or material and deliberate injury or attempted injury,in each case related to the Company or its business; (ii) Executive’sconviction of a felony; or (iii) Executive’s continued failure tosatisfactorily perform the duties assigned to him pursuant to Section 3 of thisAgreement for a period of 30 days after a written demand by the Board for suchsatisfactory performance, which demand specifically identifies the manner inwhich it is alleged that Executive has not satisfactorily performed suchduties.

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If Executive’s employment is terminated For Cause,Executive shall have no further rights against the Company hereunder, exceptfor the right to receive: (i) any unpaid Base Salary with respect to the periodprior to the effective date of termination, (ii) any Bonus declared by theBoard but unpaid with respect to the period prior to the effective date oftermination, and (iii) reimbursement of expenses to which Executive is entitledunder Section 4(d).

 

# **6.****                                     ****Confidentiality and Noncompetition**.  

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## **(a)****                                 ****Confidentiality**.  As used in this Section 6, “**ConfidentialInformation**” means information that is not generally known and thatis proprietary to the Company or that the Company is obligated to treat asproprietary, but shall not include any information known by Executive prior tothe Effective Date.  Any information thatExecutive reasonably considers Confidential Information, or that the Companytreats as Confidential Information, will be presumed to be ConfidentialInformation (whether the Executive or others originated it and regardless ofhow the Executive obtained it).

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Except as specifically permitted by an authorizedofficer of the Company or by written Company policies, Executive will not,either during or after his employment by the Company, use ConfidentialInformation for any purpose other than the business of the Company or discloseit to any person who is not also an executive of the Company unless authorizedby the Board.  When Executive’semployment with the Company ends, Executive will promptly deliver to the Companyall records and any compositions, articles, devices, apparatuses and otheritems that disclose, describe, or embody Confidential Information, includingall copies, reproductions, and specimens of the Confidential Information inExecutive’s possession, regardless of who prepared them and will promptlydeliver any other property of the Company in Executive’s possession (all suchforegoing items, the “Materials”), whether or not ConfidentialInformation.  The foregoing sentenceshall not apply to any Materials produced by Executive prior to the EffectiveDate.

 

## **(b)****                                 ****CompetitiveActivities**.  Executive agreesthat, during the Term and for a twelve-month period afterwards, Executive willnot alone or in any capacity with another entity:  directly engage in any commercial activitythat competes with the Company’s Business (as defined below) within any statein the United States or within any country in which the Company directlymarkets or services products or intends to market or service products.

 

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Notwithstanding anything to the contrary in thisAgreement, the provisions of this Section 6(b) shall apply in the event thatthe Executive is terminated without cause for so long as Executive is receivinginstallments of the Severance Payment. In addition, this Section 6 shall not apply to any activity of theExecutive from and after such time as the Company (i) shall have ceased allBusiness activities for a period of 60 days, or (ii) shall have made a decisionthrough its Board not to continue, or shall have ceased for a period of 60days, the Company’s Business activities.

 

For purposes of this Section 6, “Business” shall meanthe design, manufacture, distribution, sale or marketing of emergency parachuterecovery systems for use with recreational, general and commercial aviationaircraft and unnamed aircraft or any activity involving or relating thereto.

 

# **7.****                                     ****Conflicts of Interest**. Executive agrees that he will not, directly or indirectly, transactbusiness with the Company personally, or as agent, owner, partner orshareholder of any other entity; *provided*,*however*, that any suchtransaction may be entered into if approved by the Board so long as Executivesownership or relationship is disclosed to or otherwise known by the Board.

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# **8.****                                     ****General Provisions**.

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## **(a)****                                 ****Successorsand Assigns**.  This Agreementis binding on and inures to the benefit of the Company’s successors andassigns, all of which are included in the term the “Company” as it is used inthis Agreement; *provided*, *however*,that the Company may assign this Agreement only in connection with a merger,consolidation, assignment, sale or other disposition of substantially all ofits assets or business.

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## **(b)****                                 ****Amendment**.  This Agreement may be modified or amendedonly by a written agreement signed by both the Company and Executive.

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## **(c)****                                 ****GoverningLaw and Forum**.  The laws ofMinnesota will govern the validity, construction, and performance of thisAgreement.  Any legal proceeding relatedto this Agreement will be brought in an appropriate Minnesota court, and boththe Company and Executive hereby consent to the exclusive jurisdiction ofMinnesota courts for this purpose.

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## **(d)****                                 ****Construction**.  Wherever possible, each provision of thisAgreement will be interpreted so that it is valid under the applicablelaw.  If any provision of this Agreementis to any extent invalid under the applicable law, that provision will still beeffective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and theentire Agreement will continue to be valid in other jurisdictions.

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## **(e)****                                 ****NoWaiver**.  No failure or delayby either the Company or Executive in exercising or enforcing any right orremedy under this Agreement will waive any provision of the Agreement.  Nor will any single or partial exercise byeither the Company or Executive of any right or remedy under this Agreementpreclude either of them from otherwise or further exercising these rights orremedies, or any other rights or remedies granted by any law or any relateddocument.

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## **(f)****                                   ****Captions**.  The headings in this Agreement are forconvenience only and shall not affect this Agreement’s interpretation.

 

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## **(g)****                                ****References**.  Except as otherwise required or indicated bythe context, all references to Sections in this Agreement refer to Sections ofthis Agreement.

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## **(h)****                                ****EntireAgreement**.  This Agreementsupersedes all previous and contemporaneous oral negotiations, commitments,writings, and understandings between the parties concerning the matters in thisAgreement.

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## **(i)****                                   ****Notices**.  All notices and other communications requiredor permitted under this Agreement shall be in writing and shall be handdelivered or sent by registered or certified first class mail, postage prepaid,and shall be effective upon delivery if hand delivered, or three days aftermailing if mailed to the addresses stated below.  These addresses may be changed at any time bylike notice:

 
| *If to  the Company:* | Ballistic Recovery  Systems, Inc.  300 Airport Road  South St. Paul, MN 55075  Attention: Chairman of the Board |
|-----------------------|-----------------------------------------------------------------------------------------------------------------|
| * *              |                                                                                                            |
| *If to  Executive:*   | Larry Williams  14099 N. 99th Way  Scottsdale, AZ 85260                                                         |

 

## **(j)****                                   ****Counterparts**.  This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one agreementbinding on all parties.  Each party shallbecome bound by this Agreement immediately upon signing any counterpart,independently of the signature of any other party.  In making proof of this Agreement, however,it will be necessary to produce only one copy signed by the party to becharged.

 

*SignaturePage Follows*

 

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IN WITNESS WHEREOF, the undersigned Executive and the Company haveexecuted this Agreement effective as of the Effective Date.

 
| ** ** | **BALLISTIC  RECOVERY SYSTEMS, INC.** |
|------------|---------------------------------------|
|       | a Minnesota corporation               |
|       |                                  |
|       |                                  |
|       | By                                    |   |   |
|       |                                  | Robert L. Nelson,  Chairman of the Board and |
|       |                                  | Chairman of the  Compensation Committee |
|       |                                  |
|       |                                  |
|       |                                  |   |
| ** ** | **Larry  Williams**                   |

 

*Signature Page – EmploymentAgreement*

 

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**EXHIBIT A**

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**BonusSchedule (Fiscal Year 2005)**

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**I. Non-Discretionary Bonus (up to 75% of Base Salary for fiscal year)**

 

Executive shall receive a Non-Discretionary Bonus equal to 19.375% ofeach dollar of after-tax profit of the Company in Fiscal Year 2005; providedthat, in no event shall such Non-Discretionary Bonus exceed 75% of Executive’sBase Salary during such fiscal year.

 

**II.** **Discretionary Bonus (up to 25% of BaseSalary for fiscal year)**

 

Executive will receive a Discretionary Bonus equal to 25% of Executive’sBase Salary for Fiscal Year 2005 if the Company does not incur a net lossduring Fiscal Year 2005.

 

Both the Non-Discretionary Bonus and Discretionary Bonus shall be paidas indicated in Section 4(b)(ii) of the Employment Agreement to which this ExhibitA is incorporated.

 

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