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 ”).
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A.
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It
is the desire of the Company to assure itself of the services of
the Executive by entering into this Agreement.
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B.
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The
Executive and the Company mutually desire that Executive provide
services to the Company on the terms herein provided.
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NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements set forth below the parties hereto agree as
follows:
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(a)
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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.
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(b)
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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 .
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(c)
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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.
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2.
Compensation and Related Matters.
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(a)
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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.
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(b)
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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.
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(c)
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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.
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(d)
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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)
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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.
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(f)
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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.
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(g)
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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).
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(h)
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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.
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(i)
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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.
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(j)
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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)
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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.
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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:
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(i)
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Death . The Executive’s employment
hereunder shall terminate upon his death.
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(ii)
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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.
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(iii)
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Termination for Cause
. The Company may
terminate the Executive’s employment for Cause.
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(iv)
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Termination without Cause
. The Company may
terminate the Executive’s employment without
Cause.
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(v)
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Resignation for Good
Reason . The
Executive may resign his employment for Good Reason.
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(vi)
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Resignation without Good
Reason . The
Executive may resign his employment without Good Reason.
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(vii)
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Non-extension of Term by the
Company . The
Company may give notice of non-extension to the Executive pursuant
to
Section 1(b) .
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(viii)
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Non-extension of Term by the
Executive. The Executive may give notice of
non-extension to the Company pursuant to
Section 1(b) .
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(b)
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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.
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(c)
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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.
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(a)
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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.
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(b)
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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
:
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(i)
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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
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(ii)
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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.
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(c)
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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.
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(d)
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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.
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(a)
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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.
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(b)
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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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