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EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT signed the 8th day of February, 1999 to
be effective January 21, 1999 (the "Agreement") by and between AMERICAN
AIRCARRIERS SUPPORT, INCORPORATED, a Delaware corporation (the "Company") with
principal offices at Fort Mill, South Carolina and XXXXXX X. XXXXXXXXX (the
"Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to serve the Company as its Chief Operating Officer and
President. In addition, for so long as Executive is employed by Company, he
shall agree to serve and the Company shall nominate him to a position on the
Board of Directors.
2. Position and Responsibilities. The Executive shall exert his best
efforts and devote full time and attention to the affairs of the Company.
Generally, Executive shall be responsible for the general direction and
operations of the Company, including all subsidiaries; developing strategic
activities, mergers and acquisitions; investor relations; the ability to hire
and fire personnel; and all other activities attendant to the ones described
hereto. The Executive shall be directly supervised by the Chief Executive
Officer of the Company and shall have the authority and responsibility with
respect thereto subject to the general direction, approval and control of the
Board of Directors and Chief Executive Officer of the Company, to the
restrictions, limitations and guidelines set forth by the Board of Directors in
resolutions adopted in the minutes of the Board of Directors meetings, copies of
which will be provided to the Executive from time to time and will be
incorporated herein by reference.
3. Term of Employment. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on February 8, 1999 and shall
continue until February 8, 2002, (the "Initial Term"), subject to extension as
hereinafter provided or termination pursuant to the provisions set forth
hereafter. The term of Executive's employment shall be automatically extended
for an additional one-year term upon expiration of the Initial Term unless
either party hereto receives 180 days' prior written notice from the other
electing not to extend the Executive's employment. Compensation during the term
shall be that set forth in Section 5 hereof, unless one of the termination
provisions overrides.
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4. Duties. During the period of his employment hereunder and except for
illness, specified vacation periods and reasonable leaves of absence, the
Executive shall devote his best efforts and full attention and skill to the
business and affairs of the Company and its affiliated companies, as such
business and affairs now exist and as they may be hereinafter changed or added
to, under and pursuant to the general direction of the Board of Directors of the
Company.
5. Compensation. Commencing on February 8, 1999, the Company shall pay
to the Executive as compensation for his services the sum of $225,000.00 per
year, payable semi-monthly. Any increases shall be in the discretion of the
Compensation Committee which shall make an annual review of Executive's
compensation. Executive shall also be eligible for a bonus in the Company's
EBITDA Incentive Compensation Plan to be adopted by the Compensation Committee
for 1999 (the "Plan") in the form substantially similar to the draft previous
provided with the assistance of the Executive. However, for 1999 only, Executive
shall be guaranteed a minimum bonus under the Plan of at least fifty percent
(50%) of Executive's base salary. The Plan shall remain in effect after 1999 and
the Executive shall be entitled to receive annual bonuses under the Plan until
such time as a new bonus plan mutually acceptable to the Executive and the
Company is established.
Separately, Company shall grant Executive an option to purchase 200,000
shares of the Company's common stock under the 1998 Stock Option Plan at an
exercise price equal to the closing price of the stock on January 21, 1999
($9.625). The options shall vest as follows: 50,000 on date of grant and 50,000
at each anniversary of the Employment Agreement. A "triggering event" as defined
below, or the death or disability of the Executive, shall immediately accelerate
and vest all outstanding options. Any additional options in the future shall be
in the discretion of the Compensation Committee.
In the event of the occurrence of a "triggering event" which shall be
defined to include a (i) change in ownership in one or a series of transactions
of 50% or more of the outstanding shares of the Company, or (ii) merger,
consolidation, reorganization or liquidation of the Company, and following such
triggering event either (i) the Executive elects to terminate this agreement or
(ii) the Executive's services are terminated by the Company or the Executive or
the Executive's duties, authority or responsibilities are substantially
diminished, the Executive shall receive lump sum compensation equal to 2 times
his annual salary and incentive or bonus payments, if any, as shall have been
paid to the Executive during the Company's most recent 12-month period within 30
days of the triggering event. If the total amount of the change of control
compensation were to exceed three (3) times the Executive's base amount (the
average annual taxable compensation of the Executive for the five (5) years
preceding the year in which the change of control occurs), the Company and the
Executive may agree to reduce the lump sum
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compensation to be received by Executive in order to avoid the imposition of the
golden parachute tax as provided in the Tax Reform Act of 1984, as amended by
the Tax Return Act of 1986. If the Company fails to pay the sum calculated
hereunder pursuant to a triggering event then the noncompete set forth in
paragraph 11(c) shall be void.
In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or resignation from the Company
upon the occurrence of a triggering event, or in order to enforce the rights and
obligations of the Company as provided in this paragraph, the Company shall
reimburse to the Executive all reasonable attorneys' fees which may be expended
by the Executive in seeking to enforce the terms hereof. Such reimbursement
shall be paid every 30 days after the Executive provides copies of invoices from
the Executive's counsel to the Company. However, such invoices may be redacted
to preserve the attorney-client privilege, client confidentiality or work
product.
6. Expense Reimbursement. The Company will reimburse the Executive, at
least semi-monthly, for all reasonable and necessary expenses, including without
limitation, travel expenses, and reasonable entertainment expenses, incurred by
him in carrying out his duties under this Agreement. The Executive shall present
to the Company each month an account of such expenses in such form as is
reasonably required by the Board of Directors.
Since the Executive agrees to relocate to Charlotte, North Carolina,
the Company shall reimburse Executive for reasonable relocation costs including
moving expenses for personal possessions and house hunting as well as selling
expenses for selling his home in Weston, Florida, such reimbursement not to
exceed $37,500.00.
7. Medical and Dental Coverage. Commencing February 8, 1999, the
Executive will be entitled to participate in the Company's employee group
medical and other group insurance programs on the same basis as other executives
of the Company. Any other benefits offered to personnel in the Company similar
to Executive shall also be offered to Executive upon the same terms.
8. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Executive for the benefit of the Company as may be required; provided, however,
that the Company shall bear the entire cost of such examinations and shall pay
all premiums on any key man life insurance obtained for the benefit of the
Company as beneficiary or with respect to any other designated beneficiary.
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9. Vacation Time. The Executive shall be entitled each year to three
(3) weeks vacation in accordance with the established practices of the Company,
now or hereafter in effect for the executive personnel, during which time the
Executive's compensation shall be paid in full.
10. Benefits Payable on Disability. If the Executive becomes disabled
from properly performing services hereunder by reason of illness or other
physical or mental incapacity, the Company shall continue to pay the Executive
his then current salary hereunder for the first six (6) months of such
continuous disability commencing with the first date of such disability. In
replacement to the foregoing, the Company intends to provide group disability
insurance which will cover the Executive. If the Company has not obtained such
coverage within 120 days of the Executive's employment, then the Company will
reimburse the Executive for the cost of disability insurance which will provide
not less than 65% of salary as a benefit.
11. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his
employment under this Agreement, he will engage in no other business
activities directly or indirectly, which are competitive with or which
might place him in a competing position to that of the Company, or any
affiliated company.
(b) The Executive realizes that during the course of his
employment, Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer
lists, account lists and secret inventions and processes of the Company
and its affiliated companies. Therefore, during or subsequent to his
employment by the Company, or by an affiliated company, the Executive
agrees to hold in confidence and not to directly or indirectly disclose
or use or copy or make lists of any such information, except to the
extent authorized by the Company in writing. All records, files,
business plans, documents, equipment and the like, or copies thereof,
relating to Company's business, or the business of an affiliated
company, which Executive shall prepare, or use, or come into contact
with, shall remain the sole property of the Company, or of an
affiliated company, and shall not be removed from the Company's or the
affiliated company's premises without its written consent, and shall be
promptly returned to the Company upon termination of employment with
the Company and its affiliated companies. The restrictions and
obligations of Executive set forth in this Section 11(b) shall not
apply to (i) information that is or becomes generally available and
known to the industry (other than as a result of a disclosure directly
or indirectly by Executive); or (ii) information that was known to
Executive prior to Executive's employment by the Company or its
predecessor.
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(c) Because of his employment by the Company, Executive shall
have access to trade secrets and confidential information about the
Company, its business plans, its business accounts, its business
opportunities, its expansion plans into other geographical areas and
its methods of doing business. Executive agrees that for a period of
one (1) year after termination (regardless of any longer severance
payments) or expiration of his employment, he will not, directly or
indirectly, compete with the Company in its then present aviation
business.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 11 to be so overbroad as to be unenforceable,
then such provision shall be reduced in scope by the court, but only to
the extent deemed necessary by the court to render the provision
reasonable and enforceable, it being the Executive's intention to
provide the Company with the broadest protection possible against
harmful competition.
(e) The Company acknowledges and agrees that during the term
of this Agreement, Executive may, in his discretion, engage in other
business and investment activities in addition to those contemplated by
this Agreement, so long as (a) such activities do not violate the terms
of the noncompete provisions of paragraph 11(c) hereof, and (b)
notwithstanding such activities, the Executive devotes such time and
attention to the affairs of the Company as is reasonably necessary to
discharge his duties under this Employment Agreement.
(f) Notwithstanding anything herein to the contrary, nothing
herein shall prohibit Executive, during the term hereof or during any
period as to which paragraph 11(c) applies, from owning interests in
any public company that engages in business competitive with the
Company if his ownership interest in such company does not exceed two
(2%) percent of any class of its capital stock.
12. Termination for Cause by the Company. The Company may, without
liability, terminate the Executive's employment hereunder for cause at any time
upon written notice from the Board of Directors specifying such cause, and
thereafter the Company's obligations hereunder shall cease and terminate;
provided, however, that such written notice shall not be delivered until after
the Board of Directors shall have given the Executive written notice specifying
the conduct alleged to have constituted such cause and the Executive has failed
to cure such conduct, if curable, within fifteen (15) days following receipt of
such notice.
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Grounds for termination "for cause" are one or more of the following:
(a) A willful breach of a material duty by the Executive
during the course of his employment;
(b) Habitual neglect of a material duty by the Executive;
(c) Fraud on the Company, conviction of a felony involving or
against the Company, or conviction of a crime of moral turpitude that
affects the integrity and name of the Company.
13. Termination by the Executive or the Company Without Cause;
Termination by Executive With Cause.
(a) The Executive, without cause, may terminate this Agreement
upon 90 days prior written notice to the Company. In such event, the
Executive shall be required to render the services required under this
Agreement during such 90-day period unless otherwise directed by the
Board of Directors. Compensation for vacation time not taken by
Executive shall be paid to the Executive at the date of termination.
Executive shall be paid for only the ninety (90) day period pursuant to
normal pay practices and then all obligations regarding pay shall
cease.
(b) The Company, without cause, may terminate this Agreement.
In such event, the Company shall pay a severance allowance equal to the
balance of the base salary payable over the term of the contract at
regular monthly installments unless the parties negotiate a mutually
acceptable discounted lump sum. No other benefits will be provided once
this Agreement is terminated. However, if a triggering event as defined
in paragraph 5 supra occurs within six (6) months of Executive's
termination without cause, Executive shall be paid the lump sum
compensation amount due under paragraph 5.
(c) The Executive may terminate this Agreement with the
Company at any time, upon 30 days' written notice and opportunity for
the Company to remedy any non-compliance, by reason of (i) the
Company's material failure to perform its duties pursuant to this
Agreement, or (ii) any material diminishment in the duties and
responsibilities, working facilities, or compensation as described in
paragraphs 1, 2, 4 and 5 of this Agreement. In the event of termination
of this Agreement by the Executive for cause, the Executive shall be
paid all base salary specified herein for the remaining term of this
Agreement. The provisions of paragraph 11(c) shall only apply so long
as Executive is receiving timely payment in accordance with the
bi-weekly payroll process.
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14. Termination upon Death of Executive. In addition to any other
provision relating to the termination, this Agreement shall terminate upon the
Executive's death. In such event, the Company shall pay a severance allowance
equal to one hundred eighty (180) days' salary to the Executive's estate.
15. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte,
Mecklenburg County, North Carolina, in accordance with the Rules of the American
Arbitration Association then existing. This Agreement to arbitrate shall be
specifically enforceable under the prevailing arbitration law of the State of
North Carolina. The award rendered by the arbitrators shall be final and
judgment may be entered upon the award in any court of the State of North
Carolina having jurisdiction of the matter.
16. General Provisions.
(a) The Executive's rights and obligations under this
Agreement shall not be transferrable by assignment or otherwise, nor
shall Executive's rights be subject to encumbrance or to the claims of
the Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement and the rights of Executive with respect to
the benefits of employment referred to herein constitute the entire
Agreement between the parties hereto in respect of the employment of
the Executive by the Company and supersede any and all other agreements
either oral or in writing between the parties hereto with respect to
the employment of the Executive.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction
or in an arbitration proceeding, the validity and enforceability of the
remainder of such provisions or parts thereof and the applicability
thereof shall not be affected thereby.
(d) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(e) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of South Carolina.
(f) Executive shall have no duty to mitigate the payment due
him from Company pursuant to this Agreement and any money earned by
Executive from other sources after his
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employment with the Company terminates shall not reduce the amount owed
him by the Company pursuant to this Agreement.
(g) In the event of any proceeding regarding the enforcement
of any provision of this Agreement to which the Company and the
Executive are adverse parties, the losing party shall reimburse the
prevailing party for all cost and expenses, including attorneys' fees
and disbursements, incurred by the prevailing party in defense or
prosecution of any such proceeding.
17. Construction. Throughout this Agreement the singular shall include
the plural, and the plural shall include the singular, and the masculine and
neuter shall include the feminine, wherever the context so requires.
18. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
19. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
20. Effective Date. This Agreement may be executed on the dates noted
below but shall only be effective on November 19, 1998.
FOR THE COMPANY: AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED
Dated 2/8/99 By /s/ Xxxx Xxxxx
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Title: Chairman and CEO
FOR THE EXECUTIVE:
Dated 2/8/99 /s/ Xxxxxx X. Xxxxxxxxx (SEAL)
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XXXXXX X. XXXXXXXXX
