EMPLOYMENT AND NONCOMPETE AGREEMENT
EXHIBIT
10.1
EMPLOYMENT
AND NONCOMPETE AGREEMENT
THIS
EMPLOYMENT AND NONCOMPETE AGREEMENT
(“Agreement”), made and entered into as of the 6th day of October, 2006, by and
between XXXX
XXXXX,
an
individual resident of Idaho (“Employee”), and AIR
T, INC.,
a
Delaware corporation (the “Company”).
Background
Statement
The
Company, through its subsidiaries, provides overnight air freight service to
the
express delivery industry, and manufactures, sells and services aircraft ground
support and special purpose industrial equipment. Employee has agreed to join
the Company initially as a Vice President and after a brief period as Chief
Financial Officer and Vice President--Finance pursuant to the terms of this
Agreement. Employee has or will be exposed to various information, data,
methods, processes, software and systems of the Company, many of which are
proprietary to the Company or which will represent a substantial investment
in
the training and/or development of Employee.
IN
CONSIDERATION
of the
promises and the mutual covenants contained herein, the parties hereto agree
as
follows:
1. Employment.
Subject
to the terms and conditions stated herein, and in consideration of Employee’s
obligations and covenants, including without limitation, those obligations
and
covenants set forth in Paragraphs 7, 8 and 9 hereof, the Company agrees to
employ Employee on an active and full-time basis, and Employee accepts such
employment, initially as a Vice President and after a brief period as Chief
Financial Officer and Vice President--Finance of the Company, subject to the
order, supervision and direction of the Company’s Board of Directors and its
Chief Executive Officer.
2. Duties.
Employee shall initially serve the Company as Vice President and after a brief
transition period shall thereafter serve the Company as Chief Financial Officer
and Vice President—Finance and in those capacities shall devote Employee’s full
business time, skill and best efforts to the business of the Company and
faithfully perform such executive and supervisory duties as may be prescribed
by
the Company’s Board of Directors and its Chief Executive Officer. Employee shall
act at all times in compliance, in all material respects, with all policies,
rules and decisions adopted from time to time by the Board of Directors of
the
Company, including the Company’s Code of Business Conduct and
Ethics.
3. Term
of Employment.
The
term of Employee’s employment by the Company hereunder shall commence as of the
date hereof and shall continue for a period of three (3) years after such
commencement date (the “Term of Employment”), unless sooner terminated as
provided in paragraph 5 below.
4. Compensation.
(a) The
base
annual compensation rate to be paid to Employee for the services to be rendered
hereunder (“Base Rate”) throughout the Term of Employment, except to the extent
adjusted as provided below, shall be $125,000, payable in accordance with the
Company’s normal payroll practices, subject to applicable federal and state
income and social security tax withholding requirements. Employee’s Base Rate
may be reviewed from time to time and may be adjusted upward as Employee’s
performance, the performance of the Company and other pertinent factors
warrant.
(b) Incentive
Compensation.
During
the term of this Agreement, Employee will be entitled to receive, as incentive
compensation, compensation equal to 1.5 % of the Company’s pre-tax net income
included in the audited, consolidated net income statement of the Company.
This
incentive compensation will be paid on or about June 15 of each year, with
respect to results achieved during the previous fiscal year. In the event
Employee’s employment is terminated during the fiscal year, he shall be eligible
to receive a pro-rata portion of the incentive compensation for that fiscal
year, to be paid on or about June 15 following his termination of
employment.
(c) Employee
Benefit Plans.
In
addition to the Base Salary provided for above, the Company shall provide to
Employee the opportunity to participate in all life insurance, medical,
disability, and other employee benefit plans (collectively, “Employee Benefit
Plans”) sponsored from time to time by the Company and covering its employees
generally or a particular group of its employees of which Employee is a member
(including participation by Employee’s spouse and dependents to the extent they
are eligible under the terms of such plans), subject to the terms and conditions
of such benefit plans.
(d) Reimbursement
of Expenses.
The
Company shall pay or reimburse Employee for all reasonable travel and other
expenses incurred by Employee in performing Employee’s obligations under this
Employment Agreement in accordance with the Company’s expense reimbursement
policies as established and changed from time to time. In addition, the Company
will reimburse Employee for up to$10,000 in moving expenses in connection with
the relocation of his residence from Idaho to Maiden, North Carolina or any
nearby area.
(e) Vacation.
Employee shall be entitled to paid annual vacation of up to four weeks per
year.
(f) Car
Allowance.
Employee shall be entitled to receive a car allowance of four hundred dollars
($400) per month plus reimbursement for fuel, repair expense and insurance
for
his primary automobile upon presentation of documentation in accordance with
the
Company’s expense reimbursement policies as established and changed from time to
time.
(g) Stock
Options.
Employee shall be eligible to be considered for participation in any stock
option plan approved by the stockholders of Air T, Inc., with the amount of
options and vesting schedule to be determined by the Compensation Committee
of
the member company’s Board of Directors.
5. Termination.
(a) Termination
Events.
Employee’s employment hereunder will terminate upon the earlier of (i) the
death of Employee or Employee’s becoming Permanently Disabled (as defined
below), (ii) termination by the Company for Cause (as defined below),
(iii) termination by the Company without Cause or (iv) the expiration of
the Term of Employment.
(b) Termination
Payments.
From
and after the termination of Employee’s employment for any reason set forth in
Sections 5(a)(i), 5(a)(ii) or 5(a)(iv) the Company shall not be liable to
Employee, Employee’s spouse or Employee’s personal representative for the
payment of salary, benefits, or payments of any kind, except for amounts payable
under this Employment Agreement that are attributable to services performed
by
Employee prior to the termination of Employee’s employment, or except as
provided by the terms of any Company benefit, disability or retirement plan
in
which Employee may be a participant.
(c) Termination
Without Cause.
In the
event Employee is terminated by Employer without cause, Employee shall be
entitled solely to receive the payments set forth in paragraph 6 herein, subject
to the conditions thereof.
(d) Definition
of “Cause.”
“Cause”
means (i) the failure of Employee to carry out and perform Employee’s
duties hereunder; (ii) the refusal by or inability of Employee to follow
the lawful directions of the member company’s Board of Directors; (iii) the
commission of an act by Employee constituting financial dishonesty against
the
Company; (iv) the commission of an act by Employee involving a felony;
(v) the commission of an act by Employee that brings the Company or any of
its affiliates into public disrepute or disgrace or causes material harm to
the
customer relations, operations or business prospects of the Company or its
subsidiaries; or (vi) violation by Employee of any provision of this
Agreement.
(e) Definition
of “Permanent Disability”.
“Permanent Disability” means any physical or mental impairment that renders
Employee unable to perform the essential functions of Employee’s job under the
terms of this Employment Agreement, either with or without reasonable
accommodation, for a period of six (6) months or more.
6. Severance
Payment.
In the
event of the termination of Employee’s employment without Cause, the Company
shall continue to pay the base salary of Employee for a period of twelve (12)
months from the date of termination, conditional upon Employee’s execution of a
release of claims against the Company. This release shall be in a form
satisfactory to the Company, and shall be a general release of all claims.
These
separation payments shall be payable at a time and in accord with the regular
payroll practices of the Company, but shall not commence until the execution
of
such release by Employee and the satisfaction of all waiting and revocation
periods required by law. All such amounts shall be subject to and reduced by
any
applicable federal and state withholding taxes.
7. Confidentiality.
Employee acknowledges that during Employee’s employment with the Company
Employee will acquire, be exposed to and have access to, material, data and
information of the Company and/or its customers or clients that is confidential,
proprietary, and/or a trade secret. At all times, both during and after the
termination of employment, Employee shall keep and retain in confidence and
shall not disclose, except as required in the course of Employee’s employment
with the Company, to any person, firm or corporation, or use for his own
purposes, any of this proprietary, confidential or trade secret information.
For
purposes of this paragraph, such information shall include, but shall not be
limited to: sales methods, information concerning customers, advertising
methods, financial affairs or methods of procurement, marketing and business
plans, strategies, projections, business opportunities, client lists, sales
and
cost information and financial results and performance. Employee acknowledges
that the obligations pertaining to the confidentiality and non-disclosure of
information shall remain in effect for a period of five (5) years, or until
the
Company has released any such information into the public domain, in which
case
Employee’s obligation hereunder shall cease with respect only to such
information so released.
8. Non-Competition
Agreement.
So long
as Employee is employed by the Company and for a period of one (1) year
following termination of Employee’s employment (such period not to include any
period(s) of violation or period(s) of time required for litigation to enforce
the covenants herein), whether such termination is voluntary or involuntary
on
the part of Employee and whether such termination is with or without Cause,
Employee shall not:
(f) Become
employed by (as an officer, director, employee, consultant or otherwise), or
otherwise become commercially interested in or affiliated with (whether through
direct, indirect, actual or beneficial ownership or through a financial
interest), a COMPETITOR, unless Employee accepts employment with a COMPETITOR
in
an area of the COMPETITOR’S business which does not compete with the Company.
For purposes of this Agreement, a COMPETITOR shall be defined as any person,
firm, business or entity (including any sole proprietorship of Employee)
that
provides
overnight air freight service to any of the Company’s customers or manufactures,
leases, sells or provides third-party maintenance services with respect to
mobile deicing/decontamination equipment, catering/cabin service trucks,
pedestal-mounted deicing systems or ground support equipment.
(g) Solicit
or attempt to solicit, for competitive purposes, the business of any of the
Company’s clients or customers or otherwise induce such customers or clients to
reduce, terminate, or restrict or alter their business relationships with the
Company in any fashion.
(h) Induce
or
attempt to induce any employee of the Company to leave the Company for the
purpose of engaging in a business operation that is competitive with the
Company’s business operations.
(i) In
recognition of the broad geographic scope of the Company’s business, including
that its customer base extends throughout the United States, and of the ease
of
competing with that business in any part of the United States, the restrictions
on competition set forth herein are intended to cover the United States.
Provided, however, that the Company shall have the right to limit, unilaterally,
the scope of any provision of this Agreement to ensure the enforceability of
Employee’s agreement not to compete with the Company.
9. Assignment
of Inventions.
Employee understands and agrees that Employee is performing work for hire for
the Company and that any INVENTIONS developed or conceived by Employee during
Employee’s employment with the Company are the sole property of the Company.
INVENTIONS shall include any inventions, discoveries, programs, programming
techniques, underlying program designs and/or concepts, machinery, products,
processes, computer hardware, information systems, software (including without
limitation source code, object code, documentation, diagrams and flow charts),
as well as any other discoveries, concepts and ideas, whether patentable or
not,
relating to any present or prospective activities or business of the Company.
Employee agrees to assign, and does hereby assign, to the Company or its
nominees, all right, title and interest in and to INVENTIONS made by Employee.
Employee will, with reasonable reimbursement for expenses, but at no other
expense to the Company, at any time during or after Employee’s employment with
the Company, sign and deliver all lawful papers and cooperate in such other
lawful acts which may be reasonably necessary or desirable to protect or vest
title in INVENTIONS in the Company or its nominees, including applying for,
obtaining, maintaining, and enforcing copyrights and/or patents on INVENTIONS
in
all countries of the world. Provided, however, that nothing herein shall require
the Company to accept or perfect any such assignment or other conveyance of
any
interest in any patent or INVENTIONS or require the Company to prosecute such
patent or other application. This provision does not apply to any INVENTIONS
for
which Employee affirmatively proves that no equipment, supplies, facility,
or
trade secret information of the Company was used and which was developed
entirely on Employee’s own time unless (a) the INVENTIONS relate
(i) directly to the business of the Company, or (ii) to the Company’s
actual or demonstrably anticipated research or development; or (b) the
INVENTIONS result, either directly or indirectly, from any work performed by
Employee for the Company.
10. Company’s
Right to Obtain an Injunction.
Employee acknowledges that the Company will have no adequate means of protecting
its rights under paragraphs 7, 8 and 9 of this Agreement other than by securing
an injunction (a court order prohibiting Employee from violating the Agreement).
Accordingly, Employee agrees that the Company is entitled to enforce this
Agreement by obtaining a preliminary and permanent injunction and any other
appropriate equitable relief. Nothing contained in this paragraph, however,
shall prohibit the Company from pursuing any remedies in addition to injunctive
relief, including recovery of damages.
11. Condition
to Seeking Subsequent Employment.
Employee agrees to show a copy of this Agreement to any COMPETITOR with whom
Employee interviews during Employee’s employment with the Company or with whom
Employee interviews within one (1) years following the effective date of the
termination of Employee’s employment with the Company.
12. General
Provisions.
(j) Entire
Agreement.
This
Employment Agreement contains the entire understanding between the parties
hereto relating to the employment of Employee by the Company and supersedes
any
and all prior employment or compensation agreements between the Company and
Employee.
(k) Severability.
If any
provision contained in this Employment Agreement shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or
unenforceability shall not affect any other provision of this Employment
Agreement but this Employment Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
(l) Assignment.
Neither
this Employment Agreement nor any right or interest hereunder shall be
assignable by Employee, Employee’s beneficiaries or legal representatives,
without the prior written consent of the Company; provided, however, that
nothing shall preclude (i) Employee from designating a beneficiary to
receive any benefit payable upon Employee’s death, or (ii) the executors,
administrators or other legal representatives of Employee or Employee estate
from assigning any rights hereunder to the person or persons entitled thereunto.
The Company may transfer or assign its rights and interest in this Employment
Agreement to any person, proprietorship, partnership, limited liability company
or corporation that acquires or succeeds to at least a majority of the equity,
assets, accounts or other business of the Company.
(m) Binding
Agreement.
This
Employment Agreement shall be binding upon, and inure to the benefit of,
Employee and the Company and their respective permitted successors and
assigns.
(n) Amendment
or Modification of Employment Agreement.
This
Employment Agreement may not be modified or amended except by an instrument
in
writing signed by the parties hereto.
(o) Waiver.
No
delay or omission by either party hereto in exercising any right, power or
privilege hereunder shall impair such right, power or privilege, nor shall
any
single or partial exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or privilege. The
provisions of this paragraph 12(f) cannot be waived except in writing signed
by
both parties.
(p) Governing
Law and Forum Selection.
This
Agreement shall be construed in accordance with and governed by the substantive
laws of the State of North Carolina, without regard to conflict of laws
principles. Furthermore, in exchange for the consideration set forth herein,
Employee agrees that any claim against the Company (i) for the breach or
invalidity of any provision of this Agreement; (ii) arising out of or
relating to the employment of Employee with the Company or
(iii) encompassed within or related to any claim to be released as provided
in paragraph 6 herein, shall be brought exclusively in the Superior Court of
Lincoln County, North Carolina, or the United States District Court for the
Western District of North Carolina, and in no other forum. Employee hereby
consents to the personal and subject matter jurisdiction of these courts for
the
purpose of adjudicating any claims subject to this forum selection clause.
Employee also agrees that any dispute of any kind arising out of or relating
to
this Agreement or to Employee’s employment with the Company shall at the
Company’s sole election be submitted to arbitration before the American
Arbitration Association in Mecklenburg County, North Carolina, which election
may be made by the Company at any time prior to the last day to answer and/or
respond to a summons and/or complaint or counterclaim, crossclaim or third-party
claim made by Employee. The provisions of the North Carolina Uniform Arbitration
Act, N.C. Gen. Stat. § 1-567.1 et seq. shall apply to the arbitration of
disputes hereunder unless such provisions are preempted by the Federal
Arbitration Act.
(q) Notices.
Any
notice, offer, acceptance or other document required or permitted to be given
pursuant to any provisions of this Agreement shall be in writing, signed by
or
on behalf of the person giving the same, and (as elected by the person giving
such notice) delivered by hand or mailed to the parties at the following
addresses by registered or certified mail, postage prepaid, return receipt
requested, or by a third party company or governmental entity providing delivery
services in the ordinary course of business, which guarantees delivery on a
specified date:
If
to
Employee: Xxxx
Xxxxx
If
to the
Company: Air
T,
Inc.
XX
Xxx
000
Xxxxxx,
X.X., 00000
Attention:
Xxxxxx Xxxxx
or
to
such other address as any party hereto may designate by complying with the
provisions of this Section 12(h).
Such
notice shall be deemed given (i) as of the date of written acknowledgment
by Employee or an officer of the Company if delivered by hand,
(ii) seventy-two (72) hours after deposit in United States mail if sent by
registered or certified mail or (iii) on the delivery date guaranteed by
the third party delivery service if sent by such service.
Rejection
or other refusal to accept or inability to deliver because of changed address
of
which no notice has been received shall not affect the date upon which the
notice is deemed to have been given pursuant hereto. Notwithstanding the
foregoing, no notice of change of address shall be effective until the date
of
receipt hereof.
13. Consideration
for Election to Board Of Directors.
Employee
shall be considered by the Nominating Committee of the Board of Directors for
nomination for election as a director at the Company’s 2007 annual meeting of
stockholders and at subsequent annual meetings of stockholders for so long
as he
continues to serve as the Company’s Chief Financial Officer.
IN
WITNESS WHEREOF,
Employee has executed this Agreement and the Company has caused this Agreement
to be executed in its name by its duly authorized officials as of the day and
year first above written.
EMPLOYEE:
/s/
Xxxx Xxxxx
Xxxx
Xxxxx
COMPANY:
AIR
T,
INC.
By: /s/
Xxxxxx Xxxxx
Title: Chief
Executive Officer
