AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), is made
and entered into as of this ___ day of ______, 2001, by and between ▇▇▇▇▇▇
▇▇▇▇▇▇▇ III, an individual resident of the State of Georgia ("Executive"), and
INTERNATIONAL AIRLINE SUPPORT GROUP, INC., a Delaware corporation ("Company").
W I T N E S S E T H
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WHEREAS, Executive and Company entered into an Employment Agreement as of
October 3, 1996 (the "Employment Agreement");
WHEREAS, Executive and Company desire to amend and restate the Employment
Agreement on the terms and conditions set forth herein;
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:
Section1. Employment.
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1.1. Duties. Subject to the terms contained herein, Company hereby agrees
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to the continued employment of Executive, and Executive hereby accepts such
continued employment. Executive shall serve as Executive Vice President and
Chief Operating Officer of Company and as a member of its Board of Directors.
In his capacity as the Executive Vice President and Chief Operating Officer of
the Company, Executive shall (i) be in charge of the operations and management
of the business of the Company, subject to the overall direction of the
President and Chief Executive Officer of the Company and (ii) assume and perform
such further reasonable responsibilities and duties assigned to him by the
President and Chief Executive Officer 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. Executive shall serve as a member of the Board of
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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.
Section2. Term.
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The employment of Executive hereunder shall commence as of the date hereof
and shall continue until the close of business on October 1, 2005 (the
"Employment Term"). Following the Employment Term, this Agreement shall
continue in force for successive one-year terms (each, a "Renewal Term") unless
either the Company or Executive provides written notice to the other, on or
before October 1, 2004 (or October 1 of any year thereafter with respect to
Renewal Terms), that this Agreement shall terminate at the end of the Employment
Term or Renewal Term, as the case may be. The Employment Term and any Renewal
Term may be referred to collectively hereinafter as the "Term".
Section3. Compensation; Expenses.
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3.1. Salary. During the Term, Executive shall be paid a salary (the
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"Salary") by the Company at the annual rate of not less than One Hundred
Sixty-Four Thousand Four Hundred Dollars ($164,400). 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. Notwithstanding
the foregoing, beginning October 1, 2001, the Company shall increase the Salary
effective each October 1 during the term of this Agreement by an amount which is
at least equal to the percentage increase in the Consumer Price Index, all
items, Urban Wage Earners and Clerical Workers, Atlanta, Georgia, Not Seasonally
Adjusted (Bureau of Labor Statistics Data Series ID CWURA319SAO) as computed for
the most recent twelve-month period ended prior to October 1 of the applicable
year. 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. [RESERVED].
3.3. Bonuses. In addition to the Salary, Executive shall be paid,
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subject to conditions set forth herein, an annual bonus ("Bonus") during the
Term and in respect of each fiscal year of the Company commencing on or after
May 31, 2000. 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; provided, however, that, items of revenue
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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.
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 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 Executive.
3.4. Participation in Employee Stock Option Plan. During the Term,
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Executive shall be entitled to participate in the Company's 1996 Long Term
Incentive and Share Award Plan (the "Stock Option Plan"). All Awards under the
Plan shall be made in accordance with and subject to the terms of the Plan.
3.5. Other Remuneration. During the Term, Executive shall be entitled
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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. During the Term, Executive is authorized to incur
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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. 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.
Section4. Additional Employment Benefits.
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During the Term, Company shall provide Executive with the following fringe
benefits (collectively, the "Benefits"):
4.1. Medical Insurance. Executive shall be entitled to participate in
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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
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time each fiscal year of the Company during the Term; provided, however, that
Executive shall receive no more than a total of four weeks of paid vacation time
in the fiscal year that includes the date of this Agreement. 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. Death Benefit. Promptly following the execution of this
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Agreement, the Company will acquire a $1,000,000 term life insurance policy on
Executive's life. As long as Executive is employed by the Company, (i) the
Company shall pay the premiums on the policy as and when due and shall maintain
the policy in full force and effect and (ii) Executive shall have the exclusive
right to designate the beneficiary under such policy. The Company shall assign
the policy to Executive, without any cost to Executive, effective immediately
after Executive ceases to be an employee of the Company, regardless of the
reason for Executive's termination of employment. The Company shall not pledge
or otherwise encumber the policy at any time.
4.4. Disability Benefits. The Company shall provide Executive with the
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following disability benefits:
(i) If Executive becomes disabled during the Term, the Company shall
continue to pay the Salary to Executive during the period of his incapacity for
a period of not less than the exclusion period, if any, provided for in the
disability insurance policy referred to in subparagraph 4.4(ii), regardless of
whether such period extends beyond the Term.
(ii) Promptly following the execution of this Agreement, the Company will
acquire a disability insurance policy with respect to Executive and will
maintain the policy in full force and effect during the Term. Such policy shall
provide for the payment of the Salary to Executive for a period of no less than
four years from the date of disability (calculated after giving effect to any
exclusion period). If Executive becomes disabled during the Term and such
disability extends beyond the exclusion period set forth in disability insurance
policy, Executive shall be paid the benefits provided for under such disability
insurance policy. To the extent the Company is unable to cause such policy to
be so amended, then the Company shall be obligated to provide such payments to
Executive directly. Such coverage shall apply regardless of whether such
four-year period extends beyond the Term.
(iii) For all purposes under this Agreement, any determination of disability
shall be made in a manner consistent with the manner provided for in the
disability insurance policy referred to in subparagraph 4.4(ii), if such policy
has not been terminated or cancelled, except that, for purposes of subparagraph
4.4(i), the duration of Executive's condition for determining when disability
has occurred and when benefits are payable under the policy shall not apply; if
the policy described in subparagraph 4.4(ii) has been terminated or cancelled,
then any determination of disability shall be made in a manner consistent with
the definition of "Disability" in Section 5.1 below.
4.5. Other. In addition to the foregoing, Executive shall be entitled to the
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prerequisites and other fringe benefits made available to senior executives of
the Company.
Section5. Termination.
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The following provisions relate solely to termination of Executive's
employment during the Term:
5.1. Death or Disability.
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(a) Subject to Section 7 below, this Agreement shall terminate
automatically upon Executive's death.
(b) Subject to Section 7 below, the Company shall at all times have the
right to terminate Executive's employment hereunder at any time if Executive
cannot perform the essential functions of his job even with reasonable
accommodation due 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 Executive's employment for
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"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) a material violation by
Executive of 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 such 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
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of Control" (as defined below) of the Company or a "Change of Responsibilities"
(as defined below), Executive shall have the right to terminate his employment
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,
is determined by the Board of Directors of the Company (acting in good faith) to
be, or files a report on Schedule 13D, 13G or 14D-2 (or any successor schedule,
form or report) disclosing that such person or group is the ultimate "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of securities
representing more than 25% of the combined voting power of the Company's then
outstanding securities ordinarily having the right to vote at an election of
directors; provided, however, that the acquisition by the Company, its
subsidiaries, any employee benefit plan sponsored by the Company or Executive of
securities representing more than 25% of such voting power shall not constitute
a Change of Control;
(ii) individuals who, on the date hereof, constitute the board of
directors (together with any new directors who were appointed to the board of
directors by individuals who, on the date hereof, constitute the board of
directors or whose nomination for election to the board of directors was
approved by the then incumbent Chairman of the Board of Directors and
disregarding any Director who resigned from the board of directors in the
ordinary course of business) (the "Board of Directors") cease for any reason to
constitute at least seventy-five percent (75%) of the members of the Board of
Directors then in office;
(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;
(iv) the Company is merged, consolidated or reorganized into or with another
corporation or other legal person, or securities of the Company are exchanged
for securities of another corporation or other legal person, and immediately
after such merger, consolidation, reorganization or exchange less than 50% of
the combined voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held, directly or indirectly,
in the aggregate by the holders of securities entitled to vote generally in the
election of the members of the board of directors of the Company immediately
prior to such transaction;
(v) the stockholders of the Company or the Board of Directors of the Company
shall take any action in contemplation of the liquidation or dissolution of the
Company; or
(vi) any other transaction or series of related transactions occur that have
substantially the effect of the transactions specified in any of the preceding
clauses in this sentences.
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 Executive's function, duties or responsibilities with the
Company or the Successor, as the case may be, that would cause Executive's
position to become of less dignity, responsibility, importance or scope;
(ii) the relocation of the Company's headquarters from Atlanta,
Georgia, the assignment of Executive to an office of the Company located outside
of Atlanta, Georgia or the imposition of any other requirement that Executive
perform his duties, except for the periods of temporary business related travel,
outside Atlanta, Georgia;
(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; or
(iv) the failure of the Board of Director of the Company to nominate
Executive for election to the Company's Board of Directors or the failure of the
Company's stockholders to elect Executive to the Board of Directors following
his nomination.
"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.
Section6. Notice of Termination.
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Any termination by the Company for Cause shall be communicated in writing to
Executive and if the termination date is other than the date of receipt, the
notice shall specify the termination date.
Section7. Obligations of the Company Upon Termination.
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The following provisions apply only in the event Executive's employment
hereunder is terminated.
7.1. Death. If Executive's employment is terminated during the Term by
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reason of Executive's death, the Company shall pay, in addition to any accrued
benefits payable hereunder, to Executive's legal representatives in a lump sum,
an amount equal to two times the annual Salary in effect at the time of
Executive's death. 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. Executive's family
shall also be entitled to receive the prior year's Bonus or any portion thereof
remaining 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. The Company shall make the payments
required pursuant to this Section 7.1 to Executive's family as soon as
practicable following Executive's death, and, in any event, within 30 days
thereafter.
7.2. Disability. If Executive's employment is terminated during the
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Term by reason of Executive's Disability, the Company shall pay, in addition to
any accrued benefits payable hereunder, to Executive, in a lump sum, an amount
equal to two times the annual Salary in effect at the time of Executive's
Disability. 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. Executive shall also be entitled to receive the prior year's Bonus or any
portion thereof remaining 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 Executive's employment shall be terminated for Cause,
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the Company shall pay 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 Executive under this Agreement. Executive shall also be
entitled to receive the prior year's Bonus or any portion thereof remaining
unpaid at the time of Executive's termination.
7.4. Termination without Cause or Following a Change of Control or
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Change of Responsibilities. If the Company shall terminate Executive's
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employment with the Company without Cause or if Executive resigns following a
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Change of Control or Change of Responsibilities during the Term and within the
period described in Section 5.3:
(a) the Company shall pay to Executive on the effective date of his
termination or resignation, as the case may be, a lump sum in an amount equal to
the sum of (A) the greater of (i) the Salary for the remaining Term or (ii) an
amount equal to two times the Salary plus (B) an amount equal to the sum of (i)
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the prior year's Bonus or any portion thereof remaining unpaid at the time of
Executive's termination or resignation, as the case may be, and (ii) an amount
equal to two times the average of the two prior years' Bonuses;
(b) the Company shall, promptly upon submission by Executive of
supporting documentation, pay or reimburse, or cause to be paid or reimbursed,
to Executive any business related costs and expenses paid or incurred by
Executive on or before the date of termination or resignation, as the case may
be, which would have been payable if Executive's employment with the Company had
not ended;
(c) until the eighteen month anniversary of Executive's termination or
resignation, as the case may be, the Company shall continue benefits (or
equivalent coverage) to Executive and/or 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 or resignation, as
the case may be;
(d) until the eighteen month anniversary of Executive's termination or
resignation, as the case may be, the Company shall furnish Executive with office
space in Atlanta, Georgia that is comparable to the office space now occupied by
Executive; provided, however, that, the Company's obligation to provide such
office space shall terminate upon Executive's commencement of other employment;
and
(e) (i) all options to purchase shares of the Company's Common Stock held by
Executive shall vest and shall be subject to immediate exercise by Executive;
notwithstanding any provision in the Stock Option Plan or any option award
certificate issued to Executive to the contrary;
(ii) if Executive informs the Company that he does not intend to exercise
any or all of the options held by Executive, the Company shall pay to Executive
a lump sum in an amount equal to the value of the options that Executive does
not exercise; the value of the unexercised options shall be determined as of the
effective date of termination or resignation, as the case may be, using the
Black-Scholes option pricing method with the following assumptions: a dividend
yield of 0%; volatility equal to the volatility assumed for the Company's most
recently ended fiscal year as specified in the audited financial statements for
such fiscal year; a risk-free interest rate equal to the interest rate borne by
90-day Treasury Bills as of the effective date of termination or resignation, as
the case may be; and an expected holding period equal to the remaining duration
of the unexercised options.
7.5 Additional Payments. If Executive is subject to a federal
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excise tax on all or any part of any payment made pursuant to Section 7.4 of
this Agreement under Code Section 4999 or any successor to such Section, the
Company shall pay to Executive an additional amount sufficient, considering the
state and federal income and other taxes that Executive will be required to pay
with respect to such additional amount, to provide to Executive on an after-tax
basis an amount equal to the amounts to be paid to Executive without regard to
such excise tax.
Section8. Non-Disclosure.
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Except as expressly permitted by the Company, or in connection with the
performance of his duties hereunder, 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 Executive. Executive acknowledges and agrees that the Confidential
Information is a valuable, special and unique asset of the Company's business.
Section9. Books and Records.
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All books, records and accounts relating in any manner to the Company's
customers or suppliers, whether prepared by Executive or otherwise coming into
Executive's possession, and all copies thereof in Executive's possession, shall
be the exclusive property of the Company and shall be returned immediately to
the Company upon termination of Executive's employment hereunder or upon the
Company's request at any time.
Section10. Injunction.
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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 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.
Section11. Company's Covenant.
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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.
Section12. Miscellaneous.
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12.1. Binding Effect. This Agreement shall inure to the benefit of and
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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
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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
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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
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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.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) If to Executive, addressed to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
12.5. Counterparts. This Agreement may be executed in two counterparts,
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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
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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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III