EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
1st day of December, 1998 by and between Compass Aerospace Corporation, a
Delaware corporation (the "Company") and Xxxxxxxx XxXxxxxxxx (the
"Executive").
RECITALS
WHEREAS, Company wishes to employ the Executive and Executive wishes
to accept employment subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the parties hereto agree as
follows:
1. EMPLOYMENT.
Company hereby employs and engages the services of Executive in the
position of Executive Vice President, Aircraft Structures North America, for
the Term of Employment set forth in Section 2. Executive agrees to serve the
Company for the Term of Employment as provided herein.
2. TERM OF EMPLOYMENT.
Executive's "Term of Employment" shall be for a period of three (3)
years commencing on the effective date hereof and ending three (3) years
thereafter (the " Term" or "Term of Employment").
3. POSITION AND DUTIES.
During the Term of Employment:
(a) Executive shall perform services as Executive Vice
President, Aircraft Structures North America, of the Company subject to the
direction and control of the President of the Company (the "President").
Executive shall perform such services and duties to the best of his
abilities, and shall perform such services and duties at such of the
Company's facilities as may be requested by the Company. Executive shall
also provide such services and duties to any of the Company's subsidiaries
and affiliates as shall be directed from time to time by the President.
(b) Executive agrees to devote his full business time to the
business and affairs of the Company, and to use his best efforts to promote
the interests of Company and to perform faithfully and efficiently the
responsibilities assigned to him in accordance with the
terms of this Agreement to the extent necessary to satisfactorily discharge
such responsibilities. Executive shall not, without the President's prior
written consent, render to others services of any kind for compensation, or
engage in any other business activity that would materially interfere with
the performance of his responsibilities under this Agreement. It is
expressly understood and agreed that it shall not be a violation of this
Agreement for Executive to serve on corporate, civic or charitable boards or
committees, so long as such activities do not materially interfere with the
performance of such responsibilities or reflect adversely on Company to any
material extent.
4. RESULTS AND PROCEEDS.
As Executive's employer, Company shall, by virtue of such
relationship, own all rights in and to the results and proceeds directly or
indirectly connected with, or arising out of, Executive's services hereunder.
5. COMPENSATION AND BENEFITS.
5.1 BASE SALARY. During the Term, Company shall compensate
Executive for the services to be rendered hereunder at an annual rate of Two
Hundred Thousand Dollars ($200,000) (the "Base Salary"), with an annual
review each year. Executive understands and agrees that Company has no
obligation to increase his Base Salary as a result of such annual reviews.
Such Base Salary shall be payable to Executive in equal bi-weekly
installments or at such other intervals as salary is normally paid by Company
to its executive employees (except during any unpaid vacation), subject to
the usual or required employee payroll deductions and withholdings.
5.2 REIMBURSEMENT OF EXPENSES. During the Term of Employment,
Executive shall be entitled to receive prompt reimbursement for all
reasonable and necessary business expenses incurred by Executive in
connection with his performance of services under this Agreement in
accordance with Company's then prevailing policies and procedures (which
requirements shall include appropriate itemization and substantiation of all
such expenses incurred). Executive shall be personally liable for any
violation of these terms.
5.3 PERSONAL PAID TIME. Executive shall be entitled to Personal
Paid Time (including, without limitation four (4) weeks paid vacation and
holidays specified by the Company) in accordance with the policy applicable
to Company employees and shall not be entitled to paid vacation or sick time
other than Personal Paid Time. Personal Paid Time shall consist solely of a
continuation of Executive's Base Salary, and Executive shall be entitled to
no additional compensation during Personal Paid Time. Executive shall only
be allowed to carry over into the next fiscal year ten (10) days of unused
Personal Paid Time. All remaining unused Personal Paid Time will be cashed
out.
5.4 STOCK OPTIONS. Executive shall be granted a stock option to
purchase 40,000 shares of common stock of the Company (the "Common Stock")
with an exercise price equal to
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$1.47 per share. Such option will vest 25% per year in each of four (4)
years beginning on the first anniversary of the effective date hereof (no
part thereof vesting prior thereto) and will be subject to standard
repurchase and exercise provisions as stated in the Plan, including without
limitation (i) customary antidilution protection as relates to the number of
shares subject to such option (e.g., in the event of stock splits) but
excluding antidilution protection as relates to the percentage of Common
Stock subject to such option (e.g., in the event of new stock issuances) and
(ii) immediate vesting in the event that Executive dies or becomes disabled.
5.5 EXECUTIVE'S REPRESENTATIONS REGARDING STOCK. Executive
represents that he will retain and consult with his own professional advisors
to review and evaluate the economic, tax and other consequences of the Stock
Options. Executive further represents that any interest he may acquire will
be acquired for investment purposes only and that he understands that there
is no public market for any of the securities comprising the Stock Options
and that the securities he will receive are subject to restrictions on both
transferability and resale, and may not be transferred or resold except as
permitted under the Securities Act of 1933, as amended, and the applicable
state securities laws, pursuant to registration or exemption therefrom. The
shares of stock issuable to Executive shall bear an appropriate legend
setting out restrictions on transfer and the fact that the securities have
not been registered.
5.6 WITHHOLDING ON STOCK OPTIONS. The Company shall deduct from
all stock issued under the Stock Options any federal, state, or local taxes
required by law to be withheld with respect to such payments. In the
alternative, Executive may pay to the Company the amount of any such taxes
which the Company is required to withhold with respect to the grant or
delivery of stock.
5.7 RESTRICTIONS ON TRANSFER OF SHARES. The shares issued to
Executive will be transferable only in accordance with the terms of this
Agreement and the Stockholders Agreement (in the form and substance set forth
in Exhibit A attached hereto). The Company is hereby granted an option to
purchase Executive's shares if Executive terminates employment, other than by
death or permanent disability, or elects to sell or otherwise transfer title
to the shares. The purchase price shall be fair market value as agreed by
the parties or, if the parties cannot agree, it shall be the last price paid
for Company's Common Stock in an arm's-length transaction, including by way
of conversion of any of Company's other securities. The option granted in
this Section 5.7 shall terminate if and when Company's Common Stock is
publicly traded.
5.8 BENEFITS. In addition to the other benefits provided herein,
Executive shall be entitled to participate in such medical, dental,
prescription drug, vision, health care spending account, 401(k) saving and
retirement, short-term disability insurance, long-term disability insurance,
or other employee welfare benefit plans as the Company may offer to and
maintain for the benefit of its Corporate officers and as changed from
time-to-time, subject to Executive's fulfilling all applicable eligibility
requirements of each such plan. No statement concerning
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benefits or compensation to which Executive is entitled alters in any way the
Term of Employment or the termination of this Agreement.
6. COVENANTS. Executive covenants in favor of Company as follows:
6.1 TRADE SECRETS OF OTHERS. Executive represents that Executive's
performance of all the terms of this Agreement does not and will not breach
any agreement to keep in confidence proprietary information, material or
trade secrets acquired by Executive in confidence or in trust prior to
Executive's rendering of services to Company. Executive agrees not to enter
into any agreement either written or oral in conflict herewith.
6.2 CONFIDENTIALITY; TRADE SECRETS. Executive acknowledges that
his position with Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of
Company. Executive agrees that during the Term of Employment and thereafter:
(a) He shall protect and safeguard the trade secrets and
confidential and proprietary information of Company, including (by way of
illustration and not limitation) its arrangements with vendors, customers and
joint venture partners (referred to collectively as Company's
"contractors"); its data, records, patents, licenses, trademarks, copyrights,
compilations of information, processes, programs, know-how, improvements,
discoveries, marketing plans, strategies, forecasts, unpublished financial
statements, budgets, projections, licenses, prices, costs, files, documents,
drawings, memoranda, notes, or other documents, whether maintained
electronically or in hard copy (all such information is hereinafter called
the "Proprietary Information"); other than information known to him\her
before the date hereof and learned from third parties without breach of any
obligation of confidentiality or otherwise to Company, or in the public
domain;
(b) He shall not disclose any of such Proprietary
Information, except as may be required in the ordinary course of performing
his duties as an employee of Company; and
(c) He shall not use, directly or indirectly, for his own
benefit or for the benefit of another, any of such Proprietary Information,
other than for the benefit of Company as may be required in the ordinary
course of performing his duties as an employee of Company.
The Proprietary Information shall be the exclusive property of Company.
Executive agrees that he shall deliver to Company all files, records,
documents, drawings, memoranda, and other materials, whether electronic or
hard copy, relating to the Proprietary Information or pertaining to his work
with Company in the event of either Company's request or the termination of
his employment for any reason, and that he will not take with him any of the
foregoing or any reproduction of any of the foregoing.
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6.3 INDUCEMENT. Executive shall not during the Term of Employment
and for a period of two (2) years thereafter, directly or indirectly, employ,
cause others to employ, or attempt to induce others to employ any employees
of the Company or attempt to induce said employees to gain or seek other
employment.
6.4 REMEDIES FOR BREACH OF COVENANTS OF EXECUTIVE. The covenants
set forth in Section 6 of this Agreement shall continue to be binding upon
Executive, notwithstanding the termination of his employment with Company for
any reason whatsoever. Such covenants shall be deemed and construed as
separate agreements independent of any other provisions of this Agreement and
any other agreement between Company and Executive. The existence of any
claim or cause of action by Executive against Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by Company of any or all of such covenants. If Executive
breaches or threatens to breach any of the covenants in Section 6 of this
Agreement, the Parties acknowledge and agree that the damage or imminent
damage to Company's business and/or its goodwill would be irreparable and
extremely difficult to estimate, making any remedy at law or in damages
inadequate. Accordingly, Company shall be entitled to injunctive relief
against Executive in the event of any breach or threatened breach of the
covenants set forth in Section 6, in addition to any other relief (including
damages) available to Company under this Agreement or under law.
6.5 LITIGATION. Executive agrees that during the Term of
Employment and thereafter Executive shall do all things, including the giving
of evidence in suits and other proceedings, which Company shall deem
necessary to obtain, maintain, defend, or assert rights accruing to Company
during the Term of Employment and in connection with which Executive has
knowledge, information, or expertise. All reasonable expenses incurred by
Executive during the Term of Employment or thereafter in fulfilling the
duties set forth in this Section, shall be reimbursed by Company to the full
extent legally appropriate, including without limitation a reasonable payment
for Executive's time in the event this Agreement has terminated prior to the
time Executive renders such duties.
6.6 FUTURE COOPERATION. The Parties hereto agree to cooperate with
each other without additional compensation from and after the date hereof, to
supply any information and to execute documents reasonably required for the
purposes of giving effect to this Agreement, or in connection with the
consummation of any actions contemplated hereby.
7. TERMINATION OF EMPLOYMENT. This Agreement and the employment of
Executive hereunder shall terminate upon the occurrence of the first to occur
of the following events or conditions, and the Parties shall remain subject
to the following conditions and covenants after termination:
7.1 EXPIRATION OF TERM. This Agreement shall terminate upon
expiration of the term specified in Section 2 hereof.
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7.2 DEATH OR INCAPACITY. This Agreement shall automatically
terminate upon the death or Incapacity of Executive. Subject to the
Americans with Disabilities Act and applicable state law, "Incapacity" shall
mean Executive's inability by reason of mental or physical condition to
perform substantially all of his duties and responsibilities hereunder for a
continuous period of three (3) months or more, or for any aggregate period of
four (4) months or more in any twelve-month period whether or not continuous.
In the event of a dispute as to the existence of any such disability,
Executive agrees to submit to medical or psychiatric examinations conducted
by physicians mutually agreed upon by Company and Executive and to be bound
by any determination made by such physicians.
7.3 CAUSE. Company may terminate Executive's employment for Cause.
"Cause" shall mean a determination by Company in its sole discretion
exercised in good faith that there has been (i) an act of dishonesty, fraud,
embezzlement, breach of trust, misappropriation, acceptance of a bribe or
kickback or other similar activity on Executive's part; (ii) an act by
Executive in bad faith and to the detriment of Company or a refusal or
failure by Executive to act in accordance with any specific direction of
order of Company; (iii) neglect by Executive of such Executive's duties,
chronic absenteeism, unacceptable performance, or any material breach or
violation of Executive's obligations (including, without limitation, any
failure to implement material policies or procedures established by Company
for the transaction of business by Company) or covenants pursuant to this
Agreement, any of which is not rectified to the satisfaction of Company by
Executive within a reasonable time after notification to Executive of such
conduct; or (iv) the conviction, or a plea of nolo contendere, of Executive
of a felony or a crime involving fraud, dishonesty or moral turpitude.
Executive's termination for Cause shall be effective immediately upon notice
to Executive. If Executive's employment is terminated for Cause, or if
Executive voluntarily terminates his employment, Company shall pay Executive
his prorated Base Salary through the effective date of the termination of
employment (which shall be no earlier than the date of notice thereof to
Executive) at the rate in effect at the time of such termination, and Company
shall have no further obligations to Executive under this Agreement.
Executive shall forfeit all benefits, rights, and Stock Options which have
not vested as of the effective date of termination.
7.4 OTHER THAN FOR CAUSE. Company may terminate Executive's
employment other than for Cause. If Company terminates Executive's
employment other than for Cause, Company shall pay Executive the following
amounts, according to that portion of the Term of Employment which has
elapsed, such payments to be payable in installments at such time as
Executive would have been paid the Base Salary had the Term of Employment
continued:
EMPLOYMENT TERM ELAPSED SEVERANCE PAY
Less than 180 days Nothing
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More than 180 days but less than five (5) years Base Salary
(prorated to a
monthly sum)
multiplied by
six (6) months
All amounts which are vested benefits or to which Executive is otherwise
entitled under any employee benefits plan of Company shall be payable in
accordance with the terms of such plan. Executive's termination other than
for Cause shall be effective immediately upon notice to Executive.
7.5 TERMINATION BY EMPLOYEE Executive may terminate his
employment by Company at any time, with or without cause, by providing
Company thirty (30) days' advance written notice. Company will have the
option, in its complete discretion, to make Executive's termination of
employment effective at any time after receipt of such notice and prior to
the end of such notice period, provided Company pays Executive all
compensation due and owing through the last day actually worked plus an
amount equal to the Base Salary Executive would have earned through the
balance of the notice period, and thereafter all of Company's obligations
under this Agreement terminate.
7.6 CONTINUATION OF COVENANTS. Notwithstanding termination of his
employment pursuant to the provisions of this Section 7, the obligations of
Executive set forth in Sections 5.2, 5.7, 6, 10 and 11 herein shall survive
the termination of this Agreement.
8. ASSIGNMENT.
8.1 BY EXECUTIVE. This Agreement is personal to Executive and
without the prior written consent of Company (which consent may be withheld
in Company's sole discretion) shall not be assignable by Executive.
Executive shall not have the right to sell, transfer, or assign the right to
receive payments or benefits hereunder, and any such attempted assignment or
transfer shall terminate this Agreement for Cause at the option of Company.
8.2 BY COMPANY. The provisions of this Agreement shall inure to
the benefit of and be binding upon Company, its successors and assigns,
including without limitation any corporation which may acquire all or
substantially all of Company's assets and business, or with or into which
Company may be consolidated, merged, or reorganized. Upon any such merger,
consolidation or reorganization, the term "Company" as used herein shall be
deemed to refer to such successor corporation.
9. SEVERABILITY. In case one or more provisions of this Agreement shall
for any reason be held by an arbitrator or court of competent jurisdiction to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement, and this Agreement
shall be construed in all respects as if such invalid, illegal or
unenforceable provision or clause were omitted and had never been contained
herein. In the event any provision of this Agreement is determined by an
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arbitrator or court to be unenforceable by reason of its being extended for
too great a period of time or over too great a range of activities, the
parties hereto agree that the affected provision shall be interpreted to
extend only over the maximum period of time or range of activities as to
which it may be enforceable.
10. ARBITRATION OF DISPUTES. Except as otherwise provided herein, any
dispute or controversy arising from or relating to this Agreement, or from
any other aspect of Executive's employment or the termination thereof,
including but not limited to alleged violations of federal, state, and/or
local statutes (for example, claims for discrimination including but not
limited to discrimination based on race, sex, sexual orientation, religion,
national origin, age, marital status, medical condition as defined under
California law, handicap, or disability, and claims relating to leaves of
absence mandated by state or federal law), breach of any contract or covenant
(express or implied), tort claims, violation of public policy, or any other
alleged violation of Executive's statutory, contractual, or common law rights
(and including claims against Company's officers, directors, employees, and
agents), which Executive and Company or other party are unable to resolve
through direct discussion, regardless of the kind or type of dispute
(excluding claims for workers' compensation or unemployment insurance,
administrative charges of employment discrimination or retaliation, and any
solely monetary dispute within the jurisdiction of small claims court) shall
be decided by final and binding arbitration in the County of Los Angeles,
State of California in accordance with the American Arbitration Association's
("AAA") National Rules for the Resolution of Employment Disputes (the
"Rules"). Executive and Company each have the right to be represented by
counsel with respect to arbitration of any dispute pursuant to this
paragraph. The arbitrator shall be selected by agreement between Executive
and Company, but if they do not agree on the selection of an arbitrator
within 30 days after the date of the request for arbitration, the arbitrator
shall be selected pursuant to the Rules. At the request of either Company or
Executive, arbitration proceedings shall be conducted in the utmost secrecy,
and, in such case, all documents, testimony and records shall be received,
heard, and maintained by the arbitrator in secrecy, available for inspection
only by Company and Executive and their respective attorneys and experts who
shall agree, in advance and in writing, to receive all such information
confidentially and to maintain the secrecy of such information until such
information shall become generally known. The arbitrator shall have
authority to award equitable relief, damages, costs, and fees to the greatest
extent permitted by law, including but not limited to any remedy or relief
that a court may order. The fees of the arbitrator shall be split equally
between the Parties. Except for a breach or threatened breach of Section 6
of this Agreement, the arbitrator shall have exclusive authority to resolve
all claims between the Parties, including but not limited to whether any
particular claim is arbitrable and whether all or any part of this Agreement
is void or unenforceable.
11. LEGAL FEES. Without implying consent to or agreeing to any legal
proceeding other than arbitration as provided in Section 10 herein, in the
event of any arbitration proceeding, administrative proceeding, or litigation
between the Parties relating to or arising from this Agreement, the
prevailing Party in such proceeding or litigation shall be entitled to
recover all reasonable attorney's fees and costs.
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12. GOVERNING LAW. This Agreement, and each and every related document,
are to be governed by and construed in accordance with the laws of the State
of California.
13. NOTICES. All notices, requests, demands or other communications
hereunder given by the Executive to Company shall be sent by certified mail to
the following address:
Compass Aerospace Corporation
0000 Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxx
Fax: 000-000-0000
All notices, requests, demands or other communications hereunder given by
Company to Executive shall be personally delivered to him or sent by certified
mail to the following address:
Xxxxxxxx XxXxxxxxxx
0000 Xxx Xxxx Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
or such other addresses as a party may from time to time specify in writing to
the other in accordance with this notice provision. All notices hereunder sent
by certified mail shall be effective when mailed.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
among the Parties, and supersedes any and all prior agreements, arrangements and
understandings, both written and oral. No change, supplement, amendment,
modification, waiver or termination of this Agreement or any provisions
contained herein shall be binding unless executed in writing by the President of
Company.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPASS AEROSPACE CORPORATION,
a Delaware corporation
By: /S/ Xxxxxxxxx Xxxx
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Its: Chief Executive Officer and President
XXXXXXXX XXXXXXXXXX
"Executive"
/s/ N. Xxxxxxxx Xxxxxxxxxx
--------------------------------------------
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