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EXHIBIT 10.57
CONFORMED COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the 18th day of August, 1997 (the
"Agreement"), is made by and between Xxxx X. Xxxxxxxxx (hereinafter referred to
as "Employee") and Atlas Air, Inc. ("Atlas" or the "Company").
WHEREAS, Employee warrants that she is entering voluntarily into this
Agreement, and that no promises or inducements for this Agreement have been made
outside of the terms and conditions referred to herein, and Employee enters into
this Agreement without reliance upon any statement or representation by Atlas or
any other person, concerning any fact material hereto.
NOW, THEREFORE, in consideration of the covenants contained herein,
Employee and Atlas agree to this Employment Agreement as of the date first
mentioned above for implementation effective August 18, 1997.
1. DEFINITIONS
1.1 For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of Atlas, (ii) repeated
violations by the Employee of the Employee's obligations under this Agreement
which are demonstrably willful and deliberate on the Employee's part and which
are not remedied in a reasonable period of time after receipt of written notice
from Atlas, (iii) the conviction of the Employee of a felony, or (iv) grievous
violations of corporate policies and procedures.
1.2 For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred upon the happening of two of the following:
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(a) Xxxxxxx Xxxxxxx ceasing to have a direct or indirect beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of at least 51% of the combined voting
power of Atlas' then outstanding voting securities entitled to vote
generally in the election of directors; or
(b) Xxxxxxx Xxxxxxx ceasing to be, on a substantially full-time basis,
the Chief Executive Officer of Atlas; or
(c) The acquisition by any person, entity or "group," within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (excluding, for this purpose, any Employee benefit plan of Atlas or
its subsidiaries which acquires beneficial ownership of voting securities
of Atlas) of beneficial ownership, within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, of a percentage of
the combined voting power of Atlas' then outstanding voting securities
entitled to vote generally in the election of directors which is greater
than the percentage beneficially owned directly or indirectly by Xxxxxxx
Xxxxxxx.
1.3 The "Employment Period" shall be defined as the period commencing on
the date hereof and extending until August 18, 2000, unless sooner terminated
as set forth in Section 4 below, or unless extended by mutual agreement of
Atlas and Employee.
1.4 "Permanent Disability" as used herein shall be deemed to have been
sustained by Employee if she shall have been continuously disabled from
performing the duties assigned to her during the Employment Period for a period
of six consecutive calendar months, and such Permanent Disability shall be
deemed to have commenced on the day following the end of such six consecutive
calendar months.
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1.5 "Confidential or Proprietary" as used herein shall refer to all
non-public information relative to Atlas' structure and practices except:
(a) information that is or becomes a matter of public knowledge
through no fault of the Employee; or
(b) information rightfully received by the Employee from a third party
without a duty of confidentiality; or
(c) information independently developed by the Employee; or
(d) information disclosed to Employee with Atlas' prior written
approval for public dissemination. 1.6 For purposes of this Agreement "Good
Reason" means a reduction by Atlas during the term of this Agreement in
Employee's Base Annual Salary of $175,000 or participation in a bonus plan
which provides Employee with an opportunity to earn a bonus payment in a
range of 50% to 100% of Employee's then current Base Annual Salary, or a
direct or indirect reduction in the Employee's title, job authorities,
reporting relationship, or responsibilities.
2. EMPLOYMENT AND OBLIGATIONS OF EMPLOYEE
2.1 Employment. During the Employment Period, Atlas agrees to employ the
Employee as Senior Vice President and General Counsel. Employee will be the
senior legal counsel of the Company. Employee shall not be entitled to any
additional compensation for serving in any other office for Atlas or any
subsidiary or affiliate of Atlas.
2.2 Obligations of Employee. During the Employment Period, the Employee
agrees, except when prevented by illness or Permanent Disability or during a
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period of vacation, to devote substantially all of her business time and
attention to the good faith performance of such services.
2.3 Principal Residence of Employee. Employee shall maintain her principal
residence in the Denver, Colorado area.
3. COMPENSATION
During the Employment Period, Atlas will pay Employee as follows:
3.1 Base Annual Salary. Atlas will pay Employee a base annual salary (the
"Base Annual Salary") of not less than $175,000 per annum, payable in
semi-monthly installments. Officer salaries will be reviewed during 1998.
3.2 Incentive Bonus Payments. Employee will be eligible to receive an
Incentive Bonus payment based on performance for each calendar year during the
Employment Period upon approval of the Compensation Committee of the Board of
Directors at Atlas (the "Compensation Committee"). For 1997, Employee's bonus
payment will be a minimum of $60,000 payable in the first quarter of 1998. Such
Incentive Bonuses shall be calculated and paid on the same basis as other senior
executives at Atlas.
3.3.1 Stock Options. Employee will be entitled to a stock option grant of
15,000 Atlas Air, Inc. shares. The shares will vest starting on the first
anniversary of this Agreement and for two years thereafter in three (3) equal
portions at the rate of 5,000 options per year. The option price shall be the
average of the high and low sale prices per share quoted by NASDAQ on August 15,
1997 (i.e., $27.25). All other terms of this grant are contained in the Stock
Option Agreement which is incorporated herein and made a part hereof. A copy of
such Agreement will be provided after August 18, 1997.
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3.3.2 Sign-on Bonus. Employee will be paid a sign on bonus of $50,000 minus
applicable taxes during the week of August 18, 1997. If Employee terminates her
employment with Atlas during the first year of employment, she shall repay such
sign-on bonus within 30 days of such termination and if she terminates
employment during the second year of employment, she shall repay one-half of
such sign-on bonus ($25,000) within 30 days of such termination, provided that
no such repayment shall be required if Employee terminates her employment for
Good Reason.
3.4 Profit Sharing. Beginning at the end of Employee's thirteenth month of
employment (September 18, 1998), Employee will be entitled to participate in the
Company's profit sharing plan beginning in calendar year 1998 on a pro-rated
basis, and on the same basis as all other executives of Atlas; provided that
such profit sharing plan will guarantee Employee a minimum of 10% of the Base
Annual Salary per month through 1999.
3.5 401K Plan. After ninety (90) days of employment, Employee will be
eligible to participate in the Company's 401K Plan which provides for a 50%
match by the Company of Employee's contribution up to a maximum contribution of
10% of Employee's Base Annual Salary (as it may be adjusted) plus amounts
received under Section 3.4 above.
3.6 Stock Purchase Plan. After one (1) year of service, Employee will be
eligible to participate in the Company's stock purchase plan whereby Employee
may purchase Company stock at a 15% discount up to an aggregate of 15% of
Employee's Base Annual Salary.
3.7 Health Care. After ninety days of service, Employee and her dependents
shall be entitled to participate in the Atlas health insurance plan, and Atlas
will pay Employee's monthly premium. During Employee's initial ninety (90) days
of service, Atlas will pay any COBRA (as defined below) premiums for such period
for Employee and her dependents. Atlas reserves the
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right to discontinue participation in any health insurance plan at any time
with the understanding that Atlas will comply in full measure with all state
and federal laws regarding the changes of insurance coverage by private
employers and notification under the Consolidated Omnibus Budget Reconciliation
Act ("COBRA"). In such event, Atlas shall pay all COBRA premiums on behalf of
Employee and her dependents for the Employment Period. Employee shall also be
entitled, to the same extent and at a level commensurate with the corporate
officers of Atlas, to participate in any other benefit plans or arrangements of
Atlas.
3.8 Corporate Automobile. Employee will be entitled to professional and
personal use of a company vehicle initially blue-book valued at up to, or actual
value not to exceed, $40,000.00. The decision to lease or purchase is at the
discretion of the Company. Title to the automobile shall be in the Company's
name. Atlas will be responsible for all insurance premium payments related to
the vehicle and all other vehicle related expenses, except that Employee will
pay the costs of fuel.
3.9 Expenses. During the Employment Period, the Employee shall be entitled
to receive promptly reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable expense reimbursement policies,
practices and procedures in effect with respect to key executives of Atlas and
its subsidiaries.
4. TERMINATION OF EMPLOYMENT PERIOD
The Employment Period shall terminate under the following terms and
conditions:
4.1 At-Will Arrangement. Atlas or Employee may terminate the Employment
Period upon written notice to the other at any time and for any reason. Both
Atlas and Employee expressly understand and agree that the employment
relationship is at-will. Each of Atlas and Employee is entitled to sever the
employment relationship for any reason.
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4.2 Rights Following Termination.
(a) If the Employment Period is terminated by Atlas for reasons other
than Cause or if the Employment Period is terminated by the Employee for
Good Reason, the Employee shall receive, in a single lump sum payment
within ten (10) business days after such termination, an amount equal to
Employee's Base Annual Salary. In addition, Employee shall be entitled to
receive profit sharing amounts under Section 3.4 above up until the date of
such termination which be calculated in the ordinary course of business and
paid at such time as such payments are made to other executives at Atlas.
Atlas will pay COBRA premiums for Employee for a period of one year
following such termination or until she is otherwise provided with medical
insurance by another employer, whichever period is shorter.
(b) Upon the death or Permanent Disability of the Employee, the
Employment Period shall terminate and the Employee's Base Annual Salary,
plus profit sharing amounts under Section 3.4 above which are accrued but
unpaid as of the date of such death or Permanent Disability, shall be paid
to the Employee or her personal representative.
(c) If the Employment Period is terminated by Atlas for Cause or by
the Employee for other than Good Reason, the Employee shall be entitled to
receive her Base Annual Salary plus profit sharing amounts under Section
3.4 above which, in each case, is accrued but unpaid as of the date of such
termination. Such profit sharing amounts shall be calculated and paid as
set forth in Section 4.2(a) above.
4.3 Non-Competition Provision. Employee covenants and agrees that she will
not, at any time before five years after her termination of employment with
Atlas, reveal, divulge or
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make known to any third party any confidential or proprietary records, data,
trade secrets, pricing policies, strategy, rate structure, personnel policy,
management methods, financial reports, methods or practice of obtaining or
doing business, or any other Confidential or Proprietary information of Atlas
or any of its affiliates which is not in the public domain, except as required
by law. In addition, Employee agrees that, at no time before five years after
her termination of employment with Atlas, will she engage in any of the
following activities directly or indirectly, for any reason, whether for her
own account or for the account of any other person, firm, corporation or other
organization:
(a) solicit, employ, or otherwise interfere with any of Atlas'
contracts or relationships with any client, Employee, officer, director or
any independent contractor whether the person is employed by or associated
with Atlas on the date of this Agreement or at any time thereafter, to the
extent that Employee learns of or is introduced to any such person by
virtue of her performance as an Employee of Atlas; or
(b) solicit, accept, or otherwise interfere with any of Atlas'
contracts or relationships with any independent contractor, customer,
client or supplier, or any person who is a bonafide prospective independent
contractor, customer, client or supplier of Atlas, at any time, to the
extent that Employee learns of or is introduced to any such person by
virtue of her performance as an Employee of Atlas.
The parties agree and intend that breach of this non-competition clause shall
subject Employee to the full measure of contract and equitable damages including
punitive damages.
5. EXCISE TAX GROSS-UP
5.1 (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution made, or
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benefit provided, by Atlas to or for the benefit of the Employee (whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 5.1) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
code of 1986, as amended and then in effect (the "Code") (or any similar
excise tax) or any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Employee of all Federal, state, local or other taxes (including any
interest or penalties imposed with respect to any such taxes), including,
without limitation, any such income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph (c) of this Section 5.1,
all determinations required to be made under this Section 5.1, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Xxxxxx Xxxxxxxx (the "Accounting Firm")
which shall provide detailed supporting calculations both to Atlas and the
Employee within 20 calendar days of the receipt of written notice from the
Employee that there has been a Payment, or such earlier time as is
requested by Atlas. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the
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Change in Control, the Employee shall have the right by written notice to
Atlas to appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by Atlas and shall be paid by Atlas
upon demand of the Employee as incurred or billed by the Accounting Firm.
Any Gross-Up Payment, as determined pursuant to this Section 5.1, shall be
paid by Atlas to the Employee within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall furnish the Employee with
an unqualified written opinion in form and substance satisfactory to the
Employee that failure to report the Excise Tax on the Employee's applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by Atlas should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that Atlas exhausts its remedies described in
paragraph (c) of this Section 5.1 and the Employee thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be paid by Atlas to or for the benefit of the Employee within five
days of the receipt of the Accounting Firm's determination. All
determinations made by the Accounting Firm in connection with any Gross-Up
Payment or Underpayment shall be final and binding upon Atlas and the
Employee.
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(c) The Employee shall notify Atlas in writing of any claim asserted
in writing by the Internal Revenue Service to the Employee that, if
successful, would require the payment by Atlas of the Gross-Up Payment.
Such notification shall be given as soon as practicable but not later than
60 days after the Employee is informed in writing of such claim and shall
apprise Atlas of the nature of such claim and the date on which such claim
is requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to Atlas (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If Atlas notifies the Employee
in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall at Atlas' expense:
(i) give Atlas any information reasonably requested by Atlas
relating to such claim,
(ii) take such action in connection with contesting such claim as
Atlas shall reasonably requesting writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Atlas,
(iii) cooperate with Atlas in good faith in order effectively to
contest such claim, and
(iv) permit Atlas to participate in any proceedings relating to
such claim;
provided, however, that Atlas shall bear and pay directly as incurred all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for
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any Excise Tax or any Federal, state, local or other income or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 5.1, Atlas shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings, and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as Atlas shall determine; provided, however, that if Atlas directs the
Employee to pay such claim and xxx for a refund, Atlas shall advance the amount
of such payment to the Employee, on an interest-free basis and shall indemnify
and hold the Employee harmless, on an after-tax basis, from any Excise Tax or
Federal, state, local or other income or other tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment
of taxes for the taxable year of the Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, Atlas' control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
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(d) If, after the receipt by the Employee of an amount advanced by
Atlas pursuant to paragraph (c) of this Section 5.1, the Employee becomes
entitled to receive any refund with respect to such claim, the Employee
shall (subject to Atlas' complying with the requirements of paragraph (c)
of this Section 5.1) promptly pay to Atlas the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto) upon receipt thereof; provided that Employee shall not be required
to pay Atlas an amount of the refund in excess of any such amount advanced
by Atlas. If, after the receipt by the Employee of an amount advanced by
Atlas pursuant to paragraph (c) of this Section 5.1, a determination is
made that the Employee shall not be entitled to any refund with respect to
such claim and Atlas does not notify the Employee in writing of its intent
to contest such denial of refund prior to the expiration of 30 days after
such determination, the such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
6. CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado, without reference to principles of conflict of
laws. Employee shall submit to jurisdiction of the courts in the State of
Colorado (state or Federal court, as applicable).
7. SEVERABILITY AND ENFORCEABILITY
It is expressly acknowledged and agreed that the covenants and provisions
hereof are separable; that the enforceability of one covenant or provision shall
in no event affect the full enforceability of any other covenant or provision
herein. Further, it is agreed that, in the event of any covenant or provision of
this Agreement is found by any court of competent jurisdiction to
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be unenforceable, illegal or invalid, such invalidity, illegality or
unenforceability shall not affect any other term or condition had never been
contained herein. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or unenforceability of any other
provision of this Agreement.
8. MISCELLANEOUS
8.1 No Mitigation. The amounts to be paid Employee are net to Employee,
without any reduction or duty to mitigate, except for taxes, other governmental
charges or amounts owed to Atlas by Employee.
8.2 Pro-Ration. In the event the Employment Period is terminated in the
middle of any calendar month, the amount due for such month shall be pro-rated
on a daily basis.
8.3 No Waiver Except in Writing. No waiver or modification of this
Agreement or any of the terms and conditions set forth herein shall be effective
unless submitted to a writing duly executed by the parties.
8.4 Successors and Assignees. This Agreement shall be binding on Atlas and
any successor thereto, whether by reason of merger, consolidation or otherwise.
The duties and obligations of Employee may not be assigned by Employee.
8.5 Confidentiality of Terms. Atlas and Employee agree that the terms and
conditions of this Agreement are confidential and that they will not disclose
the terms of this Agreement to any third parties, other than the Employee's
spouse, their attorneys, auditors, accountants or as required by law or as may
be necessary to enforce this Agreement.
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8.6 Full Understanding. Employee declares and represents that she has
carefully read and fully understands the terms of this Agreement, has had the
opportunity to obtain advice and assistance of counsel with respect thereto, and
knowingly and of her own free will, without any duress, being fully informed and
after due deliberation, voluntarily accepts the terms of this Agreement.
8.7 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements, and understandings between the
parties with respect to the subject matter hereof.
8.8 Indemnification. Employee shall be entitled to be indemnified to the
fullest extent permitted by law for Employee's services as an executive officer
of Atlas.
EMPLOYEE: ATLAS AIR, INC.
/s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxxxx Xxxxx
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Xxxx X. Xxxxxxxxx Name: Xxxxxx Xxxxx
Title: President
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