Vice President of Finance Employment Agreement

EXHIBIT 10.4


EMPLOYMENT AGREEMENT


THIS AGREEMENT made as of May 22, 2002 by and between MERCURY AIR GROUP, INC., a Delaware corporation having its principal offices at 5456 McConnell Avenue, Los Angeles, California 90066 (hereinafter referred to as "Mercury"), and Mr. Robert Schlax, residing at 15 Windham Lane, Laguna Miguel, California 92677 (hereinafter referred to as "Schlax").


W I T N E S S E T H:


WHEREAS, Schlax has been employed as Vice President of Finance of Mercury since February 2002 and Treasurer since March 2002; and


WHEREAS, Mercury's Board of Directors (the "Board of Directors") would like to continue Schlax's role as Vice President of Finance and Treasurer of Mercury on the terms and conditions set forth in this Agreement; and


WHEREAS, Schlax wishes to accept this position on the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties agree as follows:


First: Employment


(a) Employment. Mercury hereby confirms and agrees that Schlax will be appointed by the Board of Directors of Mercury to continue serving as the Vice President of Finance and Treasurer of Mercury. In his capacity as Vice President of Finance and Treasurer of Mercury, Schlax shall continue to report directly to Mercury's Chief Executive Officer.


(b) Schlax's Acceptance. Schlax hereby accepts his appointments as Vice President of Finance and Treasurer of Mercury.


Second: Term


Subject to the provisions governing termination as hereinafter provided, the term of this Agreement shall begin on the date hereof and shall terminate three years thereafter. If Schlax is then employed by Mercury, on each successive anniversary date, the term of this Agreement shall be automatically extended for one additional year such that the remaining term of the Agreement shall then be one (1) year; provided, however, that upon written notice given by either party at least thirty (30) days prior to the next automatic extension, the automatic extension right may be terminated.


Third: Compensation


(a) Base Compensation. For all services rendered by Schlax under this Agreement, Mercury shall pay Schlax a salary of $170,000 per year, payable in semi-monthly installments in accordance with Mercury's standard payroll practices. From time to time, the salary payable to Schlax may be adjusted at the sole discretion of the Compensation Committee of the Board of Directors (the "Compensation Committee"). Schlax's annual salary, as from time to time adjusted by the Compensation Committee, is hereinafter referred to as "Base Compensation".


(b) Bonus Plans. The Board of Directors may, at its discretion, establish a bonus plan for Schlax.


Fourth: Extent of Services


Schlax shall devote his entire time, attention and energies to the business of Mercury (and its various subsidiaries) and shall not during the term of this Agreement be engaged in any other business activity whether or not such business activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing Schlax from investing his assets in companies or other entities in such form or manner as will not require any services on the part of Schlax in the operation of the affairs of such companies or entities in which such investments are made, and, with respect to companies or other entities which are competitors of Mercury, where Schlax's investment does not represent in excess of five percent (5%) of the outstanding equity of such company or entity.


Fifth: Working Facilities


Schlax shall be furnished with a private office and other facilities and services reasonably suitable to his position and adequate for the performance of his duties. Schlax shall be employed at the principal offices of Mercury located in Los Angeles, California and shall travel to the extent necessary to fulfill his duties in his discretion.


Sixth: Disclosure of Information


(a) Generally. The parties acknowledge that Mercury and its affiliates (individually and collectively, the "Companies"), have developed and intend to continue the development of and to formulate, acquire and use commercially valuable technical and non-technical information, design and specification documents, concepts, technology, know-how, improvements, proposals, patent applications, techniques, marketing plans, strategies, forecasts, inventions (not limited by the definition of an invention contained in the United States Patent Laws), Trade Secrets (as defined in Sec. 3426.1(d) of the Uniform Trade Secrets Act) and processes which are considered proprietary by the Companies, particularly including, without limitation, customer and supplier lists, books and records, computer programs, pricing information and business plans (collectively, the "Proprietary Information"). It is necessary for the Companies to protect the Proprietary Information by patents or copyrights or by holding it secret and confidential.


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(b) Access to Proprietary Information. The parties acknowledge that Schlax has access to the Proprietary Information and that the disclosure or misuse of such Proprietary Information could irreparably damage the Companies and/or their respective clients or customers.


(c) Nondisclosure to others. Except as directed by Mercury in writing or verbally, Schlax shall not at any time during or after the Term disclose any Proprietary Information to any person whatsoever, examine or make copies of any reports or other documents, papers, memoranda or extracts for use other than in connection with his duties with Mercury or utilize for his own benefit or for the benefit of any other party any such Proprietary Information and will use reasonable diligence to maintain the confidential, secret or proprietary character of all Proprietary Information.


(d) Survivability. Schlax acknowledges that his obligations hereunder shall continue beyond the Term with respect to any Proprietary Information (as defined in Article Sixth, paragraph (a) hereof) which came into his possession during the Term.


Seventh: Expenses


Schlax is authorized to incur reasonable expenses for promoting the business of Mercury, including expenses for entertainment, travel and similar items but only in accordance with the policies of the Board of Directors of Mercury's Chief Executive Officer, as from time to time adopted. Mercury will reimburse Schlax for all such reasonable expenses upon the presentation by Schlax, from time to time, of an itemized account and documentation of such expenditures in sufficient detail to allow Mercury to claim an income tax deduction for each paid item, if such item is deductible.


Eighth: Fringe Benefits


(a) Participating in General Plans. Schlax shall have such employee benefits (including medical insurance, life insurance, 401(k) and disability insurance plans) as Mercury shall from time-to-time establish, promulgate or keep in effect for the benefit of its management level employees. Such benefits will include company paid medical insurance for Schlax and his family under Mercury's medical insurance plans. Schlax shall be required to comply with, and be entitled to benefits only in accordance with, the terms and conditions of such plans. Nothing contained in this paragraph (a) of Article Eighth, however, shall be construed to require Mercury to establish any life, disability or medical insurance plans not in existence on the date hereof, to continue any plans in existence on the date hereof, to prevent Mercury from modifying and/or terminating any of the plans in existence on the date hereof or otherwise require Mercury to take special steps to insure the eligibility of Schlax or his dependents under the provisions of such plans, and no such act or omission shall be deemed to affect this Agreement or to require modification of the compensation, additional benefit or other provisions contained ...