EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
21st day of September, 1998 by and between Compass Aerospace Corporation, a
Delaware corporation (the "Company") and N. Xxxx Xxxxx (the "Executive").
RECITALS
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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 Chief Financial Officer 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 Vice President and Chief
Financial Officer 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 One Hundred
and Twenty-five Thousand Dollars ($125,000) (the "Base Salary"), increased to
One Hundred and Fifty Thousand Dollars ($150,000) after six months of service
with an annual review each year thereafter. 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 25,000 shares of common stock of the Company (the "Common Stock")
with an exercise price equal to $1.47 per share. Such option will vest 25%
per year in each of four (4) years beginning on the
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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 benefits or
compensation to which Executive is entitled alters in any way the Term of
Employment or the termination of this Agreement.
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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.
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.
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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.
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
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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
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Less than 180 days Nothing
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
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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
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.
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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.
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.
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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:
N. Xxxx Xxxxx
00000 Xxxxxxxx Xx.
Xxxxxxxx, Xxxxxxxxxx 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
N. XXXX XXXXX
"Executive"
/S/ N. XXXX XXXXX
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