EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and
entered into as of this 3rd day of October, 1996, by and between
XXXXXX XXXXXXX III, an individual resident of the State of New
York ("Executive"), and INTERNATIONAL AIRLINE SUPPORT GROUP,
INC., a Delaware corporation ("Company").
W I T N E S S E T H
WHEREAS, Company desires to employ Executive, and Executive
desires to be employed by Company on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. Employment.
1.1. Duties. Subject to the terms contained herein,
Company hereby agrees to the continued employment of Executive,
and Executive hereby accepts such continued employment.
Executive shall serve as Executive Vice President and Chief
Financial Officer of Company and as a Director. In his capacity
as the Executive Vice President and Chief Financial Officer of
the Company, Executive shall (i) be in charge of all financial,
treasury and corporate finance activities and (ii) assume and
perform such further reasonable responsibilities and duties
assigned to him by the Board of Directors of the Company.
Executive shall devote his full business time (except for periods
of illness and incapacity) and best efforts to rendering services
on behalf of Company. Nothing in this Agreement shall preclude
Executive from engaging, so long as, in the reasonable
determination of such Board of Directors, such activities do not
interfere with his duties and responsibilities hereunder, in
charitable and community affairs, from managing any passive
investment made by him or from serving, subject to the prior
approval of such Board of Directors, as a member of the board of
directors or as a trustee of any other corporation, association
or entity.
1.2. Directorship. The Executive shall serve as a
member of the Board of Directors of the Company so long as he is
employed by the Company. Executive shall serve as a member of
the Board of Directors of the Company pursuant to this Agreement
without any additional compensation.
Section 2. Term.
The employment of Executive hereunder shall commence as of
the date hereof and shall continue for a period of five years
(the "Employment Term") from the date hereof. Following the
Employment Term, this Agreement shall continue in force for
successive one-year terms (each, a "Renewal Term") unless either
the Company or the Executive provides not less than ninety days'
prior written notice to the other that this Agreement shall
terminate at the end of the Employment Term. During any Renewal
Term, either the Company or the Executive may terminate this
Agreement effective at the end of a subsequent Renewal Term by
giving the other party not less than ninety days' prior written
notice of such termination.
Section 3. Compensation; Expenses.
3.1. Salary. During the Employment Term and any
Renewal Term, Executive shall be paid a salary by Company at the
annual rate of not less than One Hundred Twenty Thousand Dollars
($120,000.00) (as from time-to-time increased in accordance with
the terms of this Agreement, the "Salary"); provided, however,
that (i) the Salary shall be increased to an annual rate of not
less than One Hundred Fifty Thousand Dollars ($150,000) effective
upon the consummation of a transaction pursuant to which the
Company's payment obligations with respect to its outstanding
indebtedness are restructured in a manner satisfactory to the
Board of Directors (a "Restructuring"). The Salary shall be
reviewed by the Board of Directors of the Company on an annual
basis and the Salary may be increased based on the performance of
Executive; provided that the Executive shall be entitled to
annual cost of living increases. The Salary shall be paid to
Executive in equal weekly installments, less all applicable
withholding taxes in the same manner as other executive officers
of the Company.
3.2. Relocation Expenses. The Company shall reimburse
Executive for reasonable expenses incurred as a result of
Executive relocating his private residence to the Atlanta,
Georgia area.
3.3. Bonuses. In addition to the Salary, Executive
shall be paid, subject to conditions set forth herein, an annual
bonus ("Bonus") during the Employment Term and any Renewal Term
in respect of each fiscal year of the Company commencing on or
after May 31, 1996. The Bonus payable under this subsection 3.3
in each such fiscal year shall be not less than an amount equal
to three percent (3%) of the Company's net income before
extraordinary and non-recurring items and income taxes, and
before giving effect to any bonuses paid to the Company's
employees, including the Bonus, as reported on the Company's
periodic filings with the Securities and Exchange Commission,
subject to the following adjustments: (i) there shall be excluded
from the computation of net income any item of revenue
(including, without limitation, cancellation of indebtedness
income) or expense attributable to the Restructuring or to any
litigation commenced by or against the Company and (ii) items of
revenue and expense attributable to the sale of aircraft (whether
now owned or acquired in the future) shall not be considered
extraordinary or non-recurring items regardless of the treatment
accorded such items under generally accepted accounting
principles or the rules of the Securities and Exchange
Commission; provided that with respect to the fiscal year ending
May 31, 1997, the amount due pursuant to this sentence shall be
no less than $50,000. The Bonus shall be paid in cash not later
than the ninetieth (90th) day following the last day of the
fiscal year with respect to which such Bonus was earned and in a
manner in accordance with the ordinary payroll practices of the
Company. Notwithstanding anything to the contrary set forth in
this Agreement, the Board of Directors of the Company shall be
permitted to pay to the Executive a bonus in an amount in excess
of the amount that would be paid pursuant to the formula
described in the second sentence of this paragraph based on the
performance of the Executive.
3.4. Participation in Employee Stock Option Plan.
During the Term, Executive shall be entitled to participate in
the Company's 1996 Long Term Incentive and Share Award Plan (the
"Stock Option Plan"), a copy of which is attached hereto as
Exhibit A. All Awards under the Plan shall be made in accordance
with and subject to the terms of the Plan. Upon closing of the
Restructuring and in accordance with the terms thereof, Executive
shall be entitled to receive options for 104,787 shares of the
Company's Common Stock (after giving effect to the reverse stock
split to be effected in connection with the Restructuring), the
terms of which shall be in accordance with the Option Agreement
attached as Exhibit B.
3.5. Other Remuneration. Executive shall be entitled
to such other remuneration as the Board of Directors of the
Company may hereafter from time-to-time approve for payment to
Executive.
3.6. Expenses. Executive is authorized to incur
reasonable and necessary expenses in carrying out his duties and
responsibilities under this Agreement, including, without
limitation, expenses for travel and similar items related to such
duties and responsibilities, including travel expenses to the
Company's offices in Miami. The Company will reimburse Executive
for all such expenses upon presentation by Executive from time-
to-time of appropriately itemized and approved (consistent with
the Company's policy) accounts of such expenditures.
Section 4. Additional Employment Benefits.
During the Employment Term and any Renewal Term, Company
shall provide Executive with the following fringe benefits
(collectively, the "Benefits"):
4.1. Medical Insurance. Executive shall be entitled to
participate in such medical, dental, disability, hospitalization,
life insurance and other benefit plans (such as pension and
profit sharing plans) as shall be made available to similarly
situated officers of the Company on the terms and subject to the
conditions set forth in such plans.
4.2. Vacation. Executive shall receive four weeks of
paid vacation time each fiscal year during the Employment Term.
In the event that this Agreement is terminated by the Company
other than for cause, Executive shall be paid for each unused
vacation day at the rate of 1/365th of the Salary in effect
during the year in which the vacation day accrued.
4.3. Other. In addition to the foregoing, Executive
shall be entitled to the prerequisites and other fringe benefits
made available to senior executives of the Company.
Section 5. Termination.
The following provisions relate solely to termination of the
Executive's employment during the Employment Term and any Renewal
Term:
5.1. Death or Disability.
(a) Subject to Section 7 below, this Agreement
shall terminate automatically upon the Executive's death.
(b) Subject to Section 7 below, the Company shall
at all times have the right to terminate the Executive's
employment hereunder at any time after the Executive shall
be absent from his employment, for whatever cause, including
but not limited to mental or physical incapacity, illness or
disability (collectively "Disability") for a continuous
period of more than twenty-six (26) weeks.
5.2. Cause. The Company may terminate the Executive's
employment for "Cause." For purposes of this Agreement, "Cause"
means (i) if Executive is convicted by a court of competent
jurisdiction of a felony, (ii) if Executive engages in illegal or
other wrongful conduct substantially detrimental to the business
or the reputation of the Company, or (iii) repeated violations by
the Executive of the Executive's obligations under Sections 1.1
or 1.2 of this Agreement unless Executive corrects such violation
within ten (10) days after written notice from the Company of
such violation or if, having once received such notice of
violation and having so corrected such violation, Executive at
any time thereafter again violates Executive's obligations under
Sections 1.1 or 1.2 of this Agreement.
5.3. Change of Control or Change of Responsibilities.
Following a "Change of Control" (as defined below) of the
Company or a "Change of Responsibilities" (as defined below), the
Executive shall have the right to terminate his employment (i) by
resignation on not less than ninety (90) days' prior written
notice given within six (6) calendar months after the occurrence
of such Change of Control or Change of Responsibilities, as the
case may be, or (ii) by resignation on not less than ninety (90)
days' prior written notice given within eighteen (18) calendar
months after such Change of Control or Change of
Responsibilities, as the case may be.
A "Change of Control" means:
(i) a "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934 (the "Exchange Act") becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of voting stock representing more that 35% of
the total voting power of the total voting stock of the
Company on a fully diluted basis;
(ii) individuals who on the date hereof constitute the
Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for
election by the Company's stockholders was approved by a
vote of at least a majority of the members of the Board of
Directors then in office who either were members of the
Board of Directors on the closing date with respect to the
Restructuring or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority of the members of the Board of
Directors then in office; or
(iii) the sale of all or substantially all of the
Company's assets in one transaction or a series of related
transactions to any person or group.
A "Change of Responsibilities" shall occur upon any of
the following:
(i) the making of any material change by the Company
or a "Successor" (as defined below) in the Executive's
function, duties or responsibilities with the Company or the
Successor, as the case may be, that would cause the
Executive's position to become of less dignity,
responsibility, importance or scope;
(ii) the relocation of the Company's headquarters from
Miami, Florida (other than to Atlanta, Georgia); or
(iii) the occurrence of any material breach of this
Agreement by the Company, including, without limitation, the
failure to pay any material amounts owed under this
Agreement.
"Successor" means the person, or group of persons, that
(i) operates all or substantially all of the Company's business
following a Change of Control or (ii) that survives a merger or
consolidation of the Company that constitutes a Change of
Control.
Section 6. Notice of Termination.
Any termination by the Company for Cause shall be
communicated in writing to the Executive and if the termination
date is other than the date of receipt, the notice shall specify
the termination date.
Section 7. Obligations of the Company Upon Termination.
The following provisions apply only in the event the
Executive's employment hereunder is terminated.
7.1. Death. If the Executive's employment is
terminated by reason of the Executive's death, the Company shall
pay, in addition to any accrued benefits payable hereunder, the
Salary to the Executive's legal representatives for a period of
eighteen months subsequent to such Termination. The Salary may
be paid, at the option of the Company, either in a lump sum or in
equal monthly installments. The Executive's family shall also be
entitled to receive benefits at least equal to those provided by
the Company to surviving families of executives of the Company in
comparable positions under such plans, programs and policies
relating to family death benefits, if any. The Executive's
family shall also be entitled to receive the prior year's Bonus
or any portion thereof unpaid at the time of Executive's death,
plus a bonus equal to the product of the prior year's Bonus
multiplied by a fraction, the numerator of which is the number of
months Executive was employed during the year of death and the
denominator of which is twelve.
7.2. Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, the Executive
shall be entitled to receive, in addition to any accrued benefits
payable hereunder, the Salary for a period of eighteen months
subsequent to such termination. The Salary may be paid, at the
option of the Company, either in a lump sum or in equal monthly
installments. The Executive shall also be entitled to receive
benefits at least equal to those provided by the Company to
disabled employees of the Company in accordance with such plans,
programs and policies relating to disability, if any. The
Executive shall also be entitled to receive the prior year's
Bonus or any portion thereof unpaid at the time of Executive's
termination, plus a bonus equal to the product of the prior
year's Bonus multiplied by a fraction, the numerator of which is
the number of months Executive was employed during the year of
termination and the denominator of which is twelve.
7.3. Cause. If the Executive's employment shall be
terminated for Cause, the Company shall pay the Executive his
Salary through the date of termination at the rate in effect at
the time notice of termination is given and shall have no further
obligation to the Executive under this Agreement. The Executive
shall also be entitled to receive the prior year's Bonus or any
portion thereof unpaid at the time of Executive's termination.
7.4. Termination Without Cause. If the Company shall
terminate the Executive's employment with the Company without
Cause:
(a) the Company shall pay to the Executive at the
time such payments would otherwise be payable hereunder, the
Salary for the remaining Employment Term or any Renewal
Term. The Executive shall also be entitled to receive the
prior year's Bonus or any portion thereof unpaid at the time
of Executive's termination, plus a bonus equal to the
product of the prior year's Bonus multiplied by a fraction,
the numerator of which is the number of months Executive was
employed during the year of termination and the denominator
of which is twelve;
(b) the Company shall, promptly upon submission
by the Executive of supporting documentation, pay or
reimburse, or cause to be paid or reimbursed, to the
Executive any business related costs and expenses paid or
incurred by the Executive on or before the date of
termination which would have been payable if the
Executive's employment had not terminated;
(c) until the eighteen-month anniversary of the
Executive's termination, the Company shall continue
benefits (or equivalent coverage) to the Executive and/or
the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs and policies in effect as of the date of
termination; and
(d) until the eighteen-month anniversary of the
Executive's termination, the Company shall furnish the
Executive with office space that is comparable to the
office space now occupied by the Executive; provided,
however, that, the Company's obligation to provide such
office space shall termination upon the Executive's
commencement of other employment.
7.5. Change of Control. Upon the occurrence of a
Change of Control (as defined in Section 5.3) or Change of
Responsibilities, and an election by the Executive to terminate
his employment, the Company (or the Successor) shall pay the
Executive severance pay equal to one (1) times the "Base Amount"
(as defined below). Upon the occurrence of a Change of Control
pursuant to which the Successor does not assume the Company's
obligations pursuant to this Agreement, the Company shall pay the
Executive severance pay equal to one (1) times the Base Amount.
The severance pay payable pursuant to this Section 7.5 shall be
paid in a lump sum. In addition, the Executive shall be entitled
to receive the benefits described in Section 7.4 for the period
set forth in such Section. "Base Amount" means the Executive's
average annual compensation (including Salary, bonus, fringe and
pension benefits and deferred compensation) paid by the Company
for the most recent two (2) years ending prior to the Change of
Control.
Section 8. Non-Disclosure.
Except as expressly permitted by the Company, or in
connection with the performance of his duties hereunder, the
Executive shall not at any time during or subsequent to his
employment by the Company, disclose, directly or indirectly to
any person, firm, corporation, partnership, association or other
entity any proprietary or confidential information relating to
the Company or any information concerning the Company's financial
condition or prospects, the Company's customers or suppliers, the
Company's sources of leads and methods of obtaining new business,
the Company's marketing plans or strategy or the Company's
methods of doing and operating its business (collectively,
"Confidential Information") except when required to do so by a
court of competent jurisdiction, by any governmental agency
having supervisory authority over the business of the Company or,
as the case may be, an affiliate of the Company or by any
administrative body or legislative body (including a committee
thereof) with jurisdiction to order Executive to divulge,
disclose or make accessible such information. Confidential
Information shall not include information which, at the time of
disclosure, is known or available to the general public by
publication or otherwise through no act or failure to act on the
part of the Executive. The Executive acknowledges and agrees
that the Confidential Information is a valuable, special and
unique asset of the Company's business.
Section 9. Books and Records.
All books, records and accounts relating in any manner to
the Company's customers or suppliers, whether prepared by the
Executive or otherwise coming into the Executive's possession,
and all copies thereof in the Executive's possession, shall be
the exclusive property of the Company and shall be returned
immediately to the Company upon termination of the Executive's
employment hereunder or upon the Company's request at any time.
Section 10. Injunction.
Executive acknowledges that if he were to breach any of the
provisions of Sections 8 or 9, it would result in immediate and
irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Executive agrees that
the Company shall be entitled, if any such breach shall occur or
be threatened or attempted, if it so elects, to a decree of
specific performance and to a temporary and permanent injunction,
without being required to post a bond, enjoining and restraining
such breach by the Executive, his associates, his partners or
agents, either directly or indirectly, and that such right to
injunction shall be cumulative to whatever remedies or actual
damages the Company may possess.
Section 11. Company's Covenant.
The Company agrees that it shall not enter into any
agreement pursuant to which a Change of Control would occur
unless it makes provision in such agreement for the assumption by
the Successor of the Company's obligations pursuant to this
Agreement.
Section 12. Miscellaneous.
12.1. Binding Effect. This Agreement shall inure to
the benefit of and shall be binding upon Executive and his
executor, administrator, heirs, personal representatives and
assigns, and Company and its respective successors and assigns;
provided, however, that Executive shall not be entitled to assign
or delegate any of his rights or obligations hereunder without
the prior written consent of Company.
12.2. Governing Law. This Agreement shall be deemed
to be made in, and in all respects shall be interpreted,
construed and governed by and in accordance with, the laws of the
State of Georgia (without giving effect to the conflicts of law
principles thereof). No provision of this Agreement or any
related document shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having
or being deemed to have structured or drafted such provision.
12.3. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
12.4. Notices. Unless otherwise agreed to in writing
by the parties hereto, all communications provided for hereunder
shall be in writing and shall be deemed to be given when
delivered in person (by courier service or otherwise) or seven
days after being deposited in the United States mail, first
class, registered or certified, return receipt requested, with
proper postage prepaid, and addressed as follows:
(a) If to Company:
International Airline Support Group, Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
(b) If to Executive, addressed to:
Xx. Xxxxxx Xxxxxxx III
International Airline Support Group, Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
12.5. Counterparts. This Agreement may be executed in
two counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
12.6. Entire Agreement. This Agreement is intended by
the parties hereto to be the final expression of their agreement
with respect to the subject matter hereof and is the complete and
exclusive statement of the terms thereof, notwithstanding any
representations, statements or agreement to the contrary
heretofore made. This Agreement may be modified only by a
written instrument signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the date first above written.
INTERNATIONAL AIRLINE SUPPORT
GROUP, INC.
By:
Title: Chairman, Compensation
Committee
EXECUTIVE
Xxxxxx Xxxxxxx III
