UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 2006
ESSEX CORPORATION
(Exact name of Registrant as specified in its charter)
Commission File No. 0-10772
Virginia 54-0846569
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
6708 Alexander Bell Drive
Columbia, Maryland 21046-2306
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (301) 939-7000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
INFORMATION TO BE INCLUDED IN THE REPORT
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATION ARRANGEMENTS OF
CERTAIN OFFICERS.
COMPENSATION ARRANGEMENTS OF CERTAIN OFFICERS
EMPLOYMENT AGREEMENT WITH LEONARD E. MOODISPAW
On November 8, 2006, in connection with entering into the definitive merger
agreement (the "MERGER AGREEMENT") between Northrop Grumman Space & Missions
Systems Corp. ("NORTHROP GRUMMAN"), Eagle Transaction Corporation and Essex
Corporation (the "COMPANY"), Leonard E. Moodispaw, the Company's President,
Chief Executive Officer and Chairman of the Board of Directors, entered into an
employment agreement (the "EMPLOYMENT AGREEMENT") with the Company providing for
the employment of Mr. Moodispaw following the effective time (the "EFFECTIVE
TIME") of the merger (the "MERGER") contemplated in the Merger Agreement for a
period of two years after the Effective Time, unless Mr. Moodispaw's employment
with the Company is sooner terminated in accordance with the terms of the
Employment Agreement (the "TERM").
The Employment Agreement provides for the employment of Mr. Moodispaw during the
Term in such positions as he and the Company shall mutually agree from time to
time for a base salary of $350,000 per year (subject to upward adjustment from
time to time in accordance with the Company's standard payroll policies). In
addition, the Employment Agreement provides that Mr. Moodispaw is eligible to
receive an annual cash bonus targeted at 40% of his base salary, with the actual
amount of his annual bonus to be based upon individual and/or Company
performance criteria as may be established for each such fiscal year. Further,
if Mr. Moodispaw remains employed with the Company through the second
anniversary of the Effective Time (the "RETENTION PERIOD"), then, subject to
certain restrictions set forth in the Employment Agreement, the Employment
Agreement provides that he shall be entitled to receive a payment (the
"PERFORMANCE BONUS") in an amount equal to the product of (i) $500,000 (the
"TARGET PERFORMANCE BONUS") and (ii) the multiplier applied by Northrop Grumman
Corporation ("NGC"), the parent corporation of Northrop Grumman, to the award of
restricted performance stock rights under NGC's employee benefits plans for the
performance period ending December 31, 2008. Under the Employment Agreement, the
actual Performance Bonus may range from 30% to 150% of the Target Performance
Bonus and shall be determined in February 2009. Except as indicated below, in
the event Mr. Moodispaw's employment is terminated prior to the end of the
Retention Period, his right to the Performance Bonus shall be forfeited.
The Employment Agreement also provides that if Mr. Moodispaw remains employed by
the Company through the Retention Period, then, subject to certain restrictions
set forth in the Employment Agreement, he also shall be paid as a retention
bonus a lump sum in the amount of $500,000 (the "RETENTION BONUS"), less
applicable withholding, within thirty (30) days after the end of the Retention
Period. Again, except as indicated below, in the event Mr. Moodispaw's
employment is terminated prior to the end of the Retention Period, his right to
the Retention Bonus shall be forfeited.
The Employment Agreement further provides that upon termination of Mr.
Moodispaw's employment with the Company for any reason, Mr. Moodispaw shall be
entitled to any base salary earned but unpaid through the date of termination,
any earned but unpaid annual bonus for completed fiscal years, and any
unreimbursed expenses. In addition, if Mr. Moodispaw's employment is terminated
by the Company during the Term other than for cause or disability (as each is
defined in the Employment Agreement), he is also entitled to the following
payments and benefits payable within thirty (30) days after the termination of
his employment: (i) a lump sum equal to the sum of (A) Mr. Moodispaw's base
salary at the rate in effect immediately prior to the date of termination and
(B) Mr. Moodispaw's target annual bonus and (ii) the Retention Bonus and the
Target Performance Bonus (the "SEVERANCE PAYMENTS"). The Company's obligations
to make the Severance Payments are conditioned upon: (i) Mr. Moodispaw's
continued compliance with certain non-solicitation, non-competition,
non-disclosure and proprietary information obligations under the Employment
Agreement and (ii) his execution, delivery and non-revocation of a valid and
enforceable general release of claims arising in connection with his employment
and termination of employment with the Company and its affiliates in a form
acceptable to the Company.
In the event Mr. Moodispaw's employment with the Company is terminated by reason
of his death or disability after the Effective Time but prior to the end of the
Retention Period, then, provided that (i) except in the event of Mr. Moodispaw's
death, he executes a release of claims acceptable to the Company, and (ii) at
the time of such payment he is not in breach of his non-solicitation,
non-competition, non-disclosure and proprietary information obligations under
the Employment Agreement, he shall be entitled to receive the Retention Bonus
and Target Performance Bonus.
In addition, under the Employment Agreement Mr. Moodispaw has agreed to certain
customary non-competition and non-solicitation restrictions during the period of
his employment with the Company and thereafter for a period ending on the later
of (i) 12 months following the termination of his employment or (ii) 24 months
following the Effective Time, and he has also agreed to certain customary
confidentiality and proprietary information obligations.
RETENTION AGREEMENTS
On November 8, 2006, also in connection with the Company and Northrop Grumman
entering into the Merger Agreement, Terry M. Turpin, Senior Vice President and
Chief Scientist of the Company and a member of the Company's Board of Directors,
and Rudolph Liskovec, Vice President of the Company's Technical Services Group,
entered into employment retention agreements (the "RETENTION AGREEMENTS") with
the Company providing for the continued employment of these executive officers
with the Company commencing at the Effective Time and ending on the first
anniversary of the Effective Time, in the case of Mr. Liskovec, and on the
second anniversary of the Effective Time, in the case of Mr. Turpin (the
"EXECUTIVE RETENTION PERIOD").
The Retention Agreements provide that if the executive remains employed by the
Company through his Executive Retention Period, then, subject to certain
restrictions set forth in his
Retention Agreement, he shall be paid as a retention bonus a lump sum in the
amount of 50% of his base salary as in effect on November 8, 2006, less
applicable withholding (the "EXECUTIVE RETENTION BONUS"), within thirty (30)
days after the end of his Executive Retention Period. In addition, under Mr.
Liskovec's Retention Agreement, the Company has agreed to recommend to the
Chairman and Chief Executive Officer of NGC that Mr. Liskovec be granted during
the regular grant cycle expected to occur in February 2007 restricted
performance stock rights in accordance with NGC's 2001 Long-Term Incentive Stock
Plan with respect to 1,500 shares of NGC common stock, with such grant to be on
terms and conditions consistent with grants made to other similarly situated
employees of NGC and its subsidiaries from time to time.
In the event Mr. Turpin's or Mr. Liskovec's employment with the Company is
terminated by the Company without cause (as defined in their respective
Retention Agreements) or by reason of Mr. Turpin's or Mr. Liskovec's death or
disability after the Effective Time but prior to the end of their applicable
Executive Retention Period, then, provided that (i) except in the event of the
executive's death, he executes a release of claims acceptable to the Company,
and (ii) at the time of such payment the executive is not in breach of his
non-solicitation, non-competition, non-disclosure and proprietary information
obligations under his Retention Agreement, the executive shall be entitled to
receive his applicable Executive Retention Bonus.
In addition, under their respective Retention Agreements, Messrs. Turpin and
Liskovec have agreed to certain customary non-competition and non-solicitation
restrictions during the period of their employment with the Company and
thereafter for a period ending on the later of (i) 12 months following the
termination of their employment or (ii) 24 months following the Effective Time.
Each executive has also agreed to certain customary confidentiality and
proprietary information obligations.
EMPLOYMENT AGREEMENT WITH LISA G. JACOBSON
On November 14, 2006, the Company entered into an employment agreement with Lisa
G. Jacobson, the Company's Chief Financial Officer, providing for the employment
of Ms. Jacobson through the closing of the Merger at a base salary of $250,000
per year (subject to upward adjustment from time to time in accordance with the
Company's standard payroll policies). In addition, Ms. Jacobson's employment
agreement provides that upon the closing of the Merger, the Company shall pay
her the sum of $200,000 (the "BONUS") within 90 days after the closing of the
Merger. In addition, Ms. Jacobson's employment agreement provides that upon the
termination of her employment with the Company for any reason, she shall be
entitled to any base salary earned but unpaid through the date of termination,
the full amount of her Bonus and any unreimbursed expenses. Pursuant to her
employment agreement, Ms. Jacobson has also agreed to certain customary
confidentiality obligations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ESSEX CORPORATION
/S/ LISA G. JACOBSON
----------------------------------------------------
DATE: November 14, 2006 Lisa G. Jacobson
Executive Vice President and Chief Financial Officer