EMPLOYMENT AGREEMENT
Exhibit
10.1
This
EMPLOYMENT AGREEMENT (the “Agreement”),
dated
as of September 1, 2006, is entered into among FBO Air, Inc. (the “Company”),
and
Xxxxx X. Xxxxxx (“Executive”).
Recitals
WHEREAS,
the Company wishes to employ Executive and Executive wishes to be employed
by
the Company, on the terms and conditions set forth below.
THEREFORE,
the parties agree as follows:
1. Employment
Duties.
During
the Term (as defined in paragraph
2
below),
the Company will employ Executive as Senior Vice President and Chief Financial
Officer of the Company. Executive will devote substantially all of his business
time and attention to the performance of his duties under this Agreement.
Executive shall have the duties, rights and responsibilities normally associated
with his position with the Company, together with such other reasonable duties
consistent with Executive’s position and relating to the operation of the
business of the Company and its affiliates as may be assigned to him from time
to time by the Chairman or Chief Executive Officer of the Company or the Board
of Directors of the Company. Executive hereby agrees to promote and develop
all
business opportunities that come to his attention relating to the current or
anticipated future business of the Company, in a manner consistent with the
best
interest of the Company and with his duties under this Agreement. As used
herein, the term “business opportunity” shall not include business opportunities
involving investment in publicly traded stocks, bonds or other securities,
or
other investments of a personal nature.
2. Term. The
term
of Executive’s employment under this Agreement (the “Term”)
will
begin on September 15, 2006 and will continue, subject to the termination
provisions set forth in paragraph
5
below,
until the third anniversary of such date; provided,
however,
that
this Agreement will automatically renew for additional one-year periods unless
either party gives written notice to the other not to extend the Term not less
than 90 days prior to the then next upcoming expiration date.
3. Salary
and Bonus.
a.
Salary.
During
each year of the Term, Executive will receive a salary at the annual rate of
$185,000 (the “Base
Salary”),
which
amount shall increase by 5% on each anniversary date during the term of this
Agreement. The Base Salary shall be payable in equal semi-monthly installments.
The Board of Directors of the Company may increase such salary at any time
and
from time to time.
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b. Incentive
Bonus.
In
addition to Base Salary, the Executive shall be entitled to an annual
performance bonus payable within 120 days after the end of each year ended
December 31 in an amount which shall be determined in the sole discretion of
the
Board of Directors taking into account such factors concerning the performance
of the Company and Executive and Executive’s overall compensation level as shall
be determined by the Board of Directors. The primary criteria for the amount
of
the performance bonus will be the operating results of the Company, which
factors shall be consistent with those provided to other executives similarly
situated within the Company. The amount of the performance bonus shall be
determined in the sole discretion of the Board of Directors, but shall not
be
less than the amount provided to other similarly situated executives, and
Executive shall not be entitled to any performance bonus unless and until such
performance bonus is approved by the Board of Directors.
4. Fringe
Benefits.
In
addition to the other compensation payable pursuant to this Agreement, during
the Term:
a. Standard
Benefits.
Executive will be entitled to receive such fringe benefits and perquisites,
including medical and life insurance, as are generally made available from
time
to time to senior management employees and executives of the Company and to
participate in any pension, profit-sharing, stock option or similar plan or
program established from time to time by the Company for the benefit of its
senior management employees, provided,
that
such benefits, perquisites and plans shall be at the same level or better,
in
the aggregate, than those made available generally to similarly situated
employees of the Company. Without limiting the generality of the foregoing,
the
Company agrees to (i) pay premium expenses on behalf of Executive and family
for
medical, dental and vision insurance coverage; (ii) provide an automobile
allowance of $700 per month plus the cost of insurance for one vehicle; (iii)
provide and pay for term life insurance insuring the life of Executive during
the term of this Agreement in the amount of One Million Dollars ($1,000,000.00),
with one-half (1/2) of the proceeds thereof directed to such beneficiary or
beneficiaries as Executive may from time to time appoint and one-half (1/2)
the
proceeds thereof directed to the Company.
b. Vacation.
In
addition to standard Company holidays, the Executive shall be entitled each
year
to a vacation of three (3) weeks, during which time his compensation shall
be
paid in full. Each vacation shall be taken at such time as to minimize its
affect on the operations of the Company.
c. Business
Expenses.
The
Company will pay or reimburse Executive for all business-related expenses
incurred by Executive in the course of his performance of duties under this
Agreement, subject to the procedures established by the Company from time to
time with respect to incurrence, substantiation, reasonableness and
approval.
d. Stock
Options.
Executive shall be entitled to receive an Option to purchase shares of the
Company’s Common Stock, par value $0.001 per share (the “Common
Stock”),
as
follows:
250,000
shares on the date hereof;
250,000
shares on the first anniversary of the date hereof; and
250,000
shares on the second anniversary of the date hereof.
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The
price
for the initial tranche shall be $0.60 per share. The per share price for the
remaining tranches will be the fair market value of the Common Stock as of
the
close of business on the day immediately preceding each respective grant date.
Each tranche shall be vested after one year and the executive will have five
years to acquire the stock from the date of vesting. So long as it may be done
lawfully, the manner of acquisition of stock shall be structured as to minimize
adverse tax consequences to Executive.
Additional
options may be granted by Compensation Committee of the Board of Directors
of
the Company at its discretion.
5. Termination
of Employment.
a. Death
and Disability.
Executive’s employment under this Agreement will terminate immediately upon his
death and upon 30 days’ prior written notice given by the Company in the event
Executive is determined to be “permanently disabled” (as defined
below).
b. For
Cause.
The
Company may terminate Executive’s employment under this Agreement for “Cause”
(as defined below), upon providing Executive 30 days’ prior written notice of
termination, which notice will describe in detail the basis of such termination
and will become effective on the 30th day after Executive’s receipt thereof
unless Executive reasonably cures the alleged violation or other circumstance
which was the basis of such termination within such 30--day notice period;
provided,
however,
that
the termination for “Cause” under subparagraphs 5(f)(ii)(B), (C), (E) or (F)
thereof shall be effective immediately upon the giving of the notice of
termination and may not be cured by any act or event.
c. For
Good Reason.
Executive may terminate his employment under this Agreement for “Good Reason”
(as defined below) upon providing the Company 30 days’ prior written notice of
termination, which notice will detail the basis of such termination and will
become effective on the 30th day after the Company’s receipt thereof, unless the
Company cures the alleged violation or other circumstance which was the basis
of
such termination within such 30-day notice period.
d. Without
Cause.
The
Company may terminate Executive’s employment under this Agreement without
“Cause” at any time upon thirty (30) days written notice to the
Executive.
e. Change
of Control.
Notwithstanding anything to the contrary, the Company or Executive may terminate
this Agreement upon ten (10) days’ notice to the other party upon the occurrence
of a “Change of Control” (as defined below).
f. Definitions.
For
purposes of this Agreement:
(i) Executive
will be deemed “permanently
disabled”
if
he
becomes unable to discharge his normal duties as contemplated under this
Agreement for at least four months during any eight-month period as a result
of
incapacity due to mental or physical illness as determined by a physician
acceptable to Executive and the Company and paid by the Company, whose
determination will be final and binding. If Executive and the Company are unable
to agree on a physician, Executive and the Company will each choose one
physician who will mutually choose the third physician, whose determination
will
be final and binding.
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(ii) “Cause”
means
either (A) a breach by Executive of any material provisions of this Agreement,
but only if, after notice provided in subparagraph (b) above, Executive fails
to
cure such breach to the reasonable satisfaction of the Company; (B) conviction
of a felony offense, whether or not such offense was committed in connection
with the Company’s business; (C) theft, embezzlement, intentional or reckless
false entries on records, intentional or reckless misapplication of funds or
property, misappropriation of any asset, or any actual or constructive fraud;
(D) gross neglect of duty and/or willfully engaging in gross misconduct
materially and demonstrably injurious to the Company; (E) at any time during
employment at the Company, intentionally or recklessly imparting confidential
information, whether proprietary or non-proprietary, to any person other than
(i) an authorized employee of the Company; or (ii) as required by law, or (iii)
as part of a privileged communication to an attorney; or (F) receiving, during
the term of this Agreement, compensation, income, anything of value, or a future
interest in or future entitlement to compensation, income or a thing of value,
from any person or entity who or which is engaged in the same or substantially
the same business as the Company in the same product, service or geographical
market, except stock dividends and/or capital gains from passive investments
in
financial institutions by Executive made in the ordinary course of business
and
as part of Executive’s investment portfolio.
(iii) “Good
Reason”
means
a
breach by the Company of any of its material obligations under this Agreement,
but only if after expiration of the 30-day notice period provided in
subparagraph
(c)
above,
the Company fails to cure such breach.
(iv) “Change
of Control”
means
the occurrence of:
(a) the
sale
by the Company of fifty-one percent (51%) of its assets to a single purchaser
or
to a group of associated purchasers;
(b) the
merger or consolidation of the Company in a transaction in which the
stockholders of the Company receive less than fifty percent (50%) of the
outstanding voting shares of the new or continuing corporation; or
(c) the
sale,
exchange, or other disposition, in one transaction, of at least fifty-one
percent (51%) of the outstanding shares of the Company.
6. Benefits
upon Termination.
a. Termination
with Cause or Resignation.
Upon
termination of Executive’s employment by the Company for Cause or a voluntary
resignation by Executive (other than for Good Reason pursuant to paragraph
5(c)
above)
during the Term, the Company will remain obligated to pay Executive only the
unpaid portion of his Base Salary and benefits to the extent accrued through
the
effective date of termination. Any amount due under this subparagraph will
be
payable within 30 days after the date of termination. In addition to whatever
other rights or remedies the Company may have at law or in equity, all unvested
stock options held by Executive, shall immediately expire on the date of
termination and all unpaid bonuses shall be forfeited.
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b. Termination
without Cause or for Good Reason.
Upon
termination of Executive’s employment (x) by the Company without Cause or (y) by
Executive for Good Reason, Executive will be entitled to the benefits provided
below, subject to signing by Executive of a general release of claims in a
form
reasonably satisfactory to the Company:
(i)
In such
event, the Executive shall be paid his Base Salary up to the date of
termination, and in addition, there shall be paid to the Executive on the date
of termination a severance allowance equal to one times then applicable Base
Salary (less all amounts required to be withheld and deducted).
(ii)
Further, the Company acknowledges that any incentive Bonus due Executive shall
be paid on a pro-rated basis; that any issued but non-vested Options shall
be
terminated; and that benefits under paragraph
4(a) shall
continue for a period of six (6) months from the end of the month of
termination.
Notwithstanding
anything herein to the contrary, the Company shall not terminate Executive’s
employment without Cause during the initial 3-year Term of this Agreement;
provided,
however,
that
the Company may terminate Executive without Cause during any renewal period
and
may elect not to renew the Term.
c. Termination
Upon Death or Permanent Disability.
Upon
termination of Executive’s employment upon Executive’s death or permanent
disability, Executive or Executive’s estate will be entitled to the benefits
provided below:
(i) Base
Salary up to the date of death or termination; and
(ii) Any
incentive Bonus due Executive shall be paid on a pro-rated basis; and any issued
but non-vested Options shall be terminated.
d. Termination
upon Change of Control.
Upon
termination of Executive’s employment upon a Change of Control (x) by the
Company or (y) by Executive within one (1) year after such Change of Control
without Good Reason, Executive will be entitled to the benefits provided below,
subject to signing by Executive of a general release of claims in a form
reasonably satisfactory to the Company:
(i) Executive
shall be considered immediately and fully vested in any issued but non-vested
Options;
(ii) Executive
shall be paid his Base Salary up to the date of termination, and in addition,
there shall be paid to the Executive on the date of termination a severance
allowance equal to one times then applicable Base Salary (less all amounts
required to be withheld and deducted) and an amount equal to the incentive
bonus
paid to Executive in the immediately preceding year or due to Executive for
such
year; and
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(iii) Executive
shall continue to be covered by all non-cash benefit plans of the Company except
for the retirement plans or retirement programs in which Executive participates
or any successor plans or programs in effect on the date of such acquisition
of
control, for six (6) months thereafter; provided,
however,
that if
during such time period Executive should enter into the employment of a
competitor of the Company, his participation in such non-cash benefit plans
would cease. In the event Executive is ineligible under the terms of such plans
to continue to be so covered, the Company shall provide substantially equivalent
coverage through other sources.
e. No
Mitigation.
Executive will not be required to mitigate the amount of any payment provided
for in this paragraph
6
by
seeking other employment or otherwise, nor will the amount of any payment or
benefit provided for in this paragraph
6
be
reduced by any compensation earned by him as the result of employment by another
employer or by retirement benefits after the date of termination, or
otherwise.
f. Expiration
of this Agreement.
In the
event the Term of this Agreement expires without having otherwise been
previously terminated pursuant to paragraph
5 above
or
by the Company without Cause, Executive will not be entitled to any severance
compensation whatsoever under this paragraph
6.
7. No
Solicitation; Confidentiality; Competition;
Cooperation
a. During
the Restricted Period (defined below), neither Executive nor any
Executive-Controlled Person (defined below) will, without the prior written
consent of the Board, directly or indirectly solicit for employment, employ
in
any capacity or make an unsolicited recommendation to any other person or entity
that it employ or solicit for employment any person who is or was, at any time
during the Restricted Period, an officer, executive or employee of the Company
or of any of its affiliates. As used in this Agreement, the term “Executive-Controlled
Person”
shall
mean any company, partnership, firm or other entity as to which Executive
possesses, directly or indirectly, the power to direct or cause the direction
of
the management and policies of such entity, whether through the ownership of
voting securities, by contract or otherwise.
b. Executive
acknowledges that, through his status as an officer of the Company, he has,
and
will have, possession of important, confidential information and knowledge
as to
the business of the Company and its affiliates, including, but not limited
to,
knowledge of marketing and operating strategies, acquisition, leasing and other
agreements, financial results and projections, future plans, the provisions
of
other important contracts entered into by the Company and its affiliates,
possible acquisitions and similar information. Executive agrees that all such
knowledge and information constitutes a vital part of the business of the
Company and its affiliates and is by its nature trade secrets and confidential
information proprietary to the Company and its affiliates (collectively,
“Confidential
Information”).
Except for information that becomes public other than as a result of disclosure
by the Executive in violation of section 7 or as may be required by law,
Executive agrees that, during the Restricted Period, he shall not, divulge,
communicate, furnish or make accessible (whether orally or in writing or in
books, articles or any other medium) to any individual, firm, partnership or
corporation, any knowledge or information with respect to Confidential
Information directly or indirectly useful in any aspect of the business of
the
Company or any of its affiliates.
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c. All
memoranda, notes, notebooks, lists, records and other documents or papers (and
all copies thereof), including such items stored in computer memories, portable
computers and the like, on microfiche, disk or by any other means, made or
compiled by or on behalf of Executive or made available to him relating to
the
Company are and shall be the Company’s property and shall be delivered to the
Company promptly upon the termination of Executive’s employment with the Company
or at any other time on request and such information shall be held confidential
by Executive after the termination of his employment with the
Company.
d. During
the Non-Competition Period, neither Executive nor any Executive-Controlled
Person will (i) render any services, directly or indirectly, as an employee,
officer, consultant or in any other capacity, to any individual, firm,
corporation or partnership engaged in any business substantially providing
services similar to those of the Company in the Restricted Area (such activities
being herein called the “Company
Business”).
During the Non-Competition Period, Executive shall not, without the prior
written consent of the Company, hold an equity interest in any firm, partnership
or corporation which competes with Company Business, except that beneficial
ownership by Executive (including ownership by any one or more members of his
immediate family and any entity under his direct or indirect control) of less
than five (5%) percent of the outstanding shares of capital stock of any
corporation which may be engaged in any of the same lines of business as Company
Business, if such stock is listed on a national securities exchange or publicly
traded in the over-the-counter market, shall not constitute a breach of the
covenants contained in this paragraph
7.
e. (i)
As
used in this Agreement, “Restricted
Period”
shall
mean the term of employment and twelve (12) months following Executive’s
termination of employment for any reason.
(ii)
As
used in this Agreement, “Non-Competition
Period”
shall
mean the term of employment and twelve (12) months following Executive’s
termination of employment unless the termination is (A) by the Company without
Cause (other than at the expiration of the Term), or (B) by the Executive for
Good Reason, in which case the Non-Competition Period shall be one
day.
(iii)
As
used in this Agreement “Restricted
Area”
shall
mean a 50-mile radius around Elmira, Corning, and Horseheads, New
York.
f. Following
Executive’s termination of employment, Executive will reasonably cooperate with
the Company, its executives, counsel and other professional advisors (i) to
the
extent reasonably possible with respect to the consummation of matters that
were
in progress at the time of Executive’s termination of employment and (ii) with
respect to any litigation or regulatory matters arising out of or related to
the
business, operations, or personnel of the Company (including participation
in
depositions, hearings and trials, as and if deemed necessary or appropriate
by
the Company, execution of appropriate affidavits and participation in interviews
with Company counsel). The Company shall compensate Executive on a reasonable
basis for any services provided by Executive pursuant to this paragraph
7(f).
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g. The
provisions contained in this paragraph 7
as to
the time periods, scope of activities, persons or entities affected, and
territories restricted shall be deemed divisible so that, if any provision
contained in this paragraph
7
is
determined to be invalid or unenforceable, such provisions shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
h. Executive
agrees that the provisions of this paragraph
7
are
reasonable and necessary for the protection of the Company and that they may
not
be adequately enforced by an action for damages and that, in the event of a
breach thereof by Executive or any Executive-Controlled Person, the Company
shall be entitled to apply for and obtain injunctive relief in any court of
competent jurisdiction to restrain the breach or threatened breach of such
violation or otherwise to enforce specifically such provisions against such
violation, without the necessity of the posting of any bond by the Company.
Executive further covenants and agrees that if he shall violate any of his
covenants under this paragraph 7,
the
Company shall not be obligated to make any payments or provide any benefits
provided in paragraph
6
and the
Company shall be entitled to recover any amounts previously paid pursuant to
paragraph
6.
Such a
remedy shall, however, not be exclusive and shall be in addition to any
injunctive relief or other legal or equitable remedy to which the Company is
or
may be entitled.
8. Indemnification.
To
the
full extent permitted by applicable law, Executive shall be indemnified and
held
harmless by the Company against any and all judgments, penalties, fines, amounts
paid in settlement, and other reasonable expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) actually incurred by
Executive in connection with any threatened, pending or completed action, suit
or proceeding (whether civil, criminal, administrative, investigative or other)
for any action or omission in his capacity as a director, officer or employee
of
the Company. Indemnification under this paragraph 8
shall be
in addition to, and not in substitution of, any other indemnification by the
Company of its officers and directors.
9. Miscellaneous.
a. Executive
represents and warrants that he is not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or prohibit
him from undertaking or performing employment in accordance with the terms
and
conditions of this Agreement.
b. The
provisions of this Agreement are severable and if any one or more provisions
may
be determined to be illegal or otherwise unenforceable, in whole or in part,
the
remaining provisions and any partially unenforceable provision to the extent
enforceable in any jurisdiction will remain binding and
enforceable.
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c. The
rights and obligations of the Company under this Agreement inure to the benefit
of, and will be binding on, the Company and its successors and assigns, and
the
rights and obligations (other than obligations to perform services) of Executive
under this Agreement will inure to the benefit of, and will be binding upon,
Executive and his heirs, personal representatives and permitted assigns;
provided,
however,
that
Executive shall not be entitled to assign or delegate any of his rights and
obligations under this Agreement without the prior written consent of the
Company.
d. Any
notice to be given under this Agreement will be personally delivered in writing
or will have been deemed duly given when received after it is posted in the
United States mail, postage prepaid, registered or certified, return receipt
requested, or sent by overnight courier service addressed to each of the parties
hereto at such address or addresses as each party shall provide from time to
time in writing to the other. Initially such notices shall be sent,
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If
to Executive:
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Xxxxxx
Xxxxxxx & Xxxxx LLP
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Attention:
Xxxxxx X. Xxxxx, Esq.
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0000
Xxxxxx & Xxxx Xxxxx
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Xxxxxxxxx,
Xxx Xxxx 00000
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If
to Company:
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Attention:
Xxxxxx X. Xxxxxxxxx
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000
Xxxxxx Xxxx
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Xxxxx,
Xxxxxxxxxxxx 00000.
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e. The
failure of either party to enforce any provision or provisions of this Agreement
will not in any way be construed as a waiver of any such provision or provisions
as to any future violations thereof, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
the parties herein are cumulative and the waiver of any single remedy will
not
constitute a waiver of such party’s right to assert all other legal remedies
available to it under the circumstances.
f. THIS
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS.
g. Captions
and paragraph headings used herein are for convenience and are not a part of
this Agreement and will not be used in construing it.
h. In
the
event of any dispute arising out of the subject matter of the Agreement, the
prevailing party shall recover, in addition to any other damages assessed,
its
attorney’s fees and court costs incurred in litigating or otherwise settling or
resolving such dispute whether or not an action is brought or prosecuted to
judgment.
i. This
Agreement contains the entire understanding of the parties. It may not be
changed orally but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension, or discharge
is
sought.
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first set forth above.
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By:
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Name:
Xxxxxx X. Xxxxxxxxx
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Title:
President and Chief Executive Officer
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Xxxxx
X. Xxxxxx
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