Exhibit 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), effective as of April 14, 1997
("Effective Date") is entered by and between Xxxx Xxxx Xxxxx ("Employee") and
Hawaiian Airlines, Inc. ("Company").
The Company desires to establish its right to the continued services of
the Employee, in the capacity described below, on the terms and conditions
and subject to the rights of termination hereinafter set forth, and the
Employee is willing to accept such employment on such terms and conditions,
In consideration of the mutual agreements hereinafter set forth, the
Employee and the Company have agreed and do hereby agree as follows:
1. EMPLOYMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE COMPANY.
The Company does hereby employ, engage, and hire the Employee as President
and Chief Executive Officer of the Company and the Employee does hereby
accept and agree to such hiring, engagement, and employment. The Employee's
duties during the Employment Period (defined below) shall be such executive,
managerial and reporting duties as are appropriate for a President/CEO and
such other duties as the Board of Directors of the Company shall from time to
time prescribe and as provided in the Bylaws of the Company. The Employee
shall devote his full time, energy, and skill to the performance of his
duties for the Company and for the benefit of the Company, reasonable
vacations authorized by the Company's Board of Directors and reasonable
absences because of illness excepted. Furthermore, the Employee shall
exercise due diligence and care in the performance of his duties to the
Company under this Agreement.
2. TERM OF AGREEMENT. This Agreement ("Term") shall commence on the
Effective Date and shall continue for a period of eighteen (18) months;
provided; however, that on the first day of each calendar month commencing
one month following the Effective Date, the Term shall be extended one
additional month unless either party shall have given written notice to the
other that it does not wish to extend the Term. The period of time
commencing on the Effective Date and ending on the expiration date of the
Term, or, if earlier, the date of termination of the Employee's employment
("Termination Date") under this or any successor agreement shall be referred
to as the "Employment Period." If (a) Employee is still employed with the
Company on April 14, 1999 or (b) the Company is involved in a merger or other
change in control as provided in PARA 9, and neither party has prior to that
date given notice that it does not wish to extend the term of this Agreement,
the term hereof will, on April 14, 1999 or the effective date of the merger
or change of control, be extended from 18 (eighteen) months to 24
(twenty-four) months and thereafter it will be extended month-by-month, as
provided above.
3. COMPENSATION
(a) BASE SALARY. The Company shall pay the Employee, and the
Employee agrees to accept from the Company in full payment for his services
to the Company, a base salary at the rate of Three Hundred Thousand U.S.
Dollars ($300,000) per year ("Base Salary"), payable in equal semi-monthly
installments or at such other time or times or times as the Employee and the
Company shall agree. Employee's Base Salary shall be reviewed on a calendar
year basis, at least annually by the Company and may be increased as
determined by the Company's Board of Directors in its sole and absolute
discretion. In addition to the foregoing and in consideration of Employee
entering into this Agreement, Employee shall receive an initial bonus of
Seventy Thousand U.S. Dollars ($70,000.00), payable on April 14, 1997.
Provided, however that if Employee is hereafter able to obtain any bonus from
his present employer; the bonus to be paid by the Company will be reduced by
an amount equal to fifty percent (50%) of the amount of such bonus, up to a
maximum reduction of Twenty Thousand U.S. Dollars ($20,000.00). Thus, in no
circumstances will Company's obligation be less than Fifty Thousand U.S.
Dollars ($50,000.00). Company understands that it is unlikely that
Employee's current employer will pay him any bonus.
(b) PERFORMANCE BONUS-BOARD OF DIRECTORS' DISCRETION. Employee
shall be eligible to receive an annual performance bonus based upon the
Company's actual performance compared to the Company's business plan(s).
Promptly after the execution of this Agreement Employee and a representative
of Company shall develop a new package of financial incentives for Employee
and Company's other senior management. This package shall include, but not be
limited to stock incentives and cash performance bonuses.
4. FRINGE BENEFITS. Employee shall be entitled to participate in any
benefit programs adopted from time to time by the Company for the benefit of
its executive employees, and Employee shall be entitled to receive such other
fringe benefits as may be granted to him from time to time by the Company's
Board of Directors.
(a) BENEFIT PLANS. Employee shall be entitled to participate in
any benefit plans relating to stock options, stock purchases, pension,
thrift, profit sharing, life and disability insurance, medical coverage,
executive medical coverage, education, or other retirement or employee
benefits available to other executive employees of the Company, subject to
any restrictions (including waiting periods) specified in such plans.
(b) AUTOMOBILE. The Company shall provide Employee with an
automobile allowance of $800.00 per month.
(c) CLUB DUES. The Company shall pay all dues and similar charges
(other than initiation fees) for one combination social and golf club, one
business meal club and one health or fitness club.
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(d) TRAVEL BENEFITS. Employee and his spouse shall be entitled to
travel benefits on Company flights (but not charter flights) at the PS2F/PS2Y
category. Employee's dependents shall be entitled to travel benefits on
Company flights (but not charter flights) at the SA2F/SA1Y category.
Employee and his dependents shall be entitled to travel benefits on other
airlines at the sole discretion of such airlines, at a comparable level to
that provided to other Company executive officers.
(e) 1996 INCENTIVE STOCK PLAN. On February 28, 1996, Employee
shall be granted 150,000 options under the Company's 1996 Incentive Stock
Plan, contingent upon this Agreement becoming effective on April 14, 1997.
The exercise price will be equal to the closing price of the Company's stock
on February 28, 1997. The vesting period and other terms will be determined
by the Compensation Committee.
(f) EXECUTIVE LONG-TERM DISABILITY INSURANCE PLAN. Subject to the
applicable waiting periods, Employee will be included in the Company's
Executive Long-Term Disability Insurance Plan, as it may be modified from
time to time, at the Company's expenses.
(g) BUSINESS EXPENSES. The Company shall reimburse the Employee
for any and all necessary, customary, and usual expenses, properly received
in accordance with Company policies, incurred by Employee on behalf of the
Company.
5. CONFIDENTIAL INFORMATION. Employee recognizes that by reason of his
employment by and service to the Company he will occupy a position of trust
with respect to business and technical information of a secret or
confidential nature which is the property of the Company which will be
imparted to him from time to time in the course of the performance of his
duties hereunder. Employee acknowledges that such information is a valuable
and unique asset of the Company and agrees that he shall not during or after
the Term of this Agreement, use or disclose directly or indirectly any
confidential information of the Company to any person, except that Employee
may use and disclose to authorized personnel of the company such confidential
information as is reasonably appropriate in the course of the performance of
his duties hereunder. Confidential information of the Company shall include
all information and knowledge of any nature and in any form relating to the
Company including but not limited to, business plans; development projects;
computer software and related documentation and materials; designs,
practices, processes, methods, know-how and other facts relating to the
business of the Company; advertising, promotions, financial matters, sales
and profits figures, customers or customer lists. Confidential information
shall not include any information that is or shall become publicly known
through no fault of the Employee and any information received in good faith
from a third party who has the right to disclose such information and who has
not received such information, either directly or indirectly, from the
Company.
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6. TERMINATION OF EMPLOYEE'S EMPLOYMENT.
(a) DEATH. If the Employee dies while employed by the Company, his
employment shall immediately terminate. The Company's obligation to pay the
Employee's Base Salary shall cease as of the date of Employee's death.
Thereafter, Employee's beneficiaries or his estate shall receive benefits in
accordance with the Company's retirement, insurance and other applicable
programs and plans then in effect.
(b) DISABILITY. If, as a result of Employee's mental or physical
incapacity, Employee shall be unable to perform the services for the Company
contemplated by this Agreement in the manner in which he previously performed
them during an aggregate of one hundred twenty (120) business days in any
consecutive seven (7) month period ("Disability"). Employee's employment may
be terminated by the Company for Disability. During any period prior to such
termination during which Employee is absent from the full-time performance of
his duties with the Company due to Disability, the Company shall continue to
pay Employee his Base Salary at the rate in effect at the commencement of
such period of Disability. Any such payments made to the Employee shall be
reduced by amounts received from disability insurance obtained or provided by
the Company, and by the amounts of any benefits payable to Employee, with
respect to such period, under the Company's Executive Long-Term Disability
Plan. Subsequent to the termination provided for in this Section 6(b),
Employee's benefits shall be determined under the Company's retirement,
insurance, and other compensation programs then in effect in accordance with
the terms of such programs.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate Employee's employment under this Agreement for "Cause" at any time
prior to expiration of the Term, only upon the occurrence of any one or more
of the following events:
(i) The material breach of this Agreement by Employee,
including without limitation, repeated willful neglect of Employee's duties,
Employee's material lack of diligence and attention in performing services as
provided in this Agreement, or Employee's repeated willful failure (other
than any such failure resulting from the termination of the Employee's
employment for death, disability, retirement or good reason, as provided
elsewhere in this Agreement) to implement or adhere to policies established
by, or directives of, the Company's Board of Directors.
(ii) Conduct of a criminal nature that may have an adverse
impact on the Company's reputation and standing in the community; or
(iii) Fraudulent conduct in connection with the business
affairs of the Company, regardless of whether said conduct is designed to
defraud the Company or others.
In the event of termination for cause or resignation by the Employee
without good reason, the Company's obligation to pay Employee's Base Salary
for any periods after the Termination Date shall cease as the Termination
Date. If Employee's employment is terminated
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for cause, Employee's employment may be terminated immediately without any
advance written notice.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company shall
have the right to terminate this Agreement prior to the expiration of Term,
at any time, without cause. In the event the Company shall so elect to
terminate this Agreement, the Employee shall receive compensation pursuant to
the provisions of Section 7 hereof.
(e) TERMINATION BY THE EMPLOYEE FOR GOOD REASON. The Employee
shall have the right to terminate this Agreement for good reason. For
purposes of this Agreement, "good reason" shall mean the occurrence, without
the Employee's prior written consent, of any one or more of the following
events:
(i) The assignment to the Employee of any duties that are
materially inconsistent with, or reflect a material continuing reduction of
the powers and responsibilities, or a change of the Employee's reporting
responsibilities, or a material improper intervention by the Company's Board
of Directors in the Employee's ability to materially perform the duties and
responsibilities.
(ii) The Company's material breach of any of the provisions of
this Agreement, or a material change in the conditions of Employee's
employment (e.g. including, without limitation, a failure by the Company to
provide the Employee with incentive compensation and benefit plans that
provide comparable benefits and amounts as such type programs in effect as of
the Effective Date or as provided to other Company executive officers, etc.);
and
(iii) The relocation of the Company's principal executive
officers to a location outside of the Honolulu areas or the Company's
requiring the Employee to be based anywhere other than the Company's
principal executive offices, except for travel on Company business to an
extent substantially consistent with the Employee's position and
responsibilities.
The Employee agrees to provide the Company thirty (30) days' prior
written notice of any termination for good reason, during which 30-day period
the Company shall have the right to cure the circumstances giving rise to the
good reason stated in such notice. In the event of termination for good
reason, the Employee shall receive compensation pursuant to the provision of
Section 7 hereof.
(f) RETIREMENT. The Employee may terminate this Agreement on
account of retirement. For purposes of this Agreement, retirement shall have
the same meaning as provided for in the Company's defined benefit plan
covering Employee. Employee shall provide six (6) months notice to the
Company of Employee's intent to terminate this Agreement on account of
retirement. The Employee shall not be entitled to any further payments of
compensation or other benefits provided under Section 3 of this Agreement
after the Termination
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Date, except for any amounts earned and any accrued but unpaid retirement
benefit payment due the Employee from any Company sponsored plan.
7. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR
BY THE EMPLOYEE FOR GOOD REASON. If the Employee's employment shall be
terminated (i) by act of the Company other than for cause, or (ii) by the
Employee for good reason, the Employee shall be entitled to the following
benefits:
(a) PAYMENT OF UNPAID BASE SALARY. The Company shall immediately
pay the Employee any portion of the Employee's Base salary accrued, but not
paid, prior to the Termination Date.
(b) CONTINUED PAYMENT OF BASE SALARY. The Employee shall receive,
on a monthly basis, the Base Salary that would have been paid to the Employee
pursuant to this Agreement had the Employee continued to be employed for the
remaining term of this Agreement (i.e., eighteen (18) months or twenty-four
(24) months, depending upon the Termination Date)(such Base Salary for such
period being equal to the Employee's Base Salary in effect as of the
Termination Date); plus (ii) an amount equal to the bonus payments that would
have been payable to the Employee pursuant to this Agreement. These
post-termination bonus payments will be equal to the greater of (A) the total
of any performance bonus or bonuses paid to the Employee pursuant to Section
3(b) in the fiscal year of the Company which ended immediately prior to the
fiscal year in which the Termination Date occurs, and (B) the average of the
annual performance bonuses (excluding the signing bonus and any special bonus
not based on performance) paid to Employee by the Company during the three
prior fiscal years or, if the Employee has been employed with the Company
less than three fiscal years, during the term of Employee's tenure with the
Company.
(c) CONTINUATION OF FRINGE BENEFITS. The Company shall continue to
provide the Employee with all Fringe Benefits set forth in Section 4
throughout the remaining term of this Agreement (i.e., eighteen (18) months
or twenty-four (24) months, depending upon the Termination Date), as if the
Employee's employment under the Agreement had not been terminated. If, as
the result of terminating of Employee's employment, Employee and/or his
otherwise eligible dependents or beneficiaries shall become ineligible for
benefits under any one or more of the Company's benefit plans, the Company
shall continue to provide the Employee and his eligible dependents or
beneficiaries with benefits at a level at least equivalent to the level of
benefits for which the Employee and his dependents and beneficiaries were
eligible under such plans immediately prior to the Termination Date.
(d) STOCK OPTIONS. Notwithstanding any provision in any applicable
Company benefit plans or agreements (including, but not limited to, those
relating to stock options, stock appreciation rights, restricted stock
awards, stock purchases, pensions, thrift, profit sharing, or other
retirement or employee benefits) to the contrary, all rights to such benefits
previously granted to Employee shall become immediately fully vested and
exercisable as of the Termination Date and shall remain exercisable for a
period thereafter of one (1) year.
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The provision of this Section 7(d) shall supersede, insofar as concerns
Employee, any such plans or agreements of the Company referred to above as of
the Effective Date.
(e) NO MITIGATION REQUIRED; NO OTHER ENTITLEMENT TO BENEFITS UNDER
AGREEMENT. The Employee shall not be required in any way to mitigate the
amount of any payment provided for in this Section 7, including, but not
limited to, by seeking other employment, nor shall the amount of any payment
provided for in this Section 7 be reduced by any compensation earned by the
Employee as the result of employment with another employer after the
Termination Date, or otherwise. Following a termination governed by this
Section 7, the Employee shall not be entitled to any compensation or benefits
beyond those set forth in this Agreement, except as may be separately
negotiated by the parties and approved by the Board of Directors of the
Company in writing in conjunction with the termination of Employee's
employment under this Section 7.
8. NONCOMPETITION PROVISIONS.
(a) RIGHT TO COMPANY MATERIALS. Employee agrees that all styles,
designs, lists, materials, books, files, reports, correspondence, records,
and other documents ("Company Materials") used, prepared, or made available
to Employee, shall be and shall remain the property of the Company. Upon the
termination of employment or the expiration of this Agreement, all Company
Materials shall be returned immediately to the Company, and Employee shall
not make or retain any copies thereof.
(b) ANTISOLICITATION. Employee promises and agrees that during the
term of this Agreement he will not influence or attempt to influence
customers or suppliers of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity
then in competition with the business of the Company, or any subsidiary or
affiliate of the Company.
(c) SOLICITING EMPLOYEES. During the term of this Agreement and
for the eighteen (18) month period commencing on the termination Date,
Employee promises and agrees that he will not directly or indirectly solicit
any of the Company's employees to work for any business, individual,
partnership, firm, corporation, or other entity then in competition in Hawaii
with the business of the Company or any subsidiary or affiliate of the
Company.
9. MERGER OR OTHER CHANGE IN CONTROL. Employee shall have the right to
terminate this Agreement for good reason if at any time within ninety (90)
days after completion of (i) a merger of the Company with any other
corporation as a result of which the shareholders of the Company immediately
prior to such merger fail to hold at least a majority of the voting
securities of the surviving corporation in such merger immediately after the
merger, and members of the pre-merger Board of Directors of the Company,
elected by the pre-merger shareholders of the Company or by a majority of the
directors of the Company who were elected by the pre-merger stockholders of
the Company, fail to constitute a majority of the Board of Directors of the
surviving corporation following completion of the merger, or (ii) a sale of
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all or substantially all of the assets of the Company to another corporation
if (x) a majority of the directors of the ultimate parent of the purchaser
immediately following the purchase and sale were not members of the Board of
Directors of the Company immediately prior to such sale and y) shareholders
of the Company immediately prior to such sale do not hold a majority of the
voting securities of the ultimate parent of the purchasing corporation
following completion of such sale; or (iii) a purchase by another person,
firm, or corporation of a majority of the voting securities of the Company,
and following completion of such sale, members of the Board of Directors of
the Company elected by shareholders of the Company (other than such
purchaser) fail to constitute a majority of the Board of Directors of the
Company.
10. NOTICES. All notices and other communications under the Agreement
shall be in writing and shall be given by facsimile, first class mail,
certified or registered with return receipt requested, or express mail and
shall be deemed to have been duly given three (3) days after mailing or
twenty-four (24) hours after transmission of a facsimile to the respective
persons named below:
If to the Company: Hawaiian Airlines, Inc.
Attn: Chairman
0000 Xxxxxxx Xxxxxx, Xxxxx X-000
Xxxxxxxx, Xxxxxx 00000
with a copy to the General Counsel
If to Employee: Xxxx Xxxx Xxxxx
0000 Xxxxxxxx Xxxxxx, #0000
Xxxxxxxx, Xxxxxx 00000
Fax (000) 000-0000
Either party may change such party's address for notices by notice duly
given pursuant hereto.
11. ATTORNEY'S FEES. In the event judicial or quasi-judicial
determination is necessary of any dispute arising as to the parties' rights
and obligations hereunder, the Company and the Employee shall each bear their
own respective attorneys' fees and costs associated with such dispute.
12. TERMINATION OF PRIOR AGREEMENTS. This Agreement terminates and
supersedes any and all prior agreements and understandings between the
parties with respect to employment or with respect to the compensation of the
Employee by the Company from and after the Effective Date.
13. ASSIGNMENT: SUCCESSORS. This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger,
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consolidation, transfer or sale of all or substantially all of the assets of
the Company with or to any other individual or entity, this Agreement shall,
subject to the express provisions hereof, be binding upon and inure to the
benefit of such successor and such successor shall discharge and perform all
the promises, covenants, duties, and obligations of the Company hereunder.
14. GOVERNING LAW. This Agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the laws of the State of Hawaii.
15. ARBITRATION. Any dispute regarding the interpretation or
performance of this Agreement which cannot be resolved by the parties shall
be resolved through arbitration under the Commercial Arbitration Rules of the
American Arbitration Association in Honolulu, Hawaii. The arbitrators will
allocate costs of arbitration as they deem just.
16. ENTIRE AGREEMENT: HEADINGS. This Agreement embodies the entire
Agreement of the parties respecting the matters within its scope and may be
modified only in writing. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purposes.
17. WAIVER: MODIFICATION. Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
18. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute
or public policy, only the portions of this Agreement that violate such
statute or public policy shall be stricken. All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Agreement
shall modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of the parties under this Agreement.
19. INDEMNIFICATION. The Company shall indemnify and hold Employee
harmless to the maximum extent permitted by Section 415-5 of the Hawaii
Business Corporation Act and the Restated Articles of Incorporation of the
Company, as amended.
20. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Employee has hereunto signed this
Agreement, as of the date first above written.
By:______________________________________
Xxxx Xxxxx
Chairman
By:______________________________________
Xxx X. Xxxxx
Its Vice President, General
Counsel and Corporate Secretary
"Company"
By:______________________________________
Xxxx X. Xxxxx
"Employee"
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