EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT is made and entered into as of October 2, 2009, by and
between REPUBLIC AIRWAYS HOLDINGS INC. (hereinafter referred to as the
“Company”), a Delaware corporation, and Xxxx Xxxxx (hereinafter referred to as
the “Executive”).
RECITALS
A. Executive
has been the President and the Chief Executive Officer of Frontier Airlines,
Inc. (“Frontier”).
B. Frontier
filed for protection under Chapter 11 of the Bankruptcy Code.
C. The
Company was the successful bidder in the Frontier bankruptcy and on October 1,
2009, the Company has acquired all of the capital stock of
Frontier.
D. The
Company desires to employ Executive as the Executive Vice President and Chief
Marketing Officer of the Company.
E. The
effective date of this Agreement is October 2, 2009 (the “Effective
Date”).
F. The
Company and the Executive desire to enter into this Employment Agreement to set
forth their understanding of the terms of employment.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Employment. Effective on
the Effective Date, the Company hereby employs the Executive, and the Executive
agrees to render to the Company the services and fulfill the duties during the
Term of this Agreement (as hereinafter defined):
(a) as
the Executive Vice President and Chief Marketing Officer of the Company;
and
(b) shall
hold such other offices as may be designated by the Company’s Board of Directors
of any direct or indirect subsidiary of the Company engaged in the operation of
an airline.
The
Executive shall render his services at the direction of the President and the
Board of Directors of the Company. Executive shall office at the
headquarters of Frontier in Denver, or such other location as may be agreed
between the Company and the Executive (the “Location”). The Executive
agrees to use his best efforts to promote and further the business, reputation
and good name of the Company and the affiliates (collectively, the “Company
Group”) and to promptly and faithfully comply with all instructions, directions,
requests, rules and regulations made or issued from time to time by the
Company.
During
such Term, Executive will not hold outside employment, or perform substantial
personal services for parties unrelated to the Company, without the advance
written approval of the Board; provided, that it shall not
be a violation of this Agreement for Executive to (a) serve on any civic, or
charitable boards or committees so long as such service does not interfere with
the performance of Executive’s duties and responsibilities under this Agreement,
as the Board in its reasonable discretion shall determine, or (b)
manage personal investments.
2.
Term and
Termination.
(a) Term. The term of
employment (the “Term”) shall commence on the Effective Date and continue until
December 31, 2012.
(b) Termination. This Agreement
and Executive’s employment shall automatically terminate in the event of the
Executive’s death and may be terminated as follows:
(i) Either
party may terminate this Agreement by providing the other with 30 days prior
written notice of such termination.
(ii) The
Company may terminate this Agreement immediately for Cause as defined in Section 4 of this
Agreement.
(iii)
The Company may terminate this Agreement in the event of Executive’s Disability
as defined in Section 4 of this
Agreement.
(iv) Executive
may terminate this Agreement immediately for Good Reason as defined in Section 4 of this
Agreement.
Termination
of the Agreement shall constitute termination of employment and termination of
employment shall constitute termination of the Agreement. References
herein to either termination of the Agreement or termination of employment shall
encompass both.
3. Compensation and
Benefits. As compensation for the Executive’s services
hereunder, including serving, at the designation of the Board of Directors of
the Company, as an officer of a subsidiary, the Company shall pay the Executive
the compensation and provide the benefits described below.
(a) Base Salary. During the
Term, the Company shall pay the Executive an annual base salary of $260,000
(“Base Salary”). The Board of Directors shall review the Executive’s
Base Salary each year and shall have the right in its discretion to increase
such Base Salary. The term “Base Salary” shall refer to the initial
Base Salary as the same may be increased by the Board of Directors.
(b) Guaranteed Annual Bonus. In
addition to the Base Salary, during the Term, the Company shall pay to the
Executive a Guaranteed Annual Bonus payment (a “Guaranteed Annual Bonus
Payment”) in the amount of $77,500. The Guaranteed Annual Bonus
Payment shall be paid each year during the Term within 10 business days after
the end of the calendar year and shall not be prorated for the 2009 calendar
year. In the event this Agreement is terminated, the Executive shall
not be entitled to any Guaranteed Annual Bonus Payment for such year or any
subsequent period.
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(c) Discretionary Bonus. In
addition to the Base Salary and Guaranteed Annual Bonus Payment, during the
Term, the Company may pay to the Executive an annual discretionary bonus (a
“Discretionary Bonus”) in an amount, if any, as the Board of Directors of the
Company shall determine in its discretion. The Discretionary Bonus, if any, may
be paid each year during the Term within 60 calendar days after the end of the
calendar year and may be prorated for the 2009 calendar year for the period from
the date hereof through December 31, 2009. In the event this
Agreement is terminated, the Executive shall not be entitled to any
Discretionary Bonus for such year or any subsequent period, except as provided
in Section 4
hereof.
(d) Bankruptcy Exit Bonus. On
the Effective Date, the Company will pay Executive $500,000 in cash within 10
calendar days after the Effective Date.
(e) Equity Commitment.
(i) Restricted Shares. On the
Effective Date, the Company has issued Executive 150,000 shares of restricted
common stock of the Company pursuant to the Republic Airways Holdings Inc. 2007
Equity Incentive Plan. All restrictions shall lapse and such shares
shall become fully vested in 16 equal quarterly installments on the last day of
each calendar quarter commencing December 31, 2009 until such shares have become
fully vested.
(ii) Non-Qualified Stock
Options. On the Effective Date, the Company has issued
Executive a non-qualified stock option to purchase 50,000 shares of common stock
of the Company pursuant to the Republic Airways Holdings Inc. 2007 Equity
Incentive Plan at an exercise price equal to the fair market value on the
Effective Date. Such shares shall become exercisable and fully vested
in four equal annual installments on the first, second, third and fourth
anniversaries of the Effective Date.
(iii)
Registration
Statement. The Company represents that the issuance of the
shares under this subsection is registered with the Securities and Exchange
Commission pursuant to a Registration Statement on form S-8.
(f) Reimbursement of Business
Expenses. The Company
agrees to promptly reimburse Executive for reasonable business-related expenses
incurred in the performance of Executive’s duties under this Agreement in
accordance with Company policies.
(g) Benefit Plans and Programs. To the extent
permitted by applicable law, Executive (and where applicable, his
plan-eligible dependents) will be eligible to participate in all benefit plans
and programs, including indemnification rights, insurance arrangements, 401(k),
disability, medical, pension, profit sharing, or any other plan or arrangement,
including improvements or modifications of the same, maintained by the Company
for the benefit of its executive employees (or for an employee population which
includes its executive employees), subject in any event to the eligibility
requirements and other terms and conditions of those plans and
programs.
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(h) Travel
Privileges. The Executive, his spouse and his
dependent children will travel with the priority code PSIP (Positive Space), and
companion or other eligible travelers will travel with the priority code SA3P
(Standby Space Available). Executive will be provided an annual
travel barter account of $10,000 to purchase airline travel on
Frontier.
(i) Vacation. The Executive
shall be entitled to take three weeks of paid vacation which shall accrue
monthly during each 12 months of the Executive’s employment hereunder, and which
vacation shall be taken on dates to be selected by mutual agreement of the
Company and the Executive.
(j) Moving Expenses. In the
event that Executive is required to move his residence to another Company
headquarters not located in Denver, Colorado and Executive elects to move rather
that terminate this Agreement under Section 4(c) hereof, the Company will
reimburse Executive for the following:
(i) all
expenses of sale, including without limitation, broker fees;
(ii) all
costs incurred by Executive to move to the new residence, including without
limitation, packing, unpacking, shipping costs, temporary housing for up to 6
months and furniture storage for up to 6 months; and
(iii)
any loss realized by Executive on the sale of his primary residence in Colorado
as a result of a sale at a price below his original purchase price plus capital
improvements;
provided, however, that the
total amount reimbursed or payable by the Company with respect to this Section
3(j) shall not exceed $250,000 for any single move.
(k) No Other Compensation. Any
additional compensation specifically provided to the Executive and not provided
or made available to Company executives generally, shall only be provided if set
forth in writing and signed by both the Company and the Executive.
(l) Withholding. The Company
shall have the right to deduct and withhold from the compensation payable to the
Executive hereunder any amounts required to be deducted and withheld under the
provisions of any statute, regulation, ordinance, order or any other amendment
thereto, heretofore or hereafter enacted, requiring the withholding or deduction
from compensation.
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4.
Severance
Compensation.
(a) Termination Upon Death, or by the Company for
Disability or Without Cause. In the event of Executive’s death
or in the event the Company terminates this Agreement as a result of Executive’s
Disability or other than for Cause, the Company shall pay to the Executive or
his estate as the case may be as severance compensation two times the
Executive’s Base Salary as then in effect plus two times the Executive’s
Discretionary Bonus paid for the Company’s last calendar year. The
severance compensation shall be paid in a lump sum within ten (10) days
following termination of the Agreement. The Executive agrees that the
Company may satisfy its obligations to provide severance compensation for death
or Disability pursuant to this Section
4(a) by purchasing and maintaining one or more insurance policies payable
to either the Executive or his designees or to the Company (with further payment
to the Executive or such designees) upon the Executive’s death or as a result of
the Executive’s Disability. The Executive agrees to cooperate with
the Company in obtaining such insurance, including by participating in such
physical examinations and providing such personal information as may be
requested by the Company’s insurers.
(b) Occurrence of a Change in
Control. In the event of a Change of Control (provided that
after such Change of Control, the Executive’s compensation is decreased, his
duties are diminished or the Company has requested the Executive to move his
residence from Denver, Colorado to another state or has requested Executive to
change the location of his business office to an address which is more than 25
miles from the Location), the Company shall pay to the Executive as severance
compensation two times the Executive’s Base Salary as then in effect plus two
times the Executive’s Discretionary Bonus paid for the Company’s last calendar
year. The severance compensation shall be paid in a lump sum within
ten (10) days following a qualifying event.
(c) Termination by Executive for Good
Reason. If Executive terminates this Agreement for
Good Reason, the Company shall pay to the Executive as severance compensation
two times the Executive’s Base Salary as then in effect plus two times the
Executive’s Discretionary Bonus paid for the Company’s last calendar
year. The severance compensation shall be paid in a lump sum within
ten (10) days following termination.
(d) Termination by Executive for other than Good
Reason. If the Executive terminates this Agreement other than
for Good Reason, the Company shall pay to the Executive his Base Salary for the
remainder of the Term.
(e) Failure to Renew. If either
the Executive or the Company elects not to renew this Agreement at the end of
the stated Term, the Company shall pay to the Executive one times the
Executive’s Base Salary as in effect at the end of the Term. Such
payment shall be made in a lump sum within ten (10) days following the end of
the stated Term of this Agreement.
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(f) Continuation of Benefits.
(i) Medical Benefits. Upon
termination of this Agreement for any reason by Executive or the Company,
Executive, Executive’s spouse, and Executive’s dependents will continue to be
eligible for coverage under the Company’s group health plan or any successor
plan on the same basis as active executive employees of the Company, their
spouses, and their dependents for the greater of (i) the balance of the stated
Term of this Agreement or (ii) 12 months. Upon the
failure to renew this Agreement by the Company or by Executive, Executive’s
spouse, and Executive’s dependents will continue to be eligible for coverage
under the Company’s group health plan or any successor plan on the same basis as
active executive employees of the Company, their spouses, and their dependents
for 12 months. If and when group health coverage under another group
health plan first becomes available thereafter to
Executive, Executive’s spouse, or Executive’s dependents (as applicable), the
Company’s obligations under this paragraph will cease with respect to each
person to whom such coverage becomes available, and such
person shall have such “COBRA” benefit continuation rights as may then be
available under relevant law, treating Executive’s employment termination date
as the date of such person’s “qualifying event.”
(ii) Travel
Privileges. Upon a termination of this Agreement
under Sections 4(a), (b) or (c),
Executive shall continue to receive the travel privileges set forth in Section
3(h)(i) for two years following the termination date. Upon a
termination of this Agreement under Section 4(d), Executive shall continue to
receive the travel privileges set forth in Section 3(h) for the balance of the
stated Term. Upon a termination of this Agreement under Section 4(e), Executive shall continue
to receive the travel privileges set forth in Section 3(h) for one year
following the termination date.
(g) Acceleration of Vesting; Extension of
Exercise Period. Upon a termination of this Agreement under
Sections 4(a), (b) or (c), to
the extent Executive has not previously vested in such rights, Executive shall
become fully vested in all of the rights and interests held
by Executive under the Company’s stock and other equity plans as of
the termination date, including without limitation any stock options, restricted
stock, restricted stock units, performance units, and/or performance shares; and
the exercise date of any options shall be extended for 24 months.
(h) Gross Up. In the event that
Executive shall become entitled to any amounts, whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company (the
“Regular Amounts”) that are determined to be subject to the tax (the
“Excise Tax”) imposed by IRC Section 4999 as amended (and any similar
tax that may hereafter be imposed), the Company shall pay to Executive an
additional amount (the “Gross-up Payment”) such that the net amount retained by
Executive after payment of all applicable federal and state taxes on the sum of
the Regular Amount plus the Gross-up Payment, is equal to the net amount that
would have been retained by Executive after payment of all applicable federal
and state taxes on the Regular Amount if it had not been subject to the Excise
Tax.
(i) Cause. “Cause” shall mean
that the Executive has (i) willfully or materially refused to perform a material
part of his duties hereunder, (ii) materially breached the provisions of Sections 5, 6 or 7 hereof, (iii) acted
fraudulently or dishonestly in his relations with the Company, (iv) committed
larceny, embezzlement, conversion or any other act involving the
misappropriation of Company funds or assets in the course of his employment, or
(v) been convicted of any felony or other crime involving an act of moral
turpitude.
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(j) Good Reason. “Good Reason”
shall mean that (i) the Company has materially diminished the duties and
responsibilities of the Executive, (ii) any of Executive’s Base Salary,
Guaranteed Annual Bonus Payment or other non-discretionary payments or benefits
under Section 3 has been reduced, (iii) the Company has required the Executive
to move his residence from Denver, Colorado to another state or has required
Executive to change the location of his business office to an address which is
more than 25 miles from the Location without the consent of the Executive or
(iv) a Change of Control has occurred.
(i) Change in Control. “Change
of Control” shall mean that after the Effective
Date, any person or group of affiliated or associated persons acquires a
majority or more of the voting power of the Company; (ii) the consummation of a
sale of all or substantially all of the assets of the Company; (iii) the
dissolution of the Company or (iv) the consummation of any merger,
consolidation, or reorganization involving the Company in which, immediately
after giving effect to such merger, consolidation or reorganization, less than
majority of the total voting power of outstanding stock of the surviving or
resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) in the aggregate by the
stockholders of the Company immediately prior to such merger, consolidation or
reorganization.
(k) Disability. “Disability”
shall mean that Executive has sustained sickness or injury that renders
Executive incapable, with reasonable accommodation, of performing the duties and
services required of Executive hereunder for a period of 90 consecutive calendar
days or a total of 120 calendar days during any 12-month period.
5. Confidential
Information. The Executive recognizes and acknowledges that he
shall receive in the course of his employment hereunder certain confidential
information and trade secrets concerning the Company Group’s business and
affairs which may be of great value to the Company Group. The
Executive therefore agrees that he will not disclose any such information
relating to the Company Group, the Company Group’s personnel or their operations
other than in the ordinary course of business or in any way use such information
in any manner, which could adversely affect the Company Group’s
business. For purposes of this Agreement, the terms “trade secrets”
and “confidential information” shall include any and all information concerning
the business and affairs of the Company Group and any division or other
affiliate of the Company Group that is not generally available to the
public.
6. Non-Competition. The
Executive agrees that without the prior written consent of the Board of
Directors during the Term and for a period of 12 months following the
termination of this Agreement under circumstances that require the payment of
severance compensation pursuant to Section 4 of this Agreement, he will
not participate as an advisor, partner, joint venturer, investor, lender,
consultant or in any other capacity in any business transaction or proposed
business transaction with respect to which the Executive had a material personal
involvement on behalf of the Company Group during the last 12 months of his
employment with the Company, and which is known by the Executive as of the date
of such termination or expiration to be contemplated by the Company Group to
proceed during the 12 month period following such termination.
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7. Non-Solicitation. The
Executive agrees that for a period of 12 months following the termination or
expiration of this Agreement, he shall not, without the prior written consent of
the Company, directly or indirectly, solicit for employment any person while he
or she is employed by the Company; provided, however, that nothing in this Section 7 shall prohibit Executive
from hiring applicants who applied pursuant to a general solicitation for
applicants through a newspaper or trade publication.
8. Breach of this
Agreement. If the Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5, 6 or 7 of this Agreement,
then the Company shall have the right and remedy to have those provisions
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that the rights and privileges of the
Company granted in Sections 5, 6 or
7 are of a special, unique and extraordinary character and any such
breach or threatened breach will cause great and irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
9. Notices. All notices and
other communications required or permitted hereunder shall be in writing
(including facsimile and email) and shall be deemed to have been duly given when
delivered (if by hand delivery, facsimile or email) or when mailed, certified or
registered mail, return receipt requested and postage prepaid:
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If
to the Company:
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0000
Xxxxxx Xxxx
Xxxxx
000
Xxxxxxxxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxxxx, President
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If
to the Executive:
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0000
Xxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
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10. Applicable Law. This
Agreement was negotiated and entered into within the State of
Indiana. All matters pertaining to this Agreement shall be governed
by the laws of the State of Indiana, applicable to contracts made and to be
performed wholly therein and without regard to conflicts principles that would
result in the application of the laws of another
jurisdiction. Nothing in this Agreement shall be construed to require
the commission of any act contrary to law, and wherever there is any conflict
between any provision of this Agreement and any material present or future
statute, law, governmental regulation or ordinance as a result of which the
parties have no legal right to contract or perform, the latter shall prevail,
but in such event the provision(s) of this Agreement affected shall be curtailed
and limited only to the extent necessary to bring it or them within the legal
requirements.
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11.
Entire Agreement; Modification;
Consents and Waivers. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements or understandings, written or oral,
between the parties with respect to the subject matter hereof. No
interpretation, change, termination or waiver of or extension of time for
performance under any provision of this Agreement shall be binding upon any
party unless in writing and signed by the party intended to be bound
thereby. Except as otherwise provided in this Agreement, no waiver of
or other failure to exercise any right under or default or extension of time for
performance under any provision or this Agreement shall affect the right of any
party to exercise any subsequent right under or otherwise enforce said provision
or any other provision hereof or to exercise any right or remedy in the event of
any other default, whether or not similar.
12.
Severability. The
parties acknowledge that, in their view, the terms of this Agreement are fair
and reasonable as of the date signed by them, including as to the scope and
duration of post-termination activities. Accordingly, if any one or
more of the provisions contained in this Agreement shall for any reason, whether
by application of existing law or law which may develop after the date of this
Agreement, be determined by an arbitrator or court of competent jurisdiction to
be excessively broad as to scope of activity, duration or territory, or
otherwise unenforceable, the parties hereby jointly request such court to
construe any such provision by limiting or reducing it so as to be enforceable
to the maximum extent compatible with then-applicable law. If any one
or more of the terms, provisions, covenants or restrictions of this Agreement
shall nonetheless be determined by an arbitrator or court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
13. Assignment. Neither Party
shall assign this Agreement or any of its rights hereunder without the prior
written consent of the other Party.
14. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.
15. Arbitration. Each of the
parties hereby irrevocably and unconditionally consents to arbitrate any dispute
arising out of or relating in any manner to this Agreement or the employment
relationship contemplated hereby or the termination thereof, or any alleged
breach of any term or provision of this Agreement, except for (a) matters
litigated pursuant to Section 8 of this Agreement and (b) rights provided by
statute to Executive to access federal courts under benefit
plans. Such arbitration shall be conducted in Denver, Colorado, if
initiated by Executive, and in Indianapolis, Indiana, if initiated by the
Company, by a single arbitrator in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any federal or state court in Colorado or Indiana, as
the case may be (and the parties expressly consent to the jurisdiction of such
courts), or in any other court having jurisdiction. Each of the
Parties agrees that in any arbitration arising out of or relating to this
Agreement or the employment relationship contemplated hereby or the termination
thereof, or any alleged breach of any term or provision of this Agreement or in
any action to enter judgment on an award in such arbitration each party shall
bear its own fees and expenses.
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16. Survival. The provisions of
Sections 4 through 15 of this Agreement shall survive any
expiration or termination of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as
of the date first above written.
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By:
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Name:
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Title:
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/s/
Xxxx Xxxxx
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Xxxx
Xxxxx
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