Exhibit 10.12 (c)
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 XXXXXX X. XXXXX ("Xxxxx").
Witnesseth That:
Whereas, Xxxxx is currently employed by the
Company as Chief Operating Officer and Executive Vice
President, and in connection with such employment entered
into a Severance Agreement (dated as of January 1, 1997)
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;
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 the Company in the
capacities of Chief Operating Officer and Executive Vice
President. Xxxxx shall be responsible for supervising and
directing all operations of the Company and of any other
entity(ies) to which the Company's obligations under this
Agreement shall be assigned pursuant to Paragraph 12. Xxxxx
shall otherwise be responsible for carrying out all such
other duties and services for the Company commensurate with
Xxxxx'x position, as may be designed from time to time by
the Chief Executive Officer of the Company (the "CEO").
3. Term of Employment Xxxxx'x term of
employment under this Restated Agreement shall commence on
the Effective Date and shall terminate on the last day of
the calendar month which is twelve (12) 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 Xxxxx'x
employment has previously been terminated or unless Xxxxx or
the Company has provided notice of intention to terminate
Xxxxx'x employment pursuant to the terms of Paragraph 10
below, in which case Xxxxx'x term of employment under this
Agreement will be extended to the pending Termination Date.
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 under the direction of
the CEO.
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
Thousand Dollars ($200,000) shall be paid to Xxxxx.
Commencing on May 1, 1999 and on each May 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. Xxxxx acknowledges that his
salary increase effective May 1, 1999 pursuant to this
paragraph has already been provided to him in the form of
certain stock options. 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.
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. 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 thirty percent (30%) of Xxxxx'x
annual base salary. Deferred Compensation will be based on
Xxxxx'x annual base salary in effect on May 1 in each year
beginning 1998, and will be payable as of May 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 as of July 1, 1996, 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.(iv) 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,
1997 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 as may be
determined appropriate by the Compensation Committee of the
Board of Directors.
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. Mandatory Stock Options. 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 May
commencing in May, 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 35,000 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 shall be consistent with the terms of options
granted as of the time of the grant to other senior
executive officers at or below Xxxxx'x position with the
Company.
B. Acceleration of Stock Options upon a
Change in Control. If the Company experiences a Corporate
Change, the exercisability and vesting of all Stock Options
held by Xxxxx as of the date of the Corporate Change shall
accelerate as of the date of such Corporate Change. The
Compensation Committee of the Company's Board of Directors
(the "Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Xxxxx, xxxx effect one or more of the following
alternatives or combination of alternatives with respect to
all outstanding Stock Options (which alternatives may be
conditional on the occurrence of such of the Corporate
Change specified in clause (i) through (v) of the definition
of Corporate Change below which gives rise to the Corporate
Change: (1) in the case of a Corporate Change specified in
clauses (i), (ii) or (iv) of the definition thereof, provide
that exercisable options (including any options exercisable
pursuant to the first sentence of this Paragraph 8.B.) then
outstanding may be exercised in full for a limited period of
time on or before a specified date (which will permit Xxxxx
to participate with the Common Stock received upon exercise
of such option in the event of a Corporate Change specified
in clauses (i), (ii) or (iv) of the definition of Corporate
Change below, as the case may be) fixed by the Committee,
after which specified date all unexercised options and all
rights of Xxxxx thereunder shall terminate, (2) provide that
exercisable options (including any options exercisable
pursuant to the first sentence of this Paragraph 8.B.) then
outstanding may be exercised so that such options may be
exercised in full for their then remaining term, or
(3) require the mandatory surrender to the Company of
outstanding options held by Xxxxx (including any options
exercisable pursuant to the first sentence of this Paragraph
8.B.) as of a date, before or not later than sixty days
after such Corporate Change, specified by the Committee, and
in such event the Committee shall thereupon cancel such
options and the Company shall pay to Xxxxx an amount of cash
equal to the excess of the fair market value of the
aggregate shares subject to such option over the aggregate
option price of such shares; provided, however, the
Committee shall not select an alternative (unless consented
to by Xxxxx) that, if Xxxxx exercised his accelerated
options pursuant to alternative 1 or 2 and participated in
the transaction specified in clause (i), (ii) or (iv) of
the definition of Corporate Change below or received cash
pursuant to alternative 3, would result in Xxxxx'x owing any
money by virtue of operation of Section 16(b) of the
Exchange Act. If all such alternatives have such a result,
the Committee shall take such action, which is hereby
authorized, to put Xxxxx in as close to the same position as
Xxxxx would have been in had alternative 1, 2 or 3 been
selected but without resulting in any payment by Xxxxx
pursuant to Section 16(b) of the Exchange Act.
Notwithstanding the foregoing, with the consent of Xxxxx,
the Committee may in lieu of the foregoing make such
provision with respect of any Corporate Change as it deems
appropriate.
C. Definitions. For purposes of this
Agreement:
(i) "Stock Options" shall mean any
grant to Xxxxx by the Company, pursuant to a Stock Option
Plan, of the right and option to purchase from the Company a
specified number of shares of Atlantic Coast Airlines
Holdings, Inc. common stock under certain terms and
conditions.
(ii) "Change in Control" and "Corporate
Change" shall each mean (i) any merger or consolidation in
which the Company shall not be the surviving entity (or
survives only as a subsidiary of another entity, unless the
stockholders of Company immediately before such merger or
consolidation own, directly or indirectly immediately
following such merger or consolidation, substantially all of
the combined voting power of the surviving entity in
substantially the same proportion as their ownership
immediately before such merger or consolidation, (ii) the
sale of all or substantially all of the Company's assets to
any other person or entity (other than a wholly-owned
subsidiary), (iii) the acquisition of beneficial ownership
or control of (including, without limitation, power to vote)
more than 50% of the outstanding shares of Common Stock by
any person or entity (including a "group" as defined by or
under Section 13(d)(3) of the Exchange Act), (iv) the
dissolution or liquidation of the Company, (v) a contested
election of directors, as a result of which or in connection
with which the persons who were directors of the Company
before such election or their nominees cease to constitute a
majority of the Board, or (vi) any other event specified by
the Committee, regardless of whether at the time an Option
is granted or thereafter.
D. Amendment to Existing Option Agreements.
The provisions of this Paragraph 18 shall apply to all Stock
Options or restricted stock previously granted to Employee,
and this Amendment Number One shall be deemed to be an
amendment to all Stock Option or Restricted Stock Agreements
presently in existence between the Company and Employee, and
will supersede any language to the contrary contained in
said agreements. These terms will also apply to mandatory
Stock Options granted as provided in subparagraph A above.
The Compensation Committee of the Board of Directors retains
full discretion of whether to grant any additional Stock
Options in the future, and if so whether the terms provided
herein will apply to said Stock Options.
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 six (6) 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
six month period; provided, however, that upon any such
termination Company shall be obligated to provide Xxxxx with
Severance Compensation as provided in Paragraph 10.E.
herein. Such six-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 six
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
President, Chairman of the Board, or by the Compensation
Committee of the Board of Directors of Company; 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. Any mandatory
option grants as provided herein shall be deferred until
such time as the disability period ends.
(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) Other than Following a Change in
Control. Xxxxx may terminate his employment by delivering
to Company sixty (60) days' written notice, and such
termination shall be effective on the sixtieth (60th) day
following the date of receipt 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 (paid at
the same time it would have been paid had Xxxxx'x employment
not been terminated), but will not be entitled to Severance
Compensation, to any bonus for the current bonus period, or
to any other compensation, bonus or fringe benefits accrued
after the Termination Date.
(ii) Following a Change in Control.
Notwithstanding the above, in the event of any termination
by Xxxxx of his employment with the Company which is
effected within twelve (12) months following a "Change in
Control" as defined and determined under Paragraph 8.C. of
this Agreement, Company shall be obligated to provide Xxxxx
with Severance Compensation as provided in Paragraph 10.E.
herein. The twelve month period will be deemed to mean any
notice given within twelve months following a Change in
Control where an actual termination occurs within sixty days
following said notice.
D. Termination by Company.
(i) Without Cause. Company may,
without cause, terminate Xxxxx'x employment under this
Agreement at any time by giving Xxxxx fifteen (15) days'
written notice thereof, and such termination shall be
effective on the fifteenth day following the date such
notice is given (said 15th 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, 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, shall automatically
be deemed to be a termination without cause. The twelve
month period will be deemed to mean any notice given within
twelve months following a Change in Control regardless of
when actual termination occurs following said notice.
(ii) For Cause. Company may terminate
Xxxxx'x employment under this Agreement immediately for
"cause". In such event, the Company shall not be liable to
Xxxxx for any compensation, bonus or benefits after the date
of termination of employment. 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, dishonesty or personal
misconduct by Xxxxx, which act is harmful to Company, (iii)
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 two 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 two 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 and that are not exercisable as of the Termination
Date shall terminate as of said date. For all options that
are exercisable as of said date (including options that are
accelerated following a Change in Control pursuant to
Paragraph 8 above), the terms of exercise, payment, and
expiration, shall be as provided in each option agreement.
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.
(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. 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. The Atlantic
Coast Airlines, Inc. flight pass privileges currently
granted to Xxxxx will continue for the Severance Period.
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, and his
children shall be provided free travel on a space available
basis. 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) Certain Adjustments.
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. Nonsolicitation, Non-Competition, and
Confidentiality
A. Nonsolicitation and Non-Competition.
For so long as Xxxxx is an employee of the Company, and
continuing thereafter for twelve months following any
termination of Xxxxx'x employment, or with respect to the
provisions of (i), below, for the longer of such twelve
month period or for such period as Xxxxx is receiving
Severance Compensation, Xxxxx shall not, without the prior
written consent of the Company, directly or indirectly, as a
sole proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person,
partnership, corporation or other business organization or
entity other than the Company: (i) solicit or endeavor to
entice away from the Company or any of its subsidiaries any
person or entity who is, or, during the then most recent 12
month period, was employed by, or had served as an agent of,
the Company or any of its subsidiaries; or (ii) engage in or
contract with others to engage in any business enterprise,
line of work consulting contract, joint venture or other
arrangement which conducts a business or businesses
substantially similar to the business conducted by Company
in any area in which Company or any of its affiliates or
subsidiaries provides or plans to provide air transportation
to the public. Xxxxx acknowledges that the geographic area
covered hereby, and the period and nature of the agreed
restrictions are reasonable and necessary for the protection
of the business of the Company. All provisions of this
Paragraph concerning non-competition are severable; and
while it is the intention of the parties that all of said
provisions shall be enforceable, if any one of the same
shall be held to be unenforceable in whole or in part, the
remainder shall continue to be in full force and effect.
The terms of this Paragraph 11.A will not apply following
any termination of Xxxxx'x employment that was effected as a
result of, in connection with or within twelve (12) months
following a Change in Control. The twelve month period will
be deemed to mean any notice given within twelve months
following a Change in Control regardless of when actual
termination occurs following said notice. In the event
Xxxxx is receiving Severance Compensation following
B. Confidentiality. Xxxxx covenants and
agrees with the Company that he will not at any time, except
in performance of his obligations to the Company hereunder
or with the prior written consent of the Company, directly
or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of
his association with the Company or any of its subsidiaries
and affiliates. The term "confidential information"
includes information not previously disclosed to the public
or to the trade by the Company's management, or otherwise in
the public domain, with respect to the Company's or any of
its affiliates' or subsidiaries', products, facilities,
applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals,
confidential reports, price lists, customer lists, technical
information, financial information (including the revenues,
costs or profits associated with the Company), business
plans, prospects or opportunities, but shall exclude any
information which (i) is or becomes available to the public
or is generally known in the industry or industries in which
the Company operates other than as a result of disclosure by
Xxxxx in violation of his agreements under this Paragraph
11B or (ii) Xxxxx is required to disclose under any
applicable laws, regulations or directives of any government
agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law.
C. Exclusive Property. Xxxxx confirms that
all confidential information is and shall remain the
exclusive property of the Company. All business records,
papers and documents kept or made by Xxxxx relating to the
business of the Company shall be and remain the property of
the Company, except for such papers customarily deemed to be
the personal copies of Xxxxx.
D. Injunctive Relief. Without intending to
limit the remedies available to the Company, Xxxxx
acknowledges that a breach of any of the covenants contain
in this Paragraph 11 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries 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 or threat thereof,
the Company shall be entitled to seek a temporary
restraining order and/or a preliminary or permanent
injunction restraining Xxxxx from engaging in activities
prohibited by this Paragraph 11 or such other relief as may
be required specifically to enforce any of the covenants in
this Paragraph 11. If for any reason, it is held that the
restrictions under this Paragraph 11 are not reasonable or
that consideration therefor is inadequate, such restrictions
shall be interpreted or modified to include as much of the
duration and scope identified in this Paragraph 11 as will
render such restrictions valid and enforceable.
12. 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 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.
13. 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 considers to be reasonable.
14. Specific Performance The parties hereby
agree that any violation by Xxxxx of the covenants and
agreements contained herein shall cause irreparable damage
to the Company, and the 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.
15. 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.
16. Waiver of Breach or Violation Not Deemed
Continuing The waiver by the Company of any provision of
this Agreement may be effected only by a written waiver duly
executed on behalf of the Company and except to the extent
specifically provided in such waiver 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 the 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 given the
opportunity to be represented by counsel of his choosing in
the drafting and negotiation of this Agreement and that he
reviewed this Agreement. 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 and as a condition precedent to the payment
thereof, 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.
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:
_______________________________
________________________
Xxxxxx X. Xxxxx
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary President & Chief
Executive Officer
ATTEST: ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ BY:
_________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary President & Chief
Executive Officer
