EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter, this "Agreement"), made and
entered into in the City of Washington, D.C., this 15th day of August, 1991, by
and between American Utilicraft Corporation, a corporation duly organized and
existing under the laws of the State of Delaware, having its principal office
and place of business at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxx xx Xxxxxx, Xxxxxxxx
(hereinafter, the "Corporation"), and Xxxxx X. Xxxxx, residing at 0000 Xxxxxx
Xxxx, Xxxxx, Xxxxx of Maryland (hereinafter, "Xxxxx").
W I T N E S S E T H:
1. The Corporation hereby employs Xxxxx, and Xxxxx agrees to work for
the Corporation as Vice President of Marketing of the Corporation, reporting to
the President and Chief Executive Officer.
2. This Agreement shall expire on 28 February 1996, unless sooner
terminated as hereinafter provided. In addition to the arrangements for
termination hereinafter provided, it is agreed between the parties that, until
the major start-up financing (approximately $20,000,000) of the Corporation is
achieved, this Agreement may be summarily terminated, that is, without notice,
in the sole discretion of the President and Chief Executive Officer of the
Corporation.
3. Xxxxx agrees to devote his full time efforts to his duties as Vice
President of Marketing for the profit, benefit and advantage of the business of
the Corporation.
4. (a) The Corporation agrees to pay Xxxxx a basic salary at the rate
of Sixty Thousand Dollars ($60,000) per annum, payable in semi-monthly
installments, for all the services to be rendered by Xxxxx hereunder, including
service as a member of a committee, and any other duties related to his position
required of him by the President and Chief Executive Officer. The basic salary
above-stated is understood by the parties to this Agreement to be payable to
Xxxxx during the period in which the Corporation is developing the FF-1080
aircraft and seeking its Federal Aviation Administration (hereinafter "FAA")
aircraft type certification.
(b) When the FAA certification is achieved, the basic salary
payable to Xxxxx will increase to One Hundred Thousand Dollars ($100,000.00) per
annum effective the first (1st) day of the month in which the FAA issues the
FF-1080 aircraft type certificate to the Corporation.
(c) The basic salary payable to Xxxxx will further increase to One
Hundred Twenty-Five Thousand ($125,000.00) per annum effective the first (1st)
day of the month in which the Corporation delivers production aircraft number
twenty-four (24).
(d) Basic salary payments to Xxxxx under this Agreement shall begin
on the first (1st) day of the month in which the major start-up financing
(approximately $20,000,000) of the Corporation is achieved.
(e) The basic salary payments made to Xxxxx under this paragraph
shall be adjusted annually, effective the first (1st) day of the thirteenth
(13th) month after any such payment under subparagraphs (a), (b) or (c) above
begins, by the percentage of the annual rate of change in the Consumer Price
Index for the twelve (12) months preceding the above effective date.
5. The Corporation agrees that it will pay Xxxxx, as a bonus, an
additional sum amounting to one quarter of one percent (.25%) of the basic
delivered invoice price (not including optional equipment) of an FF-1080
aircraft delivered to commercial concerns, worldwide, (including commercial air
carriers when owned and/or operated by a foreign government) as, and only as,
responsibility for such sales may be assigned to Xxxxx by the President and
Chief Executive Officer. Payments of the additional sum payable to Xxxxx under
this paragraph shall be made on the first (1st) working day of the month
following the month in which aircraft deliveries are made and final payment on
such deliveries has been received by the Corporation regardless of whether or
not this Agreement is then in effect.
6. The Corporation and Xxxxx agree that the geographical location at
which Xxxxx will devote the major portion of his time and efforts to his duties
as Vice President of Marketing is at the office facility of the Corporation in
Reston, Virginia.
7. The Corporation agrees to pay all reasonable expenses incurred by
Xxxxx in furtherance of the business of the Corporation, including travel and
entertainment expenses. The Corporation agrees to reimburse Xxxxx for any such
expenses paid out by him in the first instance, upon submission by him of a
statement itemizing such expenses.
8. If Xxxxx shall, during the term of his employment under this
Agreement, be absent from work because of illness or other cause for a period,
or aggregate of periods, in excess of six (6) months in any one (1) year of the
term of employment, the Corporation shall have the right to terminate this
Agreement on one hundred eighty (180) days notice to Xxxxx. In that event, the
Corporation shall pay Xxxxx his compensation to the date of termination.
9. Xxxxx agrees that the Corporation may, from time to time, apply for
and take out in its own name and at its own expense, life, health, accident, or
other insurance upon Xxxxx that the Corporation may deem necessary or advisable
to protect its interests hereunder; the total amount of such life insurance
shall not exceed One Million Dollars ($1,000,000.00) without the written consent
of Xxxxx. Xxxxx agrees to submit to any medical or other examination necessary
for such purpose and to assist and cooperate with the Corporation in procuring
such insurance; and Xxxxx agrees that other than his rights as a shareholder he
shall have no right, title, or interest in or to such insurance.
10. In the event of the death of Xxxxx during the term of this
Agreement and after the major start-up financing is in place, the Corporation
agrees to pay Xxxxx'x legal representatives the sum of Five Thousand Dollars
($5,000.00).
11. Xxxxx agrees that during the term of this Agreement he will not
engage in any other commercial activity, whether or not competitive with the
business of the Corporation, nor be affiliated in any other way as officer,
director, or significant stockholder of another corporation without the written
consent of the President and Chief Executive Officer of the Corporation.
12. Xxxxx agrees that he shall exercise reasonable care to prevent
disclosure of the Corporation's proprietary information to others and shall not,
himself, at any time during the period of this Agreement and after its
termination for any reason, disclose the Corporation's proprietary information
to others and will not use such information for any purpose except as
contemplated by this Agreement. The term "proprietary information" as used
herein includes, in addition to information so designated and labeled by the
Corporation, all business, financial, technical and design information related
to the Corporation's developmental and production programs whether or not
designated and labeled as proprietary information.
13. Xxxxx agrees that, for a period of three (3) years after leaving
the employ of the Corporation for any reason, he will not engage in any way,
directly or indirectly, in any business competitive with the business of the
Corporation.
14. (a) After the major start-up financing (approximately $20,000,000)
of the Corporation is achieved, either party shall have the right to terminate
this Agreement upon one hundred eight (180) days notice to the other. If Xxxxx
terminates this Agreement, the Corporation shall pay Xxxxx until the date of
termination. Except for any reason that would be considered for cause, if the
Corporation terminates the Agreement, it shall forthwith pay additional
compensation to Xxxxx in the form of a lump sum payment of two (2) times the
average amount of the annual basic salary then payable under paragraphs 4 (a),
(b) or (c) above.
(b) For purposes of paragraph (a) above, a reason that could be
considered for cause, within the sole discretion of the President and Chief
Executive Officer, would be the failure of the Corporation to have sold at least
twenty-five (25) FF-1080 aircraft or derivative aircraft during the first full
calendar year (January 1 through December 31) after the major start-up financing
(approximately $20,000,000) of the Corporation is achieved, and to sell at least
twenty-five (25) FF-1080 or derivative aircraft each calendar year thereafter.
15. (a) For protection of Xxxxx against possible termination after a
change of control (defined below) of the Corporation and to induce Xxxxx to
continue to serve in his capacity as Vice President of Marketing or in such
other capacity to which he may be elected or appointed, the Corporation will
provide severance benefits in the event Xxxxx'x employment is terminated after a
change of control.
(b) "Change of control" shall have occurred if, at any time after
the Corporation has acquired its major start-up financing, (a) any person (as
used in Sections 13(d) and 14(d) of the Securities Exchange Act ("SEA") of 1934)
becomes the beneficial owner (as defined in Rule 13(d)-3 of the SEA) of a total
of twenty percent (20%) or more of the outstanding shares of the Corporation's
common stock, or (b) the Board of Directors of the Corporation is composed of a
majority of directors who were not directors of the Corporation on the date of
this Agreement, or (c) the change is of the type that is required to be reported
under Item 5(f) of Schedule 14 of Regulation 14A promulgated under the SEA.
(c) If a change of control has occurred, Xxxxx shall be entitled to
severance benefits if his employment is terminated by him due to:
(i) the assignment to him of any duties not consistent with
his present position, or a change in titles or offices, or any failure to
re-elect him to any positions held on the date of the change of control;
(ii) a reduction in salary or discontinuance of any bonus
plans in effect on the date of the change of control; or
(iii) a change in geographical location of where his position
is based in excess of twenty (20) miles or required travel in excess of his
usual business travel schedule.
(d) Xxxxx shall be entitled to severance benefits if his employment
is terminated by the Corporation after a change of control. Such termination
must not be due to any reason that would be considered for cause.
(e) Severance benefits after a change of control has occurred shall
be:
(i) a lump sum payment of ten (10) times the amount of the
annual basic salary then payable under paragraphs 4 (a), (b) or (c) above.
(ii) allowance of surrender of all outstanding stock options,
with the price to be determined by taking the difference between the option
price and the price of the stock on the date of the change of control or the
date of termination, whichever is higher; and
(iii) all employee benefits in effect and applicable to Xxxxx
on the date of the change of control will be retained and paid by the
Corporation for Xxxxx for a period of two (2) years. These benefits shall
include all health, accident, and disability plans as well as any life insurance
plans provided by or through the Corporation.
(f) Xxxxx shall not be required to mitigate the amount of any
payment provided under these severance benefits by seeking other employment and
none of these payments may be reduced by any future salary he may earn.
(g) In the event of a change of control, the Corporation is aware
that the Board of Directors or a shareholder or shareholders of the Corporation
may cause the Corporation to refuse to comply with its obligations under this
paragraph, or may cause the Corporation to institute litigation seeking to have
this paragraph declared enforceable, or may take other action to deny Xxxxx the
benefits intended to be provided under this paragraph. It is the intent of the
Corporation that Xxxxx not be required to incur expenses in enforcing his rights
under this paragraph by litigation or other legal action because the costs and
expenses thereof would substantially detract from the benefits intended to be
extended to Xxxxx under this paragraph.
(h) If, following a change of control, Xxxxx determines that the
Corporation has failed to comply with any of its obligations under this
paragraph or in the event the Corporation or any other person takes action to
declare this paragraph void or enforceable, or institutes any litigation or
other legal action designed to deny Xxxxx the benefits intended to be extended
under this paragraph, the Corporation authorizes Xxxxx to retain counsel of his
choice at the Corporation's expense to represent Xxxxx in connection with the
initiation or defense by Xxxxx of any litigation or legal action, whether by or
against the Corporation, any director, officer, shareholder, or any other person
affiliated with the Corporation, in any jurisdiction.
(i) Despite any previously existing attorney-client relationship
between the Corporation and counsel retained by Xxxxx, the Corporation hereby
provides that Xxxxx may enter into an attorney-client relationship with such
counsel. The Corporation and Xxxxx agree that a confidential relationship will
exist between Xxxxx and such counsel.
(j) The Corporation hereby authorizes that the reasonable fees and
expenses of counsel retained by Xxxxx shall be paid or reimbursed to Xxxxx by
the Corporation on a regular, periodic basis upon Xxxxx'x presentation of a
statement or statements prepared by counsel in accordance with its customary
practices, up to a maximum aggregate amount of Two Hundred Fifty Thousand
Dollars ($250,000.00).
16. The Corporation shall have the right, with the consent of Xxxxx, to
assign this Agreement to its successors or assigns and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by or
against its said successors or assigns. The terms "successor" and "assign' shall
include any corporation which buys all or substantially all of the Corporation's
assets, or all of its stock, or with which it merges or consolidates.
17. The Corporation shall indemnify Xxxxx and hold him harmless against
any claims or legal action of any type brought against Xxxxx with respect to his
activities as Vice President of Marketing of the Corporation and in such other
capacity to which he may be appointed or elected and with respect to his
services as a member of a committee and other duties related to his position,
whether such claims or actions be rightfully or wrongfully brought or filed, and
against all costs incurred by Xxxxx therein. In the event an action should be
filed with respect to the subject of this indemnity and hold harmless agreement,
the Corporation agrees that Xxxxx may employ an attorney of Xxxxx'x own
selection to appear and defend the action, on behalf of Xxxxx, at the expense of
the Corporation. Xxxxx, at his option, shall have the sole authority for the
direction of the defense, and shall be the sole judge of the acceptability of
any compromise or settlement of any claims or actions against Xxxxx.
18. Any dispute concerning any questions of law or fact arising out of
the circumstances of employment under this Agreement shall be determined by
arbitration. The controversy shall be submitted to the American Arbitration
Association for final determination.
19. Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any subsequent
breach thereof.
20. If any provision of this Agreement is declared invalid by any
Tribunal, then such provision shall be deemed automatically adjusted to conform
to the requirements for validity as declared at such time and, as so adjusted,
shall be deemed a provision of this Agreement as though originally included
herein. In the event that the provision invalidated is of such a nature that it
cannot be so adjusted, the provisions shall be deemed deleted from this
Agreement as though the provision had never been included herein. In either
case, the remaining provisions of this Agreement shall remain in effect.
21. This Agreement may be extended or modified by mutual agreement in
writing in the form of a numbered amendment hereto.
22. This Agreement shall be construed in accordance with the laws of
the State of Delaware.
23. This Agreement consists of eight (8) pages.
IN WITNESS WHEREOF, the Corporation has hereunto signed its name by its
President and Chief Executive Officer, and the other party hereto has signed his
name, all as of the day and year first above written.
AMERICAN UTILICRAFT
CORPORATION
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
President and Chief
Executive Officer
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx