EMPLOYMENT AGREEMENT
Exhibit 10.2
This
Employment Agreement (hereinafter referred to as the
“Agreement”) is made and entered
into as of the 27th day of March, 2008 by and between Xxxxxx X. Xxxx (hereinafter referred to as
the “Employee”) and Atlas Air, Inc., a Delaware
corporation (hereinafter referred to as “Atlas” or
the “Company”).
WHEREAS, the Employee had been previously employed by the Company as Senior Vice President and
Special Advisor pursuant to that Amended Restated Employment
Agreement dated as of March 21, 2007,
(the “Original Employment Agreement”);
WHEREAS, the Company wishes to now engage Employee pursuant to the terms and conditions
hereof; and
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, covenant and agree as follows:
1. DEFINITIONS
1.1
“Employment Period” shall mean the period commencing
as of the date hereof and
extending until December 31, 2009, subject to earlier
termination as set forth in Section 4.1 below.
1.2 “Confidential or Proprietary Information” as used herein shall refer to all
information relative to the plans, structure and practices, including information relating to
its customers, contracts and aircraft of Atlas or any affiliate or
subsidiary thereof, 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
disclosed to the Employee with Atlas’ prior approval for public
dissemination.
2. OBLIGATIONS OF THE EMPLOYEE
Atlas and the Employee agree to the following rights, obligations and duties:
2.1 Obligations of the Employee. During the Employment Period, Atlas agrees to
retain the Employee as a Special Advisor. The scope of the Employee’s responsibilities shall be
determined by the Board of Directors, the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer and such other officers of Atlas as the Chief Executive Officer
shall deem appropriate. The Employee shall, except when prevented by illness or permanent
disability or during a period of vacation, devote sufficient Employee business time to ensure
accomplishment of the projects similar to those projects set forth in Exhibit A which are assigned
to him and attention to the good faith performance of the other
duties contemplated by this
Agreement. The Employee shall be able to work a minimum of four (4) days per month, and shall
report to the Company’s Chief Financial Officer.
2.2 Principal Residence of the Employee. The Employee shall maintain his
principal residence in the Long Beach, California area unless otherwise agreed.
2.3 New Position Provisions. Upon execution of this Agreement, the parties’ respective
rights and obligations under the Original Employment Agreement shall be superseded by this
Agreement. The Employee hereby affirms his resignation of his prior position as Senior Vice
President of the Company and its affiliates as of December 31, 2007.
3. COMPENSATION
During the Employment Period, Atlas will pay the Employee as follows:
3.1 Compensation. Employee acknowledges receipt of $74,819.50 from the Company
prior to the execution of this Agreement, which amount, together with an additional payment on
March 31, 2008 of $14,963.90, shall be applied against amounts due for the months of January,
February and March, 2008. Starting April 15, 2008, Atlas will pay Employee a monthly minimum
commitment of four days per month in two equal monthly installments on the 15th and last
day of each month. Atlas will pay Employee at the rate of $5,000 per diem for a minimum or four
days per month and additional days (or fractions thereof) worked above the four day minimum.
Notwithstanding the minimum commitment of four days per month, the parties agree that the target
number of days the Company intends to employ Employee is 100 days annually. Days in excess of the
four days per month are not guaranteed. Payments for days worked over and above the four day
minimum will be reconciled at month end and paid in the next mid-month payroll. The Company will
not be obligated to pay Employee an annual incentive bonus, whether in accordance with the
Company’s annual incentive plan or otherwise.
3.2 Benefits. During the Employment Period, the Employee and the Employee’s dependents
shall be entitled to participate in the Atlas health insurance plans (major medical, dental and
vision), and Atlas will contribute to the Employee’s monthly premium as provided by such plan.
Atlas reserves the 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. The Employee also shall to the same extent and at a level
commensurate with other employees of Atlas, be entitled to participate in any other benefit plans
or arrangements of Atlas.
3.3 Restricted Shares and Options. During the Employment Period, all Company
restricted shares and stock options, if any, will continue to vest in accordance with their terms.
2
4. TERMINATION OF THE EMPLOYMENT PERIOD
4.1 Termination. Employment hereunder shall be through the Employment Period;
provided, however, that the Company may immediately terminate the Employment Period with
Cause (as defined below). “Cause” shall be defined as (i) a breach by the Employee of a material
term of this Agreement; (ii) any act of misconduct or dishonesty by the Employee; or, (ii) the
Employee’s failure to perform work as assigned to him from time to time by Atlas. Provisions of
this Agreement shall survive any termination if so provided herein or if necessary or desirable to
accomplish the purposes of other surviving provisions, including without limitation the obligations
of the Company under Section 4.2 and the obligations of the Employee under Section 4.3.
4.2
Rights Following Termination. (a) Upon Employee’s execution and delivery of this
Agreement and the Release included in the Original Employment Agreement (“EA Release”) (Which EA
Release shall not release the Company of its payment obligation to the Company as provided in the
first sentence of Section 3.1), Employee shall receive severance of $426,080 paid in a lump sum
within ten (10) days (provided that the Employee does not revoke the EA Release).
(b) Upon (x) termination of the Employment Period by the Company without Cause, (y)
expiration of the Employment Period or (z) termination by the Employee for any reason, including
death or disability, subject to the Employee’s execution of a separation agreement and general
release (a true and correct copy of which is attached hereto as Exhibit B) (the “Release”),
the Employee shall be entitled to: (i) receive the Employee’s base salary and accrued benefits
through December 31, 2009, except in the case of a termination by the Employee for any reason,
including death or disability, the Employee shall be entitled only to base salary and accrued
benefits through the date the Employee’s employment terminates; (ii) subject to the Employee’s
fulfillment of all of his obligations under Section 4.3, continued coverage and rights and benefits
available under the Atlas health insurance plans as provided in Section 3.2, above, for a period of
twenty-four (24) months immediately following the date of termination subject to the Employee
paying the same portion for the premiums for such coverage as he paid during the Employment Period;
provided, however, that any such continued coverage shall cease in the event the Employee
obtains comparable coverage in connection with subsequent consulting or employment arrangements,
and to the extent Atlas is unable to continue such coverage, Atlas shall provide the Employee with
economically equivalent benefits determined on an after-tax basis; (iii) subject to the Employee’s
fulfillment of all of his obligations under Section 4.3, receive any retired employee benefits
available to retired Company employees for which he is eligible pursuant to the terms of any
applicable policies or plan documents, as amended from time to time; and (iv) subject to the
Employee’s fulfillment of all of his obligations under Section 4.3 hereof, supplemental severance
compensation in the amount of $100,000.00, paid in a lump sum within ten (10) days of the one-year
anniversary of the Employee’s separation from employment hereunder. Upon termination of the
Employment Period for any other reason (including, without limitation, by the Company with Cause),
the Employee shall be entitled only to base salary and accrued benefits through the date the
Employee’s employment terminates.
3
4.3 Restrictive Covenants.
(a) The Employee covenants and agrees that the Employee will not, at any time, reveal, divulge
or 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 subsidiaries or affiliates (collectively the
“Atlas Companies” and each, an “Atlas Company”) which is not in the public domain.
(b) (i) Acknowledging his duty of loyalty to the Atlas Companies, the Employee agrees that,
while he is employed by the Company, he will not, directly or indirectly, whether as owner,
partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with any of the
Atlas Companies anywhere in the world or undertake any planning for any business competitive with
any of the Atlas Companies with any of the following companies. Specifically, the Employee agrees
that, during his employment with the Company, he will not provide advice, services or other
assistance of any kind, whether with or without compensation, to the following companies and their
subsidiaries and affiliates: Federal Express, United Parcel Service, Southern Air Holdings, Inc.,
World Airways, Inc., Air Atlanta Icelandic, Tradewinds Airlines or any company with respect to
competition for the Company’s business related to the United States Air Force, including without
limitation the Air Mobility Command. The Employee understands, however, that his passive ownership
of one percent (1%) or less of the voting stock of any publicly traded company will not be a breach
of his obligations hereunder.
(ii) After his employment ends, the Employee may compete with any of the Atlas Companies
without limitation, except with respect to Company’s business related to the United States Air
Force, including without limitation the Air Mobility Command, but should he choose to so compete
within the twelve (12) months immediately following termination of the Employment Period without
first obtaining the express written consent of the Company, which consent shall not be unreasonably
withheld, the Employee agrees that he will not be entitled to the payment and benefits provided in
Sections 4.2(b) (ii), (iii) and (iv) above, and if such payment and benefits have already been
provided to the Employee, he shall return to the Company the payment under Section 4.2(b)(ii)
within five (5) days of written demand by the Company, or in the event of a dispute as to whether
the Employee has breached any of his obligations under this Section 4.3, Employee shall return to
the Company any payments received within five (5) days after determination of a breach in
accordance with Sections 5.1, 5.2, 5.3 or 5.5, as appropriate.
(c) The Employee acknowledges that his access to Confidential or Proprietary Information and
to the Atlas Companies’ customers and his development of goodwill on behalf of the Atlas Companies
with their customers during his employment would give him an unfair competitive advantage were he
to begin competing with the Atlas Companies for their existing customers and that he therefore is
being granted access to Confidential or Proprietary Information and the customers of the Atlas
Companies in reliance on his agreement hereunder. Therefore, the Employee covenants and agrees
that, during the Employment Period and during the twelve month period immediately following the
termination of the Employment Period the Employee will not engage in any of the following
activities directly or indirectly, for any reason,
4
whether for the Employee’s own account or for the account of any other person,
firm, corporation or other organization:
| (i) | solicit, employ or otherwise interfere with any of the Atlas Companies’ contracts or relationships with any officer, director, employee, independent contractor or with any individual who has been employed or associated with the Atlas Companies within the six (6) months prior to the Employee’s termination of his employment relationship with the Company; or | ||
| (ii) | solicit or encourage any ACMI wet lease customer utilizing at least one full aircraft (including DHL Express) of Atlas Air, Inc., to terminate or diminish its relationship with Atlas Air, Inc. or Polar Air Cargo Worldwide, Inc. or seek to persuade any such customer to conduct with any other person or entity any business or activity which such customer conducts with Atlas Air, Inc. or Polar Air Cargo Worldwide, Inc.; provided, however, that these restrictions shall apply only with respect to those persons or entities who are customers of Atlas Air, Inc. or Polar Air Cargo Worldwide, Inc. within the twelve (12) months prior to the Employee’s termination of his employment relationship with the Company. |
(d) In the event the Employee breaches any of his obligations under this Section 4.3, he
shall within five (5) days return to the Company any payments he received under Section 4.2(ii) and
any benefits under Section 4.2(iii) shall immediately cease. In such event, the Employee will
likewise forfeit his eligibility for supplemental severance under Section 4.2(iv). In the event of
a dispute as to whether the Employee has breached any of his obligations under this Section 4.3,
the Employee shall return to the Company any payments received within five (5) days after
determination of a breach in accordance with Sections 5.1, 5.2, 5.3 or 5.5, as appropriate.
4.4 Obligation to Cooperate. To the extent the Employee is reasonably available
to provide such cooperation to Company, during the twenty-four (24) month period immediately
following the termination of the Employee’s employment, the Employee shall cooperate with the
Company with respect to all matters arising during or related to his employment, including but not
limited to all matters in connection with any governmental investigation, litigation or regulatory
or other proceeding which may have arisen or which may arise following the signing of this
Agreement. The Company will reimburse the Employee out-of-pocket expenses incurred in complying
with Company requests hereunder, provided such expenses are authorized by the Company in advance.
In the event that any single Company request hereunder requires a commitment from the Employee of
more than five (5) hours, the Company and the Employee shall mutually agree on reasonable
compensation for the Employee’s services on such matter.
5. DISPUTE RESOLUTION AND CHOICE OF LAW
5.1. Negotiation. If a dispute between the parties arises under this Agreement,
the parties shall negotiate in good faith in an attempt to resolve their differences. The
obligation of
5
the parties to negotiate in good faith shall commence immediately, and shall continue
for a period of at least thirty (30) days (“Negotiation”).
If Negotiation fails to resolve a dispute between the parties within the first thirty (30)
days, either party may proceed to demand mediation (“Mediation”). Upon agreement of both parties,
arbitration may be initiated immediately, in lieu of Mediation.
5.2. Mediation. If a dispute between the parties arises under this Agreement and has
not been resolved under the Negotiation procedures described herein, either party may require, by
written notice to the other party, that Negotiation be facilitated by a single mediator, to be
elected by the parties (the “Mediator”).
The parties shall select the Mediator within ten (10) days after receipt of notice. If the
parties are unable to agree on the Mediator, the Mediator shall be selected by Atlas, but the
selected Mediator shall be independent of Atlas and its affiliates. The fees of the Mediator shall
be paid by the Company.
With the assistance of the Mediator, the parties shall continue Negotiation in good faith for
a period not to exceed thirty (30) days. If the parties are unable to reach agreement during this
period, the Mediator shall be discharged and the parties’ obligations under this Mediation section
shall be deemed satisfied.
5.3. Arbitration. Subject to the duty to negotiate and mediate set forth above, all
disputes, claims, or causes of action arising out of or relating to this Agreement or the validity,
interpretation, breach, violation, or termination thereof not resolved by Mediation, shall be
finally and solely determined and settled by arbitration, to be conducted in the State of New
York, USA, in accordance with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”) in effect at the date of arbitration (“Arbitration”).
Any Arbitration commenced pursuant to this Agreement shall be conducted by a single neutral
arbitrator, who shall have a minimum of three (3) years of commercial experience (the
“Arbitrator”). The parties shall meet within ten (10) days of failure to resolve by Mediation to
attempt to agree on an Arbitrator. Absent agreement at this meeting, the Arbitrator shall be
selected by AAA. Such Arbitrator shall be free of any conflicts with Atlas and shall hold a hearing
within thirty (30) days of the notice to the Employee.
If
the terms and conditions of this Agreement are inconsistent with the Commercial
Arbitration Rules of the AAA, the terms and conditions of this Agreement shall control.
The parties hereby consent to any process, notice, or other application to said courts and any
document in connection with Arbitration may be served by (i) certified mail, return receipt
requested; (ii) by personal service; or (iii) in such other manner as may be permissible under the
rules of the applicable court or Arbitration tribunal; provided, however, a reasonable time
for appearance is allowed. The parties further agree that Arbitration proceedings must be
instituted within one (1) year after the occurrence of any dispute, and failure to initiate
Arbitration proceedings within such time period shall constitute an absolute bar to the institution
of any proceeding and a waiver of all claims.
6
The parties shall equally divide all costs and expenses incurred in such
arbitration proceeding; provided, however, if the arbitrator rules in favor of the
Employee on all or substantially all of his claims, the Company shall reimburse the Employee
his reasonable attorney fees and costs associated with the arbitration proceedings.
The Judgment of the Arbitrator shall be final and either party may submit such decision to
courts for enforcement thereof.
The parties agree that this Section 5 shall be specifically enforceable.
5.4.
Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to principles of conflict of
laws.
5.5.
Injunctive Relief. Notwithstanding the foregoing, Sections 5.1, 5.2 and 5.3
shall not preclude the Company from attempting to pursue a court action to enforce, determine the
enforceability of, or seek injunctive relief due to a breach or threatened breach of the provisions
of Section 4.3 of this Agreement.
6. 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
any covenant or provision of this Agreement is found by any court of competent jurisdiction or
Arbitrator to be unenforceable, illegal or invalid, such invalidity, illegality or unenforceability
shall not affect the validity or enforceability of any other covenant or provision of this
Agreement. In the event a court of competent jurisdiction or an Arbitrator would otherwise hold any
part hereof unenforceable by reason of its geographic or business scope or duration, said part
shall be construed as if its geographic or business scope or duration had been more narrowly
drafted so as not to be invalid or unenforceable.
7. NOTICE
For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given if delivered personally,
if delivered by overnight courier service, if sent by facsimile transmission or if mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to the respective
addresses or sent via facsimile to the respective facsimile numbers, as the case may be, as set
forth below, or to such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective only upon receipt;
provided, however, that: (i) notices sent by personal delivery or overnight courier shall
be deemed given when delivered; (ii) notices sent by facsimile transmission shall be deemed given
upon the sender’s receipt of confirmation of complete transmission; and (iii) notices sent by
United States registered mail shall be deemed given two days after the date of deposit in the
United States mail.
If to the Company:
7
Atlas Air, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Facsimile:
0 000 000-0000
If to Employee:
Xxxxxx X. Xxxx
The address on file with the records of the Company
8. MISCELLANEOUS
8.1. No Mitigation. The Employee shall have no duty to mitigate.
8.2. Withholding. The Company shall be entitled to withhold from the payments and
benefits described herein all income taxes and other amounts required to be withheld by applicable
law.
8.3. 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,
8.4. No Waiver Except in Writing. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered a waiver of such
party’s rights or deprive such party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. 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.
8.5. Drafting. Both parties have participated in the preparation of this Agreement,
and no rules of construction or interpretation based upon which party drafted any portion of the
Agreement shall be applicable or invoked.
8.6. No Representations. The parties agree and acknowledge that they have not relied
upon any representation, whether written or oral, of the other party in connection with entering
into this Agreement.
8.7. Successors and Assigns. This Agreement shall be binding on Atlas and any
successor thereto, whether by reason of merger, consolidation or otherwise. The duties and
obligations of the Employee may not be assigned by the Employee.
8.8. Confidentiality of Terms. Atlas and the 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.
8
8.9. Full Understanding. The Employee declares and represents that the
Employee 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
the Employee’s own free will, without any duress, being fully informed and after due deliberation,
voluntarily accepts the terms of this Agreement and represents that the execution, delivery and
performance of this Agreement does not violate any agreement to which the Employee is subject.
8.10. 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, excluding only any option of restricted share agreements or other agreements related
to a grant of equity or an option to purchase equity in the Company. For the avoidance of doubt, it
is expressly agreed and understood that this Agreement cancels and replaces the parties’ Amended
and Restated Employment Agreement of March 21, 2007, which expired by its terms on December 31,
2007, that the Employee will not receive severance or other compensation under that expired and
superseded Agreement, and that this Agreement embodies the full and complete understanding of the
parties with respect to all of the subject matters addressed herein.
8.11. Counterparts. This Agreement may be executed in any number of separate
counterparts, all of which taken together shall be deemed to constitute one and the same
instrument.
[Signature page follows]
9
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the
date and year first above written.
XXXXXX X. XXXX
/s/
Xxxxxx X. Xxxx
ATLAS AIR, INC.
By:
/s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Senior Vice President & Chief Financial Officer
Name: Xxxxx Xxxxx
Title: Senior Vice President & Chief Financial Officer
10
