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EXHIBIT 10.56
EMPLOYMENT AGREEMENT
WHEREAS, Xxxxxxx X. Xxxxxxx (hereinafter referred to as "Employee") and
Atlas Air, Inc. ("Atlas") wish to enter an Employment Agreement; and
WHEREAS, Xxxxxxx X. Xxxxxxx warrants that he 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 this 1st day of
May, 1997 for implementation effective May 19, 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.
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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:
(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 May 18, 2002, unless sooner terminated as
set forth in Section 4 below.
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
information relative to Atlas' plans for going public or its 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 base salary, or substantial
reduction in the Employee's title, job authorities 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 Marketing of Atlas. The scope of employees
responsibilities will include, but are not limited to, developing and
implementing marketing strategy for Atlas' present and potential customers in
Europe as well as their Asian airline partners. 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
period of vacation,
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to devote substantially all of her business time and attention to the good
faith performance of such services.
2.3 Principal Residence of Employee. After a reasonable period of time,
Employee shall maintain his principal residence in the Denver, Colorado area.
If necessary, Atlas will provide financial assistance in the form of a loan to
obtain housing in Colorado.
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 no less than $175,000 per annum, payable in
semi-monthly installments.
3.2 Incentive Bonus Payments. The 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 may range 125 percent of base salary per Article 3.1 for the period
beginning May 19, 1997. Employe has been furnished a copy of the 1997 Bonus
Plan.
3.3 Stock Options. Employee will be entitled to a stock option grant of
20,000 Atlas Air, Inc. shares. The shares will vest starting on the first
anniversary of this Agreement and for four years thereafter in five (5) equal
portions at the rate of 4,000 options per
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year. The option price shall be the average prices per share quoted by NASDAQ
on May 1, 1997. All other terms of this grant are contained in the Stock Option
Grant which is incorporated herein and made a part hereof. A copy of such
Agreement will be provided after May 1, 1997.
3.4 Profit Sharing. Employee will be entitled to participate in the
Company's profit sharing plan beginning in calendar year 1998 on a pro-rated
basis, predicated upon one year of employment prior to eligibility.
3.5 401K Plan. After three (3) months, Employee will be eligible to
participate in the Company's 401K Plan which provides for a 50% match by the
Company of your contribution up to a maximum employee contribution of 10% of
your base salary.
3.6 Stock Purchase Plan. After one year of service, Employee will be
eligible to participate in the Company's stock purchase plan wherein Employee
may purchase company stock at a 15% discount up to 15% of Employee's base pay.
3.7 Health Care. After three (3) months of service, Employee and his
dependents shall be entitled to participate in the Atlas health insurance plan,
and Atlas will pay Employee's monthly premium. 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
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Act. 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. Arrangements concerning Employee's
dependents are subject to further discussion with the Company.
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 may terminate the Employment Period upon
written notice to the Employee at any time and for any reason. Both Atlas and
Employee
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expressly understand and agree that the employment relationship is at-will.
Atlas is entitled to sever the employment relationship for any reason.
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.
(b) Upon the death or Permanent Disability of the Employee, the Employment
Period shall terminate and the Employee's Base Annual Salary which is accrued
but unpaid as of the date of such death or Permanent Disability shall be paid
to the Employee or his 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
his Base Annual Salary which is accrued by unpaid as of the date of termination.
4.3 Non-Competition Provision. Employee covenants and agrees that he will
not, at any time before five years after his termination of employment with
Atlas, 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
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or proprietary information of Atlas or any of its affiliates which is not in
the public domain. In addition, Employee agrees that, at no time before five
years after his termination of employment with Atlas, will he engage in any of
the following activities directly or indirectly, for any reason, whether for
his 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 his 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 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
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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
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group effecting the 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
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Accounting Firm in connection with any Gross-Up Payment or Underpayment shall
be final and binding upon Atlas and the Employee.
(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
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shall indemnify and hold the Employee harmless, on an after-tax basis, for 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
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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.
(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 (ii) 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.
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 as is applicable).
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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
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.
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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.
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 his 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.
EMPLOYEE ATLAS AIR, INC.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
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