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 Employment.
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.
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 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 Compensation; Expenses.
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 Additional Employment Benefits.
During the Employment Term and any Renewal Term,
Company shall provide Executive with the following fringe
benefits (collectively, the "Benefits"):
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.
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.
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 Termination.
The following provisions relate solely to termination
of the Executive's employment during the Employment Term and
any Renewal Term:
Death or Disability.
Subject to Section 7 below, this
Agreement shall terminate automatically upon the
Executive's death.
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.
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.
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 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 Obligations of the Company Upon Termination.
The following provisions apply only in the event the
Executive's employment hereunder is terminated.
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.
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.
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.
Termination Without Cause. If the Company
shall terminate the Executive's employment with the Company
without Cause:
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;
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;
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 Companys obligation to
provide such office space shall termination upon the
Executives commencement of other employment.
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 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 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.
I. Section 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 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 Miscellaneous.
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.
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.
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.
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:
1. If to Company:
International Airline Support Group,
Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to Executive, addressed to:
Xx. Xxxxxx Xxxxxxx III
International Airline Support Group,
Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
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.
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
