EXHIBIT 10.1
CONSULTING AGREEMENT
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CONSULTING AGREEMENT, dated as of May 19, 1999 and effective
as of May 25, 1999, between Trans World Airlines, Inc. (the "Company"),
and Xxxxxx X. Xxxxxx (the "Consultant").
WHEREAS, the Company desires to retain the consulting
services of the Consultant, and the Consultant has agreed to provide
consulting services to the Company, in each case in accordance with the
terms of this Agreement; and
WHEREAS, the parties desire to set forth the entirety of
their agreements and understandings with respect to such matters;
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby duly acknowledged, the parties agree
as follows:
1. Consultancy. The Company hereby retains the Consultant to render
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to the Company certain consulting services described below, and the
Consultant hereby agrees to render such consulting services to the
Company, subject to the terms and conditions described in this
Agreement.
2. Term. The Consultant's retention commences as of the effective
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date of this Agreement and will continue until May 24, 2002, unless
earlier terminated in accordance with this Agreement.
3. Consulting Duties. The Consultant will provide such consulting
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services as from time to time may reasonably be requested by the
Company's Chief Executive Officer or Board of Directors, such consulting
services to be provided at the pleasure of the Consultant with no
minimum number of hours required. Without limiting the foregoing
sentence, while the parties intend in good faith that until May 24, 2000
the Consultant will devote to such consulting services between fifty
percent (50%) and seventy-five percent (75%) of his working time, the
parties hereto acknowledge that there is no minimum service requirement
under this Agreement.
4. Non-Consulting Duties. In addition to providing consulting
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services to the Company, the Consultant will serve at the pleasure of
the Board of Directors of the Company (subject to election by the
shareholders of the Company) and for separate compensation as the
Chairman of the Board of Directors of the Company and also as the
Chairman of the Executive Committee of the Board of Directors of the
Company. The Company agrees to nominate the Consultant for reelection
as a member of the Board of Directors of the Company at the May, 1999
annual meeting of the shareholders of the Company.
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August 13, 1999
5. Cash Compensation.
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(a) In exchange for his consulting services to the
Company, the Consultant will receive from the Company cash payments in
the amount of $770,000 for the twelve (12) month period beginning on the
effective date of this Agreement and ending on May 24, 2000 (the "Annual
Fee"), payable in equal monthly installments, but no less promptly than
when the Consultant was paid as an employee. Thereafter, the Consultant
will be paid per diem, cash payments by the Company (for consulting
services as reasonably requested by the Chief Executive Officer or the
Board of Directors of the Company) at a rate equal to $3,500 for each
full working day on which such consulting services are provided (the
"Per Diem Fees"). The Consultant's Annual Fee and Per Diem Fees will be
payable, if the Consultant so chooses, to a nominee of the Consultant
designated in writing.
(b) In exchange for performing his duties as Chairman of
the Board of Directors of the Company and Chairman of the Executive
Committee of the Board of Directors of the Company, the Consultant will
receive for so long as he acts in such capacity an annual retainer of
$75,000, payable in equal quarterly installments (the "Annual
Retainer"). In addition, the Consultant will receive fees for
participating in meetings of the Board of Directors, so long as he
remains Chairman of the Board of Directors of the Company, the Executive
Committee and other board committees on which the Consultant serves, all
at rates 1.5 times higher than the rates paid to other directors
attending such meetings (the "Board Fees"). Both the Annual Retainer
and the Board Fees shall be paid at the same time and in the same manner
as such payments are made to other members of the Board of Directors of
the Company.
6. Expenses. The Consultant will receive reimbursement from
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the Company for all reasonable out-of-pocket expenses for any business
travel and business expenses incurred in the performance of his duties
under this Agreement, in accordance with the expense reimbursement
policies of the Company from time-to-time in effect. The Company will
at its cost continue to provide the Consultant with his current
apartment or an equivalent apartment at no higher cost to the Company
(without sublet rights) in the St. Louis, Missouri area until May 24,
2000, unless this Agreement is terminated earlier in accordance with its
terms.
7. Stock Options. All stock options previously granted to the
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Consultant will continue to vest during the term of this Agreement in
accordance with the vesting schedule specified in the Stock Option
Agreements between the Company and the Consultant, and as provided in
the Company's Key Employee Stock Incentive Plan (the "KESIP"). If the
Consultant's consulting services are terminated, the Consultant's
previously granted stock options will vest and remain outstanding and
exercisable under the Stock Option Agreements and the KESIP as amended
from time to time to the extent, in the same manner and on the same
terms and conditions as if his employment with the Company had then been
so terminated at such time; provided that when the KESIP permits
exercise of options following termination, the Consultant will have no
less than sixty (60) days in which to exercise such options. During the
term of this Agreement, the Consultant will continue to be entitled to
receive stock options from the Company under the Outside Directors'
Stock Ownership and Stock Option Plan (the "Plan"), as such options may
be granted by the Board of Directors of the Company from time to time,
consistent with such Plan and on the same terms granted to other members
of the Board of Directors of the Company.
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8. Accelerated Payments.
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(a) If prior to May 24, 2000, the Consultant ceases to be
the Chairman of the Board of Directors of the Company (other than as a
result of the Consultant resigning or being removed for good cause, and
for any reason after a "change in control" (as such term is defined in
the KESIP) of the Company), then the unpaid balance of the Annual Fee
immediately will accelerate and become due and payable in one lump cash
sum to the Consultant. For purposes of this Agreement, "good cause"
shall mean that (i) the Consultant is convicted of or engages in conduct
which constitutes a felony, or a misdemeanor involving moral turpitude;
or (ii) the Consultant is found by the Company's Board of Directors
after reasonable investigation to have failed or refused to in any
material respect to perform his duties and responsibilities, (after
notice and opportunity to cure if such material failure or refusal can
be cured) provided that a failure shall not mean actions taken in good
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faith in the Consultant's exercise of his business judgment and within
the Consultant's authority as Chairman of the Company's Board of
Directors; or (iii) the Consultant is found by the Company's Board of
Directors after reasonable investigation to have willfully engaged in
conduct which is demonstrably and materially injurious to the Company
and such conduct was not taken in good faith in the Consultant's
exercise of his business judgment and within the Consultant's authority
as Chairman or was not otherwise authorized in the Company's business
plan or directly or indirectly by the Company's Board of Directors or
Chief Executive Officer, or (iv) the Consultant is found by the
Company's Board of Directors after reasonable investigation to have
breached his legal duty of loyalty to, or committed any act of fraud,
theft or dishonesty against or involving, the Company or any of its
affiliated companies; or (v) the Consultant is found by the Company's
Board of Directors after reasonable investigation to have breached any
material provision of this Agreement. For purposes of this Agreement,
"resigning" shall mean that (i) the Consultant informs one of the
Company's directors or officers in writing that the Consultant will
cease to serve as any of the Chairman of the Board of Directors of the
Company, a member of the Board of Directors of the Company, or a
consultant to the Company or (ii) the Consultant works for or provides
services to a United States, Canadian or Mexican based or incorporated
carrier operating aircraft having 51 or more seats (a "Subject Airline")
in the capacity of (x) a director or officer or (y) a consultant
providing marketing or strategic planning advice. Without altering the
provisions of subpart (ii) of the preceding sentence or the Consultant's
other obligations as a member of the Company's Board of Directors, the
Consultant will advise the Company's Board of Directors or Executive
Committee before accepting any position with another commercial, charter
or cargo airline. The Consultant may provide to a Subject Airline those
consulting services not prohibited by this Section 8(a).
(b) If after May 24, 2000, but during the term of this
Agreement, the Consultant ceases to be the Chairman of the Board of
Directors of the Company, the Company promptly will pay his out-of-
pocket expenses, his prorated Annual Retainer and his Board Fees for
meetings attended.
(c) If the Consultant's consulting services under this
Agreement are discontinued, the Company promptly will pay the
Consultant's out-of-pocket expenses, and the Consultant's accrued but
unpaid Per Diem Fees (after May 24, 2000).
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9. Medical, Dental, Insurance, Life and Accident Insurance.
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The Consultant and his spouse will at all times during the continuation
of the term of this Agreement be eligible to receive the same level of
benefits (other than vacation) on the same terms and conditions as they
may be offered to any retired executive officer of the Company and such
officer's spouse. Without limiting the foregoing, (i) the Executive and
his eligible dependents will receive medical and dental coverage, on the
same terms provided to other retired executive officers of the Company,
up to the date coverage becomes available from a federal or state
government, and (ii) the Executive will receive a life insurance policy
funded by the Company having a value equal to 30% of his final base
salary. Any insurance premium paid by the Company will be imputed to
the Consultant to the extent provided in applicable Internal Revenue
Service rules, as the same may be amended. The Consultant will use his
reasonable efforts, if subsequently employed or consulting for an entity
providing generally comparable or superior medical or dental benefits,
to elect such benefits and suspend his use of such benefits from the
Company, with full power to renew such Company coverage in the future.
If such subsequent entity provides generally comparable or superior
post-retirement medical or dental benefits, the Consultant will use his
reasonable efforts to substitute those benefits for those provided by
the Company.
10. Vacation. The Consultant will not be entitled to vacation
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or payments in lieu of vacation under this Agreement. Notwithstanding
the foregoing, the Consultant will receive on or before May 27, 1999 a
cash payment from the Company for previously accrued but unused vacation
earned by the Consultant in his previous capacities with the Company in
accordance with the Company's policies for the payment of unused
vacation.
11. Flight Privileges. The Consultant and eligible family
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members will be entitled to card-type Class A "term" passes (and tax
gross up payments in accordance with the Company's policies) on the
Company's routes worldwide for so long as the Consultant provides
consulting services to the Company or serves on the Company's Board of
Directors or any committee thereof, after which the Consultant will be
entitled to flight privileges in accordance with the Company's policies
applicable to retired directors.
12. No Assignment. This Agreement is personal to the
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Consultant and, except as set forth in Section 5, without the Company's
and the Consultant's prior written consent, it will not be assignable by
the Consultant or the Company other than by will or the laws of descent
and distribution. This Agreement will inure to the benefit of and be
enforceable by the legal representatives of the Consultant's estate.
13. Termination Obligations. The Consultant agrees that:
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(a) The Consultant will not during the term of this
Agreement and for a period of two (2) years following the termination of
his Agreement, directly or indirectly solicit or assist or encourage the
solicitation of any employee of the Company or any of its subsidiaries
or affiliated companies or anyone who was so employed at any time within
twelve (12) months prior to termination of Consultant's services to the
Company to be employed by the Consultant or by any entity in which the
Consultant owns or reasonably expects to own any equity interest in
excess of five percent (5%) of any class of the outstanding securities
thereof, or by any entity by which the Consultant is employed or for
which the Consultant serves or reasonably expects to serve in any
capacity; nor (after his consultancy ends and during such 2 year period)
encourage or induce any
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Company employee to terminate his or her Company employment. For the
purposes of this paragraph, the term "solicit" will mean any contact by
the Consultant with or providing information to others who may be
reasonably expected to contact any employees of the Company or of any of
its subsidiaries or affiliated companies regarding their employment
status, job satisfaction, interest in seeking employment with the
Consultant, with any person affiliated with the Consultant or by whom
the Consultant is employed but will not include print advertising for
personnel or responding to any unsolicited request for a personal
recommendation for or evaluation of a Company employee or an employee of
any of the Company's subsidiaries or affiliated companies.
(b) The Consultant will hold forever hereafter in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or
any of its subsidiaries or affiliated companies, including but not
limited to commercial, operational, marketing, pricing, alliance, route
structure, capital or other financial information including costs,
strategies, forecasts or trade secrets, acquisition strategies or
candidates or personnel acquisition plans ("confidential information")
which will have been obtained by the Consultant during or by reason of
his past employment or present or future retention by the Company or by
any of its subsidiaries or affiliated companies and which will not be
public knowledge. During and after the end of the term of this
Agreement, the Consultant will not, without the prior written consent of
the Company or unless required to do so by reason of a court order or
subpoena (in which case Consultant will give Company prompt notice of
any such other subpoena or order, or request therefore, so as to provide
Company the maximum opportunity to contest the same), communicate or
divulge any such confidential information to anyone other than the
Company or those designated by it, except that while employed by the
Company in the business of and for the benefit of the Company, the
Consultant may provide confidential information as appropriate to those
persons who in the Consultant's reasonable judgment have a need to know
such confidential information.
(c) Except as may otherwise be required by law or
regulation, the Consultant will not for a period of two (2) years
following the effective date of the termination of his consultancy
discuss or disclose to the media or Company personnel the circumstances
or terms of the termination of his consultancy.
(d) The Consultant will not publicly disparage or
denigrate the Company or any of its officers, directors or practices.
(e) The Company agrees that its officers, directors and
agents will not publicly disparage or denigrate the Consultant following
his termination of consultancy or, except as may be required by law or
regulation, otherwise discuss or disclose to the media or Company
personnel the circumstances or terms of the termination of his
consultancy.
(f) To the extent that any covenant or agreement contained
in this Section 13 is determined by a Court to be invalid or
unenforceable in any respect or to any extent, the covenant or agreement
will not be rendered void, but instead will be automatically amended to
such lesser scope or to such lesser extent as will grant Company the
maximum restriction on Consultant's conduct and activities permitted by
applicable law in such circumstances.
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(g) Neither party to this Agreement will issue a press
release or make a public statement regarding the other party hereto
without such other party's prior approval, except that the Company will
be entitled to make such disclosures as are required by applicable
securities laws and exchange rules and will endeavor in good faith to
consult with the Consultant regarding such disclosures.
(h) For a period of two (2) years following termination of
employment, the Consultant will to the extent reasonably possible, upon
reasonable prior notice, make himself available for consultation with
Company counsel, to meet with Company counsel and prepare to testify as
a witness or deponent, and to testify as a witness at a trial,
deposition or proceeding, concerning any legal matter involving or
affecting the Company. The Company will pay for all reasonable and
necessary out-of-pocket travel and telephone and such other costs and
expense incurred by the Consultant in connection with any such activity
including compensation at the Consultant's then standard hourly rate for
such time as the Consultant is required to devote to the matter,
provided however that as to such required time the Consultant is not
then otherwise being compensated by his employer, firm or other similar
such entity.
14. Miscellaneous.
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(a) This Agreement will be governed by and be construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within New York and without
reference to principles of conflicts of laws. The captions of this
Agreement are not part of the provisions hereof and will have no force
or effect. Neither this Agreement nor any of its terms may be amended,
waived, added to or modified other than by written agreement executed by
the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder will be
in writing and will be given by hand delivery to the other party or by
regular or registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Consultant:
Xx. Xxxxxx X. Xxxxxx
0 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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If to the Company:
Trans World Airlines, Inc.
One City Centre
000 Xxxxx 0xx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: General Counsel
With a copy to:
Xxxxxxxxxxx X. Xxxxx, Esq.
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as either party will have furnished to the
other in writing in accordance herewith. Notice and communications will
be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any
other provision of this Agreement.
(d) This Agreement contains the entire understanding
between the parties concerning the subject matter hereof and supersedes
all prior agreements (including the employment agreement between the
Company and the Consultant dated as of February 12, 1997),
understandings, discussions, negotiations and undertakings, whether
written or oral, among the parties with respect thereto. The terms of
any employee manual, handbook, or any policy of the Company, will not
modify, alter, or invalidate any term of this Agreement nor alter the
Consultant's at will status, and in case of any conflict between a term
of this Agreement and any such policy, handbook or manual, the terms of
this Agreement control, except for benefit plans and stock option awards
described herein (to the extent not otherwise provided in this
Agreement).
(e) The Consultant represents that or he is not a party to
any agreement, or under any legal obligation, which would preclude or in
any way impair the Consultant's performance of Consultant's duties for
the Company hereunder. The Consultant has not provided, and will not
provide, to the Company any trade secret of another person whose secrecy
he is obligated to maintain.
(f) In the event that a dispute arises between the Company
and the Consultant concerning the enforcement or interpretation of the
terms of this Agreement, the Company and the Consultant agree to
negotiate in good faith to resolve such dispute. In the event that the
parties are unable to resolve this dispute within ninety (90) business
days of the date of written notice one to the other concerning this
dispute, the parties agree to submit this dispute for expedited binding
arbitration at the American Arbitration Association ("AAA") in New York,
New York before a panel of three (3) arbitrators all in accordance with
the AAA rules then obtaining. Expedited arbitration will mean that the
time period following the submission of the dispute to the AAA for the
selection of the arbitrators will not exceed twenty (20) business days
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and that the time period between the selection of the arbitrators and
the issuance of a decision will not exceed sixty (60) business days.
Upon the rendering of a decision by the arbitrators, the prevailing
party will be entitled to reimbursement from the other party of all fees
and costs related to the arbitration, including submission of the claim.
The decision of the arbitrators will be binding upon the parties and any
such decision may be entered in any court having jurisdiction thereof.
During the pendency of the arbitration, this Agreement will remain in
full force and effect.
(g) Nothing in this Agreement or otherwise will be
construed as entitling the Consultant to employment rights, or to any
rights except as provided for in this Agreement, by law or by the
policies and procedures of the Company applicable to the Consultant.
(h) The Consultant will continue to receive all indemnity
protections afforded to directors and executive officers of the Company
under the Company's charter documents and insurance policies, as the
same may be modified from time to time with respect to all directors and
executive officers of the Company. The foregoing sentence will not
affect any rights the Consultant has under any indemnification agreement
between the Consultant and the Company.
(i) Any party succeeding to the Company's interest under
this Agreement pursuant to the terms of this Agreement or by operation
of Law will be required to assume (or to the extent legally permissible,
will be deemed to have assumed) all duties and obligations of the
Company to the Consultant under this Agreement.
(j) In the event of a dispute under this Agreement between
the Company and the Consultant, the Company will advance to the
Consultant all the Consultant's reasonable legal fees and costs, subject
to the Consultant's obligation to repay such amounts to the extent the
Company prevails in such dispute.
(k) All reasonable legal fees and costs incurred by the
Consultant in negotiating this Agreement will be paid for by the Company
upon submission to the Company of reasonable and customary invoices from
the Consultant or the Consultants' legal representatives.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed in its corporate name, and the Consultant has hereunto set his
hand, all as of the day and year first above written.
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Xxxxxx X. Xxxxxx
TRANS WORLD AIRLINES, INC.
By:
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Name:
Title:
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