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EXHIBIT 10.1.5
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective November 9, 1998 (the
"Agreement") by and between AMERICAN AIRCARRIERS SUPPORT, INCORPORATED (the
"Company") with principal offices at Fort Mill, South Carolina and MARTIN
WASHOFSKY (the "Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to serve the Company as its Executive Vice President, Head of
Sales, in a newly formed subsidiary.
2. Position and Responsibilities. The Executive shall exert his
best efforts and devote full time and attention to the affairs of the Company,
other than for the sporadic wrap-up of his old accounting business. Executive
shall have no ownership in or operate any other active closely-held corporation
or business entity in the aviation or aviation parts business. The Executive
shall have the authority and responsibility given by the general direction,
approval and control of the Board of Directors, President and Chief Executive
Officer of the Company, to the restrictions, limitations and guidelines set
forth by the Board of Directors in resolutions adopted in the minutes of the
Board of Directors meetings, copies of which will be provided to the Executive
from time to time and will be incorporated herein by reference.
3. Term of Employment. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on November 9, 1998 and shall
continue until November 8, 2003 (the "Initial Term"), subject to extension as
hereinafter provided or termination pursuant to the provisions set forth
hereafter. Provided that Executive is in compliance with all of his obligations
hereunder, the term of Executive's employment shall be automatically extended
for an additional one-year term upon expiration of the Initial Term unless
either party hereto receives 30 days' prior written notice from the other
electing not to extend the Executive's employment. Compensation during the term
shall be that set forth in Section 5 hereof, unless one of the termination
provisions overrides.
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4. Duties. During the period of his employment hereunder and except
for illness, specified vacation periods and reasonable leaves of absence, the
Executive shall devote his best efforts and full attention and skill to the
business and affairs of the Company and its affiliated companies, as such
business and affairs now exist and as they may be hereinafter changed or added
to, under and pursuant to the general direction of the Board of Directors of the
Company.
5. Compensation. Commencing on November 9, 1998, the Company shall
pay to the Executive as compensation for his services the sum of $150,000.00 per
year, payable semi-monthly. Base compensation shall be reviewed annually by the
Compensation Committee of the Company. Executive shall also be eligible to
receive up to $50,000 per year in an executive bonus pool beginning in 2004
should his contract be extended, which shall be administered at the sole
discretion of the Compensation Committee of the Company.
6. Executive's Incentive Pay. In addition to the compensation set
forth in Section 5 hereof, an incentive bonus pool shall be paid annually for
five (5) years (excluding the remaining partial 1998 calendar year) based on the
profitability of the subsidiary (holding the assets purchased from Condor Flight
Spares, Inc. and which shall operate the landing gear repair facility) and the
effective management of this subsidiary ("Incentive Pay"). The incentive bonus
pool shall be split 40% and 60% between Executive and Ned Angene, respectively.
The Incentive Pay shall be equal to sixteen and one-tenth percent (16.1%) of the
Excess Operating Income, as defined below.
Excess Operating Income is equal to the operating income (before
goodwill and the Incentive Pay) less taxes less the Charge on Invested Capital.
The Charge on Invested Capital is Invested Capital times the Cost of Capital
(which has been agreed to be fifteen percent (15%)). Invested Capital is defined
as the total of all operating assets (excluding cash and goodwill) less all
trade liabilities. Using projections, below is an example of how the Incentive
Pay will be computed and paid to Executive and Ned Angene, pursuant to their
respective percentages:
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Operating Income (before
goodwill and incentive) $ 927,000
Income Taxes (40% assumed) 371,000
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After Tax Operating Income $ 556,000
Invested Capital (Net cash
and goodwill) $2,836,000
Cost of Capital 15.00%
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Charge on Invested Capital $ 425,000
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Excess Operating Income $ 131,000
Incentive Percentage 16.10%
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Incentive Pay $ 21,091
This incentive bonus pool shall end at the conclusion of the fifth (5th) year.
Each year shall stand on its own. Payment of the incentive bonus shall occur
within ten (10) business days of the Company reporting its final audited
numbers. In the event that a dispute shall arise with regard to the above
definitions, then any dispute shall be mediated by an independent Certified
Public Accountant of the parties choice who shall apply generally accepted
accounting principles (GAAP) to the unresolved issue.
7. Expense Reimbursement. The Company will reimburse the Executive,
at least semi-monthly, for all reasonable and necessary expenses, including
without limitation, travel expenses, and reasonable entertainment expenses,
incurred by him in carrying out his duties under this Agreement. The Executive
shall present to the Company each month an account of such expenses in such form
as is reasonably required by the Board of Directors.
8. Medical and Dental Coverage. Commencing November 9, 1998, the
Executive will be entitled to participate in the Company's employee group
medical and other group insurance programs on the same basis as other executives
of the Company. Currently, only Executive's (excluding spouse and dependents are
paid by the Company and Executive shall receive this method of coverage unless
better company executive coverage is effected.
9. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining
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life insurance on the life of the Executive for the benefit of the Company as
may be required; provided, however, that the Company shall bear the entire cost
of such examinations and shall pay all premiums on any key man life insurance
obtained for the benefit of the Company as beneficiary or with respect to any
other designated beneficiary.
10. Vacation Time. The Executive shall be entitled each year to a
reasonable vacation in accordance with the established practices of the Company,
now or hereafter in effect for the executive personnel, during which time the
Executive's compensation shall be paid in full.
11. Benefits Payable on Disability. If the Executive becomes
disabled such that he is unable to properly perform services hereunder by reason
of illness or other physical or mental incapacity, the Company shall continue to
pay the Executive his then current salary hereunder for the first three (3)
months of such continuous disability commencing with the first date of such
disability.
12. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his
employment under this Agreement, he will engage in no other business
activities directly or indirectly, which are competitive with or which
might place him in a competing position to that of the Company, or any
affiliated company.
(b) The Executive realizes that during the course of his
employment, Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer
lists, account lists and secret inventions and processes of the Company
and its affiliated companies. Therefore, during or subsequent to his
employment by the Company, or by an affiliated company, the Executive
agrees to hold in confidence and not to directly or indirectly disclose
or use or copy or make lists of any such information, except to the
extent authorized by the Company in writing. All records, files,
business plans, documents, equipment and the like, or copies thereof,
relating to Company's business, or the business of an affiliated
company, which Executive shall
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prepare, or use, or come into contact with, shall remain the sole
property of the Company, or of an affiliated company, and shall not be
removed from the Company's or the affiliated company's premises without
its written consent, and shall be promptly returned to the Company upon
termination of employment with the Company and its affiliated
companies. The restrictions and obligations of Executive set forth in
this Section 12(b) shall not apply to (i) information that is or
becomes generally available and known to the industry (other than as a
result of a disclosure directly or indirectly by Executive); or (ii)
information that was known to Executive prior to Executive's employment
by the Company or its predecessor.
(c) Because of his employment by the Company, Executive
shall have access to trade secrets and confidential information about
the Company, its business plans, its business accounts, its business
opportunities, its expansion plans into other geographical areas and
its methods of doing business. Executive agrees that for a period of
two (2) years after termination or expiration of his employment, he
will not, directly or indirectly, compete with the Company in its then
present business or anticipated lines in the aviation business.
Further, for the same two (2) year period, Executive shall not hire or
entice to hire any employees of Company to any other business Executive
may pursue following termination or expiration of employment.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 to be so overbroad as to be unenforceable,
then such provision shall be reduced in scope by the court, but only to
the extent deemed necessary by the court to render the provision
reasonable and enforceable, it being the Executive's intention to
provide the Company with the broadest protection possible against
harmful competition.
13. Termination for Cause by the Company. The Company may, without
liability, terminate the Executive's employment hereunder for cause at any time
upon written notice from the Board of Directors specifying such cause, and
thereafter the Company's obligations hereunder shall cease and terminate;
provided, however, that such written notice shall not be delivered until after
the Board of Directors shall have given the Executive written notice
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specifying the conduct alleged to have constituted such cause and the Executive
has failed to cure such conduct, if curable, within fifteen (15) days following
receipt of such notice.
Grounds for termination "for cause" are one or more of the following:
(a) A willful breach of a material duty by the Executive
during the course of his employment;
(b) Habitual neglect of a material duty by the Executive;
(c) Action or inaction by the Executive which places the
Company in circumstances of financial peril;
(d) Fraud on the Company or conviction of a felony involving
or against the Company; and
(e) Ownership or operation of any other closely-held
corporation or business entity actively engaged in the aviation or
aviation parts business. Notwithstanding the foregoing, Executive may
(i) continue to own the corporate entity that was Condor Flight Spares,
Inc. until such time as it may reasonably be dissolved and provided
that it as well as any other entity in which Executive may have
ownership has no activity of any sort in the aviation or aviation parts
business; and (ii) conclude any transaction to which the Company is a
party.
(f) Failure of Executive to obtain before January 31, 1999
an FAA certificate for the AASI subsidiary as an operational landing
gear overhaul and repair facility.
14. Termination by the Executive or the Company Without Cause.
(a) The Executive, without cause, may terminate this
Agreement upon 90 days prior written notice to the Company. In such
event, the Executive shall be required to render the services required
under this Agreement during such 90-day period unless otherwise
directed by the Board of Directors. Compensation for vacation time not
taken by Executive shall be
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paid to the Executive at the date of termination. Executive shall be
paid for only the ninety (90) day period pursuant to normal pay
practices and then all obligations regarding pay shall cease.
(b) The Company, without cause, may terminate this
Agreement. In such event, the Company shall pay a severance allowance
equal to one-half (1/2) of Executive's then current salary each year
for a two (2) year period at the regularly scheduled pay arrangements.
No other benefits will be provided once this Agreement is terminated
and all other obligations hereunder regarding compensation in any form
shall cease.
(c) The severance pay referenced in Section 14(b) shall also
be payable to the Executive in the event that Company declines to renew
or extend this Agreement pursuant to Section (3) supra. In that event
and provided the noncompete provisions of this Agreement apply, then
Company shall pay a severance allowance equal to one-half (1/2) of
Executive's then current salary each year for a two (2) year period at
the regularly scheduled pay arrangements.
15. Termination upon Death of Executive. In addition to any other
provision relating to the termination, this Agreement shall terminate upon the
Executive's death. In such event, the Company shall pay a severance allowance
equal to one hundred eighty (180) days' salary to the Executive's estate, which
may be covered by an insurance policy.
16. Arbitration. Any controversy, dispute or claim arising out of,
or relating to, this Agreement and/or its interpretation shall, unless resolved
by agreement of the parties, be settled by binding arbitration in Charlotte,
North Carolina in accordance with the Rules of the American Arbitration
Association then existing. This Agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law of the State of South Carolina.
The award rendered by the arbitrators shall be final and judgment may be entered
upon the award in any court of the State of South Carolina having jurisdiction
of the matter.
17. General Provisions.
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(a) The Executive's rights and obligations under this
Agreement shall not be transferrable by assignment or otherwise, nor
shall Executive's rights be subject to encumbrance or to the claims of
the Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement and the rights of Executive with respect
to the benefits of employment referred to herein constitute the entire
Agreement between the parties hereto in respect of the employment of
the Executive by the Company and supersede any and all other agreements
either oral or in writing between the parties hereto with respect to
the employment of the Executive.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction
or in an arbitration proceeding, the validity and enforceability of the
remainder of such provisions or parts thereof and the applicability
thereof shall not be affected thereby.
(d) This Agreement may not be amended or modified except by
a written instrument executed by Company and Executive.
(e) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of South Carolina.
18. Construction. Throughout this Agreement the singular shall
include the plural, and the plural shall include the singular, and the masculine
and neuter shall include the feminine, wherever the context so requires.
19. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
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20. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
21. Effective Date. This Agreement shall be effective as of the date
cited above.
FOR THE COMPANY: AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED
Dated November 9, 1998 By /s/ Karl F. Brown
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Title: President
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FOR THE EXECUTIVE:
Dated November 9, 1998 /s/ Martin Washofsky (SEAL)
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MARTIN WASHOFSKY