EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT dated October 15, 2004, between FBO Air, Inc., its affiliates,
subsidiaries, joint venture partners, successors and assigns, hereinafter
referred to as "Company" and W. R. "Robert" Cumming, hereinafter referred to as
"Executive".
Company is engaged in acquiring and operating fixed base operations and related
aviation companies and operations within the United States and possibly
internationally. Company currently maintains its place of business at 9087 E.
Charter Oak, Scottsdale, AZ 85260
The Company wishes to employ the Executive, and the Executive wishes to accept
employment with the Company, on the terms and subject to the conditions set
forth in this Agreement. It is therefore agreed as follows:
1. EMPLOYMENT. The Company shall employ the Executive, and the
Executive shall serve the Company, as Chief Financial Officer and Executive Vice
President of the Company, with such duties and responsibilities as may be
assigned to the Executive by the Chairman and/or the Chief Executive Officer of
the Company and as are normally associated with a position of that nature. The
Executive shall devote his best efforts and his business time to the performance
of his duties under this Agreement and shall perform them faithfully, diligently
and competently and in a manner consistent with the policies of the Company as
determined from time to time by the Chairman and/or Chief Executive Officer. The
Executive shall report to the Chief Executive Officer of the Company. The
Executive shall not engage in other business activities outside the scope of his
employment if such activities would detract or interfere with the fulfillment of
his responsibilities or duties under this Agreement.
2. TERM. The Executive's employment by the Company under this Agreement
shall commence in two weeks from the date of the initial fixed base acquisition
and the firm commitment and written agreement by the Board of Directors in
securing no less than $20 million in debt and equity financing by the Company.
The Company will provide Executive two weeks notice from that date, which will
be the "Effective Date". The term is for a continuous thirty-six month period of
time. This Agreement will renew itself in its entirety automatically unless
either party provides notice to the other party no less than 180 days before the
expiration date of the Agreement.
3. COMPENSATION.
a. Base Salary. As compensation for the services to be rendered
by Executive during the period of his employment hereunder,
Company shall pay Executive a salary of $125,000 per annum for
the first twelve (12) months; $150,000 per annum for the
second twelve (12) months; and $200,000 per annum for the
third twelve (12) months and successive twelve (12) month
periods thereafter; salary shall be less income tax
withholdings and other normal employee deductions and shall be
payable in equal monthly installments. The Board of Directors
of the Company may increase such salary at any time and from
time to time.
b. Incentive Bonus. In addition to the Base Salary, the Executive
shall be eligible for an incentive bonus equal to three
percent (3%) of the earnings before interest, taxes,
depreciation, and amortization ("EBITDA") of the Company. The
incentive shall be earned by meeting or exceeding the annual
Plan for EBITDA, which Plan shall be developed by management
and approved by the Board of Directors. When earned, such
incentive bonus shall be paid within four (4) weeks of the end
of the applicable fiscal year of the Company. Executive, at
his option, may receive incentive bonus in cash or in the form
of Company stock at a rate equal to 80% of the listed price on
the last business day of each calendar year.
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c. B. Stock Option. Executive shall be entitled to receive an
Option to purchase shares of the Company's stock as follows:
250,000 shares March 1, 2005
250,000 shares March 1, 2006
250,000 shares March 1, 2007
The per share price will be the listed price as of each
respective date and will vest at the time of the issuance. The
executive will have five years to acquire the stock from the
date of issuance. So long as it may be done lawfully, the
manner of acquisition of stock shall be structured as to
minimize adverse tax consequences to the Executive.
Additional options may be granted by the Board of Directors at
their discretion.
This Agreement shall not be deemed abrogated or terminated if the Board of
Directors of Company shall determine to increase the compensation of Executive
or pay bonuses for any period of time.
4. CONFLICTING ACTIVITIES. Executive shall not, during the term of this
Agreement, be engaged in any business activity that is directly or indirectly in
competition with the primary business activity of the Company without the prior
written consent of the Board of Directors of the Company.
Executive hereby agrees to promote and develop all business opportunities
that come to his attention relating to the current or anticipated future
business of the Company, in a manner consistent with the best interest of the
Company and with his duties under this Agreement. As used herein, the term
"business opportunity" shall not include business opportunities involving
investment in publicly traded stocks, bonds or other securities, or other
investment of a personal nature.
5. INSURANCE AND INDEMNIFICATION. The Company will hold executive
harmless and provide the Executive with complete indemnification against any and
all claims and/or lawsuits born directly or indirectly from the execution of the
Executive's duties in the performance of his position, and/or directly or
indirectly as the result of any other employees, officers, directors, agents,
stockholders and in furtherance thereof, the Company will provide and pay for
director and officer liability insurance.
6. ADDITIONAL BENEFITS.
6.1 Health, and Welfare Coverage: Company agrees to pay premium
expenses in full on behalf of Executive and his family for
medical, dental and vision insurance coverage upon the
Effective Date of this Agreement through Blue Cross of
California and either its PPO Share 500 or HMO Health plans;
and Dental PPO plans and related vision plans.
6.2 Executive Life Insurance: The Company will provide and pay for
term life insurance insuring the life of Executive during the
term of this Agreement in the amount of one million dollars
($500,000.00), with one-half (1/2) of the proceeds thereof
directed to such beneficiary or beneficiaries as Executive may
from time to time appoint and one-half (1/2) the proceeds
thereof directed to the Company.
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6.3 Vacation: The Executive shall be entitled each year to a
vacation of three (3) weeks, during which time his
compensation shall be paid in full. Each vacation shall be
taken at such time as to minimize its affect on the operations
of the Company.
6.4 Holidays and Sick Leave. Executive shall be entitled to
thirteen paid holidays per year. Sick leave will be five days
per year and accumulate up to twenty days if unused from year
to year.
6.5 Executive Physical: Company will arrange and pay for a
complete executive physical examination every two years,
provided, however, that the results of the physical
examination shall be made known to Company as well as to
Executive.
6.6 Working Facilities and Equipment: The Executive shall have a
private office, administrative support, and Company shall make
available such equipment, computers, furniture and such other
facilities and services as are suitable to his position and
appropriate for the performance of his duties.
6.7 Reimbursement of Expenses: The Executive may incur reasonable
expenses for promoting the Company's business, including
expenses for entertainment, travel, mobile telephone,
home-based phone and fax lines, home-based Internet access,
use of personal digital assistant and similar items.
6.8 Relocation Allowance: Executive will be entitled to a
relocation allowance in order to move from California to
Arizona. This will amount to $5,000 per month for the first
three months after the Effective Date of this Agreement.
6.9 Automobile Allowance: Monthly $750.
6.10 Continuous Education and Training: Consistent with the Federal
Aviation Administration and Current Insurance Requirements for
Aircraft and Fixed Base Operators and their operations,
continuous education is required. Company recognizes Executive
has been involved directly and indirectly in flight operations
for a number of decades. Executive has an Airline Transport
Pilot Rating and is a FAA flight instructor for single and
multi-engine aircraft and has acted as Chief Check Pilot in
flight operations. Company agrees to accrue five hours per
month of flight time in Company owned and or leased aircraft
of Executive's choosing for Executive to maintain currency and
proficiency and comply with the various government and
insurance requirements. This may include type ratings and
training in simulators in addition to the actual flight time
in aircraft.
6.11 Pension, 401K Plans, ESOP Plans: Executive shall be entitled
to participate immediately in any pension or profit sharing
plan or other type of plan adopted by Company for the benefit
of its key executives and/or regular employees.
7. DISCLOSURE OF INFORMATION. The Executive acknowledges that he may be
exposed to confidential information and that this information is a valuable,
special, and unique asset of the Company's business. The Executive will not,
during or after the term of his employment, disclose such confidential
information to any person, firm, corporation, association, or other entity
except for the specific purpose of accomplishing the Company's business
objectives. In the event of a breach or threatened breach by the Executive of
the provisions of this paragraph, the Company shall be entitled to an injunction
restraining the Executive from disclosing, in whole or in part, such
confidential information, or from rendering any services to any person, firm,
corporation, association, or other entity to whom such information, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
available to the Company for such breach or threatened breach, including the
recovery of damages from the Executive.
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8. FORCE MAJEURE AND DISABILITY. If Company is unable to conduct its
business, or a substantial portion thereof, by virtue of governmental regulation
or order, or by strike, war, fire, earthquake, hurricane, or similar acts of
god, or other calamity (declared or undeclared), or because of other similar or
dissimilar cause beyond control of Company (all of which events are hereinafter
sometimes referred to as "Force Majeure"), or in the event Executive suffers a
disability which prevents him from performing his services hereunder (herein
called a "Disability"), Company shall, in the event the Force Majeure and/or
Disability continue for at least eight aggregate weeks during any four-month
period, have the right to suspend the operation of this Agreement for the
duration of said Force Majeure and/or Disability (except for any benefits
payable to Executive under such benefit plans generally available to all
executive employees), and Company shall, at its option, have the right to add a
period equal to such suspension to the Term hereof.
9. TERMINATION WITHOUT CAUSE. Without cause, the Company may terminate
this Agreement at any time upon ten (10) days written notice to the Executive.
In such event, the Executive shall be paid his Base Salary up to the date of
termination, and in addition, there shall be paid to the Executive on the date
of termination a severance allowance equal to one times then applicable Annual
Base Salary (less only those amounts required by law to be withheld and deducted
such as income taxes). Further, Company acknowledges that any Incentive Bonus
due Executive shall be paid on a pro-rated basis; that any issued but non-vested
Options shall be terminated; and that Benefits shall continue for a period of
six (6) months from the end of the month of termination. Without cause, the
Executive may terminate this Agreement upon sixty (60) days' written notice to
the Company. In such event, the Executive shall continue to render his services
and shall be paid his regular compensation up to the date of termination, but no
severance allowance shall be owed. Also, should Executive terminate, Executive
acknowledges that any Incentive Bonus due Executive shall be forfeited; that any
issued but non-vested Options shall be terminated; and that Benefits shall
continue up to the end of the month of termination. Cobra benefits, in
accordance with the various federal and state regulations, will continue at the
option of Executive.
10. TERMINATION WITH CAUSE. For "cause," as defined below, either party
may, at its election, terminate this Agreement immediately. In the event Company
terminates "for cause," Company shall pay Executive the compensation and
benefits which would otherwise be payable to Executive up to the end of the
month in which the termination or disciplinary action occurs. Further, Executive
acknowledges that any Bonus due at time of termination shall be forfeited; all
non-vested Options shall be forfeited; and that Benefits shall be canceled at
the end of the month of termination. Cobra benefits, in accordance with the
various federal and state regulations, will continue at the option of Executive.
As used in this Section, termination "for cause" shall be deemed to have
occurred if either party has breached this Agreement and the non-breaching party
gives notice in writing, delivered to the breaching party and providing sixty
(60)) calendar days, from the date of delivery of the notice, within which the
breaching party has the opportunity to cure, if possible, the breach.
In addition, cause for termination shall exist if Executive engages in any
of the following conduct while an employee of the Company: (1) conviction of a
felony offense, whether or not such offense was committed in connection with
Company's business; (2) theft, embezzlement, false entries on records,
misapplication of funds or property, misappropriation of any asset, or any
actual or constructive fraud; (3) gross neglect of duty and/or willfully
engaging in gross misconduct materially and demonstrably injurious to Company;
(4) at any time during employment at the Company, imparting confidential
information, whether proprietary, to any person other than (i) an authorized
employee of the Company; or (ii) as required by law, or (iii) as part of a
privileged communication to an attorney; (5) receiving, during the term of this
Agreement, compensation, income, anything of value, or a future interest in or
future entitlement to compensation, income or a thing of value, from any person
or entity who or which is engaged in the same or substantially the same business
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as the Company in the same product, service or geographical market (within 50
miles), except stock dividends and/or capital gains from passive investments in
financial institutions by Executive made in the ordinary course of business and
as part of Executive's investment portfolio. However, cause shall not be deemed
to exist merely because of a difference of opinion between Executive and the
Company, or any employees, directors or officers of either, as to philosophy of
management or other personal beliefs.
11. TERMINATION UPON SALE OF BUSINESS. Notwithstanding anything to the
contrary, the Company may terminate this Agreement upon ten (10) days' notice to
the Executive upon any of the following events:
(a) the sale by the Company of substantially all of its assets to
a single purchaser or to a group of associated purchasers; or
(b) the merger or consolidation of the Company in a transaction in
which the shareholders of the Company receive less than fifty
percent (50%) of the outstanding voting shares of the new or
continuing corporation; or
(c) the sale, exchange, or other disposition, in one transaction,
of at least two-thirds (2/3) of the outstanding shares of the
Company.
In order to protect Executive against the possible consequences of such
termination and thereby to induce Executive to continue to serve as an employee
of Company, Company agrees that if (a) this Agreement is terminated as stated in
this Section; or (b) one of the actions stated in this Section occurs and
Executive leaves the employment of Company or the resulting entity for whatever
reason (other than termination for cause) within one (1) year after such
occurrence:
(i) Executive shall be considered immediately and fully vested in
any issued but non-vested Options
(ii) Executive shall continue to be covered by all non-cash benefit
plans of Company except for the retirement plans or retirement
programs in which Executive participates or any successor
plans or programs in effect on the date of such acquisition of
control, for six (6) months thereafter; to include paying
Executive a severance allowance equal to one times then
applicable Annual Base Salary provided, however, that if
during such time period Executive should enter into the
employment of a competitor of Company, his participation in
such non-cash benefit plans would cease. In the event
Executive is ineligible under the terms of such plans to
continue to be so covered, Company shall provide substantially
equivalent coverage through other sources.
Executive's benefits hereunder shall be considered severance pay in
consideration of his past service, and pay in consideration of his continued
service from the date hereof and his entitlement thereto shall not be governed
by any duty to mitigate his damages by seeking further employment nor offset by
any compensation which he may receive from future employment.
12. COMPETITION DURING AND AFTER TERM. Executive agrees that during the
Term hereof, and for a period of one year after the expiration of the Term, he
will not, either separately, jointly, or in association with others, directly or
indirectly, as an agent, employee, owner, partner, stockholder, or otherwise,
allow his name to be used by, or establish, engage in, or become interested in
any business substantially providing services similar to those of the Company in
any county in any of the States of the United States in which Company's business
is being conducted at the time of termination, as long as Company, or any
person, firm, or corporation deriving title to the goodwill of, or shares from
it, carries on a like business therein. Notwithstanding the preceding sentence,
Executive shall be allowed to engage in or be interested in businesses and
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activities provided that his interest or involvement therein does not otherwise
violate any other term or provision of this Agreement. Company and Executive
acknowledge that during the Term of Executive's employment, Executive will
acquire special knowledge and/or skill that he can effectively utilize in
competition with Company. Furthermore, although not a term or condition of this
Agreement, Company and Executive acknowledge that, as of the date hereof, it is
reasonably contemplated that Executive's services will be utilized by Company in
executive, managerial, and/or supervisory capacities throughout the areas in
which Company conducts its business, and in the general operation of Company's
business wherever it is being conducted, throughout the world.
Executive agrees that the remedy at law for any breach by him of the
covenants contained herein will be inadequate, and that in the event of a
violation of the covenants contained herein, in addition to any and all legal
and equitable remedies which may be available, the said covenants may be
enforced by an injunction in a suit in equity, without the necessity of proving
actual damage, and that a temporary injunction may be granted immediately upon
the commencement of any such suit, and without notice. The parties hereto intend
that the covenants contained in this Section shall be deemed to be a series of
separate covenants, one for each county of each state where Company does
business. If, in any judicial proceeding, a court shall refuse to enforce any or
all of the separate covenants deemed included in such action, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purposes of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such proceeding. Furthermore, if
in any judicial proceeding a court shall refuse to enforce any covenant by
reason of the duration or extent thereof; such covenant shall be construed to
have only the maximum duration or extent permitted by law.
13. SEVERABILITY. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be a conflict between
any of the provisions hereof and any present or future statute, law, ordinance,
regulation, or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
14. ATTORNEY'S FEES AND COSTS. In the event of any dispute arising out
of the subject matter of the Agreement, the prevailing party shall recover, in
addition to any other damages assessed, its attorney's fees and court costs
incurred in litigating or otherwise settling or resolving such dispute whether
or not an action is brought or prosecuted to judgment. In construing the
Agreement, none of the parties hereto shall have any term or provision construed
against such party solely by reason of such party having drafted the same.
15. WAIVER. The waiver by the Company of a breach of any provision of
this Agreement by the Executive shall not operate or be construed as a waiver of
any subsequent breach by the Executive. Concurrently, the waiver by the
Executive of a breach of any provision of this Agreement by the Company shall
not operate or be construed as a waiver of any subsequent breach by the Company
No waiver shall be valid unless in writing and signed by an authorized officer
of the Company or by the Executive.
16. ASSIGNMENT. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
17. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
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18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Arizona.
19. ARBITRATION. The parties agree that they will use their best efforts
to amicably resolve any dispute arising out of or relating to this Agreement.
Any controversy, claim or dispute that cannot be so resolved shall be settled by
final binding arbitration in accordance with the rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrator
or arbitrators may be entered in any court having jurisdiction thereof. Any such
arbitration shall be conducted in the State of Arizona, County of Maricopa, or
such other place as may be mutually agreed upon by all the parties. Within
fifteen (15) days after the commencement of the arbitration, each party shall
select one person to act as arbitrator, and the two arbitrators so selected
shall select a third arbitrator with ten (10) days of their appointment. Each
party shall bear its own costs and expenses and an equal share of the
arbitrator's expenses and administrative fees of arbitration.
20. NOTICES. Notices shall be as given to each of the parties hereto at
such address or addresses as each party shall provide from time to time in
writing to the other. Initially such notices shall be sent,
If to Executive: Bob Cumming, 13428 Maxella, #304, Marina Del Rey,
CA 90292.
If to Company: FBO Air, Inc., c/o Ron Ricciardi, 9087 E. Charter
Oak, Scottsdale, AZ 85260
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
COMPANY: EXECUTIVE:
FBO Air, Inc.
/s/ Ron Ricciardi /s/ W.R. "Robert" Cumming
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Ron Ricciardi W. R. "Robert" Cumming
Its: President & CEO
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