1
EXHIBIT 10.5
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
by and between Aviation Group, Inc., a Texas corporation (the "COMPANY"), and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an individual resident of the State of Texas ("EMPLOYEE"), as
of February 1, 1997 (the "EFFECTIVE DATE").
W I T N E S S E T H :
In consideration of the mutual covenants herein contained, the
employment of Employee upon the terms, conditions and covenants set forth
herein and each act performed pursuant hereto, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT AND DUTIES
1.1 Employment. For the term of employment as below stated, the
Company hereby employs Employee as its Vice-President of its Ground Handling &
Service Division to perform such duties as the Chief Executive Officer of the
Company shall from time to time prescribe.
1.2 Employee's Resources. Employee shall devote substantially all
of his time, energy and capabilities to the performance of such duties and
shall not devote any material portion of his time or abilities to the planning,
organization, promotion, direction, management or conduct of any other business
activity, whether or not such other business activity is pursued for the gain,
profit or pecuniary advantage of Employee, without having first obtained the
consent of the Company. Employee further agrees that, without the prior
consent of the Company, Employee shall not during the term of this Agreement
directly or indirectly (i) invest in any business which is competitive with
that of the Company, (ii) attempt to influence customers or other business
associates not to do business with or not to continue to do business with the
Company, or (iii) take any other action inconsistent with the fiduciary
responsibility of an employee to his employer.
ARTICLE II
TERM OF EMPLOYMENT
2.1 Term. Subject to earlier termination as hereinafter provided,
the initial term of employment of Employee hereunder shall commence on the
Effective Date and shall end on the
2
third anniversary of the Effective Date. Thereafter, this Agreement shall be
automatically extended from year to year unless the Company shall have provided
written notice of non-renewal to the Employee not less than thirty (30) days
prior to such expiration date, or unless terminated in accordance with the
provisions of Section 2.2 of this Agreement. As used herein, the phrase "Term
of Employment" shall mean said initial term of employment as well as any
renewal terms thereof.
2.2 Termination. This Agreement may be terminated at any time
during the Term of Employment only by reason of and in accordance with the
following:
(a) Death. If Employee dies during the term of this
Agreement and while in the employ of the Company, this Agreement shall
automatically terminate as of the date of Employee's death; and the
Company shall have no further obligation to Employee or his estate,
except to pay to the estate of Employee (i) any accrued, but unpaid,
Salary (as hereinafter defined) and any vacation or sick leave
benefits which have accrued as of the date of death but were then
unpaid or unused, and (ii) any declared, accrued Bonus Compensation
(as hereinafter defined), if any.
(b) Disability. If, during the term of this Agreement,
Employee shall be prevented from performing his duties hereunder by
reason of becoming totally disabled, then the Company, on thirty (30)
days' prior notice to Employee, may terminate this Agreement. For
purposes of this Agreement, Employee shall be deemed to have become
totally disabled when (i) he receives "total disability benefits"
under the Company's disability plan (whether funded with insurance or
self-funded by the Company), or (ii) the Board, upon the written
report of a qualified physician (after complete examination of
Employee) designated by the Board, shall have determined that Employee
has become physically and/or mentally incapable of performing his
duties under this Agreement on a permanent basis. In the event of
termination pursuant to this Section, the Company shall be relieved of
all of its obligations under this Agreement, except to pay Employee
any accrued, but unpaid Salary, any vacation or sick leave benefits
which have accrued as of the date on which such permanent disability
is determined, but then remain unpaid, and any declared Bonus
Compensation. The provisions of the preceding sentence shall not
affect Employee's rights to receive payments under the Company's
disability insurance plan, if any.
(c) Termination by the Company for Cause. Prior to the
expiration of the term of this Agreement, the Company may discharge
Employee for cause and terminate this Agreement without any further
liability hereunder to Employee or his estate, except to pay any
accrued, but unpaid, Salary, any declared Bonus Compensation, and any
vacation benefits due to him. For purposes of this Agreement, a
"discharge for cause" shall mean termination of Employee upon written
notification to Employee limited, however, to one or more of the
following reasons:
-2-
3
(i) Fraud, misappropriation or embezzlement by
Employee in connection with the Company as determined by the
affirmative vote of at least a majority of the Board; or
(ii) Mismanagement or neglect of Employee's
duties as determined by the affirmative vote of at least a
majority of the Board; or
(iii) Willful and unauthorized disclosure of
information proprietary or confidential to the Company; or
(iv) Employee's breach of any material term or
provision of this Agreement, after notice to Employee of the
particular details thereof and a period of thirty (30) days
thereafter within which to cure such breach, if any, and the
failure of Employee to cure such breach within such thirty
(30) day period.
(d) Termination by Employee with Notice. Employee may
terminate this Agreement at any time upon thirty (30) days' notice to
the Company, in which event Employee shall be paid his then prevailing
Salary prorated to the date of termination, plus any accrued, but
unused, vacation benefits.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 Salary and Bonus. As compensation for his services to the
Company and other duties and responsibilities herein contemplated, Employee
shall receive from the Company a salary, payable in equal monthly installments,
equivalent to $60,000.00 per year until such time as the Company successfully
completes an initial public offering of its Common Stock (the "Public
Offering"). Commencing on the first pay period after successful completion of
the Public Offering, Employee shall receive a salary, payable in equal monthly
installments, equivalent to $70,000.00 per year. Employee may also be entitled
to receive from time to time bonuses and additional compensation ("BONUS
COMPENSATION") when, as, and if determined by the Board.
3.2 Employment Benefits. In addition to the Salary and Bonus
Compensation payable to Employee hereunder, Employee shall be entitled to the
following benefits upon satisfaction by Employee of the eligibility
requirements therefor, subject to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless
this Agreement is terminated pursuant to the provisions of Section
2.2(b) hereof, Employee shall be paid sick leave benefits at his then
prevailing Salary rate during his absence due to illness or other
incapacity, reduced by the amount, if any, of worker's compensation,
social security
-3-
4
entitlements or disability benefits, if any, under the Company's group
disability insurance plan. The Company, at its own expense, shall
provide Employee with the maximum amount of disability insurance
benefits allowed for one in the position of Employee with the Company
under and consistent with any group disability insurance plan which
the Company, at its election, may adopt. Notwithstanding anything
herein to the contrary, Employee's sick leave days shall not exceed
the number of sick leave days provided to employees of similar tenure
and position in the Company as provided in the Company's policy
manual, if any.
(b) Life Insurance. The Company, at its own expense,
shall provide Employee, subject to Employee passing any physical
examination required by the Company's insurance company, life
insurance benefits in a face amount of not less than one year's salary
under and consistent with any group term life insurance plan which the
Company, at its election, may adopt.
(c) Hospitalization, Accident, Major Medical and Dental
Insurance. The Company, at its own expense, shall provide Employee
(and all dependents of Employee) with group hospitalization, group
accident, major medical, and dental insurance in amounts of coverage
comparable to the coverage, if any, provided other employees in
similar positions with the Company.
(d) Vacations. Employee shall be entitled to a
reasonable paid vacation each year during the term of this Agreement
as determined by the Board, exclusive of holidays and weekends, which
vacation shall be taken by Employee in accordance with the business
requirements of the Company at the time and its personnel policies
then in effect relative to this subject.
(e) Working Facilities. The Company shall provide, at
its expense, adequate facilities, equipment, supplies and personnel
(including professional, clerical, support and other personnel) for
Employee's use in performing his duties and responsibilities under
this Agreement.
(f) Other Employment Benefits. As an employee of the
Company, Employee shall participate in and receive such other fringe
benefits as may be in effect from time to time for employees of
similar tenure and position in the Company, whether or not
specifically enumerated herein and whether or not through any written
plan or arrangement, upon satisfaction by Employee of the eligibility
requirements therefor.
3.3 Reimbursement of Employee Expenses. Employee is authorized to
incur ordinary, necessary and reasonable expenses in connection with the
performance of his duties and responsibilities under this Agreement and for the
promotion of the business and activities of the
-4-
5
Company during the term hereof, including, without limitation, expenses for
necessary travel and entertainment and other items of expenses required in the
normal and routine course of Employee's employment hereunder. The Company will
reimburse Employee from time to time for all such business expenses incurred
pursuant to and in conformity with the provisions of this Section provided that
Employee presents to the Company documentary evidence of such expenses
necessary to satisfy the reporting requirements of the Internal Revenue Code of
1986, as amended.
ARTICLE IV
RESTRICTIVE COVENANTS
4.1 Trade Secrets, Propriety and Confidential Information.
Employee recognizes and acknowledges that Employee will acquire during his
employment hereunder access to certain trade secrets and confidential and
proprietary information of the Company (including, but not limited to,
financial data, marketing and sales plans, customer and supplier lists, and
technical and commercial information relating to the Company's properties,
customers and suppliers). Employee acknowledges that the information he
obtains through his employment hereunder constitutes valuable, special, and
unique property of the Company and that the Company would suffer great loss and
damage if he should violate the covenants set forth in this Agreement.
Employee acknowledges that such covenants and conditions are reasonable and
necessary for the protection of the Company's business.
4.2 Solicitation of Employees. Employee agrees that during the
Term of Employment and until three years after the termination or expiration of
the Term of Employment, he will not, directly or indirectly, or by act in
concert with others, employ or attempt to employ or solicit for employment to
any business which is competitive with the Company, any of the Company's
employees, or seek to influence any employees of the Company to leave their
employment with the Company.
4.3 Nondisclosure of Trade Secrets, Propriety and Confidential
Information. Employee agrees that without the prior written approval of the
Company, Employee shall not during the Term of Employment or following the
cessation of the Term of Employment for any reason disclose any of the
Company's trade secrets or confidential or proprietary information to any
person or firm, company, association, or other entity (except for authorized
personnel of the Company) for any reason or purpose whatsoever; provided,
however, that this Section shall not apply to the extent that Employee shall be
required to provide information pursuant to a valid, lawful subpoena or court
order so long as Employee shall have made his best efforts in good faith to
cause the court of relevant jurisdiction, to the greatest extent possible, to
limit the scope of such subpoena or order and protect the confidentiality of
the information so disclosed.
-5-
6
4.4 Noncompetition Agreement. Employee covenants and agrees to
refrain for three years after any termination or expiration of his employment
with the Company from engaging in, or being employed by or performing
consulting services for any company or firm engaged in, the business of
providing painting and/or paint stripping services for aircraft, aircraft
cleaning services, ground handling services and/or light catering to the
airline industry or any other business in which the Company may be engaged at
the time of such employment termination or expiration.
4.5 Solicitation of Business of Company. Employee covenants and
agrees that during the Term of Employment Employee will not attempt to
influence customers, suppliers, and other business associates not to do
business with or not to continue to do business with the Company or its
affiliates.
4.6 Survival of Covenants. Sections 4.2, 4.3 and 4.4 hereof shall
survive any expiration or termination of this Agreement and shall continue to
bind the parties hereto in accordance with the terms hereof. The covenants
contained in this Article IV shall be construed as covenants or agreements
independent of any other provision of this Agreement and the allegation or
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the covenants contained herein.
4.7 Remedies. In the event of breach or threatened breach by
Employee of any provision of this Article IV, the Company shall be entitled to
relief by temporary restraining order, temporary injunction, permanent
injunction, or otherwise in addition to other legal and equitable relief to
which it may be entitled, including any and all monetary damages which the
Company may incur as a result of said breach, violation or threatened breach or
violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or
violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of
such remedies as to such breach, violation, or threatened breach or violation,
or as to any other breach, violation, or threatened breach or violation.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Notices. Whenever, in connection with this Agreement, any
notice is required to be given or any other act or event is to be done or occur
on or by a particular number of days, and the date thus particularized should
be a Saturday, Sunday, or bank holiday in the City of Dallas, Texas, such date
shall be postponed to the next day which shall not be a Saturday, Sunday, or
bank holiday in the City of Dallas, Texas. In the event a notice or other
document is required to be given hereunder to the Company or Employee, such
notice or other document shall either be personally
-6-
7
delivered or be mailed to the party entitled to receive the same by certified
mail, return receipt requested, at the appropriate address set forth below or
at such other address as such party shall designate in a written notice given
in accordance with this Section:
Company: Employee:
Aviation Group, Inc. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ [[ P. O. ▇▇▇ ▇▇▇▇▇▇ ]]
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ [[ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ]]
Notice shall be deemed given on the date of actual delivery, if delivered in
person, or, if mailed, then on the date noted on the return receipt.
5.2 Binding Effect. The rights and obligations of the parties
shall inure to the benefit of and shall be binding upon their heirs,
representatives, successors and assigns as the case may be.
5.3 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
5.4 Waiver, Modification, and Integration. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by any party. This
instrument contains the entire agreement of the parties concerning employment
and supersedes all prior and contemporaneous representations, understandings
and agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by the Company and all such prior or
contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated. This Agreement may not be modified, altered or
amended except by written agreement of all the parties hereto.
5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND ACTIONS HEREON SHALL BE
BROUGHT IN DALLAS COUNTY, TEXAS.
5.6 Counterpart Execution. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
5.7 Captions. The captions herein are inserted for convenience
only and shall not affect the construction of this Agreement.
-7-
8
IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth
above.
COMPANY:
AVIATION GROUP, INC., a Texas corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Title: President & Chief Executive Officer
----------------------------------------------
EMPLOYEE:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-8-