Exhibit 10.23.1
SEPARATION
AGREEMENT
SEPARATION AGREEMENT, dated as of
November 20, 2008 (this “ Agreement ”), by
and between Hawker Beechcraft Corporation, a Kansas corporation
(the “ Company ”), and James E. Schuster (the
“ Executive ,” together with the Company, the
“ Parties ”).
WHEREAS, the Executive has been
employed by the Company as Chief Executive Office and has served as
a member of the board of directors of the Company (the “
Board ”) pursuant to that certain Employment Agreement
dated as of March 26, 2007, between the Company and the
Executive (the “ Employment Agreement
”);
WHEREAS, the Company desires to
continue to employ the Executive as Chief Executive Officer for the
period commencing on November 21, 2008, and ending on the
earlier of (i) the date the Executive’s successor (other
than an interim Chief Executive Officer) commences his or her
employment with the Company and (ii) the date the Board
determines that the Transition Period should terminate (the “
Transition Period ”);
WHEREAS, the Executive and the
Company mutually agree that the Executive’s employment as
Chief Executive Officer of the Company and his service as a member
of the Board shall terminate effective as of the Separation Date
(defined below); and
WHEREAS, the Parties desire to set
forth their respective rights and obligations with respect to the
Transition Period and with respect to the termination of the
Executive’s employment on the Separation Date.
NOW, THEREFORE, in consideration of
the covenants and conditions set forth herein, the Parties,
intending to be legally bound, agree as follows:
|
|
A.
|
Position and
Duties . The Company and
the Executive agree that, during the Transition Period, the
Executive shall continue to be employed by, and serve as the Chief
Executive Officer of the Company, and shall report directly to the
Board. In such position, the Executive shall have the authorities
customary for a chief executive officer of a company of similar
size and nature as the Company, plus such additional duties,
consistent with the foregoing, as the Board may reasonably assign,
including the duty to cooperate with the Board and senior
management in connection with their search for the
Executive’s successor and to facilitate a smooth transition
of leadership. During the Transition Period, the Executive shall
also continue to serve as a member of the Board, including his
membership on the Board committees of which he is a member on the
date hereof.
|
|
|
B.
|
Exclusivity . During the Transition Period, the Executive
shall devote such portion of his business time and efforts as may
be necessary to the performance of his duties as described above,
shall faithfully serve the Company, and shall in all material
respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board.
|
|
|
C.
|
Compensation
and Benefits . The
Executive shall receive, as compensation for his services during
the Transition Period, the following compensation and
benefits:
|
|
|
(i)
|
Salary . A base salary at an annualized rate of
$630,000, to be paid in accordance with regular payroll practices
of the Company.
|
|
|
(ii)
|
Bonus . The Executive shall be eligible to receive an
annual bonus up to a maximum of $630,000 for the full calendar year
ending December 31, 2008, in accordance with the
Company’s existing Management Incentive Plan (the “
MIP ”), payable at the same time as bonuses are paid
to other senior executives participating in such plan and based on
the existing performance criteria established for the plan and the
Executive for 2008; provided , that, amounts determined to
be payable to the Executive in accordance with the MIP shall be
made to the Executive whether or not he is an executive and an
employee on the date such payment is made. Following the 2008 year,
the Executive will only be entitled to bonus compensation as the
Board in its sole discretion, may award.
|
|
|
(iii)
|
Benefits . The Executive, and his eligible dependents,
shall continue to participate in the Company’s health and
welfare benefits plans as an active employee during the Transition
Period.
|
|
|
(iv)
|
Reimbursement of Expenses
. During the Transition Period, the
Executive shall be entitled to reimbursement of reasonable business
expenses incurred during the Transition Period upon presentation of
such expenses to the Company and otherwise in accordance with the
Company’s reimbursement policy.
|
|
|
D.
|
Vesting of Options
. As of the date hereof, 40% of the
option granted to the Executive pursuant to stock option agreement
attached hereto as Exhibit A (the “ Time Vested
Option ”) shall be or become vested (506,384.8 shares).
As of the date hereof, 20% of the options granted to the Executive
pursuant to stock option agreements attached hereto as Exhibit
B and Exhibit C (the “ Performance Vested
Options ”) shall be vested (142,420.7 shares with respect
to Exhibit B, and 142,420.7 shares with respect to Exhibit C). The
remaining 60% of the Time Vested Option and 80% of the Performance
Vested Options shall terminate on the date hereof. The portions of
the options that are vested as of the date hereof (the “
Vested Options ”) shall, remain outstanding and
exercisable until December 31, 2011 and shall otherwise
continue to be governed by the Option Agreements; provided ,
that, the extension of the exercise period until December 31,
2011 shall be conditioned on (i) the Board’s
satisfaction, in its sole discretion, with the Executive’s
performance of his duties during the Transition Period and
(ii) the Executive remaining employed by the Company until the
end of the Transition Period. In the event that the Board, in its
sole discretion, is not satisfied with the Executive’s
performance during the Transition Period or the Executive does not
remain employed by the Company until the end of the Transition
Period, the Vested Options shall remain exercisable for ninety
(90) days following the
|
2
|
|
Separation Date. The Executive
acknowledges and agrees that the Time Vested Option and the
Performance Vested Options are the only stock options that have
been granted to the Executive.
|
|
|
E.
|
Notice . The Executive shall be given at least five
(5) business days’ notice of the end of the Transition
Period.
|
|
2.
|
Separation Date . The Executive and the Company agree that the
Executive’s employment as Chief Executive Officer of the
Company shall terminate effective as of the earlier of (i) the
close of business on the last day of the Transition Period and
(ii) such earlier date on which the Executive voluntarily
leaves the Company (the “ Separation Date ”).
The Executive also agrees that, effective as of the Separation
Date, the Executive shall resign from all positions he holds as an
officer, director, employee and member of the boards of directors
(and any committee thereof) of the Company and its affiliates, and
shall be required to execute such writings as are required to
effectuate the foregoing. The Executive understands and agrees
that, from and after the Separation Date, he will no longer be
authorized to act on behalf of the Company or any of its
subsidiaries or to incur any expenses, obligations or liabilities
on behalf of the Company or any subsidiary.
|
|
3.
|
Separation Benefits . In consideration of the obligations herein,
the Company agrees to provide the Executive with the following
severance payments and benefits:
|
|
|
A.
|
Severance
Payment . The Company
agrees to pay the Executive an amount equal to $321,068. This
amount shall be paid pursuant to, and in full satisfaction of the
Company’s obligations, under Sections 3.2(a) and 3.3 of the
Employment Agreement, and shall be paid in twenty-four
(24) equal monthly installments following the Separation Date,
payable on the first day of the calendar month commencing with the
calendar month next following the Separation Date.
|
|
|
B.
|
Health and Welfare
Benefits . The Company agrees to provide
the Executive and his eligible dependents with the health and
welfare benefits available to the Executive and his eligible
dependents immediately prior to the Separation Date, on the same
basis as active employees of the Company, until the earlier of
(i) the first (1 st ) anniversary of the
Separation Date and (ii) the Executive obtaining full-time
employment, with COBRA benefits commencing after such
period.
|
|
4.
|
Retention
Program . The Company
and the Executive agree that the Executive is not entitled to any
further payments pursuant to the Hawker Beechcraft Corporation
Retention Program, adopted on March 26, 2007, and that all of
the Company’s obligations to the Executive with respect to
such retention program have been satisfied.
|
|
5.
|
Restricted
Stock . As of the
date hereof, the Executive shall be or become vested in 257,149.8
shares of restricted stock. The Company and the Executive agree
that the Company shall purchase from the Executive 75,000 of these
shares of common stock of the Company, par value $0.01 (“
Common Stock ”) at a purchase price of $10 per share,
with an aggregate purchase price of $750,000, such purchase
to
|
|
