EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 29th day of April, 1998,
by and between XXXX XXXXXXX (the "Employee or CRISPIN") and
AeroCentury Corp., a Delaware Corporation (the "Company" or
"ACY").
For ease of reference, this Agreement is divided into the
following parts, which begin on the pages indicated:
FIRST PART: TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION
AND BENEFITS DURING EMPLOYMENT (Sections 1-5, beginning on page
2)
SECOND PART: COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR
CONSTRUCTIVE TERMINATION (Section 6, beginning on page 5)
THIRD PART: PARACHUTE PAYMENTS (Sections 7-8, beginning on page
6)
FOURTH PART: SUCCESSORS, MISCELLANEOUS PROVISIONS, SIGNATURE PAGE
(Sections 9-10, beginning on page 8)
FIRST PART: TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION
AND BENEFITS DURING EMPLOYMENT
Section 1. Term of Employment
(a) Basic Rule. The Company agrees to employ the Employee in the
capacity of President in the event either of the following occur:
(1) the Company terminates the Management Agreement currently in
effect between the Company and JetFleet Management Corporation
("JMC") (hereinafter the"Management Agreement"); or (2) there is
a "Change in Control" (as defined below) in the Company.
Employee's employment with the Company shall begin on the date of
the termination of the Management Agreement, or the date that the
Change in Control is completed (hereinafter "Effective Date of
Employment"). Employee shall have the option, at his sole
discretion, to decline employment if (i) there is a Change in
Control or (ii) the termination of the Management Agreement
described in clause (1) above is not in connection with the
acquisition of JMC by the Company. However, if Employee declines
employment in following a given Change in Control, he shall not
forfeit his employment rights with respect to any subsequent
Change in Control.
"Change in Control" shall mean the occurrence of any of the
following events, after the date on which this Agreement is
executed:
(i) Any person or entity other than Employee is or becomes the
beneficial owner, directly or indirectly, of securities of the
company representing 25% or more of the combined voting power of
the Company's then-outstanding securities other than in
connection with additional issuances of the Company's securities
for capital-raising purposes;
(ii) There occurs a merger or consolidation of the Company with
any other corporation or entity, other than 1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 85% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation or 2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no person or entity acquires more than 85%
or more of the combined voting power of the Company's then
outstanding securities; or
(iii) The Company sells or disposes of substantially all or a
significant portion of its assets in a series of transactions not
recommmende by JMC. For purposes of this subsection, a sale of a
"significant portion" of the assets of the Company shall mean a
sale or other disposition in a single transaction or a series of
related transactions of 25% or more of the assets (based on fair
market value) of the Company.
(b) Initial Term. The Company agrees to continue the Employee's
employment, and the Employee agrees to remain in employment with
the Company, from the effective date of employment, until the
earliest of:
(1) December 31 of the fifth year following the effective date of
employment; or
(2) The date of the Employee's death or when the Employee's
employment terminates pursuant to Subsections (b), (c), (d) or
(e), below.
(c) Automatic Extensions. The term and provisions of this
Agreement shall automatically extend for additional one-year
periods if Employee remains employed on and after December 31 of
the fifth year following the effective date of employment, unless
either party notifies the other in writing to the contrary at
least 180 days prior to the applicable December 31 that it, or
he, does not want the term to so extend.
(d) Termination By Company for Cause. The Company may terminate
the Employee's employment at any time for Cause shown. For all
purposes under this Agreement, "Cause" shall mean (1) a willful
failure by the Employee to substantially perform the Employee's
duties under this Agreement, other than a failure resulting from
the Employee's complete or partial incapacity due to physical or
mental illness or impairment, (2) a willful act by the Employee
that constitutes gross misconduct and that is materially
injurious to the Company, (3) a willful breach by the Employee of
a material provision of this Agreement or (4) a material and
willful violation of a federal or state law or regulation
applicable to the business of the Company that is materially and
demonstrably injurious to the Company. No act, or failure to act,
by the Employee shall be considered "willful" unless committed
without good faith and without a reasonable belief that the act
or omission was in the Company's best interest.
However, if such Cause is reasonably curable, the Company shall
not terminate the Employee's employment hereunder unless the
Company first gives notice of its intention to terminate and of
the grounds for such termination, and the Employee has not,
within sixty (60) days following receipt of notice, cured such
Cause.
(e) Termination Company for Disability. The Company may terminate
the Employee's employment for Disability by giving the Employee
written notice. For all purposes under this Agreement,
"Disability" shall mean that the Employee, at the time the notice
is given, has been unable to perform the Employee's duties under
this Agreement for a period of not less than twelve (12)
consecutive months as a result of the Employee's incapacity due
to physical or mental illness. In the event that the Employee
resumes the performance of substantially all of the Employee's
duties under this Agreement before the termination of the
Employee's employment under this Section becomes effective, the
notice of termination shall automatically be deemed to have been
revoked.
(f) Termination by Employee For Good Reason. The Employee may
terminate his employment with the Company for Good Reason.
Termination shall be for "Good Reason" if: (1) there is a
material and adverse change in Employee's position, duties,
responsibilities, or status with Company; (2) there is a
reduction in Employee's salary then in effect, other than a
reduction comparable to reductions generally applicable to
similarly situated employees of the Company; (3) there is a
material reduction in Employee's benefits, other than a reduction
comparable to reductions generally applicable to similarly
situated employees of the Company; or (4) the Company materially
breaches this Agreement.
Section 2. Duties and Scope of Employment
(a) Position. The Company agrees to employ the Employee for the
term of employment under this Agreement in the position of
President. Employee shall be given such duties, responsibilities
and authorities as are appropriate to his position.
(b) Obligations. During the term of employment under this
Agreement, the Employee shall devote such business efforts and
time to the business and affairs of the Company as are needed to
carry out his duties and responsibilities hereunder, subject to
the overall supervision of the Company's Board of Directors. The
foregoing shall not preclude the Employee from engaging in
appropriate civic, charitable or religious activities or from
devoting a reasonable amount of time to private investments or
from serving on the boards of directors of other entities, as
long as such activities and service do not interfere or conflict
with the Employee's responsibilities to the Company. Nor shall
the foregoing preclude the Employee from engaging in any business
activities related to any business in which Employee held a
management position within thirty (30) days prior to the
effective date of employment with the Company.
Section 3. Signing Bonus and Compensation
(a) Signing Bonus. Company agrees to pay the Employee, as a
signing bonus, a lump sum payment of $500,000, plus 5% of the
outstanding capitalization of the Company. The exercise price of
the stock options shall be one dollar ($1.00). Company agrees to
pay the signing bonus and to transfer the stock within thirty
(30) days after the effective date of employment.
(b) Base Salary. During the term of employment under this
Agreement, the Company agrees to pay the Employee as compensation
for services a Base Salary at the annual rate of $250,000, or at
such higher rate as the Company may determine from time to time.
Such salary shall be payable in accordance with the standard
payroll procedures of the Company. Once the Company has increased
such salary, it thereafter shall not be reduced; provided,
however, that such salary (including any increases) may be
reduced by the Company if the Employee commits an act or omission
that meets the definition of Cause, as defined in Section 1(b).
(c) Annual Bonus. Each year during the term of employment under
this Agreement, the Company agrees to pay the Employee an Annual
Bonus, based on the Employee's performance and the overall
performance of the Company. The amount of the Annual Bonus shall
be set each year by the Company, and shall be a multiple of the
Employee's base salary. However, in no event shall the Annual
Bonus in any year be less than two hundred percent (200%) of the
Employee' base salary.
The Base Salary and Annual Bonus specified in this Section 3,
together with any increases in such compensation that the Company
may grant from time to time, and together with any reductions
made in accordance with this Section 3, is referred to in this
Agreement as "Base Compensation."
Section 4. Employee Benefits
During the term of employment under this Agreement, the Employee
shall be eligible to participate in the employee benefit plans
and executive compensation and fringe benefit programs maintained
by the Company, including (without limitation) savings, pension
or profit-sharing plans, deferred compensation plans, stock
option, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, paid vacations, automobile
and similar plans or programs, subject in each case to the
generally applicable terms and conditions of the plan or program
in question and to the discretion and determinations of any
person, committee or entity administering such plan or program.
Section 5. Business Expenses and Travel
During the term of employment under this Agreement, the Employee
shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with the
Employee's duties hereunder. The Company shall reimburse the
Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in
accordance with generally applicable policies.
SECOND PART: COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR
CONSTRUCTIVE TERMINATION
Section 6. Termination By Company Without Cause, Or By Employee
For Good Reason
In the event that, during the term of this Agreement the
Employee's employment terminates in a Qualifying Termination, as
defined in Subsection (a), the Employee shall be entitled to
receive the payments and benefits described in Subsections (b),
(c) and (d).
(a) Qualifying Termination. A Qualifying Termination occurs if:
(1) The Company terminates the Employee's employment (i) prior
to a Change in Control, for any reason other than Cause or
Disability; or (ii) on or subsequent to a Change in Control, for
any reason.
(2) The Employee terminates his employment with the Company (i)
prior to a Change in Control, for Good Reason or (ii) on or
subsequent to a Change in Control, for any reason.
(b) Severance (2.99x payment). The Company shall pay to the
Employee in a lump sum, not less than 31 days nor more than 60
days following the date of the employment termination, an amount
equal to the following:
(1) Two hundred ninety-nine percent (299%) of the Employee's Base
Salary in effect on the date of the employment termination; plus
(2) One million five hundred thousand dollars ($1,500,000.00).
(c) Three Years of Life Insurance and Health Plan Coverage. The
coverage described in this Subsection (c) shall be provided for a
"Continuation Period" beginning on the date when the employment
termination is effective and ending on the earlier of (1) the
third anniversary of the date when the employment termination is
effective or (2) the date of the Employee's death. During the
Continuation Period, the Employee (and, where applicable, the
Employee's dependents) shall be entitled to continue
participation in the group term life insurance plan and in the
health care plan for employees maintained by the Company as if
the Employee were still an employee of the Company. The coverage
provided under this Subsection (c) shall run concurrently with
and shall be offset against any continuation coverage under
Part 6 of Title I of the Employee Retirement Income Security Act
of 1974, as amended. Where applicable, the Employee's
compensation for purposes of such plans shall be deemed to be
equal to the Employee's compensation (as defined in such plans)
in effect on the date of the employment termination. To the
extent that the Company finds it undesirable to cover the
Employee under the group life insurance and health plans of the
Company, the Company shall provide the Employee (at its own
expense) with the same level of coverage under individual
policies.
(d) Incentive Programs. All stock options or equity awards
granted by the Company shall vest 100% upon the effective date of
termination. Any stock options or equity awards granted to
Employee may be exercised within the time frames, and in a
manner, consistent with the original grant of the stock options
or equity awards.
(e) No Mitigation. The Employee shall not be required to mitigate
the amount of any payment or benefit contemplated by this
Section 6, nor shall any such payment or benefit be reduced by
any earnings or benefits that the Employee may receive from any
other source.
THIRD PART: PARACHUTE PAYMENTS
Section 7. Gross-Up Payment
In the event it is determined that any payment or distribution of
any type to or for the benefit of the Employee, pursuant to this
Agreement or otherwise, by the Company, any Person who acquires
ownership or effective control of the Company, or ownership of a
substantial portion of the assets of the Company (within the
meaning of section 260G of the Code and the regulations
thereunder) or any affiliate of such Person (the "Total
Payments") would be subject to the excise tax imposed by
section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that,
after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the
Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments.
Section 8. Determination by Accountant
All mathematical determinations and determinations as to whether
any of the Total Payments are "parachute payments" (within the
meaning of section 280G of the Code), in each case which
determinations are required to be made under this Section 8,
including whether a Gross-Up Payment is required, the amount of
such Gross-Up Payment, and amounts relevant to the last sentence
of this Section 8, shall be made by an independent accounting
firm selected by the Employee from amount the largest four
accounting firms in the United States (the "Accounting Firm").
The Accounting Firm shall provide to the Company and to the
Employee its determination (the "Determination"), together with
detailed supporting calculations regarding the amount of any
Gross-Up Payment and any other relevant matter, within ten (10)
days after termination of the Employee's employment, if
applicable, or at such earlier time following termination of
employment as is requested by the Employee (if the Employee
reasonably believes that any of the Total Payments may be subject
to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall furnish the
Employee with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons
therefor) and that the Employee has substantial authority not to
report any Excise Tax on the Employee's federal income tax
return. If a Gross-Up Payment is determined to be payable, it
shall be paid to the Employee within ten (10) days after the
Determination is delivered to the Company or the Employee. Any
determination by the Accounting Firm shall be binding upon the
Company and the Employee, absent manifest error.
As a result of uncertainty in the application of section 4999 of
the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
not made by the Company and members of the Company should have
been made ("Underpayment"), or that Gross-Up Payments will have
been made by the Company and members of the Company that should
not have been made ("Overpayments"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment,
the Company promptly shall pay, or cause to be paid, the amount
of such Underpayment to or for the benefit of the Employee. In
the case of an Overpayment, the Employee shall, at the direction
and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures
established by, the Company, and otherwise reasonably cooperate
with the Company to correct such Overpayment; provided, however,
that (1) Employee shall not in any event be obligated to return
to the Company an amount greater than the net after-tax portion
of the Overpayment that he has retained or recovered as a refund
from the applicable taxing authorities and (2) this provision
shall be interpreted in a manner consistent with the intent of
Section 7, which is to make the Employee whole, on an after-tax
basis, from the application of the Excise Tax, it being
understood that the correction of an Overpayment may result in
the Employee repaying to the Company an amount that is less than
the Overpayment.
FOURTH PART: SUCCESSORS, MISCELLANEOUS PROVISIONS, SIGNATURE PAGE
Section 9. Successors
(a) Company's Successors. The Company shall require any successor
(whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company's business and/or assets, by an
agreement in substance and form satisfactory to the Employee, to
assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the
Company would be required to perform it in the absence of a
succession. The Company's failure to obtain such agreement prior
to the effectiveness of a succession shall be a breach of this
Agreement and shall entitle the Employee to all of the
compensation and benefits to which the Employee would have been
entitled hereunder if the Company had involuntarily terminated
the Employee's employment without Cause or Disability, on the
date when such succession becomes effective. For all purposes
under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets that executes
and delivers the assumption agreement described in this
Subsection (a) or that becomes bound by this Agreement by
operation of law.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, and legatees.
Section 10. Miscellaneous Provisions
(a) Waiver. No provision of this Agreement shall be modified,
waived, or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and
by an authorized officer of the Company (other than the
Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver or any other
condition or provision or of the same condition or provision at
another time.
(b) Whole Agreement. No agreements, representations, or
understandings (whether oral or written and whether express or
implied) that are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the
subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws
of the State of California.
(d) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision hereof, which
shall remain in full force and effect.
(e) Arbitration. Except as otherwise provided in this Agreement,
any dispute or controversy arising out of the Employee's
employment or the termination thereof, including, but not limited
to, any claim of discrimination under state or federal law, shall
be settled exclusively by arbitration in the San Francisco Bay
Area, California, in accordance with the then applicable
Employment Dispute Resolution rules of the American Arbitration
Association. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
(f) Attorneys Fees. If any action is brought to enforce the
rights and obligations set forth herein, the prevailing party
shall be entitled to receive all of the fees and costs, including
reasonable attorneys fees, incurred in the action. Any fees and
costs awarded under this provision shall be in addition to any
other relief awarded to the prevailing party.
(g) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made
subject to option or assignment, either by voluntary or
involuntary assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this
Subsection (g) shall be void.
(h) Employment Taxes. All payments made pursuant to this
Agreement shall be subject to withholding of applicable taxes.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized
officer, as of the day and year first above written. Employee has
consulted (or has had the opportunity to consult) with his own
counsel prior to execution of this Agreement.
___________________
XXXX XXXXXXX
/s/ Xxxx X. Xxxxxxx
---------------------------
AEROCENTURY CORP.
By /s/ Xxxx X. Xxxxxxx
----------------------
Its Vice President -
Finance
