Document:

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

 

A.                                   The
Company is a Minnesota corporation that desires to employ Executive in
accordance with the terms and conditions stated in this employment agreement
(the “Agreement”), and wishes to
obtain reasonable protection against unfair competition from Executive
following a termination of employment and to further protect against unfair use
of its confidential business and technical information; and Executive is
willing to grant the Company the benefits of a covenant not to compete for these
same purposes.

 

B.                                     Executive
wishes to receive compensation from the Company for Executive’s continued
services and desires to accept continued employment pursuant to the terms and
conditions of this Agreement.

 

AGREEMENT

 

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

 

1.                                      Employment.  Subject
to all of the terms and conditions of this Agreement, the Company hereby agrees
to employ Executive as the Company’s Chief Executive Officer, President and
Chief Operating Officer and Executive hereby accepts such employment, and
agrees to serve the Company with undivided loyalty and to the best of his
ability.  Executive shall report to and
take direction from the Company’s Board of Directors.

 

2.                                      Term.  Unless
terminated earlier according to the provisions of Section 5, Executive’s
employment shall commence as of the Effective Date and shall continue for a
period of three (3) years from the Effective Date (the “Term”).

 

3.                                      Duties.  Executive
will devote substantially all of his business hours to and, during such time,
make the best use of his energy, knowledge, and training in advancing the
Company’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 as
are specifically approved in writing by the Company’s Board of Directors (the “Board”); and (iii) make passive personal investments which
do not conflict with the Company’s business nor require Executive to devote any
significant amount of business time to such investment activity.  Executive’s duties and responsibilities shall
include, without limitation, assisting in the management of the Company’s
routine day-to-day business operations, business development and servicing of
client accounts, and such other duties and responsibilities as may be assigned
by the Board or set forth in the Company’s Bylaws.

 

4.                                      Compensation.

 

(a)                                  Base
Salary.  In consideration for
Executive’s services under this Agreement, the Company hereby agrees to pay
Executive an annual salary of One Hundred Fifty-Five

 

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Thousand Dollars ($155,000.00) (the “Base
Salary”).  The Base Salary
shall be paid on an at least monthly basis in accordance with the Company’s
standard payroll procedures.

 

(b)                                  Bonus.  During each year of the Term, Executive is
eligible for an annual bonus of up to 100% of the Base Salary for such fiscal
year of the Company (the “Bonus”).  The Bonus will be broken down into two
components:  a non-discretionary bonus
(the “Non-Discretionary Bonus”) and a
discretionary bonus (the “Discretionary Bonus”)
as set forth below.  The Bonus
compensation is a gross bonus subject to withholding for federal and state
income taxes and all other required deductions.

 

(i)                                    Non-Discretionary Bonus. 
Executive shall be eligible for a Non-Discretionary Bonus not to exceed
75% of the Executive’s Base Salary for such fiscal year if Executive meets
certain performance goals of the Company as determined by the Board’s
Compensation Committee.  The
Non-Discretionary Bonus shall be paid to Executive within 75 days of fiscal
year-end; provided that the Company has received its audited financial
statements for such fiscal year within such 75-day period.  The Board’s Compensation Committee, in its
sole discretion, shall set performance goals for each year of the Term, and
shall provide a copy of such performance goals in writing to Executive at least
30 days prior to the commencement of the time period to which the performance
goals apply.  The performance goals relating
to the Non-Discretionary Bonus for the fiscal year ending September 30, 2005 (“Fiscal
Year 2005”) are set forth on Appendix A hereto.  Thereafter, the Board shall establish the
performance goals relating to the Non-Discretionary Bonus in its sole
discretion.  The Board’s Compensation
Committee shall retain the right, in its sole discretion, to alter the
performance goals during any fiscal year of the Term; provided that, promptly
upon such alteration, the Board’s Compensation Committee shall notify Executive
in writing of such alteration.  

 

(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 determined
in the sole discretion of the Board’s Compensation Committee based upon
Executive’s performance, and shall be paid to Executive within 75 days of
fiscal year-end; provided that the Company has received its audited financial
statements for such fiscal year within such 75-day period.  Terms and conditions applicable to the
Discretionary Bonus for Fiscal Year 2005 are set forth on Appendix A
hereto.  Thereafter, the Board’s
Compensation Committee shall establish the terms and conditions applicable to
the Discretionary Bonus as determined in the Board’s Compensation Committee’s
sole discretion.

 

(iii)                            Form
of Bonus.  The aggregate Bonus,
including both Discretionary and Non-Discretionary Bonuses, to be paid to
Executive for any fiscal year during the Term shall be subject to the
following:

 

a.               25%
of the aggregate Bonus shall be paid to Executive in the form of unrestricted
and unregistered shares of common stock of the Company.  The number of shares of common stock
Executive shall receive pursuant to this Section 4(b) shall be equal to the
quotient of (i) 25% of the aggregate Bonus to be paid to Executive for such
fiscal year, (ii) divided by the average value of the Company’s common stock
over the proceeding twelve (12) months, as determined based on the average of
the closing bid and asked prices reported during such twelve-month period, less
ten percent (10%) (the “Bonus Conversion Ratio”).  Executive understands that the Company has no
obligation to register

 

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such shares and, accordingly, such shares
must be sold in compliance with applicable federal and state securities laws
and Company policy, including Rule 144 of the Securities Act of 1933, as
amended, in addition; federal and state insider trading laws and the Company’s
Insider Trading Policy.

 

b.               At
the option of Executive, up to an additional 50% of the aggregate Bonus to be
paid to Executive for such fiscal year shall be paid in the form of
unrestricted and unregistered shares of common stock of the Company, as
determined by the Bonus Conversion Ratio. 

 

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

 

(d)                                  Reimbursement.  The Company shall reimburse Executive for all
reasonable out-of-pocket business expenses incurred by Executive on the Company’s
behalf; provided, however,
that Executive properly accounts to the Company for all such expenses in
accordance with the rules and regulations of the Internal Revenue Service under
the Internal Revenue Code of 1986, as amended, and in accordance with any
standard policies of the Company relating to reimbursement of business expenses
as such policies exist or may be implemented in the future.

 

5.                                      Termination.  Prior to
the expiration of the Term, this Agreement may be terminated under the
provisions of this Section 5.

 

(a)                                  Voluntary
Termination.  Executive may
voluntarily terminate his employment hereunder for any reason and at any time
after giving at least 30 days’ prior written notice thereof to the Board.

 

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

 

(b)                                  Termination
Without Cause.  If the Company
terminates this Agreement without cause, Executive shall have the right to
receive:  (i) any unpaid Base Salary with
respect 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 the
date of such termination (the “Severance
Payment”), payable over an 18-month period in the same manner as
Base Salary is paid.  The right to
receive (iii) above shall be conditioned upon the Company receiving a full
release from Executive in a form reasonably acceptable to the Company.  

 

For purposes of
this Agreement, a reduction in Executive’s Base Salary by the Company during
the Term occurring within twelve (12) months after a Change of Control of
the Company shall constitute a Termination Without Cause under this Section
5(b).  “Change of Control” shall mean the occurrence of any of
the following:  (i)  the acquisition (other than from the Company
directly) by any person, entity or group, within the meaning of § 13(d) or
14(d) of the Securities Exchange Act of 1934, of beneficial ownership of
twenty-five (25%) percent or more of the outstanding shares of the Company’s common
stock; (ii)  a merger, reorganization or consolidation
whereby 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 or
consolidation own more than fifty (50%) of the voting stock of the surviving
entity; or (iii) the liquidation or dissolution of the Company
or the sale of all or substantially all of the assets of the Company.

 

(c)                                  Termination
For Cause.  The Company may
terminate Executive’s employment and all of the Company’s obligations under
this Agreement at any time “For Cause” (as defined below) by giving notice to
Executive stating the basis for such termination.  Any Termination under this Section 5(c) shall
be effective immediately upon delivery of the above-described notice or at such
other 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’s
conviction of a felony; or (iii) Executive’s continued failure to
satisfactorily perform the duties assigned to him pursuant to Section 3 of this
Agreement for a period of 30 days after a written demand by the Board for such
satisfactory performance, which demand specifically identifies the manner in
which it is alleged that Executive has not satisfactorily performed such
duties.

 

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

 

6.                                      Confidentiality and Noncompetition.  

 

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

 

Except as specifically permitted by an authorized
officer of the Company or by written Company policies, Executive will not,
either during or after his employment by the Company, use Confidential
Information for any purpose other than the business of the Company or disclose
it to any person who is not also an executive of the Company unless authorized
by the Board.  When Executive’s
employment with the Company ends, Executive will promptly deliver to the Company
all records and any compositions, articles, devices, apparatuses and other
items that disclose, describe, or embody Confidential Information, including
all copies, reproductions, and specimens of the Confidential Information in
Executive’s possession, regardless of who prepared them and will promptly
deliver any other property of the Company in Executive’s possession (all such
foregoing items, the “Materials”), whether or not Confidential
Information.  The foregoing sentence
shall not apply to any Materials produced by Executive prior to the Effective
Date.

 

(b)                                  Competitive
Activities.  Executive agrees
that, during the Term and for a twelve-month period afterwards, Executive will
not alone or in any capacity with another entity:  directly engage in any commercial activity
that competes with the Company’s Business (as defined below) within any state
in the United States or within any country in which the Company directly
markets or services products or intends to market or service products.

 

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

 

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

 

7.                                      Conflicts of Interest. 
Executive agrees that he will not, directly or indirectly, transact
business with the Company personally, or as agent, owner, partner or
shareholder of any other entity; provided,
however, that any such
transaction may be entered into if approved by the Board so long as Executives
ownership or relationship is disclosed to or otherwise known by the Board.

 

8.                                      General Provisions.

 

(a)                                  Successors
and Assigns.  This Agreement
is binding on and inures to the benefit of the Company’s successors and
assigns, all of which are included in the term the “Company” as it is used in
this 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 of
its assets or business.

 

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

 

(c)                                  Governing
Law and Forum.  The laws of
Minnesota will govern the validity, construction, and performance of this
Agreement.  Any legal proceeding related
to this Agreement will be brought in an appropriate Minnesota court, and both
the Company and Executive hereby consent to the exclusive jurisdiction of
Minnesota courts for this purpose.

 

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

 

(e)                                  No
Waiver.  No failure or delay
by either the Company or Executive in exercising or enforcing any right or
remedy under this Agreement will waive any provision of the Agreement.  Nor will any single or partial exercise by
either the Company or Executive of any right or remedy under this Agreement
preclude either of them from otherwise or further exercising these rights or
remedies, or any other rights or remedies granted by any law or any related
document.

 

(f)                                    Captions.  The headings in this Agreement are for
convenience only and shall not affect this Agreement’s interpretation.

 

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(g)                                 References.  Except as otherwise required or indicated by
the context, all references to Sections in this Agreement refer to Sections of
this Agreement.

 

(h)                                 Entire
Agreement.  This Agreement
supersedes all previous and contemporaneous oral negotiations, commitments,
writings, and understandings between the parties concerning the matters in this
Agreement.

 

(i)                                    Notices.  All notices and other communications required
or permitted under this Agreement shall be in writing and shall be hand
delivered or sent by registered or certified first class mail, postage prepaid,
and shall be effective upon delivery if hand delivered, or three days after
mailing if mailed to the addresses stated below.  These addresses may be changed at any time by
like 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 number
of counterparts, all of which taken together shall constitute one agreement
binding on all parties.  Each party shall
become 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 be
charged.

 

Signature
Page Follows

 

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IN WITNESS WHEREOF, the undersigned Executive and the Company have
executed 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 – Employment
Agreement

 

 

EXHIBIT A

 

Bonus
Schedule (Fiscal Year 2005)

 

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

 

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

 

II. 
Discretionary Bonus (up to 25% of Base
Salary for fiscal year)

 

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

 

Both the Non-Discretionary Bonus and Discretionary Bonus shall be paid
as indicated in Section 4(b)(ii) of the Employment Agreement to which this Exhibit
A is incorporated.Exhibit 10.1

 

AMENDMENT TO

THE STEWART & STEVENSON SERVICES, INC.

1988 NONSTATUTORY STOCK OPTION PLAN

 

THIS AGREEMENT
by Stewart & Stevenson Services, Inc. (the “Company”),

 

W I T N E S S E T H:

 

WHEREAS, the
Board of Directors of the Company previously adopted the plan agreement known
as the “Stewart & Stevenson Services, Inc. 1988 Nonstatutory
Stock Option Plan” (the “Plan”); and

 

WHEREAS, the
Board of Directors of the Company retained the right in Section 8 of the
Plan to amend the Plan from time to time; and

 

WHEREAS, the
Board of Directors of the Company adopted resolutions approving this amendment
to the Plan;

 

NOW, THEREFORE, effective December 14, 2005, the Board of
Directors of the Company agrees that Section 5 of the Plan is hereby
amended by adding thereto the following new clause (v):

 

(v)           Anything
in this Plan to the contrary notwithstanding, if an Employee’s employment with
the Company and its subsidiaries shall terminate for any reason, the Committee
may, in its sole discretion, determine (A) that all or a portion of the
outstanding options granted to such Employee shall become immediately
exercisable and (B) to extend the period during which the Employee shall
have the right to exercise any outstanding option granted under the Plan to the
extent it is exercisable as of the date of termination of such employment, but
in no event later than the earlier of (x) of the scheduled expiration date of
such option and (y) the latest date that would not cause such option to be
treated as providing for a “deferral of compensation” as described in section 409A
of the Code and the regulations promulgated thereunder.

 

Dated:  December 14, 2005

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