Exhibit 10.20
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is dated as of September 24, 2009
(the “Effective Date”), by and between Avantair, a
Delaware corporation (the “Company”), and Steven F.
Santo (the “Executive”).
In consideration of the mutual covenants herein
contained and of the mutual benefits herein provided, the Company
and the Executive agree as follows:
1.
Representations and Warranties. The Executive
represents and warrants to the Company that Executive is not bound
by any restrictive covenants and has no prior or other obligations
or commitments of any kind that would in any way prevent, restrict,
hinder or interfere with Executive’s acceptance of continued
employment or the performance of all duties and services hereunder
to the fullest extent of the Executive’s ability and
knowledge.
2.
Term of Employment. The Company will employ the
Executive and the Executive accepts continued employment by the
Company on the terms and conditions herein contained for a period
(the “Employment Period”) provided in Section
5.
(a) The
Executive shall be employed as the Chief Executive Officer
(“CEO”) of the Company and shall oversee, direct and
manage all of the day-to-day operations of the
Company. The Executive shall report directly to the
Company’s Board of Directors (the
“Board”). The Executive agrees to undertake
the duties and responsibilities commensurate with the position of
CEO, which may encompass such different or additional duties as
may, from time to time, be reasonably assigned by the Board, and
the duties and responsibilities undertaken by the Executive may be
reasonably altered or modified from time to time by the Board,
subject to the limitations on reduction of duties provided in
Section 5(c) of this Agreement. Executive shall comply
with all of the Company’s policies and procedures.
(b) During
the Employment Period, the Executive will devote substantially all
of his full time and efforts to the best of his ability, experience
and talent to the business of the Company. Except as
provided in Section 7, nothing in this Agreement shall preclude
Executive from engaging, so long as, in the reasonable
determination of the Board, such activities do not interfere with
his duties and responsibilities hereunder, in charitable and
community affairs, from managing any passive investment made by him
in publicly traded equity securities or other property (provided
that no such investment may exceed 5% of the equity of any entity,
without the prior approval of the Board) or from serving, subject
to the prior approval of the Board, as a member of boards of
directors or as a trustee of any other corporation, association or
entity.
(a) Base
Salary: As compensation for his services hereunder,
during the Executive’s employment as CEO, the Company agrees
to pay the Executive a base salary at the rate of Five Hundred
Thousand Dollars ($500,000) per annum, payable in accordance with
the Company’s normal payroll schedule. In no event
shall Executive’s salary be reduced below his current salary
(or, subsequent to any increases, below his then current
salary). Executive’s salary shall be subject to
annual review, based on corporate policy and contributions made by
Executive to the Company and such other factors as the Board or the
Company’s Compensation Committee (the
“Committee”) shall determine and, the Board and/or the
Committee may, in its sole discretion, elect to increase
Executive’s base salary hereunder.
(b) Bonus: Executive
shall be eligible to receive annual cash and/or stock bonus awards
as determined by the Board or the Committee. All bonuses
shall be at the discretion of the Board and the Committee
contingent upon the Executive achieving goals determined by the
Board or the Committee in their sole discretion.
(c) Participation
in Stock Option Program: To the extent the Company
establishes or may, from time to time, establish at any period in
the future, an incentive program that permits, allows, or provides
for awards of stock, restricted stock, or options in the Company,
or similar incentive equity interests, the Executive shall, subject
to Committee approval, be eligible to participate in such program
to the same extent as other, similarly situated employees of the
Company.
(d) Automobile
Expenses: Executive shall be entitled to a monthly
stipend in the amount of One Thousand Five Hundred Dollars ($1,500)
to cover his car lease.
(e) Business
Expenses: In addition to the compensation provided for
above, the Company agrees to pay or to reimburse the Executive
during his employment for all reasonable, ordinary, and necessary,
properly vouchered, client-related business or entertainment
expenses incurred in the performance of his services hereunder in
accordance with Company policy in effect from time to
time. The Executive shall submit vouchers and receipts
for all expenses for which reimbursement is sought.
(f) Vacation: During
each calendar year, the Executive shall be entitled to four weeks
of vacation per year. To the extent that Executive does
not use his vacation in a given calendar year, he shall be entitled
to carry forward accrued unused vacation over from year to year;
provided, however, that in no event may he at any time have more
than 30 business days of vacation accrued and once he has 30
business days of accrued unused vacation, he shall no longer
continue to accrue further vacation time until he has used some of
his accrued vacation time.
(g) Fringe
Benefits: In addition to his compensation provided by
the foregoing, the Executive shall be entitled to the benefits made
available generally to Company employees pursuant to Company
programs, including, by way of illustration, personal leave, paid
holidays, sick leave, profit-sharing, retirement, disability,
dental, vision, group sickness, accident or family health insurance
programs of the Company, subject, in each case, to the terms of
each such program (including any discrimination testing in such
program).
5. Employment
Period; Termination.
(a) The
Executive’s employment under this Agreement shall commence on
the Effective Date of this Agreement, and shall continue thereafter
unabated until terminated upon the earlier to occur of the
following events: (i) the close of business on the third
anniversary of this Agreement (the three year term of this
Agreement shall be referred to herein as the “Term”) or
(ii) as otherwise provided below, provided, however, that ,
on the third anniversary of the date of this Agreement, and on
every subsequent annual anniversary, and unless either party has
given the other party written notice at least thirty (30) days
prior to the such anniversary date, the term of this Agreement and
the Employment Period shall be renewed for a term ending upon the
later of (i) one (1) year subsequent to such date (each such
one-year term shall be referred to herein as a “Renewal
Term”) or (ii) the close of business on the third anniversary
of a Change of Control (as defined herein) (the “Change of
Control Period”), if a Change of Control occurs, unless
sooner terminated as provided herein. For the purposes
of this Agreement, the Term and each Renewal Term (and continued
employment through the Change of Control Period) shall collectively
be referred to as the “Employment Period.”
For purposes of this Agreement, “Change of
Control” shall mean “ (i) the acquisition, in one or
more transactions, by any Person of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of more than 50% of (A) all
shares of capital stock of Company to be outstanding immediately
following such acquisition, or (B) the combined voting power of all
shares of capital stock of Company to be outstanding
immediately following such acquisition that are entitled to vote
generally in the election of directors (the shares described in
clauses (A) and (B), collectively “Company Voting
Stock”); (ii) the closing of a sale or other conveyance of
40% or more of the assets of Company; (iii), individuals who, as of
the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a member of the Board (a “Director”)
subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a
vote of at least two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a
nominee for director, without objection to such nomination) shall
be deemed to have been a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest (within the meaning of Rule 14a-11 of the Exchange
Act) with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or (iv) the effective time
of any merger, share exchange, consolidation, or other business
combination involving Company if immediately after such
transaction, persons who hold a majority of the outstanding voting
securities entitled to vote generally in the election of directors
of the surviving entity (or the entity owning 100% of such
surviving entity) are not persons who, immediately prior to such
transaction, held Company Voting Stock. For purposes of
this section, a “Person” means any individual, entity
or group within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, other than an entity
controlled by the Company.
(b)
Termination By Executive Without Good Reason.
Notwithstanding the provisions of Sections 5(a), the Executive may
terminate the employment relationship at any time for any reason by
giving the Company written notice at least sixty (60) days prior to
the effective date of termination. Unless otherwise
provided by this Section, all compensation and benefits paid by the
Company to the Executive shall cease upon his last day of
employment, but Executive shall be entitled to receive any accrued
but unpaid base salary, and to be reimbursed for any reimbursable
expenses that have not been reimbursed prior to the effective date
such termination.
(c)
Termination By Executive with “Good
Reason.” Subject to the provisions detailed
below, upon thirty (30) days’ written notice to the Company
of his intent to terminate the Agreement, Executive shall have the
right to terminate his employment under this Agreement for
“Good Reason.” For purposes of this
Agreement, “Good Reason” is defined as any one of the
following: (i) Company’s willful material breach of any
provision of this Agreement; (ii) any material adverse change in
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities
(other than a change due to Executive’s Permanent Disability
or as an accommodation under the Americans With Disabilities Act)
which results in: (A) a diminution in any material respect in
Executive’s position, authority, duties,
responsibilities or compensation, which diminution
continues in time over at least thirty (30) days, such that it
constitutes an effective demotion; or (B) a material diversion from
Executive’s performance of the functions of Executive’s
position, excluding for this purpose material adverse changes made
with Executive’s written consent or due to Executive’s
termination For Cause or termination by Executive without Good
Reason; or (iii) relocation of the Company’s headquarters
and/or Executive’s regular work address to a location which
requires him to travel more than forty (40) miles from
Executive’s place of employment on the date hereof;
provided, however , that it shall not constitute Good
Reason unless Executive shall have provided the Company with
written notice of its alleged actions constituting Good Reason
(which notice shall specify in reasonable detail the particulars of
such Good Reason) within 30 days of the events alleged actions
constituting Good Reason and Company has not cured any such alleged
Good Reason or substantially commenced its effort to cure such
breach within thirty (30) days of the Company’s receipt of
such written notice.
If the
Executive’s employment is terminated by the Executive with
Good Reason, the Executive shall continue to receive his base
salary for a period of twelve (12) months from the effective date
of termination, payable in accordance with the Company’s
normal payroll schedule, and in addition, if Executive elects to
receive Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) continuation coverage under the
Company’s medical plan, the Company shall reimburse the same
portion of the premium costs for the medical portion of such COBRA
coverage for a period of eighteen (18) months as the Company was
paying on Executive’s behalf under the Company’s
medical plan immediately prior to the termination of
Executive’s employment; provided that Executive is and
remains eligible for such COBRA continuation
coverage. For the avoidance of doubt, it is understood
and agreed that any period during which the Company reimburses for
a portion of Executive’s COBRA premium costs pursuant to the
preceding sentence shall count toward the 18-month maximum COBRA
eligibility period. Payments hereunder will be subject
to all applicable withholding taxes. The base salary continuation
and continued health insurance coverage is referred to herein as
“Severance Benefits”.
Notwithstanding
the foregoing, Executive shall not be entitled to any Severance
Benefits unless (i) Executive complies with all of the restrictive
covenants by which he is bound (whether pursuant to this Agreement
or otherwise), including, but not limited to, any non-competition
agreement, non-solicitation agreement, confidentiality agreement or
invention assignment agreement signed by Executive, and (ii) the
Executive executes, delivers and does not revoke a general release
in form and substance acceptable to the Company no later than
thirty (30) days after the date of termination and any revocation
period with respect to such release has expired; further
provided, however , that if the consideration and/or revocation
period straddles two taxable years, then the Company shall make the
severance payments starting in the second of such taxable years,
regardless of which taxable year the executed release is
delivered. The parties hereto acknowledge that the
Severance Benefits to be provided under this Section 5(c) are to be
provided in consideration for the above-specified
release.
(d)
Termination by the Company for “Cause.”
If the Executive’s employment is terminated for
“Cause,” the Executive will not be entitled to and
shall not receive any compensation or benefits of any type
following the effective date of termination. Except as
provided below, in the event Executive’s employment with the
Company is terminated for “Cause,” such termination
shall be effective upon Executive’s receipt of the notice
terminating his employment for “Cause,” which notice
shall describe the bases for the “Cause”
determination. As used in this Agreement, the term
“Cause” shall exist upon any of the following
events: (1) Executive’s fraud or breach of
fiduciary obligations in connection with performance of his duties
with the Company (including but not limited to any acts of
embezzlement or misappropriation of funds); (2) Executive’s
indictment for a felony or plea of guilty or nolo contendere
to a felony charge or any criminal act involving moral turpitude;
(3) Executive’s being under the influence of any drugs (other
than prescription medicine or other medically-related drugs to the
extent that they are taken in accordance with their directions) or
repeatedly being under the influence of alcohol, during the
performance of his duties under this Agreement, or, while under the
influence of such drugs or alcohol, engaging in grossly
inappropriate conduct during the performance of his duties under
this Agreement; (4) Executive’s refusal to substantially
perform the Executive’s duties hereunder, except in the event
that the Executive becomes permanently disabled as set forth in
Section 5(f); (5) Executive’s willful misconduct or gross
negligence in connection with his employment; (6) Executive’s
material violation of any Company policies or procedures relating
to harassment, discrimination or insider trading; or (7)
Executive’s material breach of any provision of this
Agreement. In the case of items (4), (6) and (7) above,
the Company shall provide the Executive with written notice
specifying in reasonable detail the particulars of such Cause and
the Executive shall have thirty (30) days from the giving of such
notice within which to cure, if such a cure is possible and, if
such a cure is possible and the Executive cures such Cause to the
reasonable satisfaction of the Company then Cause shall not exist
with respect to such Cause event.
(e)
Termination by the Compan
