AVIATION DISTRIBUTORS, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made
as of this 16th day of July, 1996 by and between XXXXXX X. XXXXXX, residing at
00000 Xxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Executive"), and AVIATION
DISTRIBUTORS, INC., a Delaware corporation, with offices at Xxx Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000 (the "Company"), for the purpose of setting forth the
terms and conditions of Executive's employment by the Company and to protect the
Company's knowledge, expertise, customer relationships and the confidential
information the Company has developed regarding clients, customers,
shareholders, option holders, employees, products, business operations and
services. As of the Effective Date, this Agreement supersedes any prior
understandings or agreements between Executive and the Company or any of the
Company's subsidiaries or affiliates.
The Board of Directors of the Company (the "Board") recognizes that
Executive's contribution to the growth and success of the Company has been
substantial. The Board desires to provide for the continued employment of
Executive and to make certain changes in Executive's employment arrangements
with the Company which the Board has determined will reinforce and encourage the
continued attention and dedication to the Company of Executive as a member of
the Company's management, in the best interest of the Company and its
shareholders. Executive is willing to commit himself to continue to serve the
Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and Executive wish to enter
into an employment agreement on the terms and conditions set forth below. In
consideration of the premises and the respective covenants and agreements of the
parties herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. TIME AND EFFORTS
1.1 Executive shall be employed as the Company's Chairman of the
Board, President and Chief Executive Officer, and shall devote substantially all
of his working time and efforts to the duties and responsibilities of the
President and Chief Executive Officer in furtherance of the Company's business.
In this capacity, Executive shall have such duties and responsibilities as the
Board shall designate that are consistent with Executive's positions as
President and Chief Executive Officer of the Company. Executive shall perform
such duties and responsibilities in accordance with the practices and
policies of the Company as in effect from time to time and in accordance with
Executive's employment arrangements with the Company. Executive shall report
directly to the Board.
1.2 Executive shall continue to be a member of the Board during the
term of this Agreement and to serve as its Chairman.
1.3 Without the prior express authorization of the Board (which
approval shall not be unreasonably withheld), Executive shall not, directly or
indirectly, during the term of this Agreement engage in any activity competitive
with or adverse to the Company's business, whether alone, as a partner or
independent contractor, or as an officer, director, or employee of any other
corporation. This Agreement shall not be interpreted to prohibit Executive from
making passive investments, conducting private business affairs, or engaging in
educational or charitable activities, if those activities do not materially
interfere with the services required hereunder.
1.4 In order to induce the Company to enter into this Agreement,
Executive represents and warrants to the Company that (i) Executive is not a
party or subject to any employment agreement or arrangement with any other
person, firm, company, corporation or other business entity; and (ii) Executive
is subject to no restraint, limitation or restriction by virtue of any agreement
or arrangement, or by virtue of any law or rule of law or otherwise which would
impair Executive's right or ability to enter the employ of the Company or to
perform fully his duties and obligations pursuant to this Agreement.
2. TERM
The initial term of employment of Executive under this Agreement shall
commence effective as of July 1, 1996 (the "Effective Date") and shall continue
in effect through December 31, 2001 (the "Term"), unless further extended or
sooner terminated as hereinafter provided. Commencing on January 1, 2002 and on
the fifth anniversary of each January 1 thereafter (each such January 1, an
"Anniversary Date"), the term of Executive's employment shall automatically be
extended for five additional years unless, not later than the September 30
immediately preceding an Anniversary Date, either party shall have given written
notice (a "Nonrenewal Notice") to the other party that it does not wish to
extend this Agreement or unless sooner terminated pursuant to Section 3.
References hereinafter to the "Term" of this Agreement shall refer to both the
initial term and any extended term of Executive's employment hereunder.
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3. TERMINATION
Executive's employment hereunder may be terminated without breach of
this Agreement only under the following circumstances:
3.1 DEATH. Executive's employment hereunder shall terminate upon his
death.
3.2 DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six (6) consecutive
months, and within thirty (30) days after written Notice of Termination (as
defined in paragraph (3.5) below) is given (which may occur before or after the
end of such six (6) month period) shall not have returned to the performance of
his duties hereunder on a full-time basis, Executive's employment hereunder
shall terminate for "Disability."
3.3 CAUSE. The Company may terminate Executive's employment
hereunder for "Cause." For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (i) Executive's
conviction for the commission of an act or acts constituting a felony under the
laws of the United States or any state thereof, (ii) action by Executive toward
the Company involving dishonesty, (iii) Executive's refusal to abide by or
follow written directions of the Board, (iv) Executive's gross nonfeasance or
(v) failure of Executive to comply with the provisions of Section 8 of this
Agreement or other willful conduct by Executive which is intended to have and
does have a material adverse impact on the Company.
3.4 TERMINATION BY EXECUTIVE.
3.4.1 Executive may terminate his employment hereunder for "Good
Reason." For purposes of this Agreement, Executive shall have "Good
Reason" to terminate his employment hereunder (i) upon a failure by the
Company to comply with any material provision of this Agreement which has
not been cured within ten (10) business days after notice of such
noncompliance has been given by Executive to the Company, (ii) upon action
by the Company resulting in a diminution of Executive's title or authority,
(iii) upon the Company's relocation of Executive's principal place of
employment outside of the Irvine, California metropolitan area or (iv) one
year after a "Change in Control of the Company" (as defined in paragraph
3.4.2 below). Executive may terminate his employment voluntarily without
Good Reason upon at least six months' prior notice to the Company.
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3.4.2 For purposes of this Agreement, a "Change in Control of
the Company" will be deemed to have occurred if:
A. any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than (i) the
Company, (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or (iii) any corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportion as their ownership of
Shares), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company
representing 50% or more of the combined voting power
of the Company's then outstanding voting securities;
B. during any period of not more than two consecutive
years, individuals who at the beginning of such period
constitute the Board, and any new director (other than
a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in clause (A), (C), or (D) of this Section
3.4.2) whose election by the Board or nomination for
election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
C. the stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving or parent entity) 50% or
more of the combined voting power of the voting
securities of the Company or such surviving or parent
entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as
hereinabove defined) acquires 50% or more of the
combined voting power of the Company's then outstanding
securities; or
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D. the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets (or any
transaction having a similar effect).
3.5 NOTICE OF TERMINATION. Any termination of Executive's employment
by the Company or by Executive (other than termination under Section 3.1 hereof)
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
3.6 DATE OF TERMINATION. "Date of Termination" shall mean (i) if
Executive's employment is terminated by his death, the date of his death, (ii)
if Executive's employment is terminated pursuant to subsection (3.2) above,
thirty (30) days after Notice of Termination is given (provided that Executive
shall not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period), (iii) if Executive's employment is
terminated pursuant to subsection (3.3) or (3.4) above, other than as provided
in (iv), the date specified in the Notice of Termination; and (iv) if Executive
receives from the Company a Nonrenewal Notice, the date the Agreement expires;
PROVIDED THAT, if within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties or by a binding and final arbitration award.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
4.1 DISABILITY. During any period that Executive fails to perform
his duties hereunder as a result of Disability, Executive shall continue to
receive his full salary at the rate then in effect for such period until his
employment is terminated pursuant to Section 3.2 hereof. Subject to the
provisions of Section 8 hereof, in the event Executive's employment is
terminated pursuant to this Section 4.1 hereof, then
4.1.1 as soon as practicable thereafter, the Company shall pay
Executive all unpaid amounts, if any, to which Executive is entitled as of
the Date of Termination under Sections 5, 6.1 and 6.2 hereof and shall pay
to Executive, in accordance with the terms of the applicable plan or
program, all other unpaid amounts to which Executive is then entitled under
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any compensation or benefit plan or program of the Company (collectively,
"Accrued Obligations");
4.1.2 following the Date of Termination and for the longer of
thirty (30) months thereafter or the balance of the Term as then in effect
(the "Severance Period"), the Company shall pay Executive monthly an amount
equal to (X) the quotient of (1) the sum of (A) Executive's annual base
salary at the rate in effect as of the Date of Termination and (B) the
average of the annual bonuses earned by Executive in the three fiscal years
of the Company ended immediately prior to the Date of Termination, divided
by (2) the greater of (C) the number of full months remaining in the Term
or (D) the number thirty (30) (such quotient being referred to herein as
the "Severance Payments"), minus (Y) any amounts payable to Executive
during such month as a disability benefit under any other disability plan,
program or arrangement of the Company; and
4.1.3 as of the Date of Termination, an additional number of
shares (if any) underlying outstanding stock options granted to Executive
from time to time during the Term shall become exercisable, such that the
total number of shares underlying each such grant which are exercisable is
equal to the product of (1) the total number of shares covered by such
grant (whether or not any portion of such grant has previously been
exercised) and (2) a fraction the numerator of which is the number of full
months from the date of grant to the end of the Severance Period and the
denominator of which is the number of full months from the date of grant to
the date the option would otherwise have become fully exercisable.
Executive shall have the right to exercise any stock option, to the extent
then exercisable, for a period of one (1) year following the Date of
Termination, subject to such limitations on exercisability as may be set
forth in any plan or agreement covering such options, and to the extent not
exercisable, the option shall immediately terminate.
4.2 DEATH. If Executive's employment is terminated by his death,
4.2.1 the Company shall pay to the person(s) or entity set forth
in Section 11 hereof: (1) the Accrued Obligations, at the time(s) set forth
in Section 4.1.1 hereof; (2) as soon as practicable following Executive's
death, the amounts payable under any life insurance policy maintained by
the Company on Executive's life; and (3) as soon as practicable following
the end of the fiscal year of the Company in which Executive's death
occurs, any incentive compensation which would otherwise have been paid to
Executive with respect to such fiscal year; and
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4.2.2 the additional vesting of stock options, as described in
Section 4.1.3 shall apply.
4.3 TERMINATION FOR CAUSE; VOLUNTARY TERMINATION WITHOUT GOOD REASON.
If Executive's employment is terminated by the Company for Cause or voluntarily
by Executive for other than Good Reason, the Company shall pay the Accrued
Obligations to Executive at the time(s) set forth in Section 4.1.1 hereof and
the Company shall have no further obligations to Executive under this Agreement.
4.4 TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON;
NONRENEWAL. If (1) the Company shall terminate Executive's employment other
than for Disability pursuant to Section 4.2 or for Cause, (2) Executive shall
terminate his employment for Good Reason or (3) the Term of this Agreement
expires as a result of a Nonrenewal Notice having been provided by the Company,
then, subject to the provisions of Section 8 hereof:
1. the Company shall pay the Accrued Obligations to
Executive at the time(s) set forth in Section 4.1.1
hereof;
2. the Company shall pay to Executive the Severance
Payments, as defined and for the period set forth in
Section 4.1.2 hereof (except that in the case of the
expiration of the Term, as described in clause 4.4(3)
above, the Severance Period shall end on the first
anniversary of the expiration of the Term and, for
purposes of determining the amount of Severance
Payments, the divisor shall be equal to twelve (12));
3. the additional vesting of stock options as described in
Section 4.2.2 shall apply (except that in the case of
the expiration of the Term, as described in clause
4.4(3) above, the number of additional option Shares
becoming exercisable shall be determined by reference
to the number of full months from the date of grant to
the first anniversary of the date of such expiration);
4. Executive shall continue to be provided with the same
medical and life insurance coverage as existed
immediately prior to the applicable Notice of
Termination or Notice of Nonrenewal, as the case may
be, such coverage to continue through the end of the
Severance Period (or, in the case of expiration of the
Term, as described in clause 4.4(3) above, through the
first anniversary of the date of such expiration);
PROVIDED THAT, such
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coverage shall cease as of the date Executive obtains
new employment; and
5. Executive shall be provided with appropriate
outplacement services.
4.5 TERMINATION UPON A CHANGE IN CONTROL.
4.5.1 Upon the occurrence of a Change in Control of the
Company during the Term, any then outstanding stock options granted to
Executive shall become fully exercisable, whether or not otherwise
exercisable, and such options shall be fully vested.
4.5.2 In the event that any payment or benefit received or to
be received by Executive in connection with a Change in Control of the
Company or the termination of Executive's employment, whether such payments
or benefits are received pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person (all such payments and benefits
being hereinafter called "Total Payments"), would be subject (in whole or
part) to the tax (the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to Executive such additional amounts (the "Gross-Up Payment") as may be
necessary to place Executive in the same after-tax position as if no
portion of the Total Payments had been subject to the Excise Tax. In the
event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder, Executive shall repay to the Company,
at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the Gross-Up
Payment being repaid by Executive to the extent that such repayment results
in a reduction in Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder
(including by reason of any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payment), the Company shall make
an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by Executive with respect to such
excess) at the time that the amount of such excess is finally determined.
Executive and the Company shall each reasonably cooperate with the other in
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connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Total
Payments.
5. VACATION
During each calendar year of the term of this Agreement, Executive
shall be entitled four weeks of paid vacation. Executive shall be entitled to
receive payment for accrued vacation not taken during each calendar year during
the term of this Agreement or may accrue such vacation for use in a subsequent
calendar year; however Executive shall be subject to a maximum accrual of eight
(8) weeks of paid vacation, at which time Executive shall cease accruing
vacation days until his vacation balance falls below the maximum accrual.
6. CURRENT COMPENSATION
6.1 ANNUAL SALARY. For all services rendered by Executive under this
Agreement, the Company shall pay or cause to be paid to Executive, and Executive
shall accept the Annual Salary and Incentive Compensation, if any, all in
accordance with and subject to the terms of this Agreement. For purposes of
this Agreement, the term "Compensation" shall mean the Annual Salary and
Incentive Compensation, if any. Executive shall be entitled to receive as
current compensation an Annual salary in the amount of $225,000 per annum
(hereinafter referred to as the "Annual Salary"). References in this Agreement
to "annual" or "per annum" or "Annual" and similar phrases shall mean the
twelve-month period commencing on July 1st of each year during the term of this
Agreement unless otherwise indicated.
6.2 INCENTIVE COMPENSATION. In addition, Executive shall be entitled
to annual Incentive Compensation in accordance with the Company's Executive
Incentive Compensation Plan. The Company acknowledges the current Executive
Incentive Compensation Plan provides for the contribution of 7.5% of the
Company's earnings before taxes to a senior management bonus pool to be
allocated in accordance with the determination of the Board, not to exceed the
contribution of $250,000 annually. In addition, Executive shall be entitled to
bonus compensation declared at the discretion of the independent members of the
Board from time to time in an amount not to exceed two times the Executive's
Annual Salary per calendar year.
6.3 401(k) PLAN. Executive shall be entitled to participate in the
Company's 401(k) or other similar retirement benefit plan.
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6.4 PAYMENTS OF CURRENT COMPENSATION. The payment of Executive's
Annual Salary shall be made in semi-monthly installments on the then prevailing
pay days of the Company. Any payment for Incentive Compensation will be made in
accordance with the Executive Incentive Compensation Plan, and payment will be
made in one lump sum concurrently with payments made to others in senior
management. All payments are subject to the customary withholding tax and other
employment taxes as required with respect to compensation paid to an employee.
7. MISCELLANEOUS BENEFITS
7.1 MEDICAL INSURANCE. Executive and his family shall be entitled to
participate in any medical, dental, vision, life, long-term disability, other
insurance or employee benefit program instituted or maintained by the Company
for the benefit of its executive employees.
7.2 BUSINESS EXPENSES. Executive shall be reimbursed for all
reasonable expenses incurred by Executive in connection with Executive's
attendance at business meetings and promotion of Company business upon
presentation by Executive to the Company of an expense report and adequate
records or other documentation substantiating the expenditures, not less
frequently than monthly. Any such amounts disallowed as a business expense for
federal or state income tax purposes shall be deemed additional salary to
Executive. The fact that the Company may not reimburse Executive for an expense
is not an indication that the Company determined that the expense was not
incurred on its behalf or in connection with the Company's business.
7.3 AUTOMOBILE ALLOWANCE. Executive shall be entitled to an
automobile allowance including lease payments for the automobile of Executive's
choice, taxes, licensing fees, insurance, and maintenance costs.
7.4 SERVICES FURNISHED. The Company shall furnish Executive with
office space, stenographic assistance and such other facilities and services as
shall be suitable to Executive's position and adequate for the performance of
his duties.
7.5 PLACE OF PERFORMANCE. In connection with Executive's employment
by the Company, Executive shall be based at the principal executive offices of
the Company to be located within a 15-mile radius of the Orange County Xxxx
Xxxxx Airport, except for required travel on Company business to an extent
substantially consistent with present business travel obligations.
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7.8 LIFE INSURANCE. During the term of this Agreement, the Company
shall pay for and maintain on a continuous basis, "key-man" life insurance in
the amount of $3,000,000 on the life of Executive naming the Company as
beneficiary. During the term of this Agreement, the Company shall pay for and
maintain on a continuous basis, life insurance in the amount of $3,000,000 on
the life of Executive naming Executive's estate as beneficiary.
8. CONSULTANCY ARRANGEMENT/ RESTRICTIVE COVENANTS
8.1 RETENTION AS CONSULTANT. During the "Consulting Period" (as
defined in paragraph 8.2 below), (i) the Company shall retain the Executive and
the Executive shall serve the Company as an independent consultant on the terms
and conditions set forth herein and (ii) the Executive shall provide such
consulting services to the Company as the Company may reasonably request under
the direction of the Executive's Board consistent with its overall objectives in
an amount not to exceed (x) 40 hours per month for the first six (6) months of
the Consulting Period (as defined in paragraph 8.2 below) and (y) 20 hours per
month thereafter. Executive may perform his duties hereunder at such locations
as may be agreed upon between the Executive and the Company (PROVIDED, that if
requested to perform such duties in any location other than the Irvine,
California metropolitan area, the Company shall reimburse the Executive for his
reasonable out-of-pocket expenses incurred in connection therewith in accordance
with paragraph 7.2 hereof). As an independent consultant, the Executive shall
not be authorized to act for or enter into any agreement on behalf of the
Company without written authorization from the Board.
8.2 CONSULTING PERIOD. Upon the Executive's termination of
employment (i) due to Disability, (ii) by the Company without Cause, (iii) by
the Executive for Good Reason or (iv) as a result of a Nonrenewal Notice from
the Company, the Executive shall be retained by the Company as a consultant, in
which case the Executive shall provide the services specified in paragraph 8.1
for a period of thirty (30) months from the date of such termination (such date,
the "Effective Date," and such period, the "Consulting Period"); provided that,
the Consulting Period shall not extend beyond and shall be coterminous with the
Severance Period as described in paragraphs 4.1.2 and 4.4(2) hereof. Following
the termination of the Consulting Period, except as otherwise specifically
provided herein, (i) the Company's obligations under this Agreement shall cease
and the Company shall have no further obligations to Consultant under this
Agreement and (ii) Consultant's obligation to the Company to provide the
consulting services contemplated by Section 1 paragraph 8.2 shall cease.
8.3 CONFIDENTIAL INFORMATION. Executive acknowledges that in his
employment hereunder he occupies a position of trust and confidence. During the
Term, and thereafter, Executive shall
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not, except as may be required to perform his duties hereunder or as required by
applicable law, and except for information which is or becomes publicly
available other than as a result of a breach by the Executive of the provisions
hereof, disclose to others or use, whether directly or indirectly, any
Confidential Information. "Confidential Information" shall mean information
about the Company, its subsidiaries and affiliates, and their respective
suppliers, clients and customers that is not disclosed by the Company for
financial reporting purposes and that was learned by Executive in the course of
his employment hereunder, including (without limitation) proprietary knowledge,
trade secrets, market research, data, formulae, information and supplier, client
and customer lists and all papers, resumes, and records (including computer
records) of the documents containing such Confidential Information. Executive
acknowledges that such Confidential Information is specialized, unique in nature
and of great value to the Company, and that such information gives the Company a
competitive advantage. The Executive agrees to deliver or return to the
Company, at the Company's request at any time or upon termination or expiration
of his employment or as soon thereafter as possible, all documents, computer
tapes and disks, records, lists, data, drawings, prints, notes and written
information (and all copies thereof) furnished by the Company or any of its
subsidiaries or affiliates or prepared by the Executive during the term of his
employment by the Company.
8.4 NONCOMPETION. During the Term and for any Consulting Period
thereafter, Executive shall not, directly or indirectly, without the prior
written consent of the Company, provide consultative service to (with or without
pay), own, manage, operate, join, control, participate in, or be connected with
(as a stockholder, partner, officer, director, employee or otherwise) any
business, individual, partner, firm, corporation, or other entity that operates
one or more multi-unit restaurant chains in any geographic market in which the
Company or any of its subsidiaries then operates or that otherwise directly or
indirectly competes with the Company or any of its subsidiaries (a "Competitor
of the Company"); PROVIDED, HOWEVER, that the "beneficial ownership" by
Executive, either individually or as a member of a "group," as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of not more than five
percent (5%) of the voting stock of any publicly held corporation shall not be a
violation of this Agreement. It is further expressly agreed that the Company
will or would suffer irreparable injury if Executive were to compete with the
Company or any subsidiary or affiliate of the Company in violation of this
Agreement and that the Company would by reason of such competition be entitled
to injunctive relief in a court of appropriate jurisdiction, and Executive
further consents and stipulates to the entry of such injunctive relief in such a
court prohibiting Executive from competing with the Company or any subsidiary or
affiliate of the Company in violation of this Agreement.
8.5 BUSINESS DIVERSION. During the Term and for thirty (30) months
thereafter, Executive shall not, directly or indirectly, influence or attempt to
influence customers or suppliers of the
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Company or any of its subsidiaries or affiliates to divert their business to any
Competitor of the Company.
8.6 NONSOLICITATION. Executive recognizes that he will possess
confidential information about other employees of the Company and its
subsidiaries and affiliates, relating to, among other things, their education,
experience, skills, abilities, compensation and benefits, and inter-personal
relationships with suppliers and customers of the Company. Executive recognizes
that the information he will possess about these other employees is not
generally known, is of substantial value to the Company and will be acquired by
him because of his business position with the Company. Executive agrees that,
during the Term and for thirty (30) months thereafter, he will not, directly or
indirectly, solicit or recruit any employee of the Company, its subsidiaries or
affiliates for the purpose of being employed by him or by any other person on
whose behalf he is acting as an agent, representative or employee and that he
will not convey any such confidential information or trade secrets about other
employees of the Company, its subsidiaries or affiliates to any other person.
8.7 If Executive breaches or threatens to commit breach of, any of
the provisions of Section 8 (the "Restrictive Covenants"), the Company and its
subsidiaries shall have the right to the following:
8.7.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company or its
subsidiaries and that money damages would not provide an adequate remedy to
the Company or its subsidiaries.
8.7.2 Accounting. The right and remedy to require Executive
to account for and pay over to the Company or its subsidiaries, as the case
may be, all compensation, profits, monies, accruals, increments or other
benefits derived or received by Executive as result of any transaction
constituting a breach of the Restrictive Covenants.
8.7.3 Severability of Restrictive Covenants. Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and
valid in geographic and temporal scope and in all other respects. If any
court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect
without regard to the invalid portions.
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8.7.4 Blue-Penciling. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall have
the power to reduce the duration or scope of such provision, as the case
may be, and, in its reduced form, such provision shall then be enforceable.
8.7.5 Enforceability of Jurisdictions. The obligations
contained in this Section 8 shall survive the termination of Executive's
employment or expiration of this Agreement and shall be fully enforceable
thereafter. Executive intends to and hereby confers jurisdiction to
enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographic scope of such Restrictive Covenants. If the courts
of any one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of Executive that such determination not bar or in any way
affect the right of the Company or its subsidiaries to the relief provided
above in the courts of any other jurisdiction within the geographic scope
of such Restrictive Covenants, as to breaches of such Restrictive Covenants
in such other respective jurisdictions, such Restrictive Covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse
and independent Restrictive Covenants.
9. PARTICIPATION IN STOCK OPTION AND INCENTIVE AWARD PLAN
Executive shall be granted an option to purchase 51,050 shares of Common
Stock of the Company (the "Option Shares") pursuant to the terms and conditions
contained in the Company's 1996 Stock Option and Incentive Award Plan (the
"Plan"). The exercise price for the Option Shares will be equal to $7.00, and
the options will vest six months after the closing of the Company's initial
public offering.
DISPUTE RESOLUTION
The parties agree that any dispute that may arise in connection with,
arising out of or relating to this Agreement, or any dispute that relates in any
way, in whole or in part, to Executive's employment with the Company, the
termination of that employment, or any other dispute by and among the parties or
their successors, assigns or affiliates, shall be submitted to binding
arbitration in Los Angeles, California according to the Employment Dispute
Resolution Rules and procedures of the American Arbitration Association. This
arbitration obligation extends to any and all claims that may arise by and
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between the parties or their successors, assigns or affiliates, and expressly
extends to, without limitation, claims or causes of action for wrongful
termination, impairment of ability to compete in the open labor market, breach
of an express or implied contract, breach of the covenant of good faith and fair
dealing, breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, infliction of emotional distress, disability, loss of future earnings,
and claims under the applicable state Constitution, the United States
Constitution, and applicable state fair employment laws, federal equal
employment opportunity laws, and federal and state labor statutes and
regulations, including, but not limited to, the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, the National Labor Relations
Act, as amended, the Labor-Management Relations Act, as amended, the Worker
Retraining and Notification Act of 1988, the Americans With Disabilities Act of
1990, the Rehabilitation Act of 1973, as amended, the Employee Retirement Income
Security Act of 1974, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the California Fair Employment and Housing Act, as
amended.
11. ASSIGNMENT
Neither this Agreement nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by Executive (except by will or by operation
of the law of intestate succession) or by the Company except that the Company
may require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance reasonably
satisfactory to Executive, to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Executive to compensation from
the Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 11 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
This Agreement and all rights of Executive hereunder shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amounts would still be payable to
him hereunder if he had continued to live, all such amounts, unless otherwise
provided
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herein, shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee or, if there be no such
designee, to Executive's estate.
12. NOTICES
All notices, requests and demands hereunder shall be in writing and
delivered by hand, by mail, or by telegram, and shall be deemed given if by hand
delivery, upon such delivery, and if by mail, 48 hours after deposit in the
United States mail, first-class, registered or certified mail, postage prepaid
and properly addressed to the party at the address set forth at the beginning of
this Agreement. Any party may change its address for purposes of this paragraph
by giving the other party written notice of the new address in the manner set
forth above.
13. INVALID PROVISIONS
Invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision were
omitted.
14. AMENDMENT MODIFICATION OR REVOCATION
This Agreement may be amended, modified or revoked in whole or in part, but
only by a written instrument which specifically refers to this Agreement and
expressly states that it constitutes an amendment, modification or revocation
hereof, as the case may be, and only if such written instrument has been signed
by each of the parties to this Agreement.
15. HEADINGS
The headings in this Agreement are inserted for convenience only and are
not to be considered in construction of the provisions hereof.
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16. ENTIRE AGREEMENT
This Agreement contains the entire understanding among the parties and
supersedes any prior written or verbal agreements between them respecting the
subject matter hereof, including, without limitation, any prior verbal or
written employment agreement between Executive and the Company. Upon the
effectiveness hereof, any such prior verbal or written agreements shall
terminate.
17. ATTORNEYS' FEES
If any legal action is necessary to enforce the terms and conditions of
this Agreement, the prevailing party in such action shall be entitled to recover
all costs of suit and reasonable attorneys' fees as determined by the arbitrator
or ruling court.
18. FURTHER ASSURANCES
The parties shall execute such documents and take such other action as is
necessary or appropriate to effectuate the provisions of this Agreement.
19. CONTROLLING LAW
This Agreement and the rights of the parties hereunder shall be governed by
and construed and enforced in accordance with laws of the State of Delaware
(excluding its conflict of laws principles, statutes or other similar laws)
including all matters of construction, validity, performance and enforcement.
20. WAIVER
A waiver by either party of any of the terms and conditions hereof shall
not be construed as a general waiver by such party, and such party shall be free
to reinstate such part or clause, with or without notice to the other party.
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21. INDEMNIFICATION
To the fullest extent permitted by law and the Company's certificate of
incorporation and by-laws, the Company shall indemnify Executive for all amounts
(including, without limitation, judgments, fines, settlement payments, losses,
damages, costs and expenses (including reasonable attorneys' fees)) incurred or
paid by Executive in connection with any action, proceeding, suit or
investigation arising out of or relating to the performance by Executive of
services for, or acting as a director, officer or employee of, the Company or
any subsidiary thereof.
THE COMPANY: EXECUTIVE:
AVIATION DISTRIBUTORS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx
-------------------------- ------------------------------
Xxxx X. Xxxxxx XXXXXX X. XXXXXX
Chief Financial Officer
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