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CEO Employment Agreement

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Sectors: Transportation
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: July 08, 2005
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EXHIBIT 10.1 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (" Agreement" ), made and entered into as of the 8th day of July 2005, by and between WALTER CLARK, an individual resident of North Carolina (" Employee" ), and AIR T, INC., a Delaware corporation (the " Company" ). Background Statement The Company, through its subsidiaries, is one of the largest contract carriers providing overnight air cargo services to the air express delivery industry and is a leading manufacturer and service provider with respect to military, airline and airport ground support equipment, including mobile deicing/decontamination equipment, catering/cabin service trucks and fixed pedestal-mounted deicing systems. Employee has served as Chief Executive Officer of the Company and has agreed to continue employment with the Company pursuant to the terms of this Agreement. Employee has or will be expose d to various information, data, methods, processes, software and systems of the Company, many of which are proprietary to the Company. The Company' s fiscal year end is March 31.
Statement of Agreement
In consideration of the mutual covenants herein, Employee and the Company agree as follows:
1. Employment . The Company agrees to employ Employee, and Employee agrees to serve the Company, upon the terms and conditions set forth in this Agreement.
2. Position and Responsibilities . The Company shall employ the Employee as its Chief Executive Officer and the Employee' s duties shall include all legal duties of a character in keeping with and incidental to such executive position. The Employee shall perform all legal duties, services and acts necessary to assist in the management, conduct and operation of the Company and its subsidiaries and shall perform such other legal duties as may be reasonably assigned to him from time to time by the Board of Directors of the Company (the " Board" ).
3. Term of Employment . Subject to Section 6 of this Agreement, the term of Employee' s employment hereunder shall commence immediately and shall continue for two years; provided that on each anniversary of the date of this Agreement the term of Employee' s employment hereunder shall be extended for an additional year beyond the scheduled date of expiration unless notice of termination of continued extensions of the period of Employee' s employment hereunder is provided by Employee to the Company, or by the Company to Employee, within 90 days prior to such anniversary of the date of this Agreement (the term of Employee' s employment pursuant to this Agreement being referred to herein as the " Period of Employment" ). For purposes of clarification, the foregoing sentence has the effect of establishing a rolling two-year scheduled Period of Employment term under this Agreement on each
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anniversary of the date of this Agreement absent timely notice from one party to the other of termination of continued extension of the scheduled Period of Employment term prior to the anniversary date, and, if such notice is timely provided in advance of an anniversary date, the remaining scheduled Period of Employment term on that anniversary date would be one year.

4. Duties . During the Period of Employment, Employee shall devote all of his business time, attention, skills and efforts to the business of the Company and the faithful performance of his duties hereunder; provided, however, that with the approval of the Board, Employee may engage in such other activities that, in the Board' s judgment, will not present any c onflict of interest with the Company or any affiliate of the Company (a " Company Affiliate" ) or adversely affect the performance of Employee' s duties pursuant to this Agreement. In the performance of his duties, Employee shall at all times be subject to the control, supervision and review of the Board.
5. Compensation and Benefits . For all services rendered by the Employee to the Company in any capacity under this Agreement, the Company shall compensate Employee during the Period of Employment as follows:
(a) Base Salary . The Company shall pay Employee an annual salary that is no less than a base salary (the " Base Salary" ) of $200,000 per year, subject to applicable federal and state income and social security tax withholding requirements. During the Period of Employment, the Base Salary may be increased as determined by the Board or its Compensation Committee. Employee' s salary shall be payable in accordance with the Company' s customary payroll practices.
(b) Incentive Compensation . The Company shall pay to the Employee incentive compensation equal to two percent (2%) of the annual consolidated net income before income taxes or extraordinary items of the Company and its subsidiaries as reported by the Company in its Annual Report on Form 10-K (the " Form10-K" ) for the applicable year. Such incentive compensation payment shall be subject to applicable withholding for taxes. Amounts payable under this subparagraph, if any, shall be paid within fifteen (15) days after the Company files its 10-K with the Securities and Exchange Commission. Amounts otherwise payable hereunder shall be prorated for a partial year's employment in the event Employee's employment is terminated or ceases during the course of the Company' s fiscal year. Employee shall also be eligible to participate in such other incentive compensation plans, including cash profit-sharing and bonus plans and stock option plans, as the Board or its Compensation Committee may from time to time determine.
(c) Employee Benefit Plans or Arrangements . Employee shall be eligible to participate in such other employee benefit plans of the Company, as presently in effect or as they may be modified or added to from time to time, including, without limitation, plans p roviding retirement benefits, medical insurance, life insurance, disability insurance, and accidental death or dismemberment insurance, subject to satisfaction of minimum term of service or other requirements set forth in such plans.
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(d) Vacation and Sick Leave . Employee shall be entitled to four weeks paid vacation per year and sick leave in accordance with the Company' s policies as adopted from time to time.
(e) Reimbursement of Expenses . The Company shall pay or reimburse Employee for all reasonable travel and other business expenses incurred by him in performing his duties under this Agreement. Such expenses shall be appropriately documented and submitted to t he Company in accordance with the Company' s policies in effect from time to time.
(f) Perquisites . During the Period of Employment, Employee shall be entitled to personal use of corporate passenger aircraft. Employee shall not be required to reimburse the Company for the cost of his personal use of such air craft to the extent the Company' s cost of Employee' s personal use of such aircraft does not exceed $50,000 in any fiscal year. Employee shall reimburse the Company for the cost of his personal use of such aircraft to the extent the Company' s cost of Employee' s personal use of such aircraft exceeds $50,000 in any fiscal year.
6. Termination of Employment .
(a) Termination by Company . The Company shall have the right to terminate Employee' s employment under this Agreement upon the death or Disability (as defined below) of Employee or for Cause (as defined below) without any further obligation to Employee u nder this Agreement. Termination for Disability or for Cause will be effective upon delivery of written notice of such termination to Employee.
(i) " Disability" means any impairment of mind or body that renders Employee unable to perform his normal duties and functions hereunder for a continuous period of at least three months or is likely to prevent Employee from pe rforming such duties and functions for more than six months during any 18-month period, as determined in good faith by a physician selected by the Board. Any refusal by Employee to submit to a medical examination for the purpose of certifying Disability under this Section shall be deemed conclusively to constitute evidence of Employee' s Disability.
(ii) " Cause" means (A) the repeated failure of Employee to perform his duties hereunder or the lawful directives of the Board; (B) the commission of an act by Employee constituting financial dishonesty against the Company or any Company Affiliate; (C) any knowing falsification of information to be submitted by or on behalf of the Company or any Company Affiliate to Federal Express Corporation or the Federal Aviation Administration, United States Department of Defense or other governmental authority; (D) the failure to cooperate in any investigation by Federal Express Corporation or the Federal Aviation Administration, United States Department of Defense or other governmental authority of the Company or any Company Affiliate or any internal investigation by the Company, including by the Board or any committee of the Board; (E) the commission of an act by Employee involving a felony; (F) the commission of an act by Employee involving moral turpitude that brings the Company or any Company Affiliate into public disrepute or disgrace or causes material harm to the customer relations, operations or business prospects of the Company or any Company Affiliate.
3 (b) Termination Without Cause . The Company shall have the right to terminate Employee' s employment hereunder at any time for any reason subject to the provisions of this Section 6(b). In the event the Company shall terminate the Employee for any reason other than as provided in Section 6(a) (which the Company may do at anytime in its sole discretion), the Company shall pay to Employee his Base Salary, less applicable withholding for taxes, for a period of two years and six months commencing on the date of termination of employment hereunder (the " Severance Period" ). The Company, at its option, may pay such amounts either (i) in installments in the amounts and on the payment dates on which such Base Salary would have been paid if Employee had continued as an employee of the Company or (ii) as a single payment not later than 60 days after the date of termination, in which event the single payment shall be in an amount equal to the net present value (at an 8% discount rate) of the total amount of such payments. In addition, during the Severance Period, the Company shall, to the extent permitted by the terms of its insurance policies, continue to provide all health and welfare benefits provided on the date of termination of employment, and in the event that continuation of health benefits are not permitted under the terms of the Company' s health insurance policies, if the Employee elects to purchase group health insurance coverage under federal law (COBRA), then the Company shall pay the premiums for such COBRA coverage for the Severance Period. Thereafter, the Employee may elect to purchase COBRA coverage at his own expense. Such payments pursuant to this Section 6(b) shall be Employee' s only remedy with respect to such termination.
(c) Termination by Employee . Employee shall have the right to terminate his employment under this Agreement at any time for any reason upon delivery of written notice to the Company. In the event that, at any time within twelve months following a Change in C ontrol (as defined below), Employee terminates his employment under this agreement for Good Reason (as defined below), as specified in the written notice of termination given by Employee to the Company, the Company shall pay to Employee his Base Salary, less applicable withholding for taxes, for the Severance Period. The Company, at its option, may pay such amounts either (i) in installments in the amounts and on the payment dates on which such Base Salary would have been paid if Employee had continued as an employee of the Company or (ii) as a single payment not later than 60 days after the date of termination, in which event the single payment shall be in an amount
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