EXHIBIT 10.44
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, made as of May 11, 1994 as amended and restated as of
December 1, 1995 by and between Aloha Airgroup, Inc., a Hawaii corporation
(herein referred to as the "Employer"), and Xxxxx X. Xxxxxx (herein referred to
as the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is willing to serve as the President and Chief
Executive Officer of the Employer and the Employer desires to retain the
Executive in such capacity on the terms and conditions herein set forth; and
WHEREAS, the Employer considers it essential to the best interests of
the stockholders to xxxxxx continuous employment of key management personnel,
recognizes that the possibility of a change in control exists, and that such
possibility, and the uncertainty and questions which it may raise among
management personnel, may result in the departure or distraction of management
personnel at critical times for the Employer;
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
The Employer hereby employs the Executive as its President and Chief
Executive Officer reporting directly to the Employer's Board of Directors, and
the Executive hereby accepts such employment. The Executive shall also serve as
the President and Chief Executive of Employer's principal subsidiary, Aloha
Airlines, Inc. and shall be a member of the Board of Directors of the Employer.
The Executive shall have such duties as are set forth in the Articles of
Incorporation and the By-Laws of the Employer and such additional duties
commensurate with the Executive's position as may be designated by the Board of
Directors from time to time. The Executive shall devote substantially all his
business time, attention, skill and efforts to the faithful performance of his
duties hereunder and shall not accept employment elsewhere during the effective
period of this Agreement (as defined in Section 2 of this Agreement). The
Executive shall at all times conduct himself in such a manner as not to
prejudice the reputation of the Employer in the fields of business in which it
is engaged or with the public at large.
2. TERM
The term of this Agreement shall commence on the date of this
Agreement (the "Effective Date") and shall continue in effect through and
including December 31, 1996; PROVIDED, HOWEVER, that commencing on December 31,
1996 and each subsequent anniversary of such date, the original term of this
Agreement shall automatically be extended for one
additional year unless, not later than the sixtieth day prior to December 31,
1996 or such subsequent anniversary date, as applicable, the Employer or the
Executive shall have given notice to the other that it or he does not wish to
extend this Agreement. As used hereafter in this Agreement, "Term" shall mean
the original and extended term of this Agreement, but shall not include the
Severance Period (as defined below).
3. COMPENSATION
During the Term, the Executive shall be entitled to the following
compensation for his services to the Employer and any affiliate of the
Employer:
(a) BASE SALARY. The Executive's base salary (the "Base Salary") for
the calendar year ending December 31, 1994 will be at the rate of $300,000.00
per annum payable in accordance with the Employer's normal payroll practices.
The Base Salary for the calendar year ending December 31, 1995 will not be at
an annual rate lower than the annual rate of Base Salary for 1994. The Base
Salary shall be reviewed at least annually by the Board of Directors. The Base
Salary level and any increases thereof shall not be decreased during the Term.
(b) ANNUAL BONUS. In addition to the Base Salary, for each full
calendar year during the Term, the Executive shall be eligible to receive an
annual bonus (the "Annual Bonus"), if any, payable under the Aloha Airlines,
Inc. Executive Management Incentive Plan, or any successor or substitute plan
as may be designated by the Board of Directors. Employer shall not be obligated
to pay Executive a bonus in respect of the period ending December 31, 1994.
(c) BENEFIT PLANS. In addition to the Base Salary and Annual Bonus
payable pursuant to this Agreement, the Executive shall be entitled to
participate in all incentive, savings and retirement plans and welfare benefit
plans of the Employer in effect for key executives from time to time. Attached
to this Agreement as Exhibit A is a description of the plans and benefit
programs currently in effect. Such plans and programs will not be changed
during the Term without the active participation of the Executive in making
such change.
(d) HOUSING ALLOWANCE. During the Term the Employer shall pay to the
Executive a housing allowance at an annual rate of $75,000 per year, payable
monthly.
(e) STOCK OPTIONS. The Employer's Board of Directors has approved the
grant of the stock options described in Exhibit B attached to this Agreement.
(f) EXPENSES. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him in the performance of
his duties for the Employer which shall be paid to him in accordance with the
policies and procedures of the Employer applicable to key executives.
4. TERMINATION OF EMPLOYMENT
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(a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. The
Employer may terminate the Executive's employment hereunder for Cause (as
defined in Section 6 of this Agreement). If the Executive's employment is
terminated by the Employer for Cause, or by the Executive for reasons other
than Good Reason (as defined in Section 6 of this Agreement), prior to the
expiration of the Term, (i) the Employer shall be under no obligation to make
any additional payments of Base Salary, Annual Bonus or any other benefits
specified in Section 3 of this Agreement for any periods after the Date of
Termination (as defined in Section 6 of this Agreement) except for payment of
any Base Salary or Annual Bonus earned prior to the Date of Termination but not
yet paid to the Executive or any payment from any employee benefit plan or the
continuation of coverage under any insurance program which may be required by
law, (ii) if the Executive's employment is terminated by the Executive other
than for Good Reason, the Employer may exercise the Employer's Call Option (as
defined in Section 6 hereof) and (iii) the Executive shall not be entitled to
the payment of any pro rata amount of any Annual Bonus for the calendar year
during which the Date of Termination occurs, PROVIDED, that if the Executive's
employment is terminated by the Executive notifying the Employer, pursuant to
Section 2 hereof, that the Term of this Agreement shall not be extended beyond
December 31, 1996 and the Executive does not accept Other Employment (as
defined in Section 6 hereof) within 90 days of the Date of Termination, the
Executive shall be entitled, subject to the Employer's Call Option, to exercise
the Executive Residence Put Option (as defined in Section 6 hereof).
(b) RESIGNATION FOR GOOD REASON; TERMINATION WITHOUT CAUSE. The
Executive may terminate his employment hereunder for Good Reason. If the
Executive's employment is terminated by the Executive for Good Reason or by the
Employer without Cause or if the Employer, pursuant to Section 2 hereof,
notifies the Executive that the Term of this Agreement shall not be, extended,
the Executive shall be entitled (if the Executive is not entitled to a
Separation Payment pursuant to Subsection 4(f)) to a severance payment (the
"Severance Payment") equal to the Base Salary for a period equal to the greater
of (a) the remainder of the Term or (b) one year following the Date of
Termination (the "Severance Period"). The Severance Payment shall be payable in
a lump sum. The Executive shall also be entitled to (i) continue to receive
coverage at the Employer's cost under the Employer's medical and life insurance
programs until Executive becomes covered by the insurance programs of another
employer or through the end of the Severance Period, whichever is shorter, (ii)
require the Employer to purchase the Executive's initial principal residence in
Hawaii (the "Executive Residence") pursuant to the Executive Residence Put
Option, and (iii) exercise all stock options granted to the Executive prior to
the Date of Termination regardless of whether or not such options have vested.
(c) DEATH BEFORE END OF TERM. If the Executive dies prior to the
expiration of the Term, the Employer shall be under no obligation to make any
payments to the Executive's estate after the date of death except for any
compensation earned prior to the date of death but not yet paid and for the pro
rata portion of any Annual Bonus through the date of death that would have been
paid to the Executive had he survived and been employed by the Employer until
the last day of the year of his death. Such bonus payment shall be made at the
time such
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bonus payments would normally have been made for such year. The Employer shall
also continue to provide any benefits to the Executive's survivors as required
by law and the Executive's executors or administrators shall be entitled to
exercise the Executive Residence Put Option. The agreements governing the grant
of any stock options to the Executive (including, without limitation, the
options set forth in Exhibit B hereto) shall provide for the ability to
exercise such options upon the death of the Executive regardless of whether or
not such options have vested.
(d) DISABILITY. The Employer may terminate the Executive's employment
because of Permanent Disability (as defined in Section 6 of this Agreement)
prior to the expiration of the Term. If the Executive's employment is
terminated because of Permanent Disability, the Executive shall be entitled to
(i) continue to receive payment of Base Salary for twelve months offset by any
payment to the Executive on account of disability from any employer or
government sponsored disability insurance plan through the end of the Term,
(ii) receive a pro rata portion (based upon the period ending on the date the
Executive initially became unable to perform his duties under this Agreement)
of any Annual Bonus that would have been paid to the Executive had he continued
to perform his duties under this Agreement until the last day of the year he
became disabled and (iii) exercise the Executive Residence Put Option. The
Employer shall also continue to provide any benefits to the Executive required
by law or the terms of any plan. The agreements governing the grant of any
stock options to the Executive (including, without limitation, the options set
forth in Exhibit B hereto) shall provide for the ability to exercise such
options upon the Permanent Disability of the Executive regardless of whether or
not such options have vested.
(e) RETIREMENT. The Executive's employment may be terminated by the
Executive or by the Employer on account of Retirement (as defined in Section
6 of this Agreement). The Executive shall not be entitled to any further
payments of compensation or other benefits provided under Section 3 of this
Agreement after the Date of Termination by reason of Retirement, except for
any retirement benefit payments due to the Executive from any
Employer-sponsored plan. If this Agreement is terminated on account of
Retirement, no Severance Payment shall be paid by Employer. The Executive shall
be entitled to the benefits of any life insurance or medical insurance which
the Employer is generally making available to key executives on Date of
Termination which occurs by reason of Retirement and any other benefit or
program available by its terms after retirement.
(f) TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control
shall have occurred, the Executive shall be entitled to the benefits provided
in this subparagraph upon either (i) the subsequent termination of Executive's
employment or (ii) the notification of the Executive by the Employer pursuant
to Section 2 hereof that the Term of this Agreement shall not be extended, in
each case during the Term and within one year after the Change in Control shall
have occurred unless such termination or notification is because of Executive's
death or Retirement, by the Employer for Cause or Disability, or by the
Executive for other than Good Reason:
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(i) BASE SALARY BENEFITS. The Employer shall (A) pay the
Executive's full Base Salary through the Date of Termination at the
rate in effect at the time the Notice of Termination is given (B) pay
the amounts due and payable to the Executive as a result of a Change
in Control pursuant to the Employer's stock option plans (including
the 1992 Stock Option Plan of the Employer) (unless previously paid
pursuant to such plans), (C) pay the reasonable cost of packing and
shipping the Executive's household effects back to a mainland
location to be designated by the Executive, and (D) provide the
Executive with the benefits described in clause (ii) of the last
sentence of Section 4(b) hereof;
(ii) SEPARATION PAYMENT. In lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any Severance Payment pursuant to
Subsection 4(b), the Employer shall pay as separation pay to the
Executive, not later than the fifth (5th) day following the Date of
Termination, a lump sum separation payment (the "Separation Payment")
equal to 2.99 times the average of the annual compensation which was
payable to the Executive by the Employer (or any corporation
("Affiliate") affiliated with the Employer within the meaning of
section 1504 of the internal Revenue Code of 1986, as amended (the
"Code"), determined without regard to section 1504 (b) of the Code)
and includible in the Executive's gross income for Federal income tax
purposes for the five (5) taxable years (the "Base Period") preceding
the Executive's taxable year in which a Change in Control of the
company occurred. The amount of the Executive's average annual
compensation shall be determined in accordance with temporary or
final regulations promulgated under section 280G of the Code.
(iii) LEGAL FEES AND EXPENSES. The Employer shall also pay
to the Executive all legal fees and expenses incurred by the
Executive as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement).
(iv) INSURANCE BENEFITS FOR 24 MONTHS. For a twenty-four
(24) month period after such termination, the Employer shall arrange
to provide the Executive with life, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination. Benefits
otherwise receivable by the Executive pursuant to this Subsection
4(f)(iv) shall be reduced to the extent comparable benefits are
actually received by the Executive during the twenty-four (24) month
period following the Executive's termination, and any such benefits
actually received by the Executive shall be reported to the Employer.
(v) SUPPLEMENTAL PENSION. In addition to the pension
benefits to which the Executive is entitled under the Pension Plan or
any successor plans thereto, the Employer shall pay the Executive in
one sum in cash on the fifth (5th) day following the Date of
Termination, a lump sum equal to the actuarial equivalent of the
excess of (1)
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the retirement pension (determined as a straight life annuity
commencing at age 65) which the Executive would have accrued under
the terms of the Pension Plan and any other pension benefit program
(without regard to any amendment to such Pension Plan or other
pension benefit program made subsequent to the Change in Control and
on or prior to the Date of Termination, which amendment adversely
affects in any manner the computation of pension benefits
thereunder), determined as if the Executive were fully vested
thereunder and had accumulated (after the Date of Termination)
twenty-four (24) additional months of service credit thereunder at
the Executive's highest annual rate of compensation during the twelve
(12) months immediately preceding the Date of Termination (but in no
event shall the Executive be deemed to have accumulated additional
months of service credit after the Executive's sixty-fifth (65th)
birthday), over (2) the retirement pension (determined as a straight
life annuity commencing at age sixty-five (65)) which the Executive
had then accrued pursuant to the provisions of the Pension Plan and
any other pension benefit program. For purposes of clause (1), the
term it "compensation" shall include amounts payable pursuant to
Subsection 4(f)(ii) hereof and amounts payable pursuant to Subsection
4(f)(ii) shall be deemed to represent twenty-four (24) months of
compensation (or such lesser number of months of compensation to the
Executive's sixty-fifth (65th) birthday) for purposes of determining
benefits under the Pension Plan. For purposes of this Subsection,
"actuarial equivalent" shall be determined using the same methods and
assumptions utilized under the Pension Plan immediately prior to the
Change in Control.
(vi) REDUCTION OF PAYMENTS IN CERTAIN CASES. Notwithstanding
anything herein to the contrary, if any amounts due to the Executive
under this Agreement and any other plan or program of the company
constitute a "parachute payment," as such term is defined in Section
280G(b)(2) of the Code, and the amount of the parachute payment,
reduced by all federal, state and local taxes applicable thereto,
including the excise tax imposed pursuant to Section 4999 of the
Code, is less than the amount the Executive would receive if the
Executive were paid three times the Executive's "base amount" as
defined in Section 280G(b)(3) of the Code, less $1.00, reduced by all
federal, state and local taxes applicable thereto, then the aggregate
of the amounts constituting the parachute payment shall be reduced to
an amount that will equal three times the Executive's base amount
less $1.00. The determinations to be made with respect to this
Subsection 4(f) shall be made by an accounting firm (the "Auditor")
jointly selected by the Employer and the Executive and paid by the
company. The Auditor shall be a nationally recognized United States
public accounting firm that has not during the two years preceding
the date of its selection acted, in any way, on behalf of the
Employer or any of its subsidiaries. If the Executive and the company
cannot agree on the firm to serve as the Auditor, then the Executive
and the Employer shall each select one accounting firm and these two
firms shall jointly select the accounting firm to serve as the
Auditor. If a determination is made by the Auditor that a reduction
in the aggregate of all payments due to the Executive upon a Change
in Control is required by this Subsection 4(f), the Executive shall
have the right to specify the portion of such reduction, if any, that
will be made under this Agreement and each plan or program of
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the company. If the Executive does not so specify within 60 days
following the date of a determination by the Auditor pursuant to the
preceding sentence, the Employer shall determine, in its sole
discretion, the portion of such reduction, if any, to be made under
this Agreement and each plan or program of the Employer.
(g) NOTICE OF TERMINATION REQUIRED. No termination of employment by
the Executive or by the Employer pursuant to this Section 4 shall be effective
unless the terminating party shall have delivered a Notice of Termination (as
defined in Section 6 of this Agreement) to the other party.
5. NON COMPETITION AND TRADE SECRETS
(a) NO COMPETING EMPLOYMENT. During the Term and for a period of 12
months after the Date of Termination (other than a Date of Termination
resulting from a Change in Control) (the "Restricted Period"), the Executive
shall not, unless he receives the prior written consent of the Employer,
directly or indirectly, own an interest in, manage, operate, join, control,
lend money or render financial or other assistance to or participate in or be
connected with, as an officer, employee, partner, stockholder, consultant or
otherwise, any individual partnership, firm, corporation or other business
organization or entity that, at such time, is engaged in the business of
passenger or freight airline services or aircraft ground maintenance operations
headquartered in Hawaii or which has five (5) percent or more of the
interisland market for passenger or freight air services for Hawaii measured by
passenger revenue miles or freight pound miles.
(b) NO INTERFERENCE. During the Restricted Period, the Executive
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization
(other than the Employer or an Affiliate), intentionally solicit, endeavor to
entice away from the Employer or an Affiliate, or otherwise interfere with the
relationship of the Employer or an Affiliate with, any person who is employed
by the Employer or an Affiliate or any person or entity who is, or was within
the then most recent twelve-month period, a customer or client of the
Employer's or an Affiliate's products, it being understood that the
restrictions in this Section 5(b) shall not apply to the solicitation of
airline passengers.
(c) CONFIDENTIALITY. The Executive recognizes that the services to be
performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment with the Employer, he may acquire confidential
information and trade secrets concerning the operation of the Employer or an
Affiliate, the use or disclosure of which could cause the Employer or an
Affiliate substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly, the Executive
covenants and agrees with the Employer that he will not at any time, (whether
during or after the Term) except in the performance of his obligations to the
Employer hereunder or with the prior written consent of the Board of Directors,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the
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Employer, or any predecessors to its business, or use any such information to
the detriment of the Employer. The term "confidential information" includes,
without limitation, information not previously disclosed to the public or to
the trade by the Employer's management or otherwise generally known to the
public or to the trade with respect to the Employer's products, manufacturing
processes, facilities and methods, research and development, trade secrets and
other intellectual property, systems, patents and patent applications,
procedures, manuals, confidential reports, product price lists, customer lists,
financial information (including the revenues, costs or profits associated with
any of the Employer's products), business plans, prospects or opportunities.
(d) EXCLUSIVE PROPERTY. The Executive confirms that all confidential
information is the exclusive property of the Employer. All business records,
papers and documents kept or made by the Executive relating to the business of
the Employer or an Affiliate shall be and remain the property of the Employer
or the Affiliate, respectively, during the Term and at all times thereafter.
Upon the termination of his employment with the Employer or upon the request of
the Employer at any time, the Executive shall promptly deliver to the Employer,
and shall retain no copies of, any written materials, records and documents
made by the Executive or coming into his possession concerning the business or
affairs of the Employer or an Affiliate other than personal notes or
correspondence of the Executive not containing proprietary information relating
to such business or affairs.
(e) STOCK OWNERSHIP. Nothing in this Agreement shall prohibit the
Executive from acquiring or holding any issue of stock or securities of any
company that has any securities listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc., provided that at any time during the Restricted
Period the Executive and members of his immediate family do not own more than
five (5) percent of any voting securities of any such company engaging in the
type of business described in Section 5(a) above.
(f) INJUNCTIVE RELIEF. The Executive acknowledges that a breach of
any of the covenants contained in this Section 5 may result in material
irreparable injury to the Employer for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach, any payments remaining under
the terms of this Agreement shall cease and the Employer shall be entitled to
obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining the Executive from engaging in activities prohibited by
this Section 5 or such other relief as may be required to specifically enforce
any of the covenants in this Section 5. The Executive agrees to and hereby does
submit to IN PERSONAM jurisdiction before each and every federal court or other
court located in the State of Hawaii for the purpose of interpreting or
enforcing this Section 5.
6. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
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(a) AFFILIATE. The term "Affiliate" includes any company controlling,
controlled by or under common control with the Employer.
(b) CAUSE. Each of the following shall constitute Cause:
(i) the willful and continued failure by the Executive to
perform his duties (other than any such failure resulting from the
termination of the Executive's employment for death, Retirement,
Permanent Disability or Good Reason), after written notice of such
failure has been given to the Executive and the Executive has had a
reasonable period of time to correct such failure;
(ii) the willful commission by the Executive of acts that
are dishonest and demonstrably or materially injurious to the
Employer, monetarily or otherwise;
(iii) the conviction of the Executive for a felony;
or
(iv) a material breach of any of the covenants set forth in
this Agreement, after written notice of such material breach has been
given to the Executive and the Executive has had a reasonable period
of time to correct such material breach.
(c) CHANGE IN CONTROL. A "Change in Control" shall mean a change in
control of the Employer of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether or not the Employer is
subject to such reporting requirement; PROVIDED THAT, without limitation, a
Change in Control shall be deemed to have occurred if:
(i) any individual, partnership, firm, or corporation,
association, trust, unincorporated organization or other entity, or
any syndicate or group deemed to be a person under Section 14(d)(2)
of the Exchange Act, becomes the "beneficial owner" (as defined in
Rule L73D-3 of the General Rules and Regulations under the Exchange
Act), directly or indirectly, of securities of the Employer
representing more than 50% of the combined voting power of the
Employer's then outstanding securities entitled to vote in the
election of directors of the Employer;
(ii) after completion of an initial public offering of the
Employer's voting securities by virtue of which the Employer is
required to file periodic reports pursuant to Sections 13(a) or 15(d)
of the Exchange Act any individual, partnership, firm, or
corporation, association, trust, unincorporated organization or other
entity, or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act becomes the "beneficial owner" (as
defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Employer
representing 30% or more of the combined voting power of the
Employer's then
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outstanding securities entitled to vote in the election of directors
of the Employer and such beneficial owner is the owner of the block
of securities of the Employer entitled to cast the largest number of
votes in the election of directors of the Employer;
(iii) during any period of two (2) consecutive years (not
including any period prior to December 31, 1995), individuals who at
the beginning of such period constituted the Board and any new
directors, whose election by the Board or nomination for election by
the Employer's stockholders was approved by a vote of at least three
quarters (3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or
(iv) the approval by the Shareholders of the Employer of a
transaction in which all or substantially all of the assets of the
Employer are to be liquidated or distributed or the Employer is to
merge with another entity and not be the surviving corporation.
Nothing in the foregoing shall mean or be deemed to mean that a Change in
Control shall have occurred by reason of the Employer effecting an initial
public offering of its voting securities whether or not immediately following
such initial public offering the Ching Family Group, the Ing Family Group or a
combination of such Family Groups is the beneficial owner of securities of the
Employer representing 50% or more of the combined voting power of the
Employer's then outstanding securities entitled to vote in the election of
directors of the Employer. If the Employer executes an agreement, the
consummation of which would result in the occurrence of a Change in Control as
described above, then, with respect to a termination of employment, unless such
termination is because of the Executive's death or Retirement, by the Employer
for Cause or Disability, or by the Executive other than for Good Reason,
occurring after the execution of such agreement (and, if such agreement expires
or is terminated prior to consummation, prior to such expiration or termination
of such agreement), a Change in Control shall be deemed to have occurred as of
the date of the execution of such agreement.
(d) DATE OF TERMINATION. "Date of Termination" shall mean (A) if the
Executive's employment is terminated for Disability, thirty (30) days after a
Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such
thirty (30) day period), and (B) for any other reason (including nonrenewal of
the Agreement), the date specified in the Notice of Termination (which, in the
case of a termination without Cause shall not be less than sixty (60) days, and
in the case of a termination by the Executive shall not be less than sixty (60)
nor more than ninety (90) days, respectively, from the date such Notice of
Termination is given).
(e) EMPLOYER'S CALL OPTION. "Employer's Call Option" shall mean an
option allowing the Employer to purchase the Executive Residence at a purchase
price in cash equal to 95% (100% if a Change in Control shall have occurred)
of the Executive's Cost (as defined below).
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(f) EXECUTIVE RESIDENCE PUT OPTION. "Executive Residence Put Option"
shall mean an option allowing the Executive to require the Employer to purchase
the Executive Residence at a purchase price in cash equal to 95% (100% if a
Change in Control shall have occurred) of the Executive's Cost (as defined
below) of the Executive's Cost.
(g) EXECUTIVE'S COST. "Executive's Cost" shall mean an amount equal
to the sum of (A) the amount paid by the Executive for the Executive Residence
in cash or other property, including the amount of any acquisition indebtedness
and the amount of any real estate taxes treated as part of cost under Treasury
Regulation Section 1.1012-1(b), (B) to the extent not reimbursed by the
Employer under Section 3(f) hereof, the amount of acquisition expenses related
to the Executive Residence that are paid by the Executive, including broker's
expenses, legal fees, and title insurance premiums, (C) the amount paid by the
Executive for permanent improvements to the Executive Residence which are
completed within two years of the date of purchase of the Executive Residence,
(D) the amount paid by the Executive with respect to any other capital
expenditures related to the Executive Residence that qualify for treatment as
capital expenditures under the Internal Revenue Code, including, without
limitation, those described in Treasury Regulation Section 1.263(a)-2, and (E)
the amount of any special assessments paid by the Executive for any local
benefits that improve the Executive Residence, minus the amount of any
deductible casualty loss suffered with respect to the Executive Residence to
the extent not such casualty loss is not repaired or replaced by the Executive.
(h) GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean, without the Executive's express written consent, any of the following:
(i) the Executive shall not be the Chief Executive Officer
of the Employer, reporting directly to the Board of Directors and the
Chief Executive Officer of any corporation or entity that (A) is not
controlled by the Ching Family Group or the Ing Family Group AND (B)
controls the Employer;
(ii) the assignment to the Executive of any duties
inconsistent with, or a substantial alteration in the nature or
status of, the Executive's position or responsibilities or the
conditions of his employment;
(iii) the failure of the Employer to pay the Executive any
compensation or provide other benefits as specified in Section 3 of
this Agreement;
(iv) the relocation of the office of the Employer where the
Executive is employed at the date hereof (the "Employment Location")
to a location more than fifty (50) miles away from the Employment
Location or the Employer's requiring the Executive to be based more
than fifty (50) miles away from the Employment Location (except for
required travel on the Employer's business to an extent substantially
consistent with the Executive's business travel obligations); or
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(v) after 180 days following the consummation of a Change in
Control the Executive determines, in good faith, that he is no longer
able to perform his duties and responsibilities with the Employer;
PROVIDED, that the Executive must provide the Employer a Notice of
Termination pursuant to this subparagraph (v) prior to the 365th day
following a Change in Control (or such shorter period as may be
necessary for the Notice of Termination to be given prior to such
365th day)
(i) NOTICE OF TERMINATION. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(j) OTHER EMPLOYMENT. "Other Employment" shall mean full time
employment as an officer, employee, consultant or otherwise with any individual
partnership, firm, corporation or other business organization or entity other
than the Employer or any Affiliate.
(k) PERMANENT DISABILITY. "Permanent Disability" shall mean a
physical or mental condition of the Executive that, in the judgment of the
Employer, based upon certification by a licensed physician reasonably
acceptable to the Executive and the Employer, has prevented the Executive from
being able to perform the services required under this Agreement and such
condition has continued for a period of at least six months during any twelve
consecutive months and is determined by the physician to be expected to
continue.
(1) RETIREMENT. "Retirement" shall mean the voluntary termination of
the Executive's employment by the Executive on or after age 55 or the election
of the Employer that the Executive shall retire on or after age 65. The
termination of the Executive's employment by the Employer on or after age 65
whether for cause or not shall be treated as a Retirement and Executive shall
not be entitled to any Severance Payment pursuant to Section 4(b) hereof.
7. EXECUTIVE RESIDENCE OPTIONS.
(a) The Employer hereby grants the Executive the Executive Residence
Put Option, PROVIDED, that such option shall expire (i) if the Executive
Residence Put Option is not exercised within 60 days of the Date of Termination
or date of death, as the case may be, or (ii) if the Date of Termination occurs
after the earlier of (A) five years from the date the Executive purchases his
initial principal residence in Hawaii or (B) the sixth anniversary of the
Effective Date. If the Executive is exercising the Executive Residence Put
Option pursuant to Section 4(a) hereof, the Executive shall certify in the
Notice of Termination that he has not accepted Other Employment and has no
current arrangement for accepting Other Employment.
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(b) The Executive hereby grants to the Employer the Employer's Call
Option. The Employer's Call Option may be exercised only if the Executive's
employment is terminated by the Executive prior to December 31, 1996 other than
for Good Reason or under the circumstances set forth in Section 4(a)(iii)
hereof, and, in either such event, must be exercised within 30 days of the Date
of Termination.
8. BINDING AGREEMENT
This Agreement shall be binding on, and inure to the benefit of, the
Employer and its successors and assigns. This Agreement shall be binding on the
Executive. This Agreement shall also inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable hereunder if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there is no such
designee, to the Executive's estate.
9. NOTICE
Any notice hereunder by either party to the other shall be given in
writing by personal delivery, telex, telecopy or certified mail, return receipt
requested, to the applicable address first set forth below (or such other
address as may from time to time be designated by notice by any party hereto
for such purpose):
Aloha Airgroup, Inc.
X.X. Xxx 00000
Xxxxxxxx Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
XXXXXXXX, XX 00000
with a copy to:
Xxxxxxx X. Pack, Esq.
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Notice shall be deemed given, if by personal delivery, on the date of such
delivery or, if by telex or telecopy, on the business day following receipt of
answer back or telecopy confirmation or, if by certified mail, on the date
shown on the applicable return receipt.
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10. AMENDMENT AND WAIVE
No provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, modification, waiver or discharge is agreed
to in writing and signed by the Executive and any two executive officers of the
Employer. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. MERGER OF PRIOR NEGOTIATIONS
This Agreement sets forth all of the promises, agreements, conditions
and understandings between the parties hereto respecting the subject matter
hereof and supersedes all prior negotiations, conversations, discussions,
correspondence, memoranda and agreements between the parties concerning such
subject matter.
12. PARTIAL INVALIDITY
If the final determination of a court of competent jurisdiction
declares, after the expiration of the time within which judicial review (if
permitted) of such determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining term and provisions
hereof shall be unimpaired and (b) the invalid or unenforceable term or
provision shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.
13. GOVERNING LAW
This Agreement is to be governed by and interpreted in accordance
with the laws of the State of Hawaii.
14. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
15. STATEMENTS
During the Restricted Period, the Executive and the Employer agree to
refrain from making any comments or statements to the press, the employees of
the Employer or any Affiliate or any individual or entity with whom the
Employer or any Affiliate has a business relationship which would be likely to
adversely affect (a) the conduct of the business of the Employer or any
Affiliate or the business reputation of the Employer or any Affiliate or any of
their employees, representatives or members of their boards of directors, in
the case of
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comments made by the Executive or (b) the Executive's future employment or
personal or professional reputation, in the case of comments made by the
Employer.
16. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Hawaii before a panel
of three (3) arbitrators. The Employer and the Executive shall each select one
arbitrator, who shall then select a third arbitrator. Such arbitration shall be
conducted in accordance with the commercial rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrators' award
in any court having jurisdiction. The fees, costs and expenses of such
arbitration, including the reasonable fees and disbursements of counsel, shall
be borne by the party against whom the arbitration is finally determined, or
partially by each party according to the arbitrators' determination if it is
not entirely against one party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Effective Date.
ALOHA AIRGROUP, INC.
By: /s/ [illegible]
----------------------------
Title: Chairman 7/22/96
By: /s/ [illegible]
----------------------------
Title:
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
----------------------------
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EXHIBIT A
SUMMARY OF BENEFITS FOR
KEY EXECUTIVES
ALOHA AIRGROUP, INC.
Group Life Insurance of $50,000 (including AD&D)
Supplemental Whole Life Insurance of $1,000,000 (assuming the Executive is
insurable). Policy is portable.
Long term disability after 90-day waiting period at 60% of salary subject to a
maximum of $10,000 per month.
Travel accident insurance for business travel of $200,000.
Interline travel cards based on availability with OAS.
Vacation and sick leave in accordance with past practices for executive
officers.
Initiation fees and annual dues for membership in one country club to be
designated in consultation with the Board of Directors.
Defined benefit pension plan based on 60 month average earnings times years of
service times 1.7%.
Participation in the Supplemental Executive Retirement Program in accordance
with existing Employer policies (related to Base Salary).
Participation in the 401(k) Plan without matching contributions by the
Employer.
Use of Employer owned car.
Participation in the Employer's health insurance program for executives which
includes medical and dental coverage for spouse and dependent children.
Annual physical examination at Employer expense.
Tax and financial planning at Employer expense in accordance with existing
policies.
Long distance calling card and American Express Card at Employer expense
(personal charges to be reimbursed by executive).
To the extent Executive is unable to obtain standard all-risk homeowners' or
comprehensive automobile insurance because such insurance is not available in
the Hawaii market, the Employer will assist the Executive in obtaining such
insurance and if such insurance is not obtainable, indemnify the Executive
against property loss or liability claims which would otherwise have been
covered by such insurance, subject to payment by the Executive of an amount
equal to the premiums he would have paid had such insurance been available and
any deductible amounts, as determined by a reputable, independent insurance
broker licensed to do business in Hawaii. The Executive shall use his best
efforts on a continuing basis to obtain standard all-risk homeowners' and
comprehensive automobile insurance.
A-2
EXHIBIT B
STOCK OPTIONS
Plan: 1992 Stock Option Plan
No. of Shares: 180,000 Shares of Class A Common Stock
Term of Option: 10 years
Exercise Price: $4.49 per Share
Vesting: 25% at the end of one year after the date of grant and 25%
each year thereafter (i.e., fully vesting in four years)
Status: Non-qualified stock options
AMENDMENT TO THE XXXXX X. XXXXXX EMPLOYMENT AGREEMENT
This Amendment (the "Amendment"), dated as of November 1, 2000, is entered
into by and between Aloha Airgroup, Inc., a Hawaii corporation (herein referred
to as the "Employer"), and Xxxxx X. Xxxxxx (herein referred to as the
"Executive").
WHEREAS, the Employer and the Executive have entered into an employment
agreement dated May 11, 1994, as amended and restated as of December 1, 1995
(the "Employment Agreement");
WHEREAS, the parties hereto desire to amend the Employment Agreement; and
WHEREAS, Section 10 of the Employment Agreement authorizes the parties
hereto to amend the Employment Agreement;
NOW, THEREFORE, in consideration of the recitals and agreements contained
herein, the parties hereto agree to amend the Employment Agreement as follows:
1. Section 4(e) of the Employment Agreement is amended and restated as
follows:
(e) RETIREMENT. The Executive's employment may be terminated by the
Executive or by the Employer on account of Retirement (as defined in
Section 6 of this Agreement). If the Executive elects to Retire, he
shall deliver to Employer a Notice of Termination specifying the Date
of Termination by reason of his Retirement which date shall be at least
six months from the date of such Notice of Termination unless such
Notice of Termination is given following the consummation of a Change
in Control, in which event the Date of Termination shall be as
specified in Section 6(d) of this Agreement. Subject to the proviso to
the next-to-last sentence of this Section 4(e), the Executive shall not
be entitled to any further payments of compensation or other benefits
provided under Section 3 of this Agreement after the Date of
Termination by reason of Retirement, except for any retirement benefit
payments due to the Executive from any employer sponsored plan. If this
Agreement is terminated on account of Retirement, no Severance payment
shall be paid by the Employer. The Executive shall be entitled to the
benefits of any life insurance and medical insurance which the Employer
is generally making available to key executives on the Date of
Termination which occurs by reason of Retirement and any other benefit
or program available by its terms after Retirement, provided, however,
that if the Executive's Retirement occurs prior to his attainment of
age 65, the employer shall maintain all life insurance and medical
insurance benefits that were provided to the Executive immediately
prior to the Date of Termination, at the Employer's expense, until the
date that the Executive attains the age of 65. Notwithstanding the
proviso of the preceding sentence, if the Executive obtains Other
Employment before he reaches the age of 65, after Retirement, the
Executive shall promptly inform Employer of the facts and circumstances
of such Other Employment and thereafter the life insurance and medical
insurance benefits provided by Employer may be reduced as follows: (i)
Employer may reduce the amount of life insurance coverage for Executive
by the amount of life insurance the Executive is entitled to receive
from the new employer; and (ii) although Employer shall continue to
provide medical insurance to
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the Executive, the Executive will make no claim against Employer's medical
insurer until all medical benefits provided by the new employer shall have
been exhausted.
2. The first sentence of Section 4(f) of the Employment Agreement is amended
to read as follows:
(f) TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control shall
have occurred, the Executive shall be entitled to the benefits provided in
this subsection upon either (i) the subsequent termination of Executive's
employment, including without limitation a termination as a result of a
Notice of Termination given by the Executive by reason of his Retirement,
or (ii) the notification of the Executive by the Employer pursuant to
Section 2 hereof that the Term of this Agreement shall not be extended, in
each case during the Term and within one year after the Change in Control
shall have occurred, in which event the Executive shall be entitled to all
of the benefits provided upon his Retirement, as specified in Section 4(e)
hereof, in addition to the benefits set forth below in this Section 4(f),
without regard to the limitations on benefits set forth in subsection
4(f)(iv) below, unless such termination or notification is because of the
Executive's death or as a result of a Notice of Termination given by the
Employer for Cause or Disability, or by the Executive for other than
Retirement or "Good Reason."
3. Section 6(f) of the Employment Agreement is amended and restated as
follows:
(f) EXECUTIVE RESIDENCE PUT OPTION. "Executive Residence Put Option"
shall mean an option allowing the Executive at any time prior to the
expiration of such Option to require the Employer to purchase the
Executive Residence at a purchase price in cash equal to 100% of the
Executive's Cost (as defined below) and to require the Employer to pay
the reasonable cost of packing and shipping the Executive's household
effects back to a mainland location to be designated by the Executive
and the reasonable cost of unpacking such effects at such location. The
Executive Residence Put Option shall expire on the first to occur of
(i) December 31, 2002, (ii) 60 days after the Date of Termination, or
(iii) 60 days after the date of death of the Executive. The Executive
Residence Put Option may be exercised (i) only if the Executive shall
have delivered a Notice of Termination specifying a Date of Termination
at least six months from the date of such Notice of Termination (unless
such Notice of Termination is given following the consummation of a
Change in Control, in which event the Date of Termination shall be as
specified in Section 6(d) of this Agreement) and stating Executive's
intention to exercise the Executive Residence Put Option; (ii) only if
the Executive shall certify that he has not accepted Other Employment
and has no current arrangement for accepting Other Employment; and
(iii) only by the Executive or his executor in the case of his death.
4. Subparagraph 6(h)(v) of the Employment Agreement is amended and restated
as follows:
(v) after 180 days following the consummation of a Change in Control, the
Executive determines, in his sole discretion, that he is no longer able to
perform his duties and responsibilities with the Employer; PROVIDED, that
the Executive must provide the Employer with a Notice of Termination
pursuant to this subparagraph (v) prior to the
2
365th day following a Change in Control (or such shorter period the Notice
of Termination to be given prior to such 365th day).
5. Section 7(a) of the Employment Agreement is amended and restated as
follows:
(a) the employer hereby grants the Executive the Executive Residence Put
Option. In case ofexercise of the Executive Residence Put Option, Employer
and the Executive shall establish procedures reasonably satisfactory to
each party for Employer to resell the Executive Residence, including the
engagement of real estate brokers and the showing of the Executive
Residence to prospective buyers.
6. Capitalized terms used but not defined herein shall have the meaning
assigned to such terms in the Employment Agreement.
7. Except as expressly amended hereby, the Employment Agreement remains in
full force and effect.
8. This Amendment shall be deemed to be a contract made under the laws of the
State of Hawaii, and for all purposes shall be governed by and constructed
in accordance with the laws of such State applicable to contracts made and
performed entirely within such State.
9. This Amendment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parities hereto have caused this Amendment to be
duly executed as of the day and year first above written.
ALOHAL AIRGROUP, INC.
/s/ Stuart X.X. Xx
-----------------------------------
Name: Stuart X.X. Xx
Title: CHAIRMAN, COMPENSATION COMMITTEE
/s/ Xxx X. Xxxxx
-----------------------------------
Name: Xxx X. Xxxxx
Title: CHAIRMAN OF THE BOARD
1.04.01
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
-----------------------------------
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