Exhibit 10.12(a)
AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the
"Agreement") is made and entered into as of this 28th day of
December, 1999 (the "Effective Date"), by and between ATLANTIC
COAST AIRLINES HOLDINGS, INC., a Delaware corporation ("ACAH"),
ATLANTIC COAST AIRLINES, a California corporation ("ACA") and
ATLANTIC COAST JET, INC., a Delaware corporation ("ACJet") (ACAH,
ACA and ACJet are herein collectively referred to as the
"Company") and XXXXX X. XXXXX ("Xxxxx").
WITNESSETH THAT:
WHEREAS, Xxxxx is currently employed by the Company as Chief
Executive Officer and Chairman of the Board of Directors, and in
connection with such employment entered into a Severance
Agreement (dated January 20, 1999), as amended (August 17, 1999),
with the Company; and
WHEREAS, the Company wishes to assure itself of the
continued services of Xxxxx; and
WHEREAS, the Board of Directors of the Company has
determined that the best interests of the Company would be served
by entering into this amended and restated Agreement with Xxxxx;
and
NOW, THEREFORE, the parties, for and in consideration of the
mutual and reciprocal covenants and agreements hereinafter
contained, and intending to be legally bound hereby, do contract
and agree as follows:
1. Employment: Company hereby employs Xxxxx and Xxxxx
hereby accepts employment by Company and agrees to perform his
duties and responsibilities hereunder upon all of the terms and
conditions as are hereinafter set forth.
2. Duties: Xxxxx shall serve in the capacities of Chief
Executive Officer and Chairman of the Board of the Company and of
any other entity(ies) to which the Company's obligations under
this Agreement shall be assigned pursuant to Paragraph 11. Xxxxx
shall be responsible for supervising and directing all operations
of the Company. All other officers of the Company shall report
to Xxxxx. Xxxxx shall otherwise be responsible for carrying out
all duties assigned to the Chairman by the Company's Board of
Directors and under ACAH's and ACA's Bylaws. The Company shall
use its good faith efforts to ensure that Xxxxx continues to
serve as a member of the Company's Board of Directors.
3. Terms of Employment: Xxxxx'x term of employment under
this Agreement shall commence on the Effective Date and shall
terminate on the last day of the calendar month which is thirty-
six (36) calendar months after the Effective Date, unless further
extended as hereinafter set forth. Commencing on each successive
anniversary of the Effective Date, the Agreement shall
automatically be extended for an additional twelve (12) months
without further action by either party unless one party provides
the other sixty (60) days' written notice that such party does
not wish to extend the term of this Agreement.
4. Extent of Service: Xxxxx shall devote such time and
attention as is required to perform his obligations under this
Agreement and will at all times faithfully and industriously,
consistent with his ability, experience and talent, perform his
duties hereunder.
5. Compensation: During the term of this Agreement,
Company agrees to pay to Xxxxx, and Xxxxx agrees to accept from
Company, in full payment for services rendered by Xxxxx and work
to be performed by him under the terms of this Agreement, the
following:
A. An annual base salary of Three-Hundred Ninety Five
Thousand Dollars ($395,000) shall be paid to Xxxxx. Commencing
October 1, 2000 and each October 1 thereafter, the amount of
Xxxxx'x base salary shall be increased as determined by the
Compensation Committee of the Board of Directors of the Company;
provided, however, that in no event shall Xxxxx'x annual base
salary be less than the previous year's annual base salary.
Xxxxx'x base salary for each year shall be payable to him in
accordance with the reasonable payroll practices of the Company
as from time to time in effect for executive employees (but in no
event less often than monthly).
X. Xxxxx shall participate in the Company's
Management Incentive Program, or any successor bonus plan or
program for management employees. In addition, if the Company
maintains an additional executive/management bonus plan, then
Xxxxx'x bonus arrangement shall be at least consistent with the
provisions of such bonus plan.
X. Xxxxx shall be eligible for an additional annual
bonus under an executive performance bonus plan currently known
as Senior Management Incentive Plan for so long as the Board of
Directors determines to maintain such plan. Under such plan,
each calendar year, Xxxxx shall be entitled to receive a bonus
equal to specified percentage of base salary upon the attainment
of certain pre-established goals. The maximum bonus under this
plan assuming all goals are met will not be less than 100% of
base salary. Such goals and percentage of salary shall be
determined by the Compensation Committee of the Board of
Directors of the Company prior to the commencement of each plan
year. The bonus amount each year shall be paid in a single cash
lump sum paid at the time period provided under such plan, at the
same time as paid to other eligible employees, and generally no
later than 90 days after the end of the plan period.
X. Xxxxx will be entitled to deferred compensation
("Deferred Compensation") as described in this section. The
Company will make Deferred Compensation contributions at the rate
of one hundred percent (100%) of Xxxxx'x annual base salary
beginning with 1999 contributions. Deferred Compensation will be
based on Xxxxx'x annual base salary in effect on January 1 in
each year beginning 2000, and will be payable as of
January 1 in each year beginning 2000. Such contributions will
be applied toward funding such deferred compensation program as
the Company and Xxxxx may agree to from time to time, consistent
with the funding and vesting provisions of this Agreement.
The method of funding of Deferred Compensation, and the
timing of the actual payment of contributions, shall be agreed
between the Company and Xxxxx from time to time. As of the date
hereof, the Deferred Compensation program is provided under a
split dollar life insurance arrangement with Phoenix Home Life
Mutual - (the "Split Dollar Agreement". The Company may
implement a substitute Deferred Compensation plan not tied to a
Split Dollar Agreement so long as (1) the amount contributed by
the Company on Xxxxx'x behalf equals the amount set forth herein,
and (2) the vesting schedule, credit for Years of Service, and
terms of distribution are all at least as favorable to Xxxxx as
set forth herein. The Company shall continue to abide by the
terms of the Split Dollar Agreement with Xxxxx previously
executed the 29th day of December, 1995, which shall provide for
a split dollar plan for a policy of insurance upon the life of
Xxxxx in a face amount to be mutually agreed upon between Xxxxx
and the Company. For so long as the Split Dollar Agreement shall
serve as the deferred compensation program under this Agreement,
the following terms shall apply:
(i) Xxxxx shall be the owner of the policy under the
Split Dollar Agreement and will have the right to designate his
beneficiary with respect to proceeds of the policy payable upon
his death; provided, however, that notwithstanding the
foregoing, the Company shall have a collateral assignment of the
policy as security for the repayment of the amounts contributed
by the Company toward the payment of premiums for the policy.
(ii) The Company shall, except as provided in Paragraph
5D(iii) below, each year as required under the Split Dollar
Agreement and the related policy, pay, on or before the due
date(s) under the terms of the policy, the entire amount of the
annual premium due on the policy acquired pursuant to the terms
of the Split Dollar Agreement. The annual premium due on the
policy will be the amount of the Company's contribution to
deferred compensation calculated as described above.
(iii) The "Deferred Compensation Ending Date" shall
mean the date of Termination Date (as defined below) if Xxxxx'x
employment with the Company is terminated at any time under
circumstances that do not entitle him to Severance Compensation
pursuant to Section 10 of this Agreement, or shall mean the last
day of the Severance Period (as defined in Section 10) if Xxxxx
is entitled to Severance Compensation. During a Severance
Period, Deferred Compensation shall continue pursuant to the
terms of 10.E.(iii) hereof. Upon the Deferred Compensation Ending
Date, the following shall occur:
(a) The applicable vested percentage of Xxxxx'x
interest in Deferred Compensation shall be calculated
as provided herein. Xxxxx will be entitled to receive
the deferred compensation benefit provided under such
deferred compensation program only to the extent he is
vested in the Company's contributions. Vesting will be
based upon "Years of Service", with Xxxxx to be
credited with one Year of Service for completion of
each twelve (12) consecutive month period of employment
with the Company beginning January 1, 1996 and ending
on the Deferred Compensation Ending Date. (That is,
Xxxxx will be credited with Years of Service for any
applicable Severance Period, as further provided in
Section 10.E.(iv) hereof.) Xxxxx will become vested in
the deferred compensation based on the following
schedule:
YEARS OF SERVICE PERCENTAGE VESTED
Less than 4 0%
At least 4 but less than 5 25%
At least 5 but less than 6 35%
At least 6 but less than 7 50%
At least 7 but less than 8 65%
At least 8 but less than 9 80%
At least 9 100%
In the event of a Change in Control (as defined in
Paragraph 8.C. of this Agreement) of the Company, Xxxxx
shall become immediately 100% vested in his Deferred
Compensation amount notwithstanding the above vesting
schedule.
(b) The Split Dollar Agreement shall continue in
full force and effect and survive separate and apart
from this Agreement; provided, however, that the
Company shall, at its election, have no further
obligation to pay any premium on the policy under the
Split Dollar Agreement which has a due date after the
Deferred Compensation Ending Date and such obligation
shall be transferred to Xxxxx.
(c) The Company shall pay to Xxxxx whatever
"Deferred Compensation" amount is equal to the
applicable vested percentage of the total policy
premiums paid by the Company pursuant to the Split
Dollar Agreement. The Company shall make this payment
within thirty (30) days following the Deferred
Compensation Ending Date by releasing its interest in
the policy, or a portion thereof, on Xxxxx'x life
acquired pursuant to the terms of the Split Dollar
Agreement, or any or all of the paid up additions
standing to the credit of such policy, if any, such
that such released interest equals the Deferred
Compensation amount paid to Xxxxx pursuant to this
Paragraph 5D. The Company agrees that the amount of
any such release of interest by the Company shall
reduce the amount of "Liabilities" (as such term is
defined in the Agreement of Assignment of Life
Insurance Death Benefit As Collateral entered into
between Xxxxx and the Company in connection with the
Split Dollar Agreement) owed to the Company in
connection with the Split Dollar Agreement and related
Collateral Assignment Agreement. Accordingly, the
Company also agrees to reduce to such extent its
collateral assignment of the policy pursuant to the
Split Dollar Agreement and related Collateral
Assignment Agreement.
E. The Company may pay Xxxxx discretionary compensation,
bonuses and benefits in addition to those provided for herein in
such amounts and at such times as the Compensation Committee of
the Board of Directors of the Company shall determine.
F. Compensation Upon a Change in Control. Upon a Change
in Control, whether or not Xxxxx'x employment has terminated,
Xxxxx shall receive all of the following compensation, paid at
the time of the Change in Control:
(i) Salary. A payment in the amount of 300% of
Xxxxx'x annual base salary in effect at the time of the Change
in Control.
(ii) Bonus. For all bonus plans in which Xxxxx is
participating as of a Change in Control, the Company shall pay to
Xxxxx a one-time bonus. This payment shall consist of the amount
calculated by the formula [(x + y) * z] where (x) is Xxxxx'x base
pay earned year to date in the year of the Change in Control, (y)
is the amount which is three times Xxxxx'x annual base salary in
effect at the time of the Change in Control, and (z) is the
percentage which under each plan is the maximum percentage of
base pay that Xxxxx was eligible to earn during the year in which
the Change in Control occurred assuming all targets were met in
full, whether or not said targets actually were met. Payments
under this Subparagraph 5.F.(ii) shall be considered to be full
compensation for all amounts due to Xxxxx for bonus plans in
which he was participating as of the Change in Control, and he
shall not be entitled to any further payments under any of said
plans during the year of participation. Notwithstanding the
above, any bonus due to Xxxxx for years (or other applicable
bonus period) completed prior to the Date in which the Change of
Control occurs but not yet paid shall be paid in addition to the
bonus described herein.
(iii) Disability Insurance. The Company will
prepay, to the time of Xxxxx'x reaching age 65, the premiums due
on any disability insurance policy as was provided to Xxxxx as of
the time of Change in Control. In the event that the Company
discontinued or reduced the amount of coverage of any disability
insurance within one year preceding a Change in Control, the
Company shall at the time of the Change in Control re-establish
disability insurance to the amount previously provided and with
equivalent coverage, and shall prepay future premiums as provided
herein.
(iv) Other Events Upon a Change in Control. Xxxxx
shall receive all of the other benefits separately provided
herein or in other agreements as occurring upon a Change in
Control. These include vesting of unvested stock options and
restricted stock, and vesting of deferred compensation. In the
event a Change in Control occurs, Xxxxx shall be entitled to the
insurance benefits provided upon Change in Control per Paragraph
10.E.(v), the travel benefits provided upon Change in Control per
Paragraph 10.E.(viii), and the use of Company aircraft provided
upon termination of employment per Paragraph 10.E(x). These
benefits will apply at the time of termination of Xxxxx'x
employment, even if Xxxxx'x employment is subsequently terminated
in a fashion that does not give rise to Severance Compensation.
(v) If, as a result of payments provided for under or
pursuant to this Agreement together with all other payments in
the nature of compensation provided to or for the benefit of
Xxxxx under any other agreement in connection with a Change in
Control, any state, local or federal taxing authority imposes any
taxes on Xxxxx that would not be imposed on such payments but for
the occurrence of a Change in Control, including any excise tax
under Section 4999 of the Internal Revenue Code and any successor
or comparable provision, then, in addition to any other benefits
provided under or pursuant to this Agreement or otherwise, the
Company (including any successor to the Company) shall pay to
Xxxxx at the time any such payments are made under or pursuant to
this or the other agreements, an amount equal to the amount of
any such taxes imposed or to be imposed on Xxxxx (the amount of
any such payment, the "Parachute Tax Reimbursement"). In
addition, the Company (including any successor to the Company)
shall "gross up" such Parachute Tax Reimbursement by paying to
Xxxxx at the same time an additional amount equal to the
aggregate amount of any additional taxes (whether income taxes,
excise taxes, special taxes, employment taxes or otherwise) that
are or will be payable by Xxxxx as a result of the Parachute Tax
Reimbursement being paid or payable to Xxxxx and/or as a result
of the additional amounts paid or payable to Xxxxx pursuant to
this sentence, such that after payment of such additional taxes
Xxxxx shall have been paid on a net after-tax basis an amount
equal to the Parachute Tax Reimbursement. The amount of any
Parachute Tax Reimbursement and of any such gross-up amounts
shall be determined by the Company's independent auditing firm,
whose determination, absent manifest error, shall be treated as
conclusive and binding absent a binding determination by a
governmental taxing authority that a greater amount of taxes are
payable by Xxxxx.
G. Subsequent Termination Following a Change in Control.
In the event that Xxxxx'x employment is terminated upon or within
one year following the Change in Control such that Xxxxx would be
entitled to Severance Compensation, any amounts due at the time
of termination as Severance Compensation under 10.E.(i) and
10.E.(ii) herein shall be reduced by any amounts paid under
Paragraph 5.F.(i) and 5.F.(ii) at the time of Change in Control
(under no circumstances would Xxxxx be required to repay the
amounts paid to Xxxxx under Paragraph 5.F(i) and 5.F(ii)), but
Xxxxx will be entitled to all other Severance Compensation as
provided in Paragraph 10.E. herein. In the event that Xxxxx'x
employment is terminated more than one year following the Change
in Control, Xxxxx will be entitled to the benefits provided in
Paragraphs 10.E.(i) and 10.E.(ii) herein.
6. Benefits:
A. The Company shall pay for or provide Xxxxx such
vacation time and benefits, including but not limited to,
coverage under Company's major medical, accident, health, dental,
disability and life insurance plans, as are made available to
other executive employees of Company generally (and, to the
extent provided by such policies, to Xxxxx'x dependents).
B. The Company agrees to promptly reimburse Xxxxx
for any otherwise unreimbursed premiums and/or uncovered medical
expenses up to $10,000 per calendar year under a written medical
reimbursement plan maintained for Xxxxx and other key executive
employees. If such payments are taxable to Xxxxx, the Company
shall pay Xxxxx a gross-up equal to the estimated income, FICA
and Medicare taxes due with respect to such reimbursement, with
federal and state income taxes being estimated at the highest
marginal rates.
X. Xxxxx shall be eligible to participate in any
profit sharing plan, employee stock ownership plan or other
qualified retirement plan adopted by Company to the same extent
as other executive employees of Company. Xxxxx shall also be
eligible to participate in any stock option, stock appreciation
rights or stock purchase plans or programs or nonqualified
deferred compensation arrangements of Company, which
participation shall be at levels at least equal in value to such
benefits provided by Company to other key executive employees of
Company.
D. The Company agrees to reimburse Xxxxx for the cost
of investment and tax planning services up to $5,000 incurred
during each calendar year. If such payments are taxable to
Xxxxx, the Company shall pay Xxxxx a xxxxx-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 permitted to use the Company's
aircraft from time to time for business entertainment purposes or
personal use, with personal use to be subject to the following
limitations: (i) Xxxxx'x request on timing and type of aircraft
should be reasonable as to not impact the operation of the
airline; (ii) no more than 10 segments (i.e., 5 round trips) per
calendar year, excluding ferry flights; (iii) trip length not to
exceed 800 nautical miles.
7. Reimbursement of Expenses: The Company agrees to
promptly reimburse Xxxxx, within fifteen (15) days after
presentation of receipts and other appropriate documentation, for
all reasonable, ordinary and necessary travel costs and other
necessary expenses incurred by Xxxxx in performing his duties
pursuant to this Agreement.
8. Stock Options:
A. Company agrees to continue in force a stock option
plan or one which is substantially similar to the existing plan
("Stock Option Plan"), which has been approved by the
shareholders of the Company and, on the first business day in
each October commencing in October, 2000, and (subject to the
provisions of Paragraph 10.A.(vii)) continuing so long as Xxxxx
is employed by the Company to xxxxx Xxxxx options under the Stock
Option Plan to purchase not less than 100,000 shares of the
common stock of ACAH at the price per share at the closing of the
trading market on the last business date prior to such grant.
The Company also agrees to approve the issuance of such
additional shares as are necessary to enable Xxxxx to exercise
such options. The Company will not be required to reserve shares
from existing plans to cover future obligations under this
paragraph, but will use reasonable efforts to obtain shareholder
approval as necessary from time to time to make a sufficient
number of additional shares available on a timely basis, and will
provide Xxxxx with equivalent alternative compensation should
approval not be obtained. The terms of the grant of such options
granted after January 1, 2000 shall provide that (a) Xxxxx'x
right to exercise such options shall vest and become exercisable
over the four-year period beginning on the date of each grant at
the rate of one-fourth per year (i.e., one-fourth shall vest and
become exercisable on the first anniversary of the grant) so long
as Xxxxx is employed by the Company, (b) Xxxxx'x right to
exercise such options to purchase the entire number of shares
covered thereby, and the grant of restricted stock to Xxxxx,
shall become immediately 100% vested in the event there is a
Change in Control (as hereinafter defined) or in the event
Company shall otherwise become obligated to provide Xxxxx with
Severance Compensation as provided in Paragraph 10.e. herein, (c)
such options shall be exercisable for ten (10) years after the
date of the grant so long as Xxxxx is employed by the Company and
(d) Xxxxx shall have the right to exercise such vested options
within ninety (90) days following any termination of Xxxxx'x
employment except that in the case of termination of employment
for which Xxxxx is entitled to "Severance Compensation" as
provided herein, in which case the terms of Paragraph 10.E.(iii)
shall apply. Notwithstanding the above, the terms of the grant
of such options shall be no less favorable to Xxxxx than the
terms of options granted as of the time of the grant to other
senior executive officers.
B. In addition to the foregoing, if the Company in
the exercise of its discretion, shall xxxxx Xxxxx any additional
stock options, such options shall contain terms and conditions
which are at least as favorable to Xxxxx as those set forth in
this Paragraph 8. All outstanding options previously issued to
Xxxxx prior to the Effective Date of this Amended and Restated
Severance Agreement shall also be subject to the foregoing terms,
except that vesting periods shall be as stated in the existing
option agreements, and except that no such terms shall be
applicable to options intended to qualify as Incentive Stock
Options if and to the extent such terms would be deemed to result
in a "material modification" of such options (for example, Xxxxx
will not be entitled to more than 90 days to exercise such
options following any termination of employment other than on
account of death or disability, in which case he will be entitled
to one year to exercise such options).
C. For purposes of this Agreement, a "Change in
Control" shall be deemed to occur on the earliest of (a) an
acquisition (other than directly from Company) of any securities
of Company entitled to vote for the election of Directors (the
"Voting Securities") by any "person or group" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934) other than an employee benefit plan of Company, immediately
after which such person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 under the Exchange Act) of more than thirty
percent (30%) of the combined voting power of Company's then
outstanding Voting Securities; (b) announcement by any "person
or group" (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934) of its acceptance for
payment of securities tendered pursuant to a tender offer or
exchange offer initiated by such person owning or representing
securities constituting more than twenty percent (20%) of the
combined voting power of Company's then outstanding Voting
Securities; (c) the approval by the Company's stockholders of
(1) a merger, consolidation or reorganization involving Company
or a transfer of substantially all of the assets of Company
(other than to an entity or entities owned by Company), unless
the company resulting from such merger, consolidation or
reorganization or the company to which such assets are
transferred (the "Surviving Corporation") shall adopt or assume
this Agreement and the stockholders of Company immediately before
such merger, consolidation or reorganization own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least eighty percent (80%) of the combined
voting power of the Surviving Corporation in substantially the
same proportion as their ownership immediately before such
merger, consolidation or reorganization, or (2) a complete
liquidation or dissolution of Company; or (d) persons who on the
date of this Agreement are directors of Company, together with
people nominated by a majority of them or by persons who were
nominated by them, cease for any reason to constitute a majority
of Company's Board of Directors.
D. The Company has granted to Xxxxx options, under
the Stock Option Plan and pursuant to a Company Stock Option
Agreement, to purchase 100,000 shares of the common stock of
ACAH, effective as of July 21, 1999 at the price per share at the
closing of the trading market on July 20, 1999. Xxxxx
acknowledges that said grant is in lieu of grants that were to be
made to him effective January 1, 2000 pursuant to the terms of
this Agreement as existed prior to the execution of Amendment
Number One.
9. Deductions: Deductions shall be made from Xxxxx'x
compensation for social security, Medicare, federal, state and
local withholding taxes, and any other such taxes as may from
time to time be required by any governmental authority.
10. Termination: Xxxxx'x employment with the Company shall
be terminated only in accordance with the following provisions:
A. Disability.
(i) In the event Xxxxx shall become mentally or
physically disabled so as to have been unable to perform his
duties hereunder for twelve (12) consecutive months, subject to
Xxxxx'x right to return to work as provided below, Company shall
have the right to terminate Xxxxx'x employment with Company upon
the expiration of such twelve (12) month period; provided,
however, that upon any such termination Company shall be
obligated to provide Xxxxx with Severance Compensation as
provided in Paragraph 10.E. herein. Such twelve-month period
shall be deemed to have commenced on the date when Xxxxx is first
unable to perform his duties on a substantially full-time basis
because of mental or physical disability and shall end on the
date on which Xxxxx shall return to the substantial full-time
performance of his duties. If at the expiration of such twelve
(12) month period, the Company shall desire to terminate Xxxxx
on the basis of disability, it shall give written notice to him.
Xxxxx'x employment shall thereafter be terminated if he does not
return to substantial full-time performance of his duties within
ten (10) calendar days after such notice is given.
(ii) Nothing contained herein shall be construed
to affect Xxxxx'x rights under any disability insurance or
similar policy, whether maintained by the Company, Xxxxx or
another party. The Company may utilize a disability policy to
fund, in whole or in part, the compensation that would be due to
Xxxxx during the term of or in the event of a disability, in
which case the proceeds of the policy would not be in addition to
any compensation otherwise payable to Xxxxx.
(iii) For purposes of this Agreement, Xxxxx
shall be deemed to be disabled when he shall have been absent
from his duties because of sickness, illness, injury or other
physical or mental infirmity on a substantially full-time basis.
In the event of a dispute as to whether Xxxxx is disabled, the
issue of the determination of disability shall be submitted to a
Board of Arbiters for a binding decision under the procedures set
forth in Paragraph 10.A.(v) below.
(iv)At the end of any disability (other than a
disability that results in the termination of Xxxxx'x employment
with the Company), Xxxxx shall return to work and this Agreement
shall continue as though such disability had not occurred.
(v) If there is a dispute as to whether Xxxxx is
subject to any disability, the issue shall be submitted to a
Board of Arbiters (whose decision shall be binding on the Company
and Xxxxx) consisting of three persons: one physician who
specializes in the physical or mental disability in dispute
(hereinafter referred to as a "Specialist") shall be appointed on
behalf of Company by the Board of Directors of Company (with
Xxxxx having no vote on this question); a second Specialist shall
be appointed by Xxxxx and a third Specialist shall be appointed
by the two Specialists so appointed. The decision of a majority
of such Specialists shall be binding upon the parties hereto. If
a majority of the Specialists determines that Xxxxx is not
subject to any disability for purposes of this Agreement, Xxxxx
shall return to work under the provisions hereof. Such
Specialists may physically examine Xxxxx, who hereby consents to
such examination and to make available any pertinent medical
records. The cost of such Specialists shall be paid by Company.
(vi) If it is determined that Xxxxx can return to
work hereunder on a part-time basis, the parties agree to use
good faith efforts to negotiate the terms of Xxxxx'x return to
work.
(vii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated, Xxxxx
shall continue to receive his base salary and any applicable
bonus, and shall continue to receive all benefits as an employee
and as provided herein generally. Any options previously granted
shall continue to vest, but no new options shall be issued to
Xxxxx.
(viii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated, Xxxxx
shall continue to be credited with Years of Service for purposes
of vesting of Deferred Compensation as set forth in Paragraph
5.D.
B. Death.
(i) Xxxxx'x employment with Company shall
terminate immediately upon Xxxxx'x death; provided, however, that
Company shall be obligated to provide the Severance Compensation
as specified in Paragraph 10.E. herein to Xxxxx'x estate, heirs
or beneficiaries.
(ii) Nothing contained herein shall be construed
to affect Xxxxx'x rights under any life insurance or similar
policy, whether maintained by Company, Xxxxx or another party.
The Company may utilize a life insurance policy to fund, in whole
or in part, the Severance Compensation that would be payable in
the event of Xxxxx'x death, in which case the proceeds of any
such policy other than the Split Dollar Agreement would not be in
addition to any Severance Compensation otherwise payable under
this Paragraph 10.B.
C. Termination by Xxxxx.
(i) Without Good Reason. Xxxxx may, without
"Good Reason" (as hereinafter defined), terminate his employment
by giving to Company sixty (60) days' written notice by Certified
Mail, Return Receipt Requested, at the office of Company, and
such termination shall be effective on the sixtieth (60th) day
following the date of such notice (the "Termination Date"). In
such event, Xxxxx (i) shall continue to render his services up to
the Termination Date if so requested by Company and (ii) shall be
paid his regular base salary and shall receive all benefits up to
the Termination Date. Xxxxx will be entitled to payment of any
bonus due but not yet paid for prior bonus periods, and for a pro-
rata bonus amount for the bonus period in which the termination
occurs pursuant to this Paragraph 10.C.(i) but will not be
entitled to Severance Compensation or to any other compensation,
bonus or fringe benefits accrued after the Termination Date. The
bonus payable to Xxxxx will be paid at the same time it would
have been paid had Xxxxx'x employment not been terminated, will
be based on the achievement of targets for the entire bonus
period without regard to interim results as of the termination
date, and will be paid pro-rata based on the number of full
months Xxxxx was employed within the bonus period divided by the
total number of months in the bonus period.
(ii) With Good Reason. Xxxxx may terminate his
employment with Company immediately for Good Reason. In the
event Xxxxx'x employment with Company is terminated by Xxxxx for
Good Reason, Company shall be obligated to provide Xxxxx with
Xxxxxxxxx Compensation as provided in Paragraph 10.E. herein".
Good Reason" shall mean any of the following (without Xxxxx'x
express prior written consent):
(a) The assignment to Xxxxx by Company of
duties inconsistent with Xxxxx'x positions, duties,
responsibility and status with Company, or any removal of Xxxxx
from or any failure to re-elect Xxxxx to his positions, including
his position as a member of the Company's Board of Directors
(except in connection with the termination of his employment for
disability, death or for cause as provided herein), unless cured
within fifteen (15) days of Xxxxx giving written notice thereof
to the Company.
(b) Any material adverse change in any
benefit plan or arrangement in which Xxxxx is participating and
which is not applicable generally to other key executive
employees of Company who participate in such plan or
arrangement), unless cured within fifteen (15) days of Xxxxx
giving written notice thereof to the Company.
(c) Xxxxx'x relocation outside of the
Washington D.C./ Northern Virginia region without his consent,
except for required travel by Xxxxx on Company business;
provided, however, that if the Board of Directors of Company
determines to relocate Company's principal executive offices,
Company shall pay all of Xxxxx'x reasonable moving and other
relocation expenses, the Board of Directors shall make such
adjustments in Xxxxx'x salary as it reasonably deem necessary to
reflect the increased costs of living in the new location, and
Xxxxx shall be obligated to perform his services generally at
such new location and such relocation shall not constitute "Good
Reason" hereunder.
(d) Any material breach by Company of any
provisions of this Agreement which is not cured by Company within
fifteen (15) days of Xxxxx giving written notice thereof to the
Company.
(e) Except in the case of disability or
death, any purported termination of Xxxxx'x employment by the
Company which is not effected pursuant to sixty (60) days' prior
written notice of termination.
(f) Any termination by Xxxxx of his
employment with the Company which is effected as a result of, in
connection with or within two (2) years following a "Change in
Control" as defined and determined under Paragraph 8.C. of this
Agreement; provided that any amounts due at the time of
termination as Severance Compensation under 10.E.(i) and
10.E.(ii) herein shall be reduced by any amounts paid under
Paragraph 5.F(i) and 5.F(ii). at the time of Change in Control.
(Under no circumstances would Xxxxx be required to repay the
amounts paid to Xxxxx under Paragraph 5.F(i) or 5.F(ii).) . The
two year period will be deemed to mean any notice given within
two years 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 sixty (60) days' written notice thereof, and such
termination shall be effective on the sixtieth (60th) day
following the date such notice is given (said 60th day, the
"Termination Date"). Company shall be obligated to provide Xxxxx
with Xxxxxxxxx Compensation as provided in Paragraph 10.E.
herein. At the option of Company, Xxxxx'x employment shall be
immediately terminated upon the Company giving such notice, in
which case Xxxxx shall continue to receive his full base salary
and related fringe benefits through the Termination Date.
Notwithstanding any provision of this Agreement to the contrary,
any termination of Xxxxx'x employment by the Company, for any
reason or no reason, within two years following a "Change in
Control", as defined and determined under Paragraph 8.C. of this
Agreement, shall automatically be deemed to be a termination
without cause.
(ii) For Cause. Company may terminate Xxxxx'x
employment under this Agreement immediately for "cause." In such
event, Xxxxx will be entitled to payment of a pro-rata bonus
amount to the date of termination of employment, but will not be
entitled to Severance Compensation or to any other compensation,
bonus or fringe benefits accrued after the date of termination of
employment. The bonus amount payable to Xxxxx will be calculated
in the same fashion as in the case of termination by Xxxxx
without good reason, as set forth in Paragraph 10.C.(i) above.
Cause shall be defined as any of the following: (i) willful
unauthorized misconduct in the material performance of Xxxxx'x
duties hereunder, (ii) commission of an act of theft, fraud or
dishonesty by Xxxxx, which act is materially harmful to Company,
(iii) material breach of any provision of this Agreement if such
breach has not been cured by Xxxxx (or if Xxxxx has not
compensated the Company for such breach by payment of an amount
deemed reasonable by the Company if the breach cannot be cured)
within fifteen (15) days after the Company gives Xxxxx written
notice of such breach. Any termination under this Paragraph
10.D.(ii) shall take effect immediately upon the Company giving
Xxxxx written notice thereof.
X. Xxxxxxxxx Compensation. "Severance Compensation"
is defined as all of the compensation and benefits described in
this Paragraph 10.E. It will be provided to Xxxxx upon the
occurrence of any of the events described elsewhere in this
Agreement as providing for Xxxxx'x receipt of Severance
Compensation, but not in any other circumstances except to the
extent that individual components of Severance Compensation may
be separately provided pursuant to the terms of this Agreement.
"Termination Date" is defined as the last day of Xxxxx'x
employment with the Company. "Severance Period" is defined as
the period beginning on the day following the Termination Date
and ending on the day which is three years following the
Termination Date. The compensation and benefits to be provided
as Severance Compensation are as follows:
(i) Severance Pay. Throughout the Severance
Period, Xxxxx will receive severance pay at the rate of 100% of
his annual base salary in effect at the time of his termination,
to be paid on the Company's regular payroll payment dates at the
same time and in the same fashion as the Company's regular
payroll payments.
(ii) Bonus. For all bonus plans in which Xxxxx is
participating as of the Termination Date, the Company shall pay
to Xxxxx a one-time bonus. LThis payment shall consist of the
amount calculated by the formula [(x + y) * z] where (x) is
Xxxxx'x base pay earned year to date in the year of Termination,
(y) is three times Xxxxx'x annual base salary in effect at the
time of Termination, and (z) is the percentage which under each
plan is the highest percentage of base pay paid to Xxxxx under
said plan during any one of the five years immediately preceding
the year in which the Termination Date occurs. This bonus will
be paid within thirty days following the Termination Date. It
shall be considered to be full compensation for all amounts due
to Xxxxx for bonus plans in which he was participating as of the
Termination Date, and he shall not be entitled to any further
payments under any of said plans during the Severance Period or
thereafter. Notwithstanding the above, any bonus due to Xxxxx
for years (or other applicable bonus period) completed prior to
the Termination Date but not yet paid shall be paid in addition
to the bonus described herein.
(iii) Stock Options. All options to purchase
shares of ACAH stock that have been granted to Xxxxx shall become
100% vested as of the Termination Date. All options that would
have been granted to Xxxxx in the future pursuant to Paragraph
8.A. hereof shall not be granted if the date on which they would
have been granted occurs after the Termination Date, even though
said date may occur during the Severance Period. Xxxxx (or, in
the case of death, his estate or his beneficiaries) shall have
the right to exercise such vested options until the earlier of
the original expiration date of said option, or a date determined
as follows: (a) for options not intended to qualify as Incentive
Stock Options, Xxxxx shall have the right to exercise vested
options any time prior to the end of the Severance Period;
(b) for options intended to qualify as Incentive Stock Options
where termination is caused by reasons other than his death or
disability, Xxxxx shall have the right to exercise within 90 days
following termination of his employment; (c) for options intended
to qualify as Incentive Stock Options where termination is caused
by his death or disability, Xxxxx (or his estate or his
beneficiaries) shall have the right to exercise within one year
following termination of his employment.
(iv) Deferred Compensation. The Deferred
Compensation program will continue throughout the Severance
Period, including Xxxxx'x accumulation of Years of Service for
vesting purposes, and including the Company's continuation of
contributions. The Split Dollar Agreement shall continue in full
force and effect through the Severance Period and shall survive
separate and apart from this Agreement, and the Company's
obligation to pay all premiums pursuant to this Agreement shall
continue in accordance with the terms of the Split Dollar
Agreement for the Severance Period. At the end of the Severance
Period, Xxxxx shall receive his vested interest and any
obligation to pay premiums shall be transferred to Xxxxx.
Alternatively, the Company may elect to pay such amounts to Xxxxx
as would be payable during the Severance Period by the Company
under the Deferred Compensation program in a single lump sum
payment within fifteen (15) days after the Termination Date.
(v) Insurance Programs. Coverage under the
Company's major medical, accident, health, dental, disability and
life insurance plans as from time to time provided to other
executive employees of the Company (and, to the extent provided
by such policies, to Xxxxx'x dependents) shall continue to be
paid for by the Company during the Severance Period, or, in the
event of Xxxxx'x termination upon or following a Change of
Control of the Company as defined in Paragraph 8.C., for the
longer of the Severance Period or the remainder of Xxxxx'x and
his spouse's life. Provided, however, if such coverage cannot be
continued during the Severance Period or until Xxxxx'x and his
spouse's 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 and
Investment and Tax Planning. 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, and for the $5,000 per year investment and tax
planning service expenses, incurred during each calendar year,
including the tax gross-up, if applicable.
(viii) Travel Benefits. Xxxxx and his wife
shall be provided with free travel on the Company's planes or on
the planes of any successor in interest to the Company on a
positive space basis. The above travel will be first class on
aircraft offering more than one class of service. These travel
benefits will be provided throughout the Severance Period, or, in
the event of a Change of Control of the Company as defined in
Paragraph 8.C., for the longer of the Severance Period or the
remainder of Xxxxx'x life. Xxxxx shall not be entitled to travel
benefits on any other airline.
(ix) Deductions for Taxes. Subject to Paragraph
5.F(v), 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) The limited use of Company aircraft as provided
herein shall continue throughout the Severance Period and shall
continue thereafter until such time as Xxxxx has reached age 65.
Xxxxx may elect to receive a lump sum cash payment equal to the
present value of said benefit.
11. Assignment: This Agreement, as it relates to the
employment of Xxxxx, is a personal contract and the rights and
interests of Xxxxx hereunder may not be sold, transferred,
assigned, pledged or hypothecated. However, this Agreement shall
inure to the benefit of and be binding upon Company and its
successors and assigns including, without limitation, any
corporation or other entity into which Company is merged or which
acquires all or substantially all of the outstanding common stock
or assets of Company. At any time prior to a Change in Control,
Company may provide, without the prior written consent of Xxxxx,
that Xxxxx shall be employed pursuant to this Agreement by any of
its affiliates instead of or in addition to Company, and in such
case all references herein to the "Company" shall be deemed to
include any such entity, provided that (i) such action shall not
relieve Company of its obligation to make or cause an affiliate
to make or provide for any payment to or on behalf of Xxxxx
pursuant to this Agreement, and (ii) Xxxxx'x duties and
responsibilities shall not be significantly diminished as a
result thereof. Unless otherwise agreed to by Xxxxx, Company
shall provide that Xxxxx shall be employed pursuant to this
Agreement by any other entities to which ACAH or ACA may after
the date of this Agreement transfer or assign any of the
operations or businesses operated by either of them as of the
date of this Agreement, and in such case all references herein to
the "Company" shall be deemed to include any such entities,
provided that such action shall not relieve Company of its
obligation to make or cause an affiliate to make or provide for
any payment to or on behalf of Xxxxx pursuant to this Agreement.
The Board of Directors may assign any or all of its
responsibilities hereunder to any committee of the Board, in
which case references to the Board of Directors shall be deemed
to refer to such committee.
12. Invalid Provisions: The invalidity of any one or more
of the paragraphs or provisions of this Agreement shall not
affect the reasonable enforceability of the remaining paragraphs
or provisions of this Agreement, all of which are inserted herein
conditionally upon being valid in law; and in the event one or
more of the paragraphs or provisions contained herein shall be
invalid, this instrument shall be construed as if such invalid
paragraphs or provisions had not been inserted or, alternatively,
said paragraphs or provisions shall be reasonably limited to the
extent that the applicable court interpreting the provisions of
this Agreement considered to be reasonable.
13. Specific Performance: The parties hereby agree that
any violation by Xxxxx of the covenants and agreements contained
herein shall cause irreparable damage to Company, and Company
may, as a matter of course, enjoin and restrain said violation by
Xxxxx by process issued out of a court of competent jurisdiction,
in addition to any other remedies that said court may see fit to
award.
14. Binding Effect: All the terms of this Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and
assigns.
15. Attorneys' Fees: Company shall pay all legal fees
incurred by Xxxxx in connection with the preparation of this
Agreement promptly after submission of a xxxx therefor. In the
event an action is taken by either party to enforce this
Agreement or resolve a dispute in connection herewith, the
prevailing party shall be entitled to recover the costs incurred
with the prosecution and defense of such action, including
reasonable attorney's fees.
16. Waiver of Breach or Violation Not Deemed Continuing:
The waiver by either party of any provision of this Agreement
shall not operate as, or be construed to be, a waiver of any
subsequent breach hereof.
17. Entire Agreement; Law Governing: This Agreement
supersedes in its entirety any and all other agreements
(specifically including any earlier versions of this Severance
Agreement), either oral or in writing, between the parties hereto
with respect to the subject matter hereof, by and between Company
and Xxxxx, and contains all the covenants and agreements among
the parties with respect to such subject matter. This Agreement
shall be construed in accordance with the laws of the
Commonwealth of Virginia. Xxxxx hereby acknowledges that he was
represented by counsel of his choosing in the drafting and
negotiation of this Agreement and that he reviewed this Agreement
with and was advised as to each of the terms thereof by such
counsel. In interpreting this Agreement, a court shall not treat
either party as the draftsman of the Agreement.
18. Paragraph Headings: The Paragraph headings contained
in this Agreement are for convenience only and shall in no manner
be construed as a part of this Agreement.
19. Release by Xxxxx. In the event of a termination of
employment by Xxxxx that results in the payment of Severance
Compensation to him pursuant to the terms of this Agreement, in
consideration for such Severance Compensation, Xxxxx hereby
agrees to execute a full and complete release to the Company
releasing any and all claims that he may have against the Company
including any claims relating to his termination of employment.
20. Notices. All notices permitted or required to be given
pursuant to this Agreement shall be in writing and shall be
deemed to have been sufficiently given, subject to the further
provisions of this Section 20, for all purposes when presented
personally to such party (which in the case of notice to the
Company, shall be presented to the person holding the office or
offices identified below) or sent by facsimile transmission, any
national overnight delivery service, or certified or registered
mail, to such party at its address set forth below:
If to Xxxxx, to the most recent address indicated for
Xxxxx'x residence in the personnel records of Company, unless
Xxxxx gives written notice that such notices are to be delivered
to another address.
If to ACA or the Company:
Atlantic Coast Airlines Holdings, Inc.
Atlantic Coast Airlines
Atlantic Coast Jet, Inc.
000X Xxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel or Corporate Secretary
Fax No. (000) 000-0000
Such notice shall be deemed to be given and received when
delivered if delivered personally, upon electronic or other
confirmation of receipt if delivered by facsimile transmission,
the next business day after the date sent if sent by a national
overnight delivery service, or five (5) business days after the
date mailed if mailed in the continental United States by
certified or registered mail. Any notice of any change in such
address shall also be given in the manner set forth above.
Whenever the giving of notice is required, the giving of such
notice may be waived in writing by the party entitled to receive
such notice.
A copy of any notice given to Xxxxx shall be sent to:
Xxxxxx X. Xxxxxx
Xxxx Xxxxxxx Xxx & Xxxxxx
0000 X Xxxxxx, XX
Xxxxx 000, Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Fax No. (000) 000-0000
IN WITNESS WHEREOF, the Company has hereunto caused this
Agreement to be executed by a duly authorized officer and Xxxxx
has hereunto set his hand as of the day and year first above
written.
WITNESS:
________________________________
_____________________________
Xxxxx X. Xxxxx
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
HOLDINGS, INC.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx
Xxxxx,
Secretary Chairman of the
Compensation Committee of
the Board of Directors
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx Xxxxx,
Secretary Chairman of the
Compensation Committee of
the Board of Directors
ATTEST: ATLANTIC COAST JET, INC.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx
Xxxxx,
Secretary Chairman of the
Compensation Committee of
the Board of Directors
Exhibit 10.12(b)
SEVERANCE AGREEMENT
This Amended And Restated Severance Agreement (the
"Agreement") is made and entered into as of this 28th day of
December, 1999 (the "Effective Date"), by and between ATLANTIC
COAST AIRLINES HOLDINGS, INC., a Delaware corporation ("ACAH"),
ATLANTIC COAST AIRLINES, a California corporation ("ACA") and
Atlantic Coast Jet, Inc., a Delaware corporation ("ACJet") (ACAH,
ACA and ACJet 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 President, and in connection with
such employment entered into a Severance Agreement (dated as of
January 20, 1999) as amended (August 12, 1999) 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 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 Fifty
Thousand Dollars ($250,000). Commencing on October 1, 2000 and
on each October 1 thereafter, the amount of Xxxxx'x base salary
shall be increased as determined by the Compensation Committee of
the Board of Directors of the Company. 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 seventy-five percent (75%) of
Xxxxx'x annual base salary beginning with 1999 contributions.
Deferred Compensation will be based on Xxxxx'x annual base salary
in effect on January 1 in each year beginning 2000, and will be
payable as of January 1 in each year beginning 2000. 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 Termination Date (as defined below) 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.
F. Compensation Upon a Change in Control. Upon
a Change in Control, whether or not Xxxxx'x employment has
terminated, Xxxxx shall receive all of the following
compensation, paid at the time of the Change in Control:
(i) Salary. A payment in the amount of 300% of
Xxxxx'x annual base salary in effect at the time of the Change
in Control.
(ii) Bonus. For all bonus plans in which Xxxxx is
participating as of a Change in Control, the Company shall pay to
Xxxxx a one-time bonus. This payment shall consist of the amount
calculated by the formula [(x + y) * z] where (x) is Xxxxx'x base
pay earned year to date in the year of the Change in Control, (y)
is the amount which is three times Xxxxx'x annual base salary in
effect at the time of the Change in Control, and (z) is the
percentage which under each plan is the maximum percentage of
base pay that Xxxxx was eligible to earn during the year in which
the Change in Control occurred assuming all targets were met in
full, whether or not said targets actually were met. Payments
under this Subparagraph 5.F.(ii) shall be considered to be full
compensation for all amounts due to Xxxxx for bonus plans in
which he was participating as of the Change in Control, and he
shall not be entitled to any further payments under any of said
plans during the year of participation. Notwithstanding the
above, any bonus due to Xxxxx for years (or other applicable
bonus period) completed prior to the Date in which the Change of
Control occurs but not yet paid shall be paid in addition to the
bonus described herein.
(iii) Disability Insurance. The Company will
prepay, to the time of Xxxxx'x reaching age 65, the premiums due
on any disability insurance policy as was provided to Xxxxx as of
the time of Change in Control. In the event that the Company
discontinued or reduced the amount of coverage of any disability
insurance within one year preceding a Change in Control, the
Company shall at the time of the Change in Control re-establish
disability insurance to the amount previously provided and with
equivalent coverage, and shall prepay future premiums as provided
herein.
(iv) Other Events Upon a Change in Control. Xxxxx
shall receive all of the other benefits separately provided
herein or in other agreements as occurring upon a Change in
Control. These include vesting of unvested stock options and
restricted stock, and vesting of deferred compensation. In the
event a Change in Control occurs, Xxxxx shall be entitled to the
insurance benefits, per Paragraph 10.E.(v) and the travel
benefits, per Paragraph 10.E.(viii), as provided upon a Change in
Control. These benefits will apply at the time of termination of
Xxxxx'x employment, even if Xxxxx'x employment is subsequently
terminated in a fashion that does not give rise to Severance
Compensation.
(v) 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.
G. Subsequent Termination Following a Change in
Control. In the event that Xxxxx'x employment is terminated upon
or within one year following the Change in Control such that
Xxxxx would be entitled to Severance Compensation, any amounts
due at the time of termination as Severance Compensation under
10.E.(i) and 10.E.(ii) herein shall be reduced by any amounts
paid under Paragraph 5.F.(i) and 5.F.(ii) at the time of Change
in Control (under no circumstances would Xxxxx be required to
repay the amounts paid to Xxxxx under Paragraph 5.F(i) and
5.F.(ii)), but Xxxxx will be entitled to all other Severance
Compensation as provided in Paragraph 10.E. herein. In the event
that Xxxxx'x employment is terminated more than one year
following the Change in Control, Xxxxx will be entitled to the
benefits provided in Paragraphs 10.E.(i) and 10.E.(ii) herein.
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.
D. The Company agrees to reimburse Xxxxx for the
cost of investment and tax planning services up to $5,000
incurred during each calendar year. If such payments are taxable
to Xxxxx, the Company shall pay Xxxxx a xxxxx-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.
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 October commencing in October,
2000, 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 50,000 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 Paragraph 8.B. and 8.C herein shall apply to all
Stock Options or restricted stock previously granted to Employee,
and this Amendment Number One shall be deemed to be a restatement
of the previous 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.
E. The Company has granted to Xxxxx options,
under the Stock Option Plan and pursuant to a Company Stock
Option Agreement, to purchase 100,000 shares of the common stock
of ACAH effective as of July 21, 1999 at the price per share at
the closing of the trading market on July 20, 1999. Xxxxx
acknowledges that said grant is in lieu of grants that that may
otherwise have been due to him prior to October 1, 2000.
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 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; provided that payments made
as separately provided in Paragraph 5.F. of this Agreement shall
be deducted from Severance Compensation due in this event. 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. In the event that a Termination Date occurs on
or before December 31, 1999 such that Xxxxx is entitled to
Severance Compensation as provided herein, severance pay will be
at the rate of 100% of his annual base salary that would have
been in effect beginning January 1, 2000 as provided herein.
(ii) Bonus. For all bonus plans in which
Xxxxx is participating as of the Termination Date, the Company
shall pay to Xxxxx a one-time bonus equal the sum of: (x) Xxxxx'x
base pay earned year to date as of the Termination Date, plus (y)
two times Xxxxx'x annual base salary in effect as of the
Termination Date, said sum times the percentage which under each
plan is the highest percentage of base pay paid to Xxxxx under
said plan 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 or, in the
event of Employee's termination upon or following a Change of
Control of the Company as defined in Paragraph 8.C., for the
longer of the Severance Period or the remainder of Xxxxx'x and
his spouse's life, and including children to age 21 as per
coverage prioviced prior to the Change in Control. Provided,
however, if such coverage cannot be continued during the
Severance Period or until Xxxxx'x and his spouse's 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 and Investment and Tax Planning. 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, and for the $5,000 per year investment and tax
planning service expenses, incurred during each calendar year,
including the tax gross-up, if applicable.
(viii) Travel Benefits. The Atlantic Coast
Airlines Holdings, Inc. and its subsidiaries 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. Subject to
Paragraph 5.F(v), 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.
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 provisions of clause (ii) above of this
Paragraph 11.A will not apply following any termination of
Employee's employment by the Company other than for 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. 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
Atlantic Coast Jet, Inc.
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
HOLDINGS, INC.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary Chairman & Chief
Executive Officer
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary Chairman & Chief
Executive Officer
ATTEST: ATLANTIC COAST JET, INC.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary Chairman & Chief
Executive Officer
Exhibit 10.12(c)
AMENDED AND RESTATED SEVERANCE AGREEMENT
This Amended and Restated Severance Agreement (the
"Agreement") is made and entered into as of this 28th day of
December, 1999, by and between Atlantic Coast Airlines Holdings,
Inc., a Delaware corporation ("ACAH"), Atlantic Coast Airlines, a
California corporation ("ACA"), and Atlantic Coast Jet, Inc., a
Delaware corporation ("ACJ"), (ACAH, ACA and ACJ are herein
collectively referred to as the "Company") and _______________
("Employee").
Witnesseth That:
Whereas, the Company and Employee are parties to a Severance
Agreement dated as of _____________, and desire to amend and
restate the terms of said agreement pursuant to reflect the terms
described herein; and
Whereas, the Company desires to continue to employ Employee;
and Employee desires to be employed by the Company, upon the
terms and conditions hereinafter set forth; and
Whereas, the Company and Employee desire to expressly set
forth in this Agreement the terms of Employee's employment with
the Company; 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 Agreement with Employee;
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 Employee and
Employee 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 Employee shall serve the Company in the
capacities of Senior Vice President - Customer Service. Employee
shall be responsible for supervising and directing all customer
service for the Company. Employee shall otherwise be responsible
for carrying out all such other duties and services for the
Company commensurate with Employee's position, as may be designed
from time to time by the Chief Executive Officer of the Company
(the "CEO").
3. Term of Employment Employee's term of employment
under this Agreement commences on January 1, 2000 and shall
terminate on November 30, 2000, unless further extended as
hereinafter set forth. On December 1, 2000, and on December 1 in
each subsequent year, this Agreement shall automatically be
extended for an additional twelve (12) months without further
action by either party unless Employee's employment has
previously been terminated, or unless Employee or the Company has
provided notice of intention to terminate Employee's employment
pursuant to the terms of Paragraph 10 below (in which case
Employee's term of employment under this Agreement will be
extended to the pending Termination Date).
4. Extent of Service Employee 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 Employee, and Employee agrees to accept
from Company, in full payment for services rendered by Employee
and work to be performed by him under the terms of this
Agreement, the following:
A. An annual base salary of
____________________shall be paid to Employee. Beginning December
1, 2000, the amount of Employee's base salary shall be adjusted
as determined by the Compensation Committee of the Board of
Directors of the Company. Employee's 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).
B. Employee shall participate in the Company's
Senior Management Incentive Plan and in its Management Incentive
Plan, both for so long as the Board of Directors determines to
maintain either of such plans, or any successor bonus plan or
program for key executives.
C. Employee will be entitled to deferred
compensation ("Deferred Compensation") as described in this
section. For the contributions made beginning with 1999
contributions, the Company will make Deferred Compensation
contributions at the rate of fifty percent (50%) of Employee's
annual base salary in effect as of the date the contribution
becomes payable. [Deferred Compensation will be based on
Employee's annual base salary in effect on the first business day
in January in each year beginning 2000, and will be payable as of
said date. Such contributions will be applied toward funding such
deferred compensation program as the Company and Employee 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 Employee 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, and Employee will be required to enter into an agreement
(the "Split Dollar Agreement") prior to participating in the form
of split dollar life insurance. 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
Employee's 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 Employee as set
forth herein. The Company shall abide by the terms of the Split
Dollar Agreement, which shall provide for a split dollar plan for
a policy of insurance upon the life of Employee in a face amount
to be mutually agreed upon between Employee 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) Employee 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 5.C.(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 Date as defined below.
If Employee's Employment is terminated upon or within twelve
months following a Change in Control, the "Deferred Compensation
Ending Date" shall mean the last day of the Severance Period (as
defined in Paragraph 10). Deferred Compensation shall not be due
during a Severance Period unless Employee's Employment is
terminated upon or within twelve months following a Change in
Control, in which case the terms of Paragraph 10.E.(iv)(b) will
apply. Upon the Deferred Compensation Ending Date, the following
shall occur:
(a) The applicable vested percentage of Employee's
interest in Deferred Compensation shall be calculated as provided
herein. Employee 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 Employee to be credited with one Year of Service for
completion of each twelve (12) consecutive month period of
employment with the Company beginning ____________ and ending on
the Deferred Compensation Ending Date. Employee 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 12 of this Agreement) of the Company, Employee 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 Employee.
(c) The Company shall pay to Employee 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 Employee's 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 Employee pursuant to this Paragraph 5.C. 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 Employee 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.
D. The Company may pay Employee 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 Employee
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 employees of Company generally (and, to the extent provided
by such policies, to Employee's dependents).
B. The Company agrees to promptly reimburse
Employee 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 Employee and other key
executive employees. If such payments are taxable to Employee,
the Company shall pay Employee 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.
C. The Company agrees to reimburse Employee for
the cost of investment and tax planning services up to $5,000
incurred during each calendar year. If such payments are taxable
to Employee, the Company shall pay Employee 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.
7. Reimbursement of Expenses The Company agrees to
promptly reimburse Employee, 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 Employee in performing his duties
pursuant to this Agreement.
8. Stock Options
A. Acceleration of Stock Options upon a Change
in Control. If the Company experiences a Corporate Change, the
exercisability and vesting of all Stock Options granted to
Employee before November 13, 1998 and held by Employee 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 herein 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
Employee, will 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 18.A.) then outstanding may be exercised in full for a
limited period of time on or before a specified date (which will
permit Employee 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 Employee thereunder shall terminate, (2) provide
that exercisable options (including any options exercisable
pursuant to the first sentence of this Paragraph 18.A.) 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 Employee (including any options exercisable pursuant to
the first sentence of this Paragraph 18.A.) 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
Employee 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
Employee) that, if Employee 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 Employee's 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 Employee in as
close to the same position as Employee would have been in had
alternative 1, 2 or 3 been selected but without resulting in any
payment by Employee pursuant to Section 16(b) of the Exchange
Act. Notwithstanding the foregoing, with the consent of
Employee, the Committee may in lieu of the foregoing make such
provision with respect of any Corporate Change as it deems
appropriate.
B. Definitions. For purposes of this Agreement,
"Stock Options" shall mean any grant to Employee by the Company,
pursuant to any of the Company's Stock Option Plans, of the right
and option to acquire from the Company a specified number of
shares of Atlantic Coast Airlines Holdings, Inc. common stock
under certain terms and conditions. "Change in Control" and
"Corporate Change" shall be as defined in Paragraph 12 herein.
C. Amendment to Existing Option Agreements. The
provisions of this Paragraph 8 shall apply to all Stock Options
or restricted stock previously granted to Employee, and this
Amendment Number One shall be deemed to be a restatement of the
previous amendment to all Stock Option Agreements and the
Restricted Stock Agreement presently in existence between the
Company and Employee, and will supersede any language to the
contrary contained in said agreements. 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
Employee's 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 Employee's employment with the
Company shall be terminated only in accordance with the following
provisions:
A. Disability.
(i) In the event Employee shall become
mentally or physically disabled so as to have been unable to
perform his duties hereunder (such determination to be made
solely by the Company)for six (6) consecutive months, Company
shall have the right to terminate Employee's employment with
Company upon the expiration of such six month period; provided,
however, that upon any such termination Company shall be
obligated to provide Employee with Severance Compensation as
provided in Paragraph 10.E. herein. Such six-month period shall
be deemed to have commenced on the date when Employee 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 Employee 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 Employee on
the basis of disability, it shall give written notice to him.
Employee's 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) For purposes of this Agreement, Employee
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.
(iii) At the end of any disability (other
than a disability that results in the termination of Employee's
employment with the Company), Employee shall return to work and
this Agreement shall continue as though such disability had not
occurred.
(iv) The Company will have sole discretion in
determining whether Employee is subject to any disability.
(v) During any period in which Employee is
disabled but his employment shall not have been terminated,
Employee 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 Employee.
(vi) During any period in which Employee is
disabled but his employment shall not have been terminated,
Employee shall continue to be credited with Years of Service for
purposes of vesting of Deferred Compensation as set forth in
Paragraph 5.C.
(vii) The Company may utilize a
disability policy to fund, in whole or in part, the compensation
that would be due to Employee 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
Employee. Any compensation due to Employee from the Company
during a period of disability or during a Severance Period
following a termination of employment as a result of a
disability, will be reduced by the amount of any proceeds
provided to Employee from any disability policy provided by and
at the expense of the Company. Except as provided in the
preceding two sentences, nothing contained herein shall be
construed to affect Employee's rights under any disability
insurance or similar policy, whether maintained by the Company,
Employee or another party.
B. Death.
(i) Employee's employment with Company shall
terminate immediately upon Employee's death; provided, however,
that Company shall be obligated to provide the Severance
Compensation as specified in Paragraph 10.E. herein to Employee's
estate, heirs or beneficiaries.
(ii) Nothing contained herein shall be
construed to affect Employee's rights under any life insurance or
similar policy, whether maintained by Company, Employee 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 Employee's 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 Employee
(i) Other than Following a Change in
Control. Employee may terminate his employment by delivering to
Company thirty (30) days' written notice, and such termination
shall be effective on the thirtieth (30th) day following the date
of receipt of such notice (the "Termination Date"). In such
event, Employee (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. Employee 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 Employee's 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
Employee of his employment with the Company which is effected
within twelve (12) months following a Change in Control as
defined and determined under Paragraph 12 of this Agreement,
Company shall be obligated to provide Employee with Severance
Compensation as provided in Paragraph 10.E. herein, excluding
payments as separately provided in Paragraph 12.B of this
Agreement. 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 Employee's employment under this Agreement at
any time by giving Employee 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
Employee with Severance Compensation as provided in Paragraph
10.E. herein. At the option of Company, Employee's employment
shall be immediately terminated upon the Company giving such
notice, in which case Employee 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 Employee's 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 12 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
Employee's employment under this Agreement immediately for
"cause". In such event, the Company shall not be liable to
Employee 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 Employee's duties hereunder, (ii)
commission of an act of theft, fraud, dishonesty, or personal
misconduct by Employee, which act is harmful to Company, (iii)
breach of any provision of this Agreement if such breach has not
been cured by Employee (or if Employee 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 Employee written notice of such
breach. Any termination under this Paragraph 10.D.(ii) shall
take effect immediately upon the Company giving Employee 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
Employee upon the occurrence of any of the events described
elsewhere in this Agreement as providing for Employee's 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
Employee's 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 one year
following the Termination Date. Should a termination occur upon
or within twelve months following a Change in Control, the
Severance Period will end 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, Employee 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
Employee a prorated portion of any annual bonus amount accrued
through the Termination Date, provided, however, that such bonus
amount will be paid at the time that such bonus amounts are
normally paid by the Company. Proration shall be based on the
percentage of the number of days in the bonus period to the
actual number of days in the bonus period, times the total bonus
that would have been paid for the entire bonus period had the
termination not occurred. This prorated bonus payment shall be
considered to be full compensation for all amounts due to
Employee 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 Employee
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 Employee
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 the terms of a Stock Option
Agreement), the terms of exercise, payment, and expiration, shall
be as provided in each option agreement.
(iv) Deferred Compensation
(a) Absent a Change in Control. If
Employee's employment is not terminated upon or within twelve
months following a Change in Control, the Deferred Compensation
program will terminate as of the Termination Date, and the
Company will not be obligated to make contributions during the
Severance Period. As of the Termination Date, Employee shall
receive his vested interest and any obligation to pay premiums
shall be transferred to Employee.
(b) Upon a Change in Control. If
Employee's employment is terminated upon or within twelve months
following a Change in Control, the Deferred Compensation program
will continue throughout the Severance Period, including the
Company's continuation of contributions, and with all
contributions to be fully vested. 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, Employee shall receive his 100% interest in
Deferred Compensation and any obligation to pay premiums shall be
transferred to Employee. Alternatively, the Company may elect to
pay such amounts to Employee 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, dental, and disability insurance plans
as from time to time provided to other executive employees of the
Company (including Employee's dependents) shall continue to be
paid for by the Company during the Severance Period in the same
fashion as prior to the Termination Date. Provided, however, if
such coverage cannot be continued during the Severance Period
under the terms of such policies or plans, the Company shall
reimburse Employee for the cost of comparable coverage under
individually obtained policies or for COBRA coverage, or shall
make other arrangements to assure that Employee has comparable
coverage.
(vi) Vacation. Vacation shall not continue
to accrue after the Termination Date under any circumstances.
(vii) Executive Medical Reimbursement
Plan. Reimbursement under the Executive Medical Reimbursement
Plan will terminate as of the Termination Date. Employee will be
entitled to reimbursement for expenses incurred prior to the
Termination Date if submitted within three months following the
Termination Date.
(viii) Travel Benefits. Flight pass
privileges currently granted to Employee for travel on the
Company's aircraft will continue for the Severance Period.
Employee shall not be entitled to travel benefits on any other
airline.
(ix) Deductions for Taxes. Subject to
Paragraph 12.D., any compensation due to Employee 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.
11. Nonsolicitation, Non-Competition, and
Confidentiality
A. Nonsolicitation and Non-Competition. For so
long as Employee is an employee of the Company, and continuing
thereafter for twelve months following any termination of
Employee's employment, Employee 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. Employee 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 Employee's employment
that was effected as a result of, in connection with or within
twelve (12) months following a Change in Control. The provisions
of clause (ii) above of this Paragraph 11.A will not apply
following any termination of Employee's employment by the Company
other than for 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.
B. Confidentiality. Employee 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 Employee in violation of his agreements under this Paragraph
11B or (ii) Employee 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. Employee 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 Employee 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 Employee.
D. Injunctive Relief. Without intending to
limit the remedies available to the Company, Employee
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 Employee 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. Change in Control.
A. Definition. As used in this Agreement,
"Change in Control" or "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. The Compensation Committee of the
Board of Directors reserves the right to adopt a different
definition of Change in Control for stock options granted
subsequent to the date hereof or for any other purposes not
described herein.
B. Compensation Upon a Change in Control. Upon
a Change in Control, whether or not Employee's employment has
terminated, Employee shall receive all of the following
compensation, paid at the time of the Change in Control:
(i) Salary. A payment in the amount of 200%
of Employee's annual base salary in effect at the time of the
Change in Control.
(ii) Bonus. For all bonus plans in which
Employee is participating as of a Change in Control, the Company
shall pay to Employee a one-time bonus. This payment shall
consist of the amount calculated by the formula [(x + y) * z]
where (x) is Employee's base pay earned year to date in the year
of the Change in Control, (y) is the amount which is two times
Employee's annual base salary in effect at the time of the Change
in Control, and (z) is the percentage which under each plan is
the maximum percentage of base pay that Employee was eligible to
earn during the year in which the Change in Control occurred
assuming all targets were met in full, whether or not said
targets actually were met. Payments under this Subparagraph
12.B.(ii) shall be considered to be full compensation for all
amounts due to Employee for bonus plans in which he was
participating as of the Change in Control, and he shall not be
entitled to any further payments under any of said plans during
the year of participation. Notwithstanding the above, any bonus
due to Employee for years (or other applicable bonus period)
completed prior to the Date in which the Change of Control occurs
but not yet paid shall be paid in addition to the bonus described
herein.
(iii) Disability Insurance. The Company
will prepay, for one full year following the Change of Control
(or, for two full years following the Change in Control if the
Change in Control after November 30), the premiums due on any
disability insurance policy as was provided to Xxxxx as of the
time of Change in Control. In the event that the Company
discontinued or reduced the amount of coverage of any disability
insurance within one year preceding a Change in Control, the
Company shall at the time of the Change in Control re-establish
disability insurance to the amount previously provided and with
equivalent coverage, and shall prepay future premiums as provided
herein.
C. Subsequent Termination Following a Change in
Control. In the event that Employee's employment is terminated
within one year following the Change in Control such that
Employee would be entitled to Severance Compensation, any amounts
due at the time of termination as Severance Compensation under
10.E.(i) and 10.E.(ii) herein shall be reduced by any amounts
paid under Paragraph 12.B.(i) and 12.B(ii) at the time of Change
in Control (under no circumstances would Employee be required to
repay the amounts paid to Employee under Paragraph 12.B(i) or
12.B(ii)), but Employee will be entitled to all other Severance
Compensation as provided in Paragraph 10.E. herein. In the event
that Employee's employment is terminated more than one year
following the Change in Control, Employee will be entitled to the
benefits provided in Paragraphs 10.E.(i) and 10.E.(ii) herein.
C. Certain Adjustments. If, as a result of
payments provided for under or pursuant to this Agreement
together with all other payments in the nature of compensation
provided to or for the benefit of Employee under any other
agreement in connection with a Change in Control, any state,
local or federal taxing authority imposes any taxes on Employee
that would not be imposed on such payments but for the occurrence
of a Change in Control, including any excise tax under Section
4999 of the Internal Revenue Code and any successor or comparable
provision, then, in addition to any other benefits provided under
or pursuant to this Agreement or otherwise, the Company
(including any successor to the Company) shall pay to Employee at
the time any such payments are made under or pursuant to this or
the other agreements, an amount equal to the amount of any such
taxes imposed or to be imposed on Employee (the amount of any
such payment, the "Parachute Tax Reimbursement"). In addition,
the Company (including any successor to the Company) shall "gross
up" such Parachute Tax Reimbursement by paying to Employee at the
same time an additional amount equal to the aggregate amount of
any additional taxes (whether income taxes, excise taxes, special
taxes, employment taxes or otherwise) that are or will be payable
by Employee as a result of the Parachute Tax Reimbursement being
paid or payable to Employee and/or as a result of the additional
amounts paid or payable to Employee pursuant to this sentence,
such that after payment of such additional taxes Employee shall
have been paid on a net after-tax basis an amount equal to the
Parachute Tax Reimbursement. The amount of any Parachute Tax
Reimbursement and of any such gross-up amounts shall be
determined by the Company's independent auditing firm, whose
determination, absent manifest error, shall be treated as
conclusive and binding absent a binding determination by a
governmental taxing authority that a greater amount of taxes are
payable by Employee.
13. Assignment This Agreement, as it relates to the
employment of Employee, is a personal contract and the rights and
interests of Employee 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. Company may provide, without the prior
written consent of Employee, that Employee 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 Employee pursuant to this
Agreement.
14. 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.
15. Specific Performance The parties hereby agree
that any violation by Employee 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 Employee by process issued out of a court of
competent jurisdiction, in addition to any other remedies that
said court may see fit to award.
16. 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.
17. 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.
18. Entire Agreement; Law Governing This Agreement
supersedes in its entirety the terms of the Severance Agreement
between the parties dated as of ______________ (except as
restated herein) and any and all other agreements, either oral or
in writing, between the parties hereto with respect to the
subject matter hereof, by and between the Company and Employee,
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. Employee 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.
19. 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.
20. Release by Employee In the event of a termination
of employment by Employee 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, Employee 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.
21. 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 Paragraph 21, 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 Employee, to the most recent address indicated
for Employee's residence in the personnel records of Company,
unless Employee 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
Employee has hereunto set his hand as of the day and year first
above written.
WITNESS:
________________________________
_____________________________
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
HOLDINGS, INC.
_______________________________ BY:
____________________________
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
____________________________
ATTEST: ATLANTIC COAST JET, INC.
_______________________________ BY:
____________________________
Exhibit 10.27
SPLIT DOLLAR AGREEMENT
AGREEMENT made the _____ day of ______________, 2000, by and
between ATLANTIC COAST AIRLINES HOLDINGS, INC., a corporation
organized and existing under the laws of the State of Delaware,
(hereinafter called the "Company") and ____________ (hereinafter
called the "Employee").
WHEREAS, the Employee wants to insure his life, for the
benefit and protection of his family, under a policy to be issued
by the Phoenix Home Life Mutual Insurance Company (hereinafter
called the "Insurer"); and
WHEREAS, the Company wants to help the Employee provide
insurance for the benefit and protection of his family by paying
the full amount of the premiums due on the policy on the
Employee's life; and
WHEREAS, the Employee will be the owner of the policy of
insurance on his life acquired pursuant to the terms of this
Agreement, and the policy will be assigned to the Company as
security for the repayment of the amount which the Company will
contribute toward payment of the premiums due on the policy;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, it is agreed between the parties hereto as
follows:
ARTICLE 1
Application for Insurance. The Employee has applied for and
an insurance policy on his life has been issued in the face
amount of $__________________ (hereinafter called the "Policy").
The Policy number, face amount and plan of insurance shall be
recorded on Schedule A attached hereto and the Policy shall then
be subject to the terms of this Agreement.
ARTICLE 2
Ownership of Insurance. The Employee shall be the owner of
the Policy on the Employee's life acquired pursuant to the terms
of this Agreement and he may exercise all the rights of ownership
with respect to the Policy except as otherwise hereinafter
provided. Notwithstanding the foregoing, the Employee may not
assign any right of ownership with respect to the Policy to any
other party, except as specifically provided in Article 7 hereof.
ARTICLE 3
Election of Dividend Option. To the extent that the Insurer
declares dividends on the Policy, the Company shall have the
right to choose the option or combination of options it desires
from among those offered by the Insurer. The Company shall
notify the Employee and the Insurer of its choice, and the
Employee agrees to execute any documents necessary to choose or
change the Policy's dividend option.
ARTICLE 4
Payment of Premiums on Policy.
A. On or before each due date the Company will pay to the
Insurer the full amount of each premium on the Policy on the
Employee's life acquired pursuant to the terms of this Agreement.
B. Notwithstanding the foregoing, in the event of the
termination of the employment of the Employee by the Company
pursuant to the Severance Agreement dated as of the 28th day of
December 1999, as amended or restated from time to time,
(hereinafter the "Severance Agreement"), the Company shall
continue to pay said premiums until the Deferred Compensation
Ending Date, as that term is defined in the Severance Agreement.
After the Deferred Compensation Ending Date, the Company shall
have the sole discretion to continue making any policy premium
payments on behalf of said Employee. If the Company does not
exercise its discretion to continue making policy premium
payment(s) on behalf of the Employee, all policy premium payments
which are due after the Deferred Compensation Ending Date shall
be the sole obligation of the Employee.
ARTICLE 5
Disability Waiver of Premium. If the Policy appertaining to
this Agreement is issued with a supplemental agreement providing
for waiver of premium in the event of disability, or any
additional death benefit, the additional premium for such
supplemental agreement shall be paid by the Company for the
benefit of the Employee. In the event said waiver-of-premium
benefit becomes operational, the Company's interest in the Policy
at death, under Article 9, or on surrender, under Article 11,
shall be limited to (a) the total premiums paid by the Company,
pursuant to Article 4 of this Agreement, less the Employee's
vested interest in the premiums paid as calculated pursuant to
the Severance Agreement and any Company indebtedness which may
exist against the Policy and any interest due on such Company
indebtedness; or, if less, (b) the total cash value of the
Policy, including dividend accumulations and the cash value of
the dividend additions at the last Policy anniversary before the
premium was waived, less the Employee's vested interest in the
premiums paid as calculated pursuant to the Severance Agreement
and any Company indebtedness which may exist against the Policy
and any interest due on such indebtedness.
ARTICLE 6
Employee's Obligation to Repay Premiums Paid by Company.
The Employee shall be obligated to repay to the Company the
aggregate amount paid by the Company, under Article 4 of this
Agreement, to the Insurer as premiums on this Policy on the
Employee's life acquired pursuant to the terms of this Agreement.
This obligation of the Employee to the Company shall be payable
as provided in Article 9 and Article 10 of this Agreement or
satisfied by the passage of time and service to the Company as
provided pursuant to the Severance Agreement. Upon termination
of the Employee's employment relationship with the Company
pursuant to the Severance Agreement, whether or not said Employee
is entitled to Severance Compensation pursuant to said Severance
Agreement, the Company shall within 30 days of the Deferred
Compensation Ending Date, as that term is defined in the
Severance Agreement:
(i) calculate the Employee's vested interest in the
premiums paid pursuant to the Severance Agreement;
(ii) pursuant to the Severance Agreement, release its
interest in the insurance policy and the related collateral
assignment of said policy to the Company by Employee in an amount
equal to the Employee's vested interest in the premiums paid
calculated pursuant to the Severance Agreement;
(iii) by written notice give the Employee the
option to pay the difference, if any, between the Employee's
vested interest in the premiums paid and the actual amount of
premiums paid on behalf of the Employee by the Company pursuant
to Article 4 of this Agreement to obtain a complete release of
the Company's interest in the policy and the collateral
assignment executed by said Employee pursuant to Article 7 of
this Agreement;
(iv) if the Employee does not exercise his option to
purchase the Company's interest in the Policy within 30 days of
the notice set forth in paragraph (iii) above, the ownership of
the policy shall be assigned to the Company and all of the
Employee's rights thereunder shall be released. In such event,
the Company shall have the right to cancel the policy and,
pursuant to Article 11, receive the difference between the then
current cash value of the policy and the Employee's vested
interest in the premiums paid pursuant to Article 4. The
Employee's vested interest in the cash value of the Policy will
be paid to the Employee by the Company within thirty (30) days of
the expiration of the Employee's option to acquire such policy.
If the Employee does not exercise his or her option to purchase
the Company's interest, the Employee agrees to execute any
document(s) necessary to assign all interest in such Policy to
the Company.
ARTICLE 7
Assignment of Policy. The Employee will collaterally assign
the Policy on his life, acquired pursuant to the terms of this
Agreement, to the Company as security for the repayment of the
policy premiums which the Company will pay on behalf of the
Employee under Article 4 of this Agreement. This collateral
assignment will terminate upon the repayment of said premiums
pursuant to Articles 9 and 10 or by the passage of time and
service to the Company pursuant to the Severance Agreement. This
collateral assignment will not be altered or changed without the
consent of the Company.
ARTICLE 8
Additional Policy Benefits and Riders. The Employee may add
a rider to the Policy on his life, acquired pursuant to the terms
of this Agreement, for his own benefit. Upon written request by
the Company, the Employee may add a rider to the Policy for the
benefit of the Company. Any additional premium for any rider
which is added to the Policy shall be paid by the party which
will be entitled to receive the proceeds of the rider.
ARTICLE 9
Death Claims.
A. When the Employee dies, the Company shall be entitled
to receive a portion of the death benefits provided under the
Policy on the Employee's life acquired pursuant to the terms of
this Agreement. The amount to which the Company will be entitled
shall be (a) the total amount which it has paid, pursuant to
Article 4 of this Agreement, as premiums on the Policy on the
Employee's life less the Employee's vested interest in the
premiums paid as calculated pursuant to the Severance Agreement
and the amount of any Company indebtedness which may exist
against the Policy and any interest due on such Company
indebtedness or, if less, (b) the total cash value of the Policy,
including dividend accumulations and the cash value of the
dividend additions at the last Policy anniversary before death,
less the Employee's vested interest in the premiums paid as
calculated pursuant to the Severance Agreement and the amount of
any Company indebtedness which may exist against the Policy and
any interest due on such indebtedness. The receipt of this
amount by the Company shall constitute satisfaction of the
Employee's obligation under Article 6 of this Agreement.
B. When the Employee dies, the beneficiary or
beneficiaries named by the Employee shall be entitled to receive
the amount of the death benefits provided under the Policy on the
Employee's life in excess of the amount payable to the Company
under Paragraph A of this Article. This amount shall be paid
under the settlement option elected by the Employee or his
beneficiaries.
ARTICLE 10
Termination of Agreement. This Agreement shall terminate on
the repayment in full by the Employee of the contributions made
by the Company under Article 4 of this Agreement toward payment
of the premiums due on the Policy on the Employee's life acquired
pursuant to the terms of this Agreement, provided that upon the
receipt of such repayment the Company releases the collateral
assignment of the Policy made by the Employee pursuant to Article
7 of this Agreement.
This Agreement shall not terminate and shall remain in full
force and effect upon the Employee's termination of employment
with the Company pursuant to the Severance Agreement, whether or
not the Employee is entitled to Severance Compensation pursuant
to the Severance Agreement.
ARTICLE 11
Surrender of Policy. Upon surrender of the Policy, or any
portion thereof, on the Employee's life acquired pursuant to the
terms of this Agreement or upon the surrender of any or all of
the paid up additions standing to the credit of such Policy, if
any, by the Employee at any time before any death benefit is
payable under the Policy, the Company shall have the sole right
to collect such surrender proceeds of the Policy or any such
surrender value of such paid-up additions in an amount not to
exceed the total amount the Company has paid, pursuant to Article
4 of this Agreement, as premiums on the Policy on the Employee's
life less the Employee's vested interest in the premiums paid as
calculated pursuant to the Severance Agreement and the amount of
any Company indebtedness which may exist against the Policy and
any interest due on such Company indebtedness.
ARTICLE 12
Borrowing Against the Cash Value of the Policy. The
Employee may borrow against the cash value of the Policy provided
that he may not borrow against his to his unvested interest in
the premiums paid by the Company as calculated pursuant to the
Severance Agreement. Such borrowing may only occur if the cash
value of the Policy exceeds the premiums paid by the Company on
his behalf pursuant to Article 4. If the premiums paid on behalf
of the Employee pursuant to Article 4 exceeds the cash value of
the policy plus the amount of any outstanding loan which the
Employee has borrowed against said cash value, the Employee
agrees to repay immediately to the insurance company an amount
sufficient to repay such deficit.
ARTICLE 13
Insurance Company Not a Party. The Insurer:
A. Shall not be deemed to be a party to this Agreement for
any purpose nor in any way responsible for its validity;
B. shall not be obligated to inquire as to the
distribution of any monies payable or paid by it under the Policy
on the Employee's life acquired pursuant to the terms of this
Agreement;
C. shall be fully discharged from any and all liability
under the terms of any Policy issued by it, which is subject to
the terms of this Agreement, upon payment or other performance of
its obligations in accordance with the terms of such Policy.
ARTICLE 14
Fiduciary Provisions. The Board of Directors of the Company
is hereby designated as the "Named Fiduciary" for the Split
Dollar Plan established by this Agreement, and it shall have the
authority to control and manage the operation and administration
of such Plan. However, the Insurer shall be the fiduciary of the
Plan solely with regard to the review and final decision on the
claim for benefits under its Policy, as provided in the claims
procedure set forth in Article 16.
ARTICLE 15
Allocation of Fiduciary Responsibilities. The Named
Fiduciary may delegate its responsibilities for the operation and
administration of the Split Dollar Plan, including the
designation of a person to carry out fiduciary responsibilities
under such Plan. The Named Fiduciary shall effect such
delegation of its responsibilities by delivering to the Company a
written instrument signed by its members that specifies the
nature and extent of the responsibilities delegated under the
Split Dollar Plan, together with a signed acknowledgment of their
acceptance by the persons to whom the responsibilities were
delegated.
ARTICLE 16
Claims Procedure. The following claims procedure shall
apply to the Split Dollar Plan:
A. Filing of a Claim for Benefits. The beneficiary of the
Policy shall make a claim for the benefits provided under the
Policy in the manner provided in the Policy.
B. Claim Denial. With respect to a claim for benefits
under said Policy, the Insurer shall be the entity which reviews
and makes decisions on claims denials according to the terms of
the Policy.
C. Notification to Claimant of Decisions. If a claim is
wholly or partially denied, notice of the decision, meeting the
requirements of Section D below following, shall be furnished to
the claimant within a reasonable period of time after a claim has
been filed.
D. Content of Notice. The Insurer shall provide, to any
claimant who is denied a claim for benefits, written notice
setting forth in a manner calculated to be understood by the
claimant, the following:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent Policy or
provisions of this Agreement on which the denial is based;
(iii) a description of any additional material or
information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary;
and
(iv) an explanation of this Agreement's claim review
procedure, as set forth in Sections (e) and (f) below.
E. Review Procedure. The purpose of the review procedure
set forth in this Section and Section (f) following is to provide
a method by which a claimant under the Split Dollar Plan may have
a reasonable opportunity to appeal a denial of claim for a full
and fair review. To accomplish that purpose, the claimant or
his/her duly authorized representative:
(i) may request a review upon written application to
the Insurer;
(ii) may review pertinent Split Dollar Plan
documents or agreements; and
(iii) may submit issues and comments in writing. A
claimant (or his/her duly authorized representative), shall
request review by filing a written application for review at any
time within sixty (60) days after receipt by the claimant of
written notice of the denial of the claim.
F. Decision on Review. A decision on review of a denial
of a claim shall be made in the following manner:
(i) The decision on review shall be made by the
Insurer, which may, at its discretion, hold a hearing on the
denied claim. The Insurer shall make its decision promptly,
unless special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later
than one hundred twenty (120) days after receipt of the request
for review.
(ii) The decision on review shall be in writing and
shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific
references to the pertinent Policy or provisions of this
Agreement on which the decision is based.
ARTICLE 17
Amendment of Agreement. This Agreement shall not be
modified or amended except by a writing signed by the Company and
the Employee. This Agreement shall be binding upon the heirs,
administrators or executors and the successors and assigns of
each party of this Agreement.
ARTICLE 18
State Law. This Agreement shall be subject to and shall be
construed under the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
WITNESS EMPLOYEE
______________________________ By:
- Employee
ATTEST ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ By:
[CORPORATE SEAL]
SCHEDULE A
POLICY NUMBER: ________________________
POLICY DATE: ________________________
FACE AMOUNT: ________________________
AGREEMENT OF
ASSIGNMENT OF LIFE INSURANCE DEATH BENEFIT
AS COLLATERAL
A. For value received, the undersigned hereby assigns,
transfers and sets over to Atlantic Coast Airlines Holdings,
Inc., its successors or assigns, (herein called the "Assignee")
the death benefit under Policy No. ___________________, issued by
the Phoenix Home Life Mutual Insurance Company (hereinafter
called the "Insurer"), dated the ______ day of ______________,
______, in the face amount of $_____________________, and any
supplementary contracts or endorsements issued in connection
therewith (said policy, endorsements and contracts being herein
called the "Policy"); upon the life of _________________ (the
"Owner") subject to all the terms and conditions of the Policy
and to all superior liens, if any, which the Insurer may have
against the Policy. The Owner agrees and the Assignee by the
acceptance of this assignment agrees to the conditions and
provisions herein set forth.
B. It is understood and agreed that the Assignee shall have the
sole right to collect from the Insurer a portion of the net
proceeds of the Policy, when it becomes a claim by death, equal
to the total amount of the then existing Liabilities (as that
term is defined in paragraph D herein, and that all other rights
under the Policy, including, by way of illustration and not
limitation, the right to surrender the Policy, the right to make
Policy loans, and the right to designate and change the
beneficiary are reserved exclusively to the Owner of the Policy
and are excluded from this assignment and do not pass by virtue
hereof and may be exercised by the Owner on the sole signature of
the Owner. Nothing herein shall affect funds, if any, now or
hereafter held by the Insurer for the purpose of paying premiums
under the Policy.
C. The Assignee covenants and agrees with the undersigned as
follows:
1. That any balance of sums payable by the Insurer upon the
death of the undersigned under the Policy remaining after payment
of the then existing Liabilities, as that term is defined below
in Paragraph D, matured or unmatured, shall be paid by the
Insurer to the persons entitled thereto under the terms of the
Policy had this assignment not been executed;
2. That the Assignee, not having any right to obtain policy
loans from the Insurer, will not take any steps to borrow against
the Policy, except that the Owner of the Policy may direct the
Insurer to pay the proceeds of any Policy loan to the Assignee,
in which event the Assignee shall reduce the amount of existing
Liabilities by the amount of such Policy loan and interest
accrued to the date such Policy loans are repaid by the Assignee.
3. That the Assignee will upon request forward without
unreasonable delay to the Insurer the Policy for endorsement of
any designation or change of beneficiary or any election of an
optional mode of settlement; provided, however, that any such
designation, change or election shall be made subject to this
assignment and to the rights of the Assignee hereunder.
4. That, upon surrender of the Policy or any portion thereof or
upon the surrender of any or all of the paid-up additions
standing to the credit of the Policy, if any, by the Owner at any
time before any death benefit is payable under the Policy, the
Assignee shall have the sole right to collect such surrender
proceeds of the Policy or any such surrender value of such paid-
up additions.
D. This assignment of a portion of the life insurance death
benefit under the Policy is made as collateral security for all
Liabilities of the Owner, or any of them, to the Assignee, either
now existing or that may hereafter arise with respect to premiums
advanced for or paid on the Policy by the Assignee (all of which
liabilities secured or to become secured are herein called
"Liabilities").
E. The Insurer is hereby authorized to recognize the Assignee's
claim hereunder without investigating the validity of or the
amount of the Liabilities, or the application to be made by the
Assignee of any amount to be paid to the Assignee. The sole
receipt of the Assignee for any sum received shall be a full
disclosure and release therefore to the Insurer. A check for all
or any part of the insurance death benefit payable under the
Policy and assigned herein shall be drawn to the exclusive order
of the Assignee in such amount as may be requested by the
Assignee.
F. Except as otherwise provided in the Split Dollar Agreement
effective as of the ______ day of _______________, 2000 by and
between the Assignee and the Owner, the Assignee shall be under
no obligation to pay any premium on the Policy. The principal of
or interest on any loans or advances on the Policy, or any other
charges on the Policy shall be an obligation of the Owner, and
not an obligation of the Assignee, except as otherwise
specifically provided herein under Paragraph C.2.
G. The Assignee may take or release other security, may release
any part primarily or secondarily liable for any of the
Liabilities, may grant extensions, renewals or indulgences with
respect to the Liabilities, or may apply to the Liabilities in
such order as the Assignee shall determine, the insurance death
benefit payable under the Policy hereby assigned without
resorting or regard to other security.
H. In the event of any conflict between the provisions of this
assignment and provisions of the note or other evidence of any
Liability, with respect to the Policy or rights of collateral
security therein, the provisions of this assignment shall
prevail.
I. The undersigned declares no proceedings in bankruptcy are
pending against him and that his property is not subject to any
assignment for the benefit of creditors.
J. This Agreement shall be construed under the laws of the
Commonwealth of Virginia.
Signed and sealed this _____ day of _____________________,
2000.
__________________________
__________________________
Witness Owner
__________________________
Address
__________________________
Date
ACCEPTANCE OF ASSIGNMENT
ATTEST:
ATLANTIC COAST AIRLINES
HOLDINGS, INC.
__________________________ BY:
________________________________
