Exhibit 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of , 2005, is
entered into between FBO Air, Inc.(the "Company"), and Xxxxxx X. Xxxxxxxx
("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 the Chief Operating Officer of the Company
and the President of the Company's Big Bird Division (the "Division"). Executive
will also serve as the Vice-Chairman 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 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 President or Chief Executive Officer of the Company or by the
Board of Directors. If the Company shall so request, Executive shall act as an
officer and/or director of any of the subsidiaries of the Company as they may
now exist or may be established by the Company in the future without any
compensation other than that provided for in paragraph 3. 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 investment of a personal nature.
2. TERM. The term of Executive's employment under this Agreement (the
"Term") will begin on the date of this Agreement and will continue, subject to
the termination provisions set forth in paragraph 5 below, until the third
anniversary of the date hereof; provided 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 $150,000 (the "Base Salary"). The Base Salary shall be
payable in equal monthly installments. The Board of Directors of the Company may
increase such salary at any time and from time to time.
b. Bonus. In addition to Base Salary, the Executive shall be guaranteed an
annual incentive bonus payment of $100,000 which amount shall be payable in
equal monthly installments upon execution of this agreement. In addition to the
annual incentive bonus, 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 Division. The amount of
the performance bonus shall be determined in the sole discretion of the Board of
Directors and Executive shall not be entitled to any performance bonus unless
and until such performance bonus is approved by the Board of Directors.
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Exhibit 10.5
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. Without limiting the generality of
the foregoing, Company agrees to (i) pay premium expenses on behalf of Executive
and family for medical, dental and vision insurance coverage; (ii) provide an
automobile, insurance, maintenance and fuel to the Executive; (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; and (iv) arrange and pay for a
complete executive physical examination every two years, provided, however, that
the results of the physical examination shall be made known to Company as well
as to Executive.
b. Vacation. 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 stock as follows:
250,000 shares April 1, 2005
250,000 shares April 1, 2006
250,000 shares April 1, 2007
The per share price will be the listed price as of each respective date
and will vest at the time of the issuance. The executive will have five years to
acquire the stock from the date of issuance. So long as it may be done lawfully,
the manner of acquisition of stock shall be structured as to minimize adverse
tax consequences to the Executive.
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Exhibit 10.5
Additional options may be granted by the Board of Directors at their
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 cures the alleged violation or
other circumstance which was the basis of such termination within such 30-day
notice period; provided, that the termination for "Cause" under subparagraphs
5(f)(ii)(B)-(F) thereof shall be effective immediately upon the giving of the
notice of termination.
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 ten (10) 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 either party upon the occurrence of a change of control.
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 eight aggregate weeks during any four-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.
(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; (B) conviction of a felony
offense, whether or not such offense was committed in connection with Company's
business; (C) theft, embezzlement, false entries on records, 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 Company; (E) at any time during
employment at the Company, 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.
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Exhibit 10.5
(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 substantially all of its assets
to a single purchaser or to a group of associated purchasers; or
(b) the merger or consolidation of the Company in a
transaction in which the shareholders of the Company receive less than fifty
percent (50%) of the outstanding voting shares of the new or continuing
corporation;
(c) the sale, exchange, or other disposition, in one
transaction, of at least two-thirds (2/3) of the outstanding shares of the
Company.
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Exhibit 10.5
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 stock options held by
Executive, whether vested or unvested as of the date of termination, shall
immediately expire on the date of termination and all unvested stock-based
grants shall immediately expire and all unpaid bonuses shall be forfeited.
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 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, 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 Section 4(a) shall continue
for a period of six (6) months from the end of the month of termination.
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; that 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 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 the Executive in the immediately preceding
year.
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Exhibit 10.5
(iii) Executive shall continue to be covered by all non-cash benefit
plans of 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 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, 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 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"). Executive agrees that he
shall not, so long as the Company remains in existence, 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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Exhibit 10.5
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");
provided, that the Executive shall not be prohibited from engaging in a
competitive business solely with the customers set forth on Exhibit A hereto.
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"); provided, that the Executive shall
not be prohibited from engaging in a competitive business solely with the
customers set forth on Exhibit A hereto.
e. (i) As used in this Agreement, "Restricted Period" shall mean the term
of employment and six (6) 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 six (6) 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.
(iii) As used in this Agreement "Restricted Area" shall mean any
county in any of the States of the United States in which Company's business is
being conducted at the time of termination.
f. Following Executive's termination of employment, Executive will
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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Exhibit 10.5
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. Accordingly, Executive agrees that he shall reimburse the Company for
any reasonable attorneys' fees and expenses that the Company might incur in
enforcing this paragraph 7 if it is judicially determined that Executive has
breached this paragraph 7.
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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Exhibit 10.5
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,
If to Executive: Xxxxxx X. Xxxxxxxx, 00 Xxxxxxxxx Xxxxx Xxxxxxxxxx,
Xxx Xxxxxx 00000
If to Company: FBO Air, Inc., c/o Xxx Xxxxxxxxx, 0000 X. Xxxxxxx
Xxx, Xxxxxxxxxx, XX 00000.
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. In construing the Agreement, none of the parties
hereto shall have any term or provision construed against such party solely by
reason of such party having drafted the same.
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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Exhibit 10.5
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first set forth above.
FBO AIR, INC..
By:
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Name: Xxxxxx X. Xxxxxxxxx
Title:
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Xxxxxx X. Xxxxxxxx
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