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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made this 5th day of May, 1995,
by and between XxXxxxxxx Xxxxxxx Corporation, a Maryland corporation ("MDC"),
and Xxxxxx X. Bavaria ("ECB"), currently a resident of Cincinnati, Ohio.
RECITALS
A. MDC is engaged in the aerospace business, which includes Xxxxxxx
Aircraft Company, an unincorporated business unit engaged principally in the
manufacturing, marketing, and sale of commercial aircraft ("DAC").
B. MDC desires to employ ECB as the Deputy President of DAC and ECB desires
to be so employed by MDC, all upon the terms and conditions set forth herein.
AGREEMENT
In consideration of the foregoing, the representations, warranties
and covenants herein contained, and other good and valuable consideration (the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties by their execution hereof), the parties agree as follows:
1. Employment. MDC agrees to employ ECB as Deputy President of DAC, and ECB
agrees to be so employed during the term of this Agreement, upon the terms and
conditions hereinafter set forth.
2. Duties. During the term of this Agreement, ECB shall diligently and
faithfully carry out his duties as Deputy President of DAC, which duties shall
include: (a) primary responsibility for the marketing and sales of MD-80/90 and
MD-11 aircraft, and the successful launching of the MD-95 aircraft program; (b)
performance of additional duties as may be assigned by the DAC President, the
MDC Chief Executive Officer ("CEO") or the MDC Board of Directors ("Board"); (c)
devoting his full-time and best efforts to performing his duties hereunder to
the best of his abilities and in manner consistent with MDC standards and
policies; and (d) such other duties as are appropriate for an employee holding
the position of Deputy President of DAC.
3. Term of Employment. Employment of ECB pursuant to this Agreement by MDC
shall commence on May 15, 1995 and, unless terminated earlier as provided for
herein, shall terminate on August 14, 1997.
4. Place of Performance. In connection with ECB's employment hereunder, ECB
is to be based at the principal executive offices of DAC, currently located in
Long Beach, California, except for required travel on DAC business. DAC shall
furnish ECB with office space, stenographic and secretarial assistance and such
other facilities, equipment, and services as are suitable to ECB's position at
DAC and as are adequate for the performance of his duties hereunder.
5. Compensation. As full consideration for all services ECB renders to MDC
hereunder, MDC shall compensate ECB in the following manner:
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A. Annual Salary. MDC shall pay ECB an annual base salary
hereunder of $400,000, payable in equal weekly installments or at such
other intervals as may be agreed upon by MDC and ECB, plus targeted
annual incentive compensation determined in accordance with MDC's
Performance Sharing Plan ("PSP") formula. The actual amount of earned
incentive compensation shall be based on ECB's and DAC's achievement
of performance goals and performance factors set in accordance with
the PSP; provided, however, that (i) earned incentive compensation
shall not be less than $400,000 per annum; and (ii) base and incentive
compensation in each calendar year shall be prorated for the period of
employment during such year. A copy of the PSP is attached to this
Agreement as Exhibit A and is incorporated herein by this reference.
B. Long-Term Incentive Compensation. Years-of-Service-based
restricted stock ("Restricted Stock") to be granted effective as of
the commencement date of employment, with vesting as follows:
i. 6,000 shares on August 15, 1997, and an additional 6,000
shares on August 15, 1998.
ii. All Restricted Stock shall be granted and issued under
the terms of the MDC 1994 Performance and Equity Incentive Plan
("PEIP") (including agreements to be issued pursuant to the terms
thereof), and ECB's participation thereunder shall continue as
long as such plan remains in effect, with participation on the
same basis as other corporate officers in any future incentive
compensation or other bonus plan covering MDC's executive
employees. A copy of the PEIP is attached to this Agreement as
Exhibit B and is incorporated herein by this reference.
Notwithstanding the foregoing, the Long-Term Incentive
Compensation in this Section 5.B. is intended to be the total
long-term incentive compensation of ECB during his employment
with MDC. Additional long-term incentive awards to ECB, if any,
will be granted at the sole discretion of the MDC Management
Succession and Compensation Committee ("Compensation Committee").
iii. In the event ECB's employment by MDC terminates prior
to August 14, 1997, the number of shares of Restricted Stock to
be received by ECB shall be determined as follows:
(a) If ECB voluntarily terminates his employment, or
his employment is terminated by MDC for "cause" in
accordance with Section 6.A., all rights to receive
Restricted Stock will terminate.
(b) If ECB's employment is terminated as a result of
his death or incapacity (as determined in accordance with
Section 6.E.), the MDC Compensation Committee in its sole
discretion will determine the reduction, if any, to the
number of shares of Restricted Stock, but the number will
not be less than pro rata to the length of his employment to
the term of this Agreement, payable in equal installments on
each of the scheduled vesting date(s).
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(c) If ECB breaches the noncompete or confidentiality
provisions of Section 7 or 8 after termination of this
Agreement, any shares of Restricted Stock upon which
restrictions have not yet lapsed prior to such breach shall
terminate.
(d) If this Agreement is terminated by ECB for "cause"
in accordance with Section 6.B., the Restricted Stock shall
vest and be payable in equal installments on each of the
selected vesting dates.
C. Hiring Bonus: Within one week of the execution of this Agreement,
ECB shall receive from MDC a hiring bonus of $50,000.
D. Sales of Residences.
i. ECB may place his Cincinnati residence for sale. If not sold
by August 31, 1995, MDC shall provide third-party home sale
assistance. (See Exhibit C attached hereto, Third-Party Home Sale
Assistance Program, which is incorporated herein by this reference.)
ii. In the event ECB purchases a residence in Long Beach,
California during the term of this Agreement, upon termination of
ECB's employment by MDC for any reason other than for "cause" in
accordance with Section 6.A., ECB may place his Long Beach, California
residence for sale. If not sold within six (6) months of such
termination of employment, MDC shall provide third-party home sale
assistance of the same type and scope as provided for in Exhibit C.
D. Transfer and Travel Allowances. During the term of this Agreement:
i. MDC shall reimburse ECB for all reasonable out-of-pocket costs
incurred by him in moving his residence from Cincinnati, Ohio to Long
Beach, California.
ii. MDC shall reimburse ECB for all reasonable out-of-pocket
costs incurred by him in moving his residence from Long Beach,
California to Sarasota, Florida upon termination of ECB's employment
with MDC for any reason other than for "cause" in accordance with
Section 6.A.
iii. MDC shall reimburse ECB for all reasonable out-of-pocket air
travel to and from his home in Sarasota, Florida, as needed, with
reimbursed trips not to exceed six round trips per year.
E. Other Benefits. ECB shall be entitled during the term of this
Agreement to:
i. enjoy certain personal benefits provided by MDC, including
reimbursement in full of all first-class travel for business purposes;
reimbursement for all first-class business travel for ECB's wife, when
necessary or appropriate as determined by the DAC President or the
CEO; and reimbursement of reasonable out-of-pocket entertainment
expenses reasonably incurred by ECB in performance of his duties
hereunder;
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ii. receive such employee benefits customary for senior
executives and officers of MDC, on the same terms and conditions as
generally made available to such executives, including:
(a) health insurance (to include family coverage, if customary);
(b) life, accident, and disability insurance;
(c) coverage under directors and officers liability insurance;
(d) corporate indemnification as available for other senior
management and officers;
(e) business expense reimbursement;
(f) business and/or social club memberships (non-golf); and
(g) participation in pension and savings plans.
iii. three weeks of fully paid vacation during each calendar year
at a time or times selected by ECB, exclusive of the week off between
Christmas and New Year's; and
iv. those holidays designated by MDC during which MDC's normal
business operations are closed.
6. Termination. The employment of ECB hereunder by MDC may be terminated
under the circumstances set forth below.
A. Cause. MDC may terminate ECB's employment hereunder for cause as
determined in the sole discretion of the MDC CEO or the MDC Board. For
purposes hereof, "cause" is defined as gross neglect of duty, substantial
inability or failure by ECB to perform his duties and responsibilities,
failure to pass a drug-screening test, or material breach of this Agreement
by ECB. In the event of termination by MDC for cause, ECB will have no
further entitlements (other than those that may have previously vested
under any employee benefit programs).
B. Termination for Convenience. MDC may terminate this Agreement for
convenience at any time. In such event, ECB shall be entitled to one year
of compensation (base salary plus incentive compensation as determined in
accordance with Section 5.A.) and benefits, except if termination for
convenience occurs in the final year of this Agreement, such compensation
shall continue to be paid only to the end of the original term.
C. For Cause by ECB. ECB is entitled to terminate this Agreement for
cause in the event of a material breach of this Agreement by MDC. In such
event, ECB will be entitled to continuance of compensation, plus all other
benefits as if MDC had terminated him for its convenience.
D. For Convenience by ECB. ECB is entitled to terminate this Agreement
for convenience at any time. In such event, ECB will have no further
entitlements, except those that may have previously vested under any
employee benefit programs.
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E. Incapacity. "Incapacity" shall mean ECB's inability to perform the
essential functions of his duties hereunder for health reasons for three
months in any twelve-month period. In the event of ECB's incapacity, MDC
shall continue to make payments to him hereunder to the end of the month in
which incapacity shall be deemed by MDC to have occurred. ECB's
compensation during any period of incapacity prior to the effective date of
such termination is to be the amounts payable to him hereunder. ECB is not
entitled to any further compensation from MDC for any period subsequent to
the effective date of such termination.
F. Death. If ECB dies during the term of this Agreement, MDC shall pay
to ECB's estate the compensation that would otherwise be payable to ECB up
to the end of the month in which his death occurs. Such payment is in
addition to payments received from, and does not preclude ECB or his heirs
from participating in, MDC's accidental death, life insurance and similar
plans in accordance with the terms of such plans. MDC's obligations to pay
ECB additional compensation hereunder terminates at such time as MDC
complies with its obligations under this Section.
7. Noncompete.
A. ECB agrees that during the three (3) year period beginning on the
date of termination of his employment with MDC for any reason, ECB may not,
either individually or with or through an affiliate of ECB, undertake any
employment or perform any services for any other aircraft manufacturer
which competes substantially with MDC where ECB's responsibilities would be
similar to his responsibilities at MDC.
B. Because of the potential compensation to be paid to ECB and his
duties and responsibilities under this Agreement, ECB agrees that the
provisions of Section 7.A. are reasonable and necessary to protect MDC.
8. Confidential Information.
A. Immediately upon ECB's termination of employment, ECB is to deliver
to the DAC President or the CEO all materials and things relating to ECB's
employment by MDC, including any and all materials and things embodying any
of the confidential information described in Section 8.B. ECB may neither
retain any copies or reproductions thereof nor deliver any such materials
and things or copies or reproductions thereof to any third person.
B. ECB acknowledges that, in the course of his employment with MDC, he
will become acquainted with confidential and proprietary information of
MDC. ECB agrees that he will not, without the prior written consent of MDC,
disclose or make any use of such confidential or proprietary information
except in the ordinary course of his employment with MDC or except as may
be requested by MDC or otherwise be required by applicable law.
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C. During the term of his employment with MDC, and for a period of
five years thereafter, ECB will not disclose or otherwise provide
information or documents of a confidential or proprietary nature (other
than in the ordinary course of employment with MDC) to any person regarding
MDC (i) without the prior written consent of MDC (which consent may be
granted or withheld by MDC in MDC's sole discretion), (ii) except to
regulatory officials having jurisdiction over ECB, or (iii) except as
required by law or legal process or in connection with any legal proceeding
to which ECB is a party or is otherwise subject. In any event, ECB will
immediately notify the CEO of any and all requests or demands for such
information or documents. This Section applies to all information and
documents regarding MDC, whether or not the same is confidential.
D. ECB's right to receive payments to be made to him under Section 5
hereof shall immediately terminate on any breach by ECB of the terms and
conditions of Section 7 or 8 hereof.
9. Amendment and Modification. No amendment, modification, supplement,
termination, consent or waiver of any provision of this Agreement, nor consent
to any departure therefrom, will in any event be effective unless the same is in
writing and is signed by the party against whom enforcement of the same is
sought. Any waiver of any provision of this Agreement and any consent to any
departure from the terms of any provision of this Agreement is to be effective
only in the specific instance and for the specific purpose for which given.
10. Approvals and Consents. If any provision hereof requires the approval
or consent of any party to any act or omission, such approval or consent is not
to be unreasonably withheld or delayed except as set forth herein.
11. Assignments. No party may assign or transfer any of its rights or
obligations under this Agreement to any other person without the prior written
consent of the other parties.
12. Captions. Captions contained in this Agreement have been inserted
herein only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof.
13. Counterpart Facsimile Execution. For purposes of executing this
Agreement, a document signed and transmitted by facsimile machine or telecopier
is to be treated as an original document. The signature of any party thereon,
for purposes hereof, is to be considered as an original signature, and the
document transmitted is to be considered to have the same binding effect as an
original signature or an original document. At the request of any party, any
facsimile or telecopy document is to be re-executed in original form by the
parties who executed the facsimile or telecopy document. No party may raise the
use of a facsimile machine or telecopier or the fact that any signature was
transmitted through the use of a facsimile or telecopier machine as a defense to
the enforcement of this Agreement or any amendment or other document executed in
compliance with this Section.
14. Counterparts. This Agreement may be executed by the parties on any
number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the parties notwithstanding that all the
parties are not signatories to the same counterpart.
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15. Entire Agreement. This Agreement and all of the exhibits and schedules
attached to this Agreement constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
letters of intent, understandings, negotiations and discussions of the parties,
whether oral or written.
16. Failure or Delay. No failure on the part of any party to exercise, and
no delay in exercising, any right, power or privilege hereunder operates as a
waiver thereof; nor does any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. No notice to or demand on any
party in any case entitles such party to any other or further notice or demand
in similar or other circumstances.
17. Further Assurances. The parties will execute and deliver such further
instruments and do such further acts and things as may be required to carry out
the intent and purpose of this Agreement.
18. Governing Law. This Agreement and the rights and obligations of the
parties hereunder are to be governed by and construed and interpreted in
accordance with the laws of the State of California applicable to contracts made
and to be performed wholly within California, without regard to choice or
conflict of laws rules.
19. Legal Fees. Except as otherwise provided herein, all legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby are to be paid by the party incurring such
costs and expenses. In the event any party brings suit to construe or enforce
the terms hereof, or raises this Agreement as a defense in a suit brought by
another party, the prevailing party is entitled to recover its attorneys' fees
and expenses.
20. Notices. All notices, consents, requests, demands and other
communications hereunder are to be in writing, and are deemed to have been duly
given or made: (a) when delivered in person, (b) three days after deposited in
the United States mail, first class postage prepaid, (c) in the case of
telegraph or overnight courier services, one business day after delivery to the
telegraph MDC or overnight courier service with payment provided for, or (d) in
the case of telex or telecopy or fax, when sent, verification received, in each
case addressed as follows:
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(i) if to MDC:
Xxxxx X. Xxxxxxxxxxx, President & Chief Executive Officer
XxXxxxxxx Xxxxxxx Corporation
Mailcode: 100 1060
X.X. Xxx 000
Xx. Xxxxx, XX 00000
Fax #: (000) 000-0000
with a copy to:
F. Xxxx Xxxxxxxx, Xx. Vice President-Administration
& General Counsel
XxXxxxxxx Xxxxxxx Corporation
Mailcode: 100 1240
XxXxxxxxx Xxxxxxx Corporation
X.X. Xxx 000
Xx. Xxxxx, XX 00000
Fax #: (000) 000-0000
(ii) if to ECB:
Xxxxxx X. Bavaria (and) Xxxxxx X. Bavaria
0000 Xxxxx Xxxx 0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Fax #: (000) 000-0000 Fax #: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxxxx & Shohl
1900 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax #: 000-000-0000
or to such other address as any party may designate by notice to the other party
in accordance with the terms of this Section.
21. Remedies Cumulative. Each and every right granted hereunder and the
remedies provided for under this Agreement are cumulative and are not exclusive
of any remedies or rights that may be available to any party at law, in equity,
or otherwise.
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22. Rules of Construction. Unless the context of this Agreement clearly
requires otherwise: (a) references to the plural include the singular and vice
versa; (b) references to any person include such person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by this
Agreement; (c) references to one gender include all genders; (d) "including" is
not limiting; (e) "or" has the inclusive meaning represented by the phrase
"and/or"; (f) the words "hereof," "herein," "hereby," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement; (g) article, section, subsection,
exhibit and schedule references are to this Agreement unless otherwise
specified; (h) reference to any agreement (including this Agreement), document
or instrument means such agreement, document or instrument as amended or
modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof; and (i) references to any applicable law
means such applicable law as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time, unless the effect thereof is to
reduce, limit or otherwise prejudicially affect any obligation or any right,
power or remedy hereunder, in which case such amendment, modification,
codification or reenactment will not, to the maximum extent permitted by
applicable law, form part of this Agreement and is to be disregarded for
purposes of the construction and interpretation hereof.
23. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction is, as to such jurisdiction,
ineffective to the extent of any such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions hereof, or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction, unless the ineffectiveness of such provision would result in
such a material change as to cause completion of the transactions contemplated
hereby to be unreasonable.
24. Specific Performance and Injunctive Relief. ECB recognizes that, if he
fails to perform, observe or discharge any of its obligations under Sections 7
or 8 of this Agreement, no remedy at law will provide adequate relief to the
other parties. Therefore, MDC is hereby authorized to demand specific
performance of this Agreement, and is entitled to temporary and permanent
injunctive relief, in a court of competent jurisdiction at any time when ECB
fails to comply with any of such provisions of this Agreement. To the extent
permitted by applicable law, ECB hereby irrevocably waives any defense that it
might have based on the adequacy of a remedy at law which might be asserted as a
bar to such remedy of specific performance or injunctive relief.
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25. Resolution of Disputes.
A. Except as permitted by Section 24 hereof, any controversy, dispute
or claim arising out of: (1) the interpretation, performance or alleged
breach of this Agreement; (2) the employment relationship between MDC and
ECB, or the termination of such employment relationship; (3) any alleged
breach by MDC of any statute ("statute") affecting ECB's rights; or (4) any
other controversy, dispute or claim that ECB may have against MDC or any of
its agents or representatives, shall be resolved by final and binding
arbitration, at the request of either party, in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
("Rules"). A copy of the Rules are attached as Exhibit D. An arbitrator who
decides any such dispute shall have the right to impose all remedies
provided by law, and shall enforce all statutes of limitations provided by
law. To the extent permitted by law, the prevailing party shall be entitled
to recover its attorneys' fees and legal costs in such arbitration
proceeding.
B. MDC and ECB agree to share equally the fees and costs of
arbitration; provided, however, the arbitrator shall have the discretion to
relieve ECB of such fees if the arbitrator determines that the payment of
ECB's share of the fees would impose an extreme financial burden on ECB.
C. For purposes of this Section, "statute" includes any federal, state
or other governmental regulation, or ordinance, which prohibits
discrimination on the basis of age, ancestry, color, gender, marital
status, mental or physical disability or medical condition, pregnancy,
national origin, race, religion, or sexual orientation. The term "statute"
also refers to any federal, state or other governmental statute, regulation
or ordinance which prohibits retaliation because of: (1) the taking of
leave for family care, medical care, jury duty, and military duty; or (2)
the assertion of rights under any statutes which prohibit discrimination or
govern insurance or retirement rights.
26. Successors and Assigns. All provisions of this Agreement are binding
upon, inure to the benefit of, and are enforceable by or against, the parties
and their respective heirs, executors, administrators or other legal
representatives and permitted successors and assigns.
27. Third-Party Beneficiary. This Agreement is solely for the benefit of
the parties and their respective successors and permitted assigns, and no other
person has any right, benefit, priority or interest under, or because of the
existence of, this Agreement.
28. Waiver of Jury Trial. Each party waives the right to a trial by jury.
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PLEASE READ THIS AGREEMENT CAREFULLY. BY SIGNING IT YOU ARE AGREEING TO
FINAL AND BINDING ARBITRATION OF ANY AND ALL DISPUTES BETWEEN YOU AND
MDC INCLUDING, WITHOUT LIMITATION, DISPUTES RELATING TO THIS
AGREE-MENT, YOUR EMPLOYMENT WITH MDC AND THE TERMINATION THEREOF, AND
CLAIMS OF DISCRIM-INATION AND HARASSMENT.
XXXXXXXXX XXXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxxxx
President & Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxx X. Bavaria
-----------------------------------
Xxxxxx X. Bavaria
INDEX TO EXHIBITS
Exhibit A XxXxxxxxx Xxxxxxx Corporation Performance Sharing Plan, as
amended and restated as of 5 March 1996.
- Incorporated by reference to Exhibit 10(e) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
Exhibit B XxXxxxxxx Xxxxxxx Corporation 1994 Performance and Equity
Incentive Plan.
- Incorporated by reference to Exhibit 4(a) to the Company's
Registration Statement on Form S-8, Commission File No. 33-56129,
filed with the Commission on October 21, 1994.
Exhibit C Third-Party Home Sale Assistance Program. This exhibit is omitted.
(The Company agrees to furnish supplementally a copy of this
exhibit to the Commission upon request.)
Exhibit D Employment Dispute Resolution Rules of the American Arbitration
Association. This exhibit is omitted. (The Company agrees to
furnish supplementally a copy of this exhibit to the Commission
upon request.)
