AVIATION DISTRIBUTORS, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of this 16th day of July, 1996
by and between XXXXXXX X. XXXX, residing at 00 Xxxxxxxx, Xxxxxx Xxxxxx,
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") 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,
although this Agreement may be amended at any time by written agreement among
the parties.
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 Executive Vice
President, and shall devote his full-time attention to the duties and
responsibilities of Executive Vice President in furtherance of the Company's
business.
1.2 In the performance of all of his responsibilities hereunder,
Executive shall be subject to all of the Company policies, rules, and
regulations applicable to its officers and employees generally and its Executive
Vice President specifically. Executive shall report to the Chief Executive
Officer.
1.3 Executive shall continue to be a member of the Board during the
term of this Agreement.
1.4 Without the prior express authorization of the Board, 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 personal investments, conducting private
business affairs, or engaging in educational or charitable activities, if those
activities do not materially interfere with the services required hereunder.
1.5 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, 1999 (the "Term"), unless further extended or
sooner terminated as hereinafter provided. Commencing on January 1, 2000 and on
the third anniversary of each January 1 thereafter (each such January 1, an
"Anniversary Date"), the term of Executive's employment shall automatically be
extended for three additional years unless, not later than the September 30
immediately preceding an Anniversary Date,
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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.
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 Chief Executive Officer of the Board, (iv)
Executive's nonfeasance, or (v) failure of Executive to comply with the
provisions of Section 8 of this Agreement or other willful conduct by Executive
which has a material adverse impact on the Company.
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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, or (iii) 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.
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
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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
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.
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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 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
eighteen (18) 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 annual bonuses
earned by Executive in the fiscal year of the Company ended immediately prior to
the Date of Termination, divided
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by (2) the greater of (C) the number of full months remaining in the Term or (D)
the number eighteen (18) (such quotient being referred to herein as the
"Severance Payments"), minus (Y) any amounts payable to Executive during any
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
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
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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 4.1.3 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
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first anniversary of the date of such expiration);
PROVIDED THAT, such 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 Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether 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 or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would not be deductible (in whole or part)
by the Company, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent necessary
to make such portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of section 280G
of the Code in such other plan, arrangement or agreement), the cash Severance
Payments shall first be reduced (if necessary, to zero), and all other Severance
Payments shall thereafter be reduced (if necessary, to zero); PROVIDED, HOWEVER,
that the Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
For purposes of this limitation, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have waived
at such time and in such manner as not to constitute a "payment" within the
meaning of section 280G(b) of the Code shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and
selected by the accounting firm
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which was, immediately prior to the Change in Control of the Company, the
Company's independent auditor (the "Auditor"), does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, including by
reason of section 280G(b)(4)(A) of the Code, (iii) the Severance Payments shall
be reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance
as deductions by reason of section 280G of the Code, in the opinion of Tax
Counsel, and (iv) the value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the Auditor in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final determination
of a court or an Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the terms of this
Section 4.5.2, the Total Payments paid to or for the Executive's benefit are in
an amount that would result in any portion of such Total Payments being subject
to the Excise Tax, then, if such repayment would result in (i) no portion of the
remaining Total Payments being subject to the Excise Tax and (ii) a dollar-for-
dollar reduction in the Executive's taxable income and wages for purposes of
federal, state and local income and employment taxes, the Executive shall have
an obligation to pay the Company upon demand an amount equal to the sum of (i)
the excess of the Total Payments paid to or for the Executive's benefit over the
Total Payments that could have been paid to or for the Executive's benefit
without any portion of such Total Payments being subject to the Excise Tax; and
(ii) interest on the amount set forth in clause (i) of this sentence at the rate
provided in section 1274(b)(2)(B) of the Code from the date of the Executive's
receipt of such excess until the date of such payment.
5. VACATION
During each calendar year of the term of this Agreement, Executive shall be
entitled to three weeks of paid vacation earned ratably over the term of each
calendar year during the Term. 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 three (3) weeks of
paid vacation, at which
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time Executive shall cease accruing vacation days until his vacation balance
falls below the maximum accrual period.
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 the 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 $120,000 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 among the senior management in accordance with the determination of
the Board of Directors, not to exceed the contribution of $250,000 annually.
Executive shall also be entitled to a commission on sales to those customers
identified in Exhibit "A," a copy of which is attached hereto and incorporated
herein by reference, equal to 1.25% of such sales.
6.3 401(k) PLAN. Executive shall be entitled to participate in the
Company's 401(k) or other similar retirement benefit plan.
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
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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.
8. RESTRICTIVE COVENANTS
8.1 CONFIDENTIAL INFORMATION. Executive acknowledges that in his
employment hereunder he occupies a position of trust and confidence. During the
Term, and thereafter, Executive shall 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.
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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.
8.2 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 Company or any of its subsidiaries or
affiliates to divert their business to any Competitor of the Company.
8.3 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.
8.4 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:
8.4.1 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
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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.
8.4.2 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.
8.4.3 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.
8.4.4 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.
8.4.5 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.
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9. PARTICIPATION IN STOCK AND OPTION EXECUTIVE COMPENSATION PLAN
Executive shall be granted an option to purchase 15,000 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 ratably over a three-year period commencing six months
after the closing of the Company's initial public offering.
10. 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
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
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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 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.
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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.
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.
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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.
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.
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THE COMPANY: EXECUTIVE:
AVIATION DISTRIBUTORS, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Bahit /s/ Xxxxxxx X. Xxxx
---------------------------- ----------------------------
Xxxxxx X. Bahit, XXXXXXX X. XXXX
Chief Executive Officer
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