Exhibit 10.12(b)
AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the
"Agreement") is made and entered into as of this 20th day of
January, 1999 (the "Effective Date"), by and between
ATLANTIC COAST AIRLINES HOLDINGS, INC., a Delaware
corporation ("ACAH"), ATLANTIC COAST AIRLINES, a California
corporation ("ACA") (ACAH and ACA are herein collectively
referred to as the "Company") and XXXXX X. XXXXX ("Xxxxx").
WITNESSETH THAT:
WHEREAS, Xxxxx is currently employed by the Company as
Chief Executive Officer and President, and in connection
with such employment entered into a Severance Agreement
(dated October 16, 1991), as amended (April 28, 1994, April
27, 1995 and October 16, 1996), with the Company; and
WHEREAS, the Company wishes to assure itself of the
continued services of Xxxxx; and
WHEREAS, the Board of Directors of the Company has
determined that the best interests of the Company would be
served by entering into this amended and restated Agreement
with Xxxxx; and
WHEREAS, this Amended and Restated Severance Agreement
is intended to correct and restate the Severance Agreement
dated July 20, 1998;
NOW, THEREFORE, the parties, for and in consideration
of the mutual and reciprocal covenants and agreements
hereinafter contained, and intending to be legally bound
hereby, do contract and agree as follows:
1. Employment: Company hereby employs Xxxxx and Xxxxx
hereby accepts employment by Company and agrees to perform
his duties and responsibilities hereunder upon all of the
terms and conditions as are hereinafter set forth.
2. Duties: Xxxxx shall serve in the capacities of
Chief Executive Officer and President of the Company and of
any other entity(ies) to which the Company's obligations
under this Agreement shall be assigned pursuant to Paragraph
11. Xxxxx shall be responsible for supervising and
directing all operations of the Company. All other officers
of the Company shall report to Xxxxx except the Chairman of
the Board of Directors (to the extent such person is deemed
to be an officer). Xxxxx shall otherwise be responsible for
carrying out all duties assigned to the President by the
Company's Board of Directors and under ACAH's and ACA's
Bylaws. The Company shall use its good faith efforts to
ensure that Xxxxx continues to serve as a member of the
Company's Board of Directors.
3. Terms of Employment: Xxxxx'x term of employment
under this Agreement shall commence on the Effective Date
and shall terminate on the last day of the calendar month
which is thirty-six (36) calendar months after the Effective
Date, unless further extended as hereinafter set forth.
Commencing on each successive anniversary of the Effective
Date, the Agreement shall automatically be extended for an
additional twelve (12) months without further action by
either party unless one party provides the other sixty (60)
days' written notice that such party does not wish to extend
the term of this Agreement.
4. Extent of Service: Xxxxx shall devote such time
and attention as is required to perform his obligations
under this Agreement and will at all times faithfully and
industriously, consistent with his ability, experience and
talent, perform his duties hereunder.
5. Compensation: During the term of this Agreement,
Company agrees to pay to Xxxxx, and Xxxxx agrees to accept
from Company, in full payment for services rendered by Xxxxx
and work to be performed by him under the terms of this
Agreement, the following:
A. An annual base salary of Two-Hundred Ninety
Five Thousand Dollars ($295,000) shall be paid to Xxxxx.
Commencing October 1, 1998 and each October 1 thereafter,
the amount of Xxxxx'x base salary shall be increased as
determined by the Compensation Committee of the Board of
Directors of the Company; provided, however, that in no
event shall Xxxxx'x annual base salary be less than the
previous year's annual base salary. Xxxxx'x base salary for
each year shall be payable to him in accordance with the
reasonable payroll practices of the Company as from time to
time in effect for executive employees (but in no event less
often than monthly).
X. Xxxxx shall participate in the Company's
Management Incentive Program, or any successor bonus plan or
program for management employees. In addition, if the
Company maintains an additional executive/management bonus
plan, then Xxxxx'x bonus arrangement shall be at least
consistent with the provisions of such bonus plan.
X. Xxxxx shall be eligible for an additional
annual bonus under an executive performance bonus plan
currently known as Senior Management Incentive Plan for so
long as the Board of Directors determines to maintain such
plan. Under such plan, each calendar year, Xxxxx shall be
entitled to receive a bonus equal to specified percentage of
base salary upon the attainment of certain pre-established
goals. The maximum bonus under this plan assuming all goals
are met will not be less than 100% of base salary. Such
goals and percentage of salary shall be determined by the
Compensation Committee of the Board of Directors of the
Company prior to the commencement of each plan year. The
bonus amount each year shall be paid in a single cash lump
sum paid at the time period provided under such plan, at the
same time as paid to other eligible employees, and generally
no later than 90 days after the end of the plan period.
X. Xxxxx will be entitled to deferred compensation
("Deferred Compensation") as described in this section. The
Company will make Deferred Compensation contributions at the
rate of fifty percent (50%) of Xxxxx'x annual base salary.
Deferred Compensation will be based on Xxxxx'x annual base
salary in effect on October 1 in each year beginning 1998,
and will be payable as of October 1 in each year beginning
1998. Such contributions will be applied toward funding
such deferred compensation program as the Company and Xxxxx
may agree to from time to time, consistent with the funding
and vesting provisions of this Agreement.
The method of funding of Deferred Compensation, and the
timing of the actual payment of contributions, shall be
agreed between the Company and Xxxxx from time to time. As
of the date hereof, the Deferred Compensation program is
provided under a split dollar life insurance arrangement
with Phoenix Home Life Mutual - (the "Split Dollar
Agreement". The Company may implement a substitute Deferred
Compensation plan not tied to a Split Dollar Agreement so
long as (1) the amount contributed by the Company on Xxxxx'x
behalf equals the amount set forth herein, and (2) the
vesting schedule, credit for Years of Service, and terms of
distribution are all at least as favorable to Xxxxx as set
forth herein. The Company shall continue to abide by the
terms of the Split Dollar Agreement with Xxxxx previously
executed the 29th day of December, 1995, which shall provide
for a split dollar plan for a policy of insurance upon the
life of Xxxxx in a face amount to be mutually agreed upon
between Xxxxx and the Company. For so long as the Split
Dollar Agreement shall serve as the deferred compensation
program under this Agreement, the following terms shall
apply:
(i) Xxxxx shall be the owner of the policy under
the Split Dollar Agreement and will have the right to
designate his beneficiary with respect to proceeds of the
policy payable upon his death; provided, however, that
notwithstanding the foregoing, the Company shall have a
collateral assignment of the policy as security for the
repayment of the amounts contributed by the Company toward
the payment of premiums for the policy.
(ii) The Company shall, except as provided in
Paragraph 5D(iii) below, each year as required under the
Split Dollar Agreement and the related policy, pay, on or
before the due date(s) under the terms of the policy, the
entire amount of the annual premium due on the policy
acquired pursuant to the terms of the Split Dollar
Agreement. The annual premium due on the policy will be the
amount of the Company's contribution to deferred
compensation calculated as described above.
(iii) The "Deferred Compensation Ending Date"
shall mean the date of termination of Xxxxx'x employment if
Xxxxx'x employment with the Company is terminated at any
time under circumstances that do not entitle him to
Severance Compensation pursuant to Section 10 of this
Agreement, or shall mean the last day of the Severance
Period (as defined in Section 10) if Xxxxx is entitled to
Severance Compensation. During a Severance Period, Deferred
Compensation shall continue pursuant to the terms of
10.E.(iii) hereof. Upon the Deferred Compensation Ending
Date, the following shall occur:
(a) The applicable vested percentage of
Xxxxx'x interest in Deferred Compensation shall be
calculated as provided herein. Xxxxx will be
entitled to receive the deferred compensation
benefit provided under such deferred compensation
program only to the extent he is vested in the
Company's contributions. Vesting will be based
upon "Years of Service", with Xxxxx to be credited
with one Year of Service for completion of each
twelve (12) consecutive month period of employment
with the Company beginning January 1, 1996 and
ending on the Deferred Compensation Ending Date.
(That is, Xxxxx will be credited with Years of
Service for any applicable Severance Period, as
further provided in Section 10.E.(iv) hereof.)
Xxxxx will become vested in the deferred
compensation based on the following schedule:
YEARS OF SERVICE PERCENTAGE VESTED
Less than 4 0%
At least 4 but less than 5 25%
At least 5 but less than 6 35%
At least 6 but less than 7 50%
At least 7 but less than 8 65%
At least 8 but less than 9 80%
At least 9 100%
In the event of a Change in Control (as defined in
Paragraph 8.C. of this Agreement) of the Company,
Xxxxx shall become immediately 100% vested in his
Deferred Compensation amount notwithstanding the
above vesting schedule.
(b) The Split Dollar Agreement shall
continue in full force and effect and survive
separate and apart from this Agreement; provided,
however, that the Company shall, at its election,
have no further obligation to pay any premium on
the policy under the Split Dollar Agreement which
has a due date after the Deferred Compensation
Ending Date and such obligation shall be
transferred to Xxxxx.
(c) The Company shall pay to Xxxxx whatever
"Deferred Compensation" amount is equal to the
applicable vested percentage of the total policy
premiums paid by the Company pursuant to the Split
Dollar Agreement. The Company shall make this
payment within thirty (30) days following the
Deferred Compensation Ending Date by releasing its
interest in the policy, or a portion thereof, on
Xxxxx'x life acquired pursuant to the terms of the
Split Dollar Agreement, or any or all of the paid
up additions standing to the credit of such
policy, if any, such that such released interest
equals the Deferred Compensation amount paid to
Xxxxx pursuant to this Paragraph 5D. The Company
agrees that the amount of any such release of
interest by the Company shall reduce the amount of
"Liabilities" (as such term is defined in the
Agreement of Assignment of Life Insurance Death
Benefit As Collateral entered into between Xxxxx
and the Company in connection with the Split
Dollar Agreement) owed to the Company in
connection with the Split Dollar Agreement and
related Collateral Assignment Agreement.
Accordingly, the Company also agrees to reduce to
such extent its collateral assignment of the
policy pursuant to the Split Dollar Agreement and
related Collateral Assignment Agreement.
E. The Company may pay Xxxxx discretionary
compensation, bonuses and benefits in addition to those
provided for herein in such amounts and at such times as the
Compensation Committee of the Board of Directors of the
Company shall determine.
6. Benefits:
A. The Company shall pay for or provide Xxxxx
such vacation time and benefits, including but not limited
to, coverage under Company's major medical, accident,
health, dental, disability and life insurance plans, as are
made available to other executive employees of Company
generally (and, to the extent provided by such policies, to
Xxxxx'x dependents).
B. The Company agrees to promptly reimburse
Xxxxx for any otherwise unreimbursed premiums and/or
uncovered medical expenses up to $10,000 per calendar year
under a written medical reimbursement plan maintained for
Xxxxx and other key executive employees. If such payments
are taxable to Xxxxx, the Company shall pay Xxxxx a gross-
up equal to the estimated income, FICA and Medicare taxes
due with respect to such reimbursement, with federal and
state income taxes being estimated at the highest marginal
rates.
X. Xxxxx shall be eligible to participate in any
profit sharing plan, employee stock ownership plan or other
qualified retirement plan adopted by Company to the same
extent as other executive employees of Company. Xxxxx shall
also be eligible to participate in any stock option, stock
appreciation rights or stock purchase plans or programs or
nonqualified deferred compensation arrangements of Company,
which participation shall be at levels at least equal in
value to such benefits provided by Company to other key
executive employees of Company.
7. Reimbursement of Expenses: The Company agrees to
promptly reimburse Xxxxx, within fifteen (15) days after
presentation of receipts and other appropriate
documentation, for all reasonable, ordinary and necessary
travel costs and other necessary expenses incurred by Xxxxx
in performing his duties pursuant to this Agreement.
8. Stock Options:
A. Company agrees to continue in force a stock
option plan or one which is substantially similar to the
existing plan ("Stock Option Plan"), which has been approved
by the shareholders of the Company and, on the first
business day in each January commencing in January, 1999,
and (subject to the provisions of Paragraph 10.A.(vii))
continuing so long as Xxxxx is employed by the Company to
xxxxx Xxxxx options under the Stock Option Plan to purchase
not less than 100,000 shares of the common stock of ACAH at
the price per share at the closing of the trading market on
the last business date prior to such grant. The Company
also agrees to approve the issuance of such additional
shares as are necessary to enable Xxxxx to exercise such
options. The Company will not be required to reserve shares
from existing plans to cover future obligations under this
paragraph, but will use reasonable efforts to obtain
shareholder approval as necessary from time to time to make
a sufficient number of additional shares available on a
timely basis, and will provide Xxxxx with equivalent
alternative compensation should approval not be obtained.
The terms of the grant of such options granted after January
1, 1998 shall provide that (a) Xxxxx'x right to exercise
such options shall vest and become exercisable over the five-
year period beginning on the date of each grant at the rate
of one-fifth per year (i.e., one-fifth shall vest and become
exercisable on the first anniversary of the grant) so long
as Xxxxx is employed by the Company, (b) Xxxxx'x right to
exercise such options to purchase the entire number of
shares covered thereby shall become immediately 100% vested
in the event there is a Change in Control (as hereinafter
defined) or in the event Company shall otherwise become
obligated to provide Xxxxx with Xxxxxxxxx Compensation as
provided in Paragraph 10.e. herein, (c) such options shall
be exercisable for ten (10) years after the date of the
grant so long as Xxxxx is employed by the Company and (d)
Xxxxx shall have the right to exercise such vested options
within ninety (90) days following any termination of Xxxxx'x
employment except that in the case of termination of
employment for which Xxxxx is entitled to "Severance
Compensation" as provided herein, in which case the terms of
Paragraph 10.E.(iii) shall apply.
B. In addition to the foregoing, if the Company
in the exercise of its discretion, shall xxxxx Xxxxx any
additional stock options, such options shall contain terms
and conditions which are at least as favorable to Xxxxx as
those set forth in this Paragraph 8. All outstanding options
previously issued to Xxxxx prior to the Effective Date of
this Amended and Restated Severance Agreement shall also be
subject to the foregoing terms, except that options granted
on or before December 31, 1997 shall vest over three years
at the rate of one-third per year and except that no such
terms shall be applicable to options intended to qualify as
Incentive Stock Options if and to the extent such terms
would be deemed to result in a "material modification" of
such options (for example, Xxxxx will not be entitled to
more than 90 days to exercise such options following any
termination of employment other than on account of death or
disability, in which case he will be entitled to one year to
exercise such options).
C. For purposes of this Agreement, a "Change in
Control" shall be deemed to occur on the earliest of (a) an
acquisition (other than directly from Company) of any
securities of Company entitled to vote for the election of
Directors (the "Voting Securities") by any "person or group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) other than an employee
benefit plan of Company, immediately after which such person
has "Beneficial Ownership" (within the meaning of Rule 13d-3
under the Exchange Act) of more than thirty percent (30%) of
the combined voting power of Company's then outstanding
Voting Securities; (b) announcement by any "person or
group" (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934) of its acceptance
for payment of securities tendered pursuant to a tender
offer or exchange offer initiated by such person owning or
representing securities constituting more than twenty
percent (20%) of the combined voting power of Company's then
outstanding Voting Securities; (c) the approval by the
Company's stockholders of (1) a merger, consolidation or
reorganization involving Company or a transfer of
substantially all of the assets of Company (other than to an
entity or entities owned by Company), unless the company
resulting from such merger, consolidation or reorganization
or the company to which such assets are transferred (the
"Surviving Corporation") shall adopt or assume this
Agreement and the stockholders of Company immediately before
such merger, consolidation or reorganization own, directly
or indirectly immediately following such merger,
consolidation or reorganization, at least eighty percent
(80%) of the combined voting power of the Surviving
Corporation in substantially the same proportion as their
ownership immediately before such merger, consolidation or
reorganization, or (2) a complete liquidation or dissolution
of Company; or (d) persons who on the date of this
Agreement are directors of Company, together with people
nominated by a majority of them or by persons who were
nominated by them, cease for any reason to constitute a
majority of Company's Board of Directors.
9. Deductions: Deductions shall be made from Xxxxx'x
compensation for social security, Medicare, federal, state
and local withholding taxes, and any other such taxes as
may from time to time be required by any governmental
authority.
10. Termination: Xxxxx'x employment with the Company
shall be terminated only in accordance with the following
provisions:
A. Disability.
(i) In the event Xxxxx shall become mentally
or physically disabled so as to have been unable to perform
his duties hereunder for twelve (12) consecutive months,
subject to Xxxxx'x right to return to work as provided
below, Company shall have the right to terminate Xxxxx'x
employment with Company upon the expiration of such twelve
(12) month period; provided, however, that upon any such
termination Company shall be obligated to provide Xxxxx with
Xxxxxxxxx Compensation as provided in Paragraph 10.E.
herein. Such twelve-month period shall be deemed to have
commenced on the date when Xxxxx is first unable to perform
his duties on a substantially full-time basis because of
mental or physical disability and shall end on the date on
which Xxxxx shall return to the substantial full-time
performance of his duties. If at the expiration of such
twelve (12) month period, the Company shall desire to
terminate Xxxxx on the basis of disability, it shall give
written notice to him. Xxxxx'x employment shall thereafter
be terminated if he does not return to substantial full-time
performance of his duties within ten (10) calendar days
after such notice is given.
(ii) Nothing contained herein shall be
construed to affect Xxxxx'x rights under any disability
insurance or similar policy, whether maintained by the
Company, Xxxxx or another party. The Company may utilize a
disability policy to fund, in whole or in part, the
compensation that would be due to Xxxxx during the term of
or in the event of a disability, in which case the proceeds
of the policy would not be in addition to any compensation
otherwise payable to Xxxxx.
(iii) For purposes of this Agreement,
Xxxxx shall be deemed to be disabled when he shall have been
absent from his duties because of sickness, illness, injury
or other physical or mental infirmity on a substantially
full-time basis. In the event of a dispute as to whether
Xxxxx is disabled, the issue of the determination of
disability shall be submitted to a Board of Arbiters for a
binding decision under the procedures set forth in Paragraph
10.A.(v) below.
(iv)At the end of any disability (other
than a disability that results in the termination of
Xxxxx'x employment with the Company), Xxxxx shall return to
work and this Agreement shall continue as though such
disability had not occurred.
(v) If there is a dispute as to whether
Xxxxx is subject to any disability, the issue shall be
submitted to a Board of Arbiters (whose decision shall be
binding on the Company and Xxxxx) consisting of three
persons: one physician who specializes in the physical or
mental disability in dispute (hereinafter referred to as a
"Specialist") shall be appointed on behalf of Company by the
Board of Directors of Company (with Xxxxx having no vote on
this question); a second Specialist shall be appointed by
Xxxxx and a third Specialist shall be appointed by the two
Specialists so appointed. The decision of a majority of
such Specialists shall be binding upon the parties hereto.
If a majority of the Specialists determines that Xxxxx is
not subject to any disability for purposes of this
Agreement, Xxxxx shall return to work under the provisions
hereof. Such Specialists may physically examine Xxxxx, who
hereby consents to such examination and to make available
any pertinent medical records. The cost of such Specialists
shall be paid by Company.
(vi) If it is determined that Xxxxx can
return to work hereunder on a part-time basis, the parties
agree to use good faith efforts to negotiate the terms of
Xxxxx'x return to work.
(vii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated,
Xxxxx shall continue to receive his base salary and any
applicable bonus, and shall continue to receive all benefits
as an employee and as provided herein generally. Any options
previously granted shall continue to vest, but no new
options shall be issued to Xxxxx.
(viii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated,
Xxxxx shall continue to be credited with Years of Service
for purposes of vesting of Deferred Compensation as set
forth in Paragraph 5.D.
B. Death.
(i) Xxxxx'x employment with Company shall
terminate immediately upon Xxxxx'x death; provided, however,
that Company shall be obligated to provide the Severance
Compensation as specified in Paragraph 10.E. herein to
Xxxxx'x estate, heirs or beneficiaries.
(ii) Nothing contained herein shall be
construed to affect Xxxxx'x rights under any life insurance
or similar policy, whether maintained by Company, Xxxxx or
another party. The Company may utilize a life insurance
policy to fund, in whole or in part, the Severance
Compensation that would be payable in the event of Xxxxx'x
death, in which case the proceeds of any such policy other
than the Split Dollar Agreement would not be in addition to
any Severance Compensation otherwise payable under this
Paragraph 10.B.
C. Termination by Xxxxx.
(i) Without Good Reason. Xxxxx may, without
"Good Reason" (as hereinafter defined), terminate his
employment by giving to Company sixty (60) days' written
notice by Certified Mail, Return Receipt Requested, at the
office of Company, and such termination shall be effective
on the sixtieth (60th) day following the date of such notice
(the "Termination Date"). In such event, Xxxxx (i) shall
continue to render his services up to the Termination Date
if so requested by Company and (ii) shall be paid his
regular base salary and shall receive all benefits up to the
Termination Date. Xxxxx will be entitled to payment of any
bonus due but not yet paid for prior bonus periods, and for
a pro-rata bonus amount for the bonus period in which the
termination occurs pursuant to this Paragraph 10.C.(i) but
will not be entitled to Severance Compensation or to any
other compensation, bonus or fringe benefits accrued after
the Termination Date. The bonus payable to Xxxxx will be
paid at the same time it would have been paid had Xxxxx'x
employment not been terminated, will be based on the
achievement of targets for the entire bonus period without
regard to interim results as of the termination date, and
will be paid pro-rata based on the number of full months
Xxxxx was employed within the bonus period divided by the
total number of months in the bonus period.
(ii) With Good Reason. Xxxxx may terminate
his employment with Company immediately for Good Reason. In
the event Xxxxx'x employment with Company is terminated by
Xxxxx for Good Reason, Company shall be obligated to provide
Xxxxx with Xxxxxxxxx Compensation as provided in Paragraph
10.E. herein". Good Reason" shall mean any of the following
(without Xxxxx'x express prior written consent):
(a) The assignment to Xxxxx by Company
of duties inconsistent with Xxxxx'x positions, duties,
responsibility and status with Company, or any removal of
Xxxxx from or any failure to re-elect Xxxxx to his
positions, including his position as a member of the
Company's Board of Directors (except in connection with the
termination of his employment for disability, death or for
cause as provided herein), unless cured within fifteen (15)
days of Xxxxx giving written notice thereof to the Company.
(b) Any material adverse change in any
benefit plan or arrangement in which Xxxxx is participating
and which is not applicable generally to other key executive
employees of Company who participate in such plan or
arrangement), unless cured within fifteen (15) days of Xxxxx
giving written notice thereof to the Company.
(c) Xxxxx'x relocation outside of the
Washington D.C./ Northern Virginia region without his
consent, except for required travel by Xxxxx on Company
business; provided, however, that if the Board of Directors
of Company determines to relocate Company's principal
executive offices, Company shall pay all of Xxxxx'x
reasonable moving and other relocation expenses, the Board
of Directors shall make such adjustments in Xxxxx'x salary
as it reasonably deem necessary to reflect the increased
costs of living in the new location, and Xxxxx shall be
obligated to perform his services generally at such new
location and such relocation shall not constitute "Good
Reason" hereunder.
(d) Any material breach by Company of
any provisions of this Agreement which is not cured by
Company within fifteen (15) days of Xxxxx giving written
notice thereof to the Company.
(e) Except in the case of disability or
death, any purported termination of Xxxxx'x employment by
the Company which is not effected pursuant to sixty (60)
days' prior written notice of termination.
(f) Any termination by Xxxxx of his
employment with the Company which is effected as a result
of, in connection with or within twelve (12) months
following a "Change in Control" as defined and determined
under Paragraph 8.C. of this Agreement.
D. Termination by Company.
(i) Without Cause. Company may, without
cause, terminate Xxxxx'x employment under this Agreement at
any time by giving Xxxxx sixty (60) days' written notice
thereof, and such termination shall be effective on the
sixtieth (60th) day following the date such notice is given
(said 60th day, the "Termination Date"). Company shall be
obligated to provide Xxxxx with Xxxxxxxxx Compensation as
provided in Paragraph 10.E. herein. At the option of
Company, Xxxxx'x employment shall be immediately terminated
upon the Company giving such notice, in which case Xxxxx
shall continue to receive his full base salary and related
fringe benefits through the Termination Date.
Notwithstanding any provision of this Agreement to the
contrary, any termination of Xxxxx'x employment by the
Company, for any reason or no reason, within one year
following a "Change in Control", as defined and determined
under Paragraph 8.C. of this Agreement, shall automatically
be deemed to be a termination without cause.
(ii) For Cause. Company may terminate Xxxxx'x
employment under this Agreement immediately for "cause." In
such event, Xxxxx will be entitled to payment of a pro-rata
bonus amount to the date of termination of employment, but
will not be entitled to Severance Compensation or to any
other compensation, bonus or fringe benefits accrued after
the date of termination of employment. The bonus amount
payable to Xxxxx will be calculated in the same fashion as
in the case of termination by Xxxxx without good reason, as
set forth in Paragraph 10.C.(i) above. Cause shall be
defined as any of the following: (i) willful unauthorized
misconduct in the material performance of Xxxxx'x duties
hereunder, (ii) commission of an act of theft, fraud or
dishonesty by Xxxxx, which act is materially harmful to
Company, (iii) material breach of any provision of this
Agreement if such breach has not been cured by Xxxxx (or if
Xxxxx has not compensated the Company for such breach by
payment of an amount deemed reasonable by the Company if the
breach cannot be cured) within fifteen (15) days after the
Company gives Xxxxx written notice of such breach. Any
termination under this Paragraph 10.D.(ii) shall take effect
immediately upon the Company giving Xxxxx written notice
thereof.
X. Xxxxxxxxx Compensation. "Severance
Compensation" is defined as all of the compensation and
benefits described in this Paragraph 10.E. It will be
provided to Xxxxx upon the occurrence of any of the events
described elsewhere in this Agreement as providing for
Xxxxx'x receipt of Severance Compensation, but not in any
other circumstances except to the extent that individual
components of Severance Compensation may be separately
provided pursuant to the terms of this Agreement.
"Termination Date" is defined as the last day of Xxxxx'x
employment with the Company. "Severance Period" is defined
as the period beginning on the day following the Termination
Date and ending on the day which is three years following
the Termination Date. The compensation and benefits to be
provided as Severance Compensation are as follows:
(i) Severance Pay. Throughout the Severance
Period, Xxxxx will receive severance pay at the rate of 100%
of his annual base salary in effect at the time of his
termination, to be paid on the Company's regular payroll
payment dates at the same time and in the same fashion as
the Company's regular payroll payments.
(ii) Bonus. The Company shall pay to Xxxxx a
one-time bonus equal to three times the highest annual bonus
received by Xxxxx during any one of the five years
immediately preceding the year in which the Termination Date
occurs. This bonus will be paid within thirty days
following the Termination Date. It shall be considered to
be full compensation for all amounts due to Xxxxx for bonus
plans in which he was participating as of the Termination
Date, and he shall not be entitled to any further payments
under any of said plans during the Severance Period or
thereafter. Notwithstanding the above, any bonus due to
Xxxxx for years (or other applicable bonus period) completed
prior to the Termination Date but not yet paid shall be paid
in addition to the bonus described herein.
(iii) Stock Options. All options to
purchase shares of ACAH stock that have been granted to
Xxxxx shall become 100% vested as of the Termination Date.
All options that would have been granted to Xxxxx in the
future pursuant to Paragraph 8.A. hereof shall not be
granted if the date on which they would have been granted
occurs after the Termination Date, even though said date may
occur during the Severance Period. Xxxxx (or, in the case
of death, his estate or his beneficiaries) shall have the
right to exercise such vested options until the earlier of
the original expiration date of said option, or a date
determined as follows: (a) for options not intended to
qualify as Incentive Stock Options, Xxxxx shall have the
right to exercise vested options any time prior to the end
of the Severance Period; (b) for options intended to qualify
as Incentive Stock Options where termination is caused by
reasons other than his death or disability, Xxxxx shall have
the right to exercise within 90 days following termination
of his employment; (c) for options intended to qualify as
Incentive Stock Options where termination is caused by his
death or disability, Xxxxx (or his estate or his
beneficiaries) shall have the right to exercise within one
year following termination of his employment.
(iv) Deferred Compensation. The Deferred
Compensation program will continue throughout the Severance
Period, including Xxxxx'x accumulation of Years of Service
for vesting purposes, and including the Company's
continuation of contributions. The Split Dollar Agreement
shall continue in full force and effect through the
Severance Period and shall survive separate and apart from
this Agreement, and the Company's obligation to pay all
premiums pursuant to this Agreement shall continue in
accordance with the terms of the Split Dollar Agreement for
the Severance Period. At the end of the Severance Period,
Xxxxx shall receive his vested interest and any obligation
to pay premiums shall be transferred to Xxxxx.
Alternatively, the Company may elect to pay such amounts to
Xxxxx as would be payable during the Severance Period by the
Company under the Deferred Compensation program in a single
lump sum payment within fifteen (15) days after the
Termination Date.
(v) Insurance Programs. Coverage under the
Company's major medical, accident, health, dental,
disability and life insurance plans as from time to time
provided to other executive employees of the Company (and,
to the extent provided by such policies, to Xxxxx'x
dependents) shall continue to be paid for by the Company
during the Severance Period, or, in the event of Xxxxx'x
termination following a Change of Control of the Company as
defined in Paragraph 8.C., for the longer of the Severance
Period or the remainder of Xxxxx'x life. Provided, however,
if such coverage cannot be continued during the Severance
Period or until Xxxxx'x death, as the case may be, under the
terms of such policies or plans, the Company shall reimburse
Xxxxx for the cost of comparable coverage under individually
obtained policies or for COBRA coverage, or shall make other
arrangements to assure that Xxxxx has comparable coverage.
(vi) Vacation. Vacation shall not continue
to accrue after the Termination Date under any
circumstances.
(vii) Executive Medical Reimbursement
Plan. Throughout the Severance Period, the Company will
continue to promptly reimburse Xxxxx for any otherwise
unreimbursed premiums and/or uncovered medical expenses up
to $10,000 per calendar year under a written medical
reimbursement plan maintained for the Company's key
executive employees, including the tax gross-up, if
applicable.
(viii) Travel Benefits. Xxxxx and his
wife shall be provided with free travel on the Company's
planes or on the planes of any successor in interest to the
Company on a positive space basis. These travel benefits
will be provided throughout the Severance Period, or, in the
event of a Change of Control of the Company as defined in
Paragraph 8.C., for the longer of the Severance Period or
the remainder of Xxxxx'x life. Xxxxx shall not be entitled
to travel benefits on any other airline.
(ix) Deductions for Taxes. Any compensation
due to Xxxxx hereunder will be subject to deductions for
social security, federal and state withholding taxes, and
any other such taxes as may from time to time be required by
governmental authority.
(x) Notwithstanding any provision to the
contrary in this Agreement, if any part of the payments
provided for under or pursuant to this Agreement (the
"Agreement Payments"), together with all payments in the
nature of compensation to or for the benefit of Xxxxx under
any other arrangement, would if paid constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the amount payable to
Xxxxx under or pursuant to this Agreement in such
circumstances shall be subject to the following sentence of
this Paragraph 10.E(x). If (i) the value of the Agreement
Payments plus the value of all other payments to or for the
benefit of Xxxxx that constitute "parachute payments," minus
the amount of any excise taxes payable under Code
Section 4999 with respect to such payments and the amount of
any similar or comparable taxes payable only in connection
with a change in control, is greater than (ii) the greatest
value of payments in the nature of compensation contingent
upon a change in control that could be paid at such time to
or for the benefit of Xxxxx and not constitute a "parachute
payment" (the "Alternative Payment"), then the Agreement
Payments shall be payable to Xxxxx; otherwise, only the
Alternative Payment shall be payable to Xxxxx.
11. Assignment: This Agreement, as it relates to the
employment of Xxxxx, is a personal contract and the rights
and interests of Xxxxx hereunder may not be sold,
transferred, assigned, pledged or hypothecated. However,
this Agreement shall inure to the benefit of and be binding
upon Company and its successors and assigns including,
without limitation, any corporation or other entity into
which Company is merged or which acquires all or
substantially all of the outstanding common stock or assets
of Company. At any time prior to a Change in Control,
Company may provide, without the prior written consent of
Xxxxx, that Xxxxx shall be employed pursuant to this
Agreement by any of its affiliates instead of or in addition
to Company, and in such case all references herein to the
"Company" shall be deemed to include any such entity,
provided that (i) such action shall not relieve Company of
its obligation to make or cause an affiliate to make or
provide for any payment to or on behalf of Xxxxx pursuant to
this Agreement, and (ii) Xxxxx'x duties and responsibilities
shall not be significantly diminished as a result thereof.
Unless otherwise agreed to by Xxxxx, Company shall provide
that Xxxxx shall be employed pursuant to this Agreement by
any other entities to which ACAH or ACA may after the date
of this Agreement transfer or assign any of the operations
or businesses operated by either of them as of the date of
this Agreement, and in such case all references herein to
the "Company" shall be deemed to include any such entities,
provided that such action shall not relieve Company of its
obligation to make or cause an affiliate to make or provide
for any payment to or on behalf of Xxxxx pursuant to this
Agreement. The Board of Directors may assign any or all of
its responsibilities hereunder to any committee of the
Board, in which case references to the Board of Directors
shall be deemed to refer to such committee.
12. Invalid Provisions: The invalidity of any one or
more of the paragraphs or provisions of this Agreement shall
not affect the reasonable enforceability of the remaining
paragraphs or provisions of this Agreement, all of which are
inserted herein conditionally upon being valid in law; and
in the event one or more of the paragraphs or provisions
contained herein shall be invalid, this instrument shall be
construed as if such invalid paragraphs or provisions had
not been inserted or, alternatively, said paragraphs or
provisions shall be reasonably limited to the extent that
the applicable court interpreting the provisions of this
Agreement considered to be reasonable.
13. Specific Performance: The parties hereby agree
that any violation by Xxxxx of the covenants and agreements
contained herein shall cause irreparable damage to Company,
and Company may, as a matter of course, enjoin and restrain
said violation by Xxxxx by process issued out of a court of
competent jurisdiction, in addition to any other remedies
that said court may see fit to award.
14. Binding Effect: All the terms of this Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives,
successors and assigns.
15. Attorneys' Fees: Company shall pay all legal fees
incurred by Xxxxx in connection with the preparation of this
Agreement promptly after submission of a xxxx therefor. In
the event an action is taken by either party to enforce this
Agreement or resolve a dispute in connection herewith, the
prevailing party shall be entitled to recover the costs
incurred with the prosecution and defense of such action,
including reasonable attorney's fees.
16. Waiver of Breach or Violation Not Deemed
Continuing: The waiver by either party of any provision of
this Agreement shall not operate as, or be construed to be,
a waiver of any subsequent breach hereof.
17. Entire Agreement; Law Governing: This Agreement
supersedes in its entirety any and all other agreements
(specifically including any earlier versions of this
Severance Agreement), either oral or in writing, between the
parties hereto with respect to the subject matter hereof, by
and between Company and Xxxxx, and contains all the
covenants and agreements among the parties with respect to
such subject matter. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Virginia.
Xxxxx hereby acknowledges that he was represented by counsel
of his choosing in the drafting and negotiation of this
Agreement and that he reviewed this Agreement with and was
advised as to each of the terms thereof by such counsel. In
interpreting this Agreement, a court shall not treat either
party as the draftsman of the Agreement.
18. Paragraph Headings: The Paragraph headings
contained in this Agreement are for convenience only and
shall in no manner be construed as a part of this Agreement.
19. Release by Xxxxx. In the event of a termination
of employment by Xxxxx that results in the payment of
Severance Compensation to him pursuant to the terms of this
Agreement, in consideration for such Severance Compensation,
Xxxxx hereby agrees to execute a full and complete release
to the Company releasing any and all claims that he may have
against the Company including any claims relating to his
termination of employment.
20. Notices. All notices permitted or required to be
given pursuant to this Agreement shall be in writing and
shall be deemed to have been sufficiently given, subject to
the further provisions of this Section 20, for all purposes
when presented personally to such party (which in the case
of notice to the Company, shall be presented to the person
holding the office or offices identified below) or sent by
facsimile transmission, any national overnight delivery
service, or certified or registered mail, to such party at
its address set forth below:
If to Xxxxx, to the most recent address indicated
for Xxxxx'x residence in the personnel records of Company,
unless Xxxxx gives written notice that such notices are to
be delivered to another address.
If to ACA or the Company:
Atlantic Coast Airlines Holdings, Inc.
Atlantic Coast Airlines
000X Xxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel or Corporate Secretary
Fax No. (000) 000-0000
Such notice shall be deemed to be given and received when
delivered if delivered personally, upon electronic or other
confirmation of receipt if delivered by facsimile
transmission, the next business day after the date sent if
sent by a national overnight delivery service, or five (5)
business days after the date mailed if mailed in the
continental United States by certified or registered mail.
Any notice of any change in such address shall also be given
in the manner set forth above. Whenever the giving of
notice is required, the giving of such notice may be waived
in writing by the party entitled to receive such notice.
A copy of any notice given to Xxxxx shall be sent to:
Xxxxxx X. Xxxxxx
Xxxx Xxxxxxx Xxx & Xxxxxx
0000 X Xxxxxx, XX
Xxxxx 000, Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Fax No. (000) 000-0000
IN WITNESS WHEREOF, the Company has hereunto caused
this Agreement to be executed by a duly authorized officer
and Xxxxx has hereunto set his hand as of the day and year
first above written.
WITNESS:
________________________________
_____________________________
Xxxxx X. Xxxxx
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
_________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx Xxxxx,
Secretary Chairman of the
Board
ATTEST: ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ BY:
_________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx Xxxxx,
Secretary Chairman of the Board
