EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 1, 1996, is entered into by and between Advanced
Aerodynamics & Structures, Inc., a California corporation, with its principal
office at 3060 Airport Way, Long Beach, California 90806 (the "Company"), and
Carl L. Chen, with an address at 38 Country Meadow Road, Rolling Hills Estates,
California 90274 (the "Employee").
INTRODUCTION
The parties hereto desire to provide for the employment of the Employee
with the Company. In order to accomplish such purposes and in consideration of
the terms, covenants and conditions hereinafter set forth, the parties hereby
enter into this Agreement.
ARTICLE I
EMPLOYMENT; TERM; DUTIES
1.01 EMPLOYMENT. Upon the terms and conditions hereinafter set forth, the
Company hereby employs the Employee, and the Employee hereby accepts employment,
as the President and Chief Executive Officer of the Company.
1.02 TERM. Unless sooner terminated as hereinafter provided, the
Employee's employment hereunder shall be for a term (the "Term") commencing on
the date hereof and terminating on April 30, 2004.
1.03 DUTIES. During the Term, the Employee shall perform such duties for
the Company as are prescribed by the Bylaws of the Company as of the date of
this Agreement and such additional duties, consistent with such Bylaws and his
position hereunder, as may be assigned to him from time to time by the Board of
Directors of the Company. The Employee shall devote his best efforts, attention
and energies to the performance of his duties hereunder.
ARTICLE II
COMPENSATION
2.01 For all services rendered by the Employee hereunder and all covenants
and conditions undertaken by him pursuant to this Agreement, the Company shall
pay, and the Employee shall accept, as compensation, an annual base salary
("Base Salary") of Two Hundred Thousand Dollars ($200,000), payable in equal
monthly installments. The Employee shall also be paid such bonuses and other
compensation as shall be determined from time to time by the Board of Directors
in its sole discretion based on the performance of the Company.
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ARTICLE III
BENEFITS
3.01 BENEFITS. During the Term, the Employee shall be entitled to
participate in such life, health, accident, disability or hospitalization
insurance plans, pension plans or retirement plans as the Board of Directors
makes available to the executive employees of the Company as a group.
3.02 LIFE INSURANCE. During the Term, the Company will purchase and
maintain a life and disability insurance policy insuring the life of the
Employee in the amount of $2,000,000, and the Employee shall be entitled to
designate the beneficiary of the policy, provided that in no event shall the
Company be required to pay more than $5,000 per year premium on such policy.
ARTICLE IV
TERMINATION; DEATH; DISABILITY
4.01 TERMINATION OF EMPLOYMENT WITH CAUSE; RESIGNATION. If the Employee
(a) breaches any material provision of this Agreement and such breach is not
remedied within thirty (30) days after written notice thereof from the Company;
or (b) has been convicted of any felony, or (c) has been convicted of any act of
fraud, misappropriation of funds or embezzlement, then, in addition to any other
remedies available to it at law, in equity or as set forth in this Agreement,
the Company shall have the right, upon written notice to the Employee, to
immediately terminate his employment (a "Termination With Cause") hereunder,
without any further liability or obligation to him hereunder or otherwise in
respect of his employment, other than its obligation to pay accrued but unpaid
Base Salary and vacation time as of the date of termination. If the Employee
resigns, this Agreement shall immediately terminate and the Company shall have
no further liability or obligation to Employee hereunder or otherwise in respect
of his employment, other than its obligation to pay accrued but unpaid Base
Salary and vacation time as of the date of resignation.
4.02 TERMINATION OF EMPLOYMENT WITHOUT CAUSE. Notwithstanding any
provision to the contrary herein, the Company may at any time, in its sole and
absolute discretion and for any or no reason, terminate the employment of the
Employee hereunder; PROVIDED, that if such termination is not a Termination With
Cause, the Company shall pay and/or provide the Employee as follows:
(a) any accrued but unpaid Base Salary as of the date of the
termination as and when such amount is due and payable hereunder.
(b) provided Employee has not accepted employment with another
employer (as provided below), Employer shall pay monthly to Employee one-twelfth
(1/12) of the Base Salary in effect as of the date of such termination (the
"Severance Payments") for a period not to exceed the lesser of (i) the remainder
of the initial term of this Agreement or (ii) eighteen months (the "Severance
Period"), with the first payment being made on the thirtieth (30th) day
following such date of
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termination and with each subsequent payment being made on the same day of each
successive month. The obligation of the Company to provide the Benefits shall
continue for six months following the date of such termination without cause,
PROVIDED, that the Company may, at its option, pay for and acquire insurance
which will provide to Employee the Benefits for the duration of the Severance
Period.
Notwithstanding the foregoing paragraph (b), the Severance Period,
Severance Payments and the provision of Benefits shall terminate when (i) the
Employee has secured new employment with a base salary equal to or greater than
the Base Salary in effect as of the date of termination or (ii) the Employee
enters into direct or indirect competition with Employer, as set forth in
Section 5.03. If the Employee accepts new employment with a base salary (the
"New Salary") less than the Base Salary in effect as of the date of termination
and the Severance Period set forth above has not expired, the Company, in lieu
of the remaining Severance Payments to be made, shall pay the Employee the
difference between the total amount of the remaining Severance Payments due and
the total amount of New Salary payable during the remaining applicable Severance
Period.
(c) a cash payment immediately upon the date of termination equal to the
Employee's Base Salary on a daily basis (computed on a 260 workday year) in
effect on the date of termination multiplied by the number of accrued and unused
vacation days at the date of termination.
(d) Notwithstanding the foregoing, if any amounts due to Employee pursuant
to this Agreement are determined to be "Parachute Payments" as such term is
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations promulgated thereunder, then the total compensation
paid to Employee pursuant to this Agreement, together with any other payment or
the value of any benefit received or to be received by the Employee which is
treated as a Parachute Payment shall not exceed 2.99 times the Employee's Base
Amount (as such term is defined in Section 280G of the Code). In the event a
reduction of the payments set forth in this Agreement is required pursuant to
this Section, the Employee may select the compensation which will be reduced in
order to fall within the 2.99 times Base Amount limitation.
4.03 DEATH; DISABILITY. The Employee's employment hereunder shall
terminate (x) upon his death or (y) if the Employee becomes Disabled (as such
term is hereinafter defined), at the election of the Company by written notice
to the Employee. In the event of a termination of the Employee's employment for
death or Disability, the Company shall pay the Employee (or his legal
representatives, as the case may be) as follows:
(a) any accrued but unpaid compensation for Base Salary as of the
date of death or termination for Disability, as and when such amounts are due
and payable hereunder;
(b) a cash payment payable on the date of termination equal to the
Employee's Base Salary on a daily basis (computed on a 260 workday year) in
effect on the date of death or termination, multiplied by the number of accrued
and unused vacation days at the date of such termination; and
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(c) in the event the Employee is Disabled, the Company will continue
to pay Base Salary and Benefits for the Employee for a period of six (6) months,
until and unless the Employee obtains other employment with a comparable base
salary within such period, PROVIDED, that the Company may, at its option, pay
for and acquire insurance which will provide to Employee the Base Salary and
Benefits for the duration of the Severance Period.
For the purpose of this Agreement, the Employee shall be deemed to be
"Disabled" or have a "Disability" if he has been unable to perform his duties
hereunder for three (3) consecutive months or ninety (90) days in any twelve
(12) consecutive month period, as determined in good faith by the Board of
Directors of the Company.
The Employee acknowledges that the payments referred to in this
Section 4.03 constitute the only payments to which the Employee (or his legal
representatives, as the case may be) shall be entitled to receive from the
Company hereunder in the event of a termination of his employment for death or
Disability, and that except for such payments the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
ARTICLE V
INVENTIONS; NON-DISCLOSURE; NON-COMPETITION
5.01 INVENTIONS. All processes, technologies and inventions relating to
the aircraft business (collectively, "Inventions"), including new contributions,
improvements, ideas, discoveries, trademarks and trade names, conceived,
developed, invented, made or found by the Employee, alone or with others, during
his employment by the Company, whether or not patentable and whether or not
conceived, developed, invented, made or found on the Company's time or with the
use of the Company's facilities or materials, shall be the property of the
Company and shall be promptly and fully disclosed by the Employee to the
Company. The Employee shall perform all necessary acts (including, without
limitation, executing and delivering any confirmatory assignments, documents or
instruments requested by the Company) to vest title to any such Inventions in
the Company and to enable the Company, at its expense, to secure and maintain
domestic and/or foreign patents or any other rights for such Inventions.
5.02 NON-DISCLOSURE. The Employee shall not, at any time during the Term
or thereafter, directly or indirectly disclose or furnish to any other person,
firm or corporation, except in the course of the proper performance of his
duties hereunder (a) any information relating to any process, technique or
procedure used by the Company which is not, specifically, a matter of public
knowledge; or (b) any information relating to the operations or financial status
of the Company (including, without limitation, all financial data and sources of
financing), which information is not specifically a matter of public knowledge;
or (c) any information of a confidential nature obtained as a result of his
present or future relationship with the Company, which information is not
specifically a matter of public knowledge; or (d) the name, address or other
information relating to any customer or supplier
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of the Company; or (e) any other trade secrets of the Company. Promptly upon
the expiration or termination of the Employee's employment hereunder for any
reason, the Employee (or his personal representative's as the case may be) shall
surrender to the Company all documents, drawings, work papers, lists, memoranda,
records and other data (including all copies) constituting or pertaining in any
way to any of the foregoing information.
5.03 NON-SOLICITATION. The Employee shall not, during the Term, and for
an eighteen (18) month period following the date of a resignation by Employee or
a Termination With Cause or without cause, interfere with or disrupt or attempt
to disrupt Employer's business relationship with its customers or suppliers or
solicit any of the employees of Employer to leave the employ of Employer.
5.04 NON-COMPETITION. Upon the termination of this Agreement pursuant to
the terms hereof or pursuant to any right of cancellation or termination
provided herein, or for any other reason whatsoever, Employee will not engage in
any business in competition with that of Employer within any state or territory
of the United States in which Employer is doing business or has actually
investigated doing business, nor directly or indirectly perform services for any
person, firm or corporation engaged in such a competitive business in such
territory for a period of eighteen (18) months following such termination of
employment.
5.05 BREACH OF PROVISIONS. If the Employee breaches any of the provisions
of this Article V, or in the event that any such breach is threatened by the
Employee, in addition to and without limiting or waiving any other remedies
available to the Company at law or in equity, the Company shall be entitled to
immediate injunctive relief in any court, domestic or foreign, having the
capacity to grant such relief, to restrain any such breach or threatened breach
and to enforce the provisions of this Article V. The Employee acknowledges and
agrees that there is no adequate remedy at law for any such breach or threatened
breach and, in the event that any action or proceeding is brought seeking
injunctive relief, the Employee shall not use as a defense thereto that there is
an adequate remedy at law.
5.06 REASONABLE RESTRICTIONS. The parties acknowledge that the foregoing
restrictions, as well as the duration and the territorial scope thereof as set
forth in this Article V, are under all of the circumstances reasonable and
necessary for the protection of the Company and its business.
5.07 DEFINITION. For purposes of this Article V, the term "Company" shall
be deemed to include any subsidiary or affiliate of the Company.
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ARTICLE VI
MISCELLANEOUS
6.01 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; PROVIDED, that the rights and
obligations of the Employee hereunder shall not be assignable by him.
6.02 NOTICES. Any notice provided for herein shall be in writing and
shall be deemed to have been given or made (a) when personally delivered or (b)
when sent by telecopier and confirmed within forty-eight (48) hours by letter
mailed or delivered to the party to be notified at its or his address set forth
herein; or three (3) days after being sent by registered or certified mail,
return receipt requested, to the address of the other party set forth or to such
other address as may be specified by notice given in accordance with this
Section 6.02:
If to the Company: Advanced Aerodynamics & Structures, Inc.
3060 Airport Way
Long Beach, California 90806
Facsimile: (310) 988-2238
Telephone: (310) 988-2088
If to the Employee: Carl L. Chen
38 Country Meadow Road
Rolling Hills Estates, California 90274
Facsimile: (310) 541-6627
Telephone: (310) 544-2250
6.03 SEVERABILITY. If any provision of this Agreement, or portion
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
6.04 WAIVER. No waiver by a party hereto of a breach or default hereunder
by the other party shall be considered valid, unless expressed in a writing
signed by such first party, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or any other nature.
6.05 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements between the Company and Employee, whether written
or oral, relating to any or all matters covered by and
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contained or otherwise dealt with in this Agreement, including without
limitation that certain new Management Agreement, dated as of January 29, 1995,
between the Company and the Employee. This Agreement does not constitute a
commitment of the Company with regard to the Employee's employment, express or
implied, other than to the extent expressly provided for herein.
6.06 AMENDMENT. No modification, change or amendment of this Agreement or
any of its provisions shall be valid, unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.
6.07 AUTHORITY. The parties each represent and warrant that they have the
power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
6.08 ATTORNEYS' FEES. If either party hereto commences an arbitration or
other action against the other party to enforce any of the terms hereof or
because of the breach by such other party of any of the terms hereof, the
prevailing party shall be entitled, in addition to any other relief granted, to
all actual out-of-pocket costs and expenses incurred by such prevailing party in
connection with such action, including, without limitation, all reasonable
attorneys' fees, and a right to such costs and expenses shall be deemed to have
accrued upon the commencement of such action and shall be enforceable whether or
not such action is prosecuted to judgment.
6.09 WAIVER OF PROVISIONAL REMEDIES. Each party hereby specifically
waives all rights and remedies, if available, provided under any provisional
remedies, including, but not limited to, temporary restraining orders and
injunctions.
6.10 TITLES. The titles of the Articles and Sections of this Agreement
are inserted merely for convenience and ease of reference and shall not affect
or modify the meaning of any of the terms, covenants or conditions of this
Agreement.
6.11 APPLICABLE LAW. This Agreement, and all of the rights and
obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ADVANCED AERODYNAMICS & STRUCTURES, INC.
By:/s/ Gene Comfort
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Name: Gene Comfort
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Title: Vice President
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EMPLOYEE
/s/ Carl L. Chen
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Carl L. Chen
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