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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
by and between Aviation Group, Inc., a Texas corporation (the "Company"), and
Xxxxxx X. Xxxxx, an individual ("Employee"), as of August 1, 1998 (the
"Effective Date").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained, the
employment of Employee upon the terms, conditions and covenants set forth herein
and each act performed pursuant hereto, the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT AND DUTIES
1.1 Employment. For the term of employment as below stated, the Company
hereby employs Employee as its President and Chief Operating Officer to perform
such duties as the Chief Executive Officer of the Company and the Board of
Directors shall from time to time prescribe.
1.2 Employee's Resources. Employee shall devote substantially all of
his time, energy and capabilities to the performance of such duties and shall
not devote any material portion of his time or abilities to the planning,
organization, promotion, direction, management or conduct of any other business
activity, whether or not such other business activity is pursued for the gain,
profit or pecuniary advantage of Employee, without having first obtained the
consent of the Company. Employee further agrees that, without the prior consent
of the Company, Employee shall not during the term of this Agreement directly or
indirectly (i) invest in any business which is competitive with that of the
Company, (ii) attempt to influence customers or other business associates not to
do business with or not to continue to do business with the Company, or (iii)
take any other action inconsistent with the fiduciary responsibility of an
employee to his employer.
ARTICLE II
TERM OF EMPLOYMENT
2.1 Term. Subject to earlier termination as hereinafter provided, the
initial term of employment of Employee hereunder shall commence on the Effective
Date and shall end on the third anniversary of the Effective Date. At the end of
the initial term, the Agreement will automatically extend for an additional year
and for an additional year each year thereafter, unless either party notifies
the other party in writing at least 90 days prior to the end of the Term of
Employment (as hereinafter defined) that the Agreement will terminate at the end
of the term. As used herein, the phrase "Term of Employment" shall mean said
initial term of employment as well as any renewal terms thereof.
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2.2 Termination. This Agreement may be terminated at any time during
the Term of Employment only by reason of and in accordance with the following:
(a) Death. If Employee dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically terminate
as of the date of Employee's death; and the Company shall have no further
obligation to Employee or his estate, except to pay to the estate of Employee
(i) any accrued, but unpaid, Salary (as hereinafter defined) and any vacation or
sick leave benefits which have accrued as of the date of death but were then
unpaid or unused, and (ii) any declared, accrued Bonus Compensation (as
hereinafter defined), if any.
(b) Disability. If, during the term of this Agreement, Employee
shall be prevented from performing his duties hereunder by reason of becoming
totally disabled, then the Company, on thirty (30) days' prior notice to
Employee, may terminate this Agreement. For purposes of this Agreement, Employee
shall be deemed to have become totally disabled when (i) he receives "total
disability benefits" under the Company's disability plan (whether funded with
insurance or self-funded by the Company), or (ii) the Board, upon the written
report of a qualified physician (after complete examination of Employee)
designated by the Board, shall have determined that Employee has become
physically and/or mentally incapable of performing his duties under this
Agreement on a permanent basis. In the event of termination pursuant to this
Section, the Company shall be relieved of all of its obligations under this
Agreement, except to pay Employee any accrued, but unpaid Salary, any vacation
or sick leave benefits which have accrued as of the date on which such permanent
disability is determined, but then remain unpaid, and any declared Bonus
Compensation. The provisions of the preceding sentence shall not affect
Employee's rights to receive payments under the Company's disability insurance
plan, if any.
(c) Termination by the Company for Cause. Prior to the expiration
of the term of this Agreement, the Company may discharge Employee for cause and
terminate this Agreement without any further liability hereunder to Employee or
his estate, except to pay any accrued, but unpaid, Salary, any declared Bonus
Compensation, and any vacation benefits and sick leave due to him. For purposes
of this Agreement, a "discharge for cause" shall mean termination of Employee
upon written notification to Employee limited, however, to one or more of the
following reasons:
(i) Fraud, misappropriation or embezzlement by Employee in
connection with the Company as determined by the affirmative vote of at least a
majority of the Board; or
(ii) Gross mismanagement or willful neglect of Employee's
duties as determined solely by the Board; or
(iii) Willful and unauthorized disclosure of information
proprietary or confidential to the Company; or
(iv) Employee's breach of any material term or provision of
this Agreement, after notice to Employee of the particular details thereof and a
period of thirty (30) days thereafter
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within which to cure such breach, if any, and the failure of Employee to cure
such breach within such thirty (30) day period.
(d) Termination by Employee with Notice. Employee may terminate
this Agreement at any time upon thirty (30) days' notice to the Company, in
which event Employee shall be paid his then prevailing Salary prorated to the
date of termination, plus any accrued, but unused, vacation benefits and sick
leave.
(e) Severance. Severance will be paid to Employee, only if employee
is terminated under terms listed above in Article II, Section 2.2, Subsection
(c) (ii). Employee shall receive severance pay equal to 90 days of regular pay
if employee is terminated for reasons listed in Article II, Section 2.2,
Subsection (c) (ii). If employee is terminated for any other reasons with cause
(other than the reasons listed in Article II, Section 2.2, Subsection (c) (ii)),
then Employee is due no severance pay whatsoever.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 Salary and Bonus. As compensation for the Employee's services to
the Company and other duties and responsibilities herein contemplated, Employee
shall receive from the Company a salary commencing on August 1, 1998, and
payable in equal monthly installments, equivalent to $120,000.00 per year.
Employee may also be entitled to receive from time to time bonuses and
additional compensation ("Bonus Compensation") when, as, and if determined by
the Board, consistent with Board policy.
3.2 Collections. Group shall remit promptly from time to time after the
closing (the "Closing") of the transactions contemplated in the Stock Purchase
Agreement between Aviation Group, Inc., General Electrodynamics Corporation
("GEC"), Omega Management Corporation and Employee (the "Stock Purchase
Agreement") to Employee up to $300,000 of any collections, net of direct
expenses, received by GEC pursuant to any of the Government Contracts (as
defined in the Stock Purchase Agreement) after the Closing, on a when earned/as
collected basis. If Group or GEC is required pursuant to a final judgment to
remit payments to Xxxx Xxxxx pursuant to the Non- Competition Agreement, as
amended, by and between Xxxx Xxxxx and GEC (the "Non-Competition Agreement") on
an accelerated basis, Employee agrees to accept payments owed to Employee under
this Section according to the payment schedule set forth in the Non-Competition
Agreement.
3.3 Employment Benefits. In addition to the Salary and Bonus
Compensation payable to Employee hereunder, Employee shall be entitled to the
following benefits (which shall be comparable to those benefits to which
Employee was entitled as an employee of General Electrodynamics Corporation)
upon satisfaction by Employee of the eligibility requirements therefor, subject
to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this
Agreement is terminated pursuant to the provisions of Section 2.2(b) hereof,
Employee shall be paid sick leave
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benefits at his then prevailing Salary rate during his absence due to illness or
other incapacity, reduced by the amount, if any, of worker's compensation,
social security entitlement or disability benefits, if any, under the Company's
group disability insurance plan. The Company, at its own expense, shall provide
Employee with the maximum amount of disability insurance benefits allowed for
one in the position of Employee with the Company under and consistent with any
group disability insurance plan which the Company, at its election, may adopt.
Notwithstanding anything herein to the contrary, Employee's sick leave days
shall not exceed the number of sick leave days provided to employees of similar
tenure and position in the Company as provided in the Company's policy manual,
if any.
(b) Hospitalization, Accident, Major Medical and Dental Insurance.
The Company shall provide Employee with group hospitalization, group accident,
major medical, and dental insurance in amounts of coverage comparable to the
coverage, if any, provided other employees in similar positions with the
Company. Coverage will commence on employment date of August 1, 1998.
(c) Vacations. Employee shall be entitled to a reasonable paid
vacation each year during the term of this Agreement as determined by the Board,
exclusive of holidays and weekends, which vacation shall be taken by Employee in
accordance with the business requirements of the Company at the time and its
personnel policies then in effect relative to this subject.
(d) Working Facilities. The Company shall provide, at its expense,
adequate facilities, equipment, supplies and personnel (including professional,
clerical, support and other personnel) for Employee's use in performing his
duties and responsibilities under this Agreement.
(e) Other Employment Benefits. As an employee of the Company,
Employee shall participate in and receive such other fringe benefits as may be
in effect from time to time for employees of similar tenure and position in the
Company, whether or not specifically enumerated herein and whether or not
through any written plan or arrangement, upon satisfaction by Employee of the
eligibility requirements therefor.
3.4 Reimbursement of Employee Expenses. Employee is authorized to incur
ordinary, necessary and reasonable expenses in connection with the performance
of his duties and responsibilities under this Agreement and for the promotion of
the business and activities of the Company during the term hereof, including,
without limitation, expenses for necessary travel and entertainment and other
items of expenses required in the normal and routine course of Employee's
employment hereunder. The Company will reimburse Employee from time to time for
all such business expenses incurred pursuant to and in conformity with the
provisions of this Section provided that Employee presents to the Company
documentary evidence of such expenses necessary to satisfy the reporting
requirements of the Internal Revenue Code of 1986, as amended.
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ARTICLE IV
RESTRICTIVE COVENANTS
4.1 Trade Secrets, Propriety and Confidential Information. Employee
recognizes and acknowledges that Employee will acquire during his employment
hereunder access to certain trade secrets and confidential and proprietary
information of the Company (including, but not limited to, financial data,
marketing and sales plans, customer and supplier lists, and technical and
commercial information relating to the Company's properties, customers and
suppliers). Employee acknowledges that the information he obtains through his
employment hereunder constitutes valuable, special, and unique property of the
Company and that the Company would suffer great loss and damage if he should
violate the covenants set forth in this Agreement. Employee acknowledges that
such covenants and conditions are reasonable and necessary for the protection of
the Company's business.
4.2 Solicitation of Employees. Employee agrees that during the Term of
Employment and until three years after the termination or expiration of the Term
of Employment, he will not, directly or indirectly, or by act in concert with
others, employ or attempt to employ or solicit for employment to any business
which is competitive with the Company, any of the Company's employees, or seek
to influence any employees of the Company to leave their employment with the
Company.
4.3 Nondisclosure of Trade Secrets, Propriety and Confidential
Information. Employee agrees that without the prior written approval of the
Company, Employee shall not during the Term of Employment or following the
cessation of the Term of Employment for any reason disclose any of the Company's
trade secrets or confidential or proprietary information to any person or firm,
company, association, or other entity (except for authorized personnel of the
Company) for any reason or purpose whatsoever; provided, however, that this
Section shall not apply to the extent that Employee shall be required to provide
information pursuant to a valid, lawful subpoena or court order so long as
Employee shall have made his best efforts in good faith to cause the court of
relevant jurisdiction, to the greatest extent possible, to limit the scope of
such subpoena or order and protect the confidentiality of the information so
disclosed.
4.4 Noncompetition Agreement. Employee covenants and agrees to refrain
for three years after any termination or expiration of his employment with the
Company from engaging in, or being employed by or performing consulting services
for any company or firm engaged in, the business of providing painting and/or
paint stripping services for aircraft, aircraft cleaning services, ground
handling services and/or light catering to the airline industry or any other
aviation business segment in which the Company may be engaged at the time of
such employment termination or expiration.
4.5 Solicitation of Business of Company. Employee covenants and agrees
that during the Term of Employment Employee will not attempt to influence
customers, suppliers, and other business associates not to do business with or
not to continue to do business with the Company or its affiliates.
4.6 Survival of Covenants. Sections 4.2, 4.3 and 4.4 hereof shall
survive any expiration or termination of this Agreement and shall continue to
bind the parties hereto in accordance with the terms hereof. The covenants
contained in this Article IV shall be construed as covenants or
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agreements independent of any other provision of this Agreement and the
allegation or existence of any claim or cause of action of Employee against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants contained herein.
4.7 Remedies. In the event of breach or threatened breach by Employee
of any provision of this Article IV, the Company shall be entitled to relief by
temporary restraining order, temporary injunction, permanent injunction, or
otherwise in addition to other legal and equitable relief to which it may be
entitled, including any and all monetary damages which the Company may incur as
a result of said breach, violation or threatened breach or violation. The
Company may pursue any remedy available to it concurrently or consecutively in
any order as to any breach, violation, or threatened breach or violation, and
the pursuit of one of such remedies at any time will not be deemed an election
of remedies or waiver of the right to pursue any other of such remedies as to
such breach, violation, or threatened breach or violation, or as to any other
breach, violation, or threatened breach or violation.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Notices. Whenever, in connection with this Agreement, any notice is
required to be given or any other act or event is to be done or occur on or by a
particular number of days, and the date thus particularized should be a
Saturday, Sunday, or bank holiday in the City of Dallas, Texas, such date shall
be postponed to the next day which shall not be a Saturday, Sunday, or bank
holiday in the City of Dallas, Texas. In the event a notice or other document is
required to be given hereunder to the Company or Employee, such notice or other
document shall either be personally delivered or be mailed to the party entitled
to receive the same by certified mail, return receipt requested, at the
appropriate address set forth below or at such other address as such party shall
designate in a written notice given in accordance with this Section:
Company: Employee:
Aviation Group, Inc. Xxxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000 Xxxxxxxxxxx, Xxxxx 00000
Notice shall be deemed given on the date of actual delivery, if delivered in
person, or, if mailed, then on the date noted on the return receipt.
5.2 Binding Effect. The rights and obligations of the parties shall
inure to the benefit of and shall be binding upon their heirs, representatives,
successors and assigns as the case may be.
5.3 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain
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in full force and effect as if the provision which was determined to be void,
illegal, or unenforceable had not been contained herein.
5.4 Waiver, Modification and Integration. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This instrument
contains the entire agreement of the parties concerning employment and
supersedes all prior and contemporaneous representations, understandings and
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by the Company and all such prior or
contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated. This Agreement may not be modified, altered or
amended except by written agreement of all the parties hereto.
5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND ACTIONS HEREON SHALL BE
BROUGHT IN DALLAS COUNTY, TEXAS.
5.6 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
5.7 Captions. The captions herein are inserted for convenience only and
shall not affect the construction of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
COMPANY:
AVIATION GROUP, INC., a Texas corporation
By: /s/ XXX XXXXXXX
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Name: Xxx Xxxxxxx
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Title: Chairman of the Board
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EMPLOYEE:
/s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
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GEC BENEFITS FOR XXXXXX X. XXXXX
x Xxxxxx HMO Health Insurance
o United Dental Plan
o VSP Vision plan
o Company paid:
Auto Lease:- Including insurance, gasoline and upkeep
UNUM disability insurance
Farmers Life Insurance
o Business expenses reimbursed
o 401K Program
