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Employment Agreement

Employment Agreement

Employment Agreement | Document Parties: VOUGHT AIRCRAFT INDUSTRIES INC | Elmer Doty You are currently viewing:
This Employment Agreement involves

VOUGHT AIRCRAFT INDUSTRIES INC | Elmer Doty

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Title: Employment Agreement
Governing Law: Texas     Date: 3/31/2006
Law Firm: Latham Watkins LLP    

Employment Agreement, Parties: vought aircraft industries inc , elmer doty
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Exhibit 10.7

Employment Agreement

     This Employment Agreement (the “ Agreement ”) dated as of March 29, 2006 (the “ Effective Date ”), is made by and between Vought Aircraft Industries, Inc., a Delaware corporation, (together with any successor thereto, the “ Company ”) and Elmer Doty (the “ Executive ”).

RECITALS

A.

 

It is the desire of the Company to assure itself of the services of the Executive by entering into this Agreement.

 

 

 

B.

 

The Executive and the Company mutually desire that Executive provide services to the Company on the terms herein provided.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Employment.

 

(a)

 

General . The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 1(b) , in the position set forth in Section 1(c) , and upon the other terms and conditions herein provided.

 

 

 

 

 

(b)

 

Employment Term . The initial term of employment under this Agreement (the “ Initial Term ”) shall be for the period beginning on the Effective Date and ending at the end of the day on December 31, 2006, unless earlier terminated as provided in Section 3 . The employment term hereunder shall automatically be extended for successive one-year periods (“ Extension Terms ” and, collectively with the Initial Term, the “ Term ”) unless either party gives notice of non-extension to the other no later than ninety (90) days prior to the expiration of the then-applicable Term and subject to earlier termination as provided in Section 3 .

 

 

 

 

 

(c)

 

Position and Duties . The Executive shall serve as the Chief Executive Officer of the Company with such customary responsibilities, duties and authority as may from time to time be assigned to the Executive by the Board of Directors of the Company (the “ Board ”). The Executive shall devote substantially all his working time and efforts to the business and affairs of the Company (which may include service to its Affiliates). The Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time. During the Term, it shall not be a violation of this Agreement for the Executive to (i) serve on industry trade, civic or charitable boards or committees; (ii) deliver lectures or fulfill speaking engagements; (iii) manage his personal investments and affairs; and (iv) serve on the board of directors of for-profit enterprises with

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the Board’s prior consent, as long as such activities do not materially interfere with the performance of the Executive’s duties and responsibilities as an employee of the Company. During his employment and for the 12-month period following termination of his employment with the Company, (x) the Executive agrees not to disparage in any material respect the Company, any of its products or practices, or any of its directors, officers, agents, representatives, stockholders or Affiliates, either orally or in writing, and (y) the Company agrees not to disparage in any material respect the Executive.

2. Compensation and Related Matters.

 

(a)

 

Annual Base Salary . During the Term, the Executive shall receive a base salary at a rate of $500,000 per annum (the “ Annual Base Salary ”), which shall be paid in accordance with the customary payroll practices of the Company, subject to adjustment as determined by the Board.

 

 

 

 

 

(b)

 

Annual Bonus . During the Term, the Executive will be eligible to receive annual bonuses based upon achieving annual financial plan and organization metrics to be determined by the Board (or its committee), with a maximum bonus opportunity for calendar year 2006 equal to 150% of Annual Base Salary. Notwithstanding the foregoing, the Executive will receive a bonus for calendar year 2006 that is at least equal to $500,000, provided, that the Executive’s employment has not been terminated for Cause pursuant to Section 3(a)(iii), due to Disability pursuant to Section 3(a)(ii), due to death or without Good Reason pursuant to Section 3(a)(vi) on or before December 31, 2006.

 

 

 

 

 

(c)

 

Relocation Bonuses . In addition to the annual bonus opportunity, the Executive will receive three relocation bonuses if the Executive’s employment has not been terminated for Cause pursuant to Section 3(a)(iii), due to Disability pursuant to Section 3(a)(ii), due to death or without Good Reason pursuant to Section 3(a)(vi) prior to the applicable bonus date, as follows: (i) $175,000 on the Effective Date, (ii) $175,000 on June 30, 2006, and (iii) $100,000 on December 31, 2006.

 

 

 

 

 

(d)

 

Stock Options . Unless mutually agreed to otherwise by the Company and the Executive, the Executive will receive an option to purchase 250,000 shares of common stock of the Company with a per share exercise price of $10.00 (the “Option”). Twenty-five percent (25%) of the Option will vest based on the passage of time with 6.25% of the Option vesting on each of the first four anniversaries of the Effective Date, subject to the Executive’s continued employment with the Company on the applicable vesting date. Seventy-five percent (75%) of the Option will vest based on the Company’s financial performance (based on EBITDA and cash flow targets to be established by the Board or its committee) each year over the same four years, subject to the Executive’s continued employment with the Company on the applicable vesting date. The Option will be subject to the Company’s then applicable stock plan, an option agreement and the terms of the Company’s stockholders agreement.

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(e)

 

Stock Purchase Rights . The Executive will have the right to purchase shares of common stock of the Company on or prior to December 31, 2006 at per share price equal to the then current fair market value of such stock (as reasonably determined by the Board) and in an amount determined by the Company. Such shares of Company common stock shall be subject to the terms of the Company’s stockholders agreement.

 

 

 

 

 

(f)

 

Additional Compensation . The Company shall work with the Executive to establish a compensation program that is meant to compensate him for some or all of the pension benefits and other material compensation that the Executive forfeited as a result of his terminating employment with his previous employer. Such program and the amounts paid thereunder shall be subject to approval by the Board and shall take into account the compensation and benefits provided in this Agreement.

 

 

 

 

 

(g)

 

Benefits . During the Term, the Executive shall be entitled to participate in employee benefit plans, programs and arrangements of the Company, as may be amended from time to time, which are applicable to the senior officers of the Company. During the Term, the Executive shall also be entitled to receive (i) annual reimbursements for financial and tax planning, up to a maximum of $10,000 per year, and (ii) reasonable temporary living expenses and long-range commuting expenses as mutually agreed to by the Executive and the Board (or its committee).

 

 

 

 

 

(h)

 

Vacation . During the Term, the Executive shall be entitled to participate in the Company’s vacation policy as follows: (i) in calendar year 2006 the Executive shall be entitled to four (4) weeks of paid vacation, and (ii) following calendar year 2006 the Executive shall accrue at least four (4) weeks of paid vacation each year. Any vacation shall be taken at the reasonable and mutual convenience of the Company and the Executive.

 

 

 

 

 

(i)

 

Expenses . During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties to the Company in accordance with the Company’s expense reimbursement policy.

 

 

 

 

 

(j)

 

Key Person Insurance . At any time during the Term, the Company shall have the right to insure the life of the Executive for the Company’s sole benefit. The Company shall have the right to determine the amount of insurance and the type of policy. The Executive shall cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier. The Executive shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.

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(k)

 

Indemnification . The Executive shall be indemnified and held harmless by the Company to the fullest extent authorized by the Company’s certificate of incorporation or bylaws against all costs, expenses, liabilities and losses reasonably incurred or suffered by the Executive as a result of actions taken by the Executive in good faith and in his capacity as an officer of the Company.

3. Termination.

     The Executive’s employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances:

     (a)  Circumstances .

 

(i)

 

Death . The Executive’s employment hereunder shall terminate upon his death.

 

 

 

 

 

(ii)

 

Disability . If the Executive has incurred a Disability, the Company may give the Executive written notice of its intention to terminate the Executive’s employment.

 

 

 

 

 

(iii)

 

Termination for Cause . The Company may terminate the Executive’s employment for Cause.

 

 

 

 

 

(iv)

 

Termination without Cause . The Company may terminate the Executive’s employment without Cause.

 

 

 

 

 

(v)

 

Resignation for Good Reason . The Executive may resign his employment for Good Reason.

 

 

 

 

 

(vi)

 

Resignation without Good Reason . The Executive may resign his employment without Good Reason.

 

 

 

 

 

(vii)

 

Non-extension of Term by the Company . The Company may give notice of non-extension to the Executive pursuant to
Section 1(b) .

 

 

 

 

 

(viii)

 

Non-extension of Term by the Executive. The Executive may give notice of non-extension to the Company pursuant to
Section 1(b) .

 

(b)

 

Notice of Termination . Any termination of the Executive’s employment by the Company or by the Executive under this Section 3 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party hereto indicating the specific termination provision in this Agreement relied upon, setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and specifying a Date of Termination which, for terminations under paragraphs (a) (ii), (iv) or (vi) shall be at least sixty (60) days following the date of such notice (a “ Notice of Termination ”); provided, however,

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that the Company may, in its sole discretion, advance the Date of Termination to any date following the Company’s receipt of the Notice of Termination. A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(c)

 

Company obligations upon termination . Upon termination of the Executive’s employment, the Executive (or the Executive’s estate) shall be entitled to receive the sum of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, any expenses owed to the Executive under Section 2(i) , any accrued vacation pay owed to the Executive pursuant to Section 2(h) , and any amount accrued and arising from the Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements under Section 2(g) , which amounts, if any, shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements, and such other or additional benefits as may be, or become, due to him under the applicable terms of applicable plans, programs, agreements, corporate governance documents and other arrangements of the Company and its subsidiaries (collectively, the “ Company Arrangements ”). The Executive shall not be entitled to any other payments or benefits, except as specifically provided in Section 4.

4. Severance Payments.

 

(a)

 

Termination for Cause, resignation without Good Reason, upon Non-extension of Term by the Company or the Executive, upon death or upon Disability . If the Executive’s employment shall terminate pursuant to Section 3(a)(iii) for Cause, Section 3(a)(vi) for resignation without Good Reason, pursuant to Sections 3(a)(vii) or 3(a)(viii) due to Non-extension of the Term by the Company or the Executive, or as a result of Executive’s death pursuant to Section 3(a)(i) or Disability pursuant to Section 3(a)(ii), the Executive shall not be entitled to any additional severance payment or benefits.

 

 

 

 

 

(b)

 

Termination without Cause or resignation for Good Reason . If the Executive’s employment shall terminate without Cause pursuant to Section 3(a)(iv) or for Good Reason pursuant to Section 3(a)(v) , the Company shall, subject to the Executive signing and not revoking, within sixty (60) days following the Date of Termination, a release of claims in substantially the form attached hereto as Exhibit A :

 

(i)

 

pay to the Executive, in equal installments over the twelve (12) month period following the Date of Termination in accordance with the Company’s regular payroll practice, an amount equal to the Annual Base

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Salary that the Executive would have been entitled to receive if the Executive had continued his employment hereunder for a period of twelve (12) months following the Date of Termination; and

 

 

 

 

 

(ii)

 

cover the premium costs for medical, dental and vision benefit coverage under COBRA for the Executive and, where applicable, Executive’s spouse and dependents, for a period of twelve (12) months following the Date of Termination under one of the Company’s group medical plans.

 

(c)

 

Survival . The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or termination.

 

 

 

 

 

(d)

 

409A . Notwithstanding anything to the contrary in this Section 4 , no payments in this Section 4 will be paid during the six-month period following the Executive’s termination of employment unless the Company determines, in its good faith judgment, that paying such amounts at the time or times indicated in this Section would not cause the Executive to incur an additional tax under Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) (in which case such amounts shall be paid at the time or times indicated in this Section). If the payment of any amounts are delayed as a result of the previous sentence, on the first day following the end of the six-month period, the Company will pay the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been previously paid to the Executive under this Agreement.

5. Competition.

 

(a)

 

The Executive recognizes and agrees that in order to assure that the Executive devotes all of the Executive’s professional time and energy to the operations of the Company while employed by the Company, and that during and after such employment in order to adequately protect the Company’s investment in its proprietary information and trade secrets and to protect such information and secrets and all other confidential information from disclosures to competitors and to protect the Company from unfair competition, separate covenants not to compete, not to solicit, and not to recruit the Company’s employees for the duration and scope set forth below, are necessary and desirable. The Executive understands and agrees that the restrictions imposed in these covenants represent a fair balance of the Company’s rights to protect its business and the Executive’s right to pursue employment.

 

 

 

 

 

(b)

 

The Executive shall not, at any time during the Term or during the 12-month period following the Date of Termination (the “ Non-Compete Period ”), directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, e


 
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