EXHIBIT 10.2
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 19, 1999,
and effective as of May 25, 1999, between Trans World Airlines, Inc.
("Company"), and Xxxxxxx X. Xxxxxxx ("Executive");
WHEREAS, the Executive currently serves as the Chief Operating
Officer and President of the Company, and is a member of the Board of
Directors of the Company; and
WHEREAS, the Executive will continue to be a member of the Board
of Directors of the Company but, effective as of May 25, 1999, will no
longer be the Chief Operating Officer of the Company; and
WHEREAS, the Company desires to employ and the Executive has
accepted a position as Chief Executive Officer ("CEO") and President of
the Company, effective as of May 25, 1999; and
WHEREAS, the parties desire to set forth the entirety of their
agreements and understandings;
NOW, THEREFORE, in consideration of the mutual promises contained
herein the parties agree as follows:
1. Employment. The Company hereby employs the Executive to
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render the services hereinafter described and the Executive hereby
accepts such employment and agrees to render such services, upon and
subject to the terms and conditions described in this Agreement;
provided, however, the Executive is currently a Company employee serving
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as (among other capacities) a pilot whose terms of employment are
subject to a collective bargaining agreement between the Company and the
Air Line Pilots Association ("ALPA Contract"). At such time as the
Executive ceases to serve as or is terminated pursuant to the terms of
this Agreement from his position as CEO and President or in such other
executive positions to which he might be assigned pursuant to the terms
of this Agreement, the Executive reserves the right to return to service
with the Company as a pilot subject to the terms of the ALPA Contract.
2. Term. The Executive's employment hereunder will begin upon
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the effective date of this Agreement and will continue until May 24,
2002, unless earlier terminated at any time by Company or Executive with
or without cause.
3. Duties.
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(a) The Executive will serve at the pleasure of the Board
of Directors of the Company as CEO and President and will perform such
executive, advisory and/or administrative and managerial assignments and
duties as reasonably may be assigned to the Executive from time to time
by the Board of Directors of the Company in light of his position as the
CEO and
President of the Company. The Executive will carry out and perform all
such duties and assignments and all directions of the Board of Directors
of the Company and will report directly and exclusively to the Board of
Directors of the Company and to the Chairman of that Board. The
Executive also will comply with and carry out all rules and policies of
the Company, and will serve, without additional compensation, as an
officer and/or director or any subsidiary, affiliated or related
corporation or business, or of any company in which Company may hold any
interest.
(b) The Executive will, on an exclusive basis, devote his
full time during normal business hours to the business and affairs of
the Company and use his best efforts to promote the interests of the
Company and to perform faithfully and efficiently the responsibilities
assigned to the Executive in accordance with the terms of this
Agreement; provided, however, that the Executive may during normal
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business hours perform such duties as a pilot-in-command of TWA aircraft
to the extent necessary to satisfy all applicable requirements for the
Executive to maintain a valid air line pilot's competency certificate.
Without limiting the foregoing, to the extent it does not impede his
ability to perform his duties and responsibilities as CEO and President,
the Executive may serve on one or more civic or educational boards
during the term of this Agreement, including, without limitation,
continued service on the boards of RCGA and Xxxxxxx University. The
Executive will be permitted to serve during the term of this Agreement
as a director of one other corporation, subject to the prior written
approval of the Board of Directors of the Company or the Executive
Committee thereof, which approval will not be unreasonably withheld.
4. Compensation and Other Terms of Employment. During the
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period in which the Executive is employed by Company as CEO and
President, the Executive will receive the following:
(a) Salary. The Executive will be paid an annual rate of
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$500,000 on a regular basis, not less frequently than one time per
month, on a regular Company pay day. This rate of pay ("Base Salary")
is subject to increase but not decrease from time to time, and will be
reviewed on a regular basis. All such payments will be subject to
withholding for taxes and amounts owed by the Company, if any. $22,000
of such Base Salary (or such higher maximum amount as from time to time
may be permitted by law) will be paid by the Company into the Pilots
defined contribution plan, the "Directed Account Plan."
(b) Stock Incentive Plan. The Executive continues to be
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eligible to participate in the Company's Key Employee Stock Incentive
Plan ("KESIP"). The Executive's current stock option grants are for
35,000 shares granted on March 22, 1999 in anticipation of his
employment under this Agreement and for 75,000 shares granted in January
1999, subject in each case to the terms and conditions (including as to
vesting) set forth in each KESIP Agreement between the Executive and the
Company. The exercise price of such options will be the Fair Market
Value, as that term is defined in the KESIP, of the Company's common
stock as of the option grant date. To the extent that there is any
inconsistency between the terms and conditions of this Agreement and
those of the KESIP, the terms and conditions of this Agreement will
control.
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(c) Management Annual Incentive Plan. The Executive will
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participate in the Management Annual Incentive Plan ("MAIP") in
accordance with its terms. The MAIP will be the exclusive Company bonus
program in which the Executive will participate. The Executive promptly
will present the applicable committee of the Company's Board of
Directors with written proposals for CEO goals and objectives for the
years falling within the term of this Agreement, and the applicable
committee of the Company's Board of Directors and the Executive will
work in good faith to agree upon mutually acceptable goals and
objectives.
(d) Change of Control Agreement. The Executive is party to
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a "change-of-control" agreement with the Company dated as of November 1,
1997 ("COC Agreement"). The COC Agreement will remain in full force and
effect as if it were an amendment to this Agreement instead of an
amendment to the employment agreement between the Executive and the
Company dated as of March 27, 1997.
(e) Passes. The Executive and eligible family members will
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be entitled to card-type Class A "term" passes on the Company's routes
worldwide during the period of time that the Executive is employed by
the Company; provided, however, that nothing contained herein will in
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any way alter any additional rights which the Executive may have been
provided by virtue of the Executive's service as a member of the
Company's Board of Directors.
(f) Medical, Dental, Insurance and Accident Insurance. (i)
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The Executive and his eligible dependents will be eligible to
participate in the Company-paid comprehensive Medical and Dental Plan
and the Travel Accident Insurance Program offered by the Company, on the
same terms and conditions applicable to other officers then serving as
the same level as the Executive. (ii) The Executive will be eligible
for coverage under the Company's Group Term Life Insurance Plan under
which the Company currently provides Basic Life Insurance of $50,000 at
no cost to the Executive. Assuming that the Executive is insurable at
standard rates, the Executive will also have the option to purchase
Additional Group Life Insurance in an amount up to three times the
Executive's Base Salary, less the Basic $50,000 coverage. The monthly
cost of this Additional Life Insurance is currently $4.50 per $10,000
and such monthly cost may increase from time-to-time. (iii) The
Executive will be eligible to participate in the Company's Voluntary
Personal Accident Insurance Plan. The maximum coverage for this plan is
currently $200,000 at a monthly cost of $7.20 and such monthly cost may
increase from time-to-time. (iv) The Executive will be covered for
Long-Term Disability protection pursuant to plan provisions at standard
rates and subject to standard conditions. (v) So long as permitted
under the rules of eligibility for the ALPA Contract, the Executive will
continue to be eligible for participation on the same terms and
conditions applicable to pilots under the ALPA Contract in the
Retirement Plan for Pilots (the "A" Plan), the Directed Account Plan and
the Section 401(k) Plan for Pilots. (vi) So long as permitted under the
rules of eligibility for the ALPA Contract, the Executive will continue
to be eligible to participate in the Pilot Mutual Aid Loss of License
Plan. Nothing herein will be construed to prevent the Company from
amending or altering any such plans or programs set forth herein in
sections (i) to (iv) so long as the Executive continues to have the
opportunity to receive in the aggregate benefits at a level no less
favorable than those provided to other executive officers of the
Company. Nothing herein will be construed to reduce the Executive's
rights under the ALPA Contract.
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5. Board Seat. The Executive will continue to be appointed to
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serve as a member of the Company's Board of Directors as of the
effective date of this Agreement, subject to the Executive's election
(and reelection during the term of this Agreement) to the Board of
Directors by the shareholders of the Company. The Company will take all
necessary actions to nominate the Executive to serve on the Board of
Directors of the Company during the term of this Agreement
6. Vacation. The Executive will be eligible for four (4) weeks
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vacation per annum.
7. Termination of Employment.
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(a) Death/Permanent Disability. This Agreement will
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terminate automatically upon the Executive's death and/or permanent
disability. All benefits and compensation then accrued hereunder, and
under any related plans, will be paid when due to the Executive's
beneficiaries or legal representatives, as appropriate.
(b) Termination Without Cause. The Company will have the
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right to terminate the Executive's employment without cause at any time
during the term of this Agreement on thirty (30) calendar days' notice.
In such event the Company will pay to the Executive one (1) year's Base
Salary (the "severance payment") plus, in accordance with Company
policy, any earned, unpaid salary, granted but unpaid bonus, earned
unused vacation accrued from the calendar year(s) prior to the calendar
year in which the Executive's employment is terminated ("earned unused
vacation") and current earned unused vacation for the calendar year in
which the Executive's employment is terminated pro rated by month as of
the month in which the effective date of the Executive's termination
occurs ("current earned unused vacation"). If the Executive returns to
service as a pilot for the Company after termination pursuant to this
Section 7(b), he will receive the severance payment and will also be
compensated as and receive the benefits of a pilot (less any vacation
the Executive has already used or been compensated for in a given year
in his capacity as CEO and President) under the then current ALPA
Contract. Such payment (other than earned unpaid salary, earned unused
vacation and current earned unused vacation, which will be paid in a
single lump sum) may be made at the Company's option in a single lump
sum or in equal installments payable over up to a twelve month period
("installment period"). Payments made during the installment period
will be made from the active payroll. The Company will have no further
obligation to the Executive under this Agreement and the Executive
accepts the Company's agreement and obligation to make such payments in
full satisfaction of all claims against the Company.
(c) Termination For Cause. The Company will have the right
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to terminate the Executive's employment at any time and without advance
notice for Cause. For the purposes of this Agreement, "Cause" will mean
that (i) the Executive is convicted of or engages in conduct which
constitutes a felony, or a misdemeanor involving moral turpitude; or
(ii) the Executive is found by the Company's Board of Directors to have
willfully engaged in conduct which is demonstrably and materially
injurious to the Company; or (iii) the Executive is found by the
Company's Board of Directors to have failed or refused to in any
material respect to competently
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perform his duties and responsibilities (after notice and opportunity to
cure if such material failure or refusal can be cured); or (iv) the
Executive has breached his duty of loyalty to, or committed any act of
fraud, theft or dishonesty against or involving, the Company or any of
its affiliated companies; or (v) the Executive has breached any
provision of this Agreement. If the Executive's employment is
terminated for Cause, the Company will pay the Executive his earned,
unpaid salary and granted but unpaid bonus through the date of such
termination at the rate in effect at the time of such termination and
any earned unused vacation and current earned unused vacation through
the effective date of such termination. Upon the making of such
payment, the Company will have no further obligation to the Executive
under this Agreement. In the event that the Executive's employment as
CEO and President is terminated in accordance with the immediately
preceding sentence, to the extent he remains qualified and eligible the
Executive will have the right to return to service as a pilot for the
Company and if the Executive elects to return to service as a pilot for
the Company, only earned, unpaid salary will be paid to the Executive;
earned unused vacation and current earned unused vacation will be
available for use by the Executive in the calendar year in which the
termination of Executive's employment as CEO and President is effective.
(d) Termination by the Executive. If the Executive
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voluntarily terminates his employment, the Executive must give the
Company sixty (60) calendar days' advance notice in writing. If the
Executive fails to do so, the Executive will not be entitled to any
accrued rights and benefits to which the Executive might be entitled
under this or any related agreement including but not limited to each
KESIP Agreement between the Executive and the Company and the Company
will have no further obligation to the Executive except for unpaid
salary earned by the Executive up to and including the effective date of
such termination.
Upon termination of employment and otherwise upon demand, the
Executive will turn over to Company all Company property and documents
and all computer passwords, and will (after copying the same to 3.5 inch
disks, returning the disks to the Company and receiving confirmation
from the Company that such data are retrievable in good form) delete all
Company information from any computer which is not Company property.
Upon termination, all benefits and compensation ceases except as
described above.
8. Termination Obligations. The Executive agrees that during
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his employment hereunder or as a pilot for the Company and following
termination of his employment hereunder or as a pilot (which periods
will be tolled for the duration of the Executive's service as a pilot if
he returns to such position and reimposed in full upon the termination
of such service):
(a) he will not during his employment and for a period of
two (2) years following the effective date of his termination, directly
or indirectly solicit (or assist or encourage the solicitation of) any
employee of the Company or any of its subsidiaries or affiliated
companies or anyone who was so employed at any time within twelve (12)
months prior to termination of the Executive's employment by the
Company to be employed by the Executive or by any entity in which the
Executive owns or expects to own any equity interest in excess of five
(5) percent of any class of the outstanding securities thereof, or by
any entity by which the Executive is employed or for which the Executive
serves or expects to serve in any capacity; nor (after his
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employment ends and during such two (2) year period) encourage or induce
any Company employee to terminate his or her Company employment. For
the purposes of this paragraph, the term "solicit" will mean any contact
by the Executive with or providing information to others who may be
expected to contact any employees of the Company or of any of its
subsidiaries or affiliated companies regarding their employment status,
job satisfaction, interest in seeking employment with the Executive,
with any person affiliated with the Executive or by whom the Executive
is employed but will not include print advertising for personnel or
responding to any unsolicited request for a personal recommendation for
or evaluation of a Company employee or an employee of any of the
Company's subsidiaries or affiliated companies.
(b) he will hold forever hereafter in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge and data relating to the Company or any of its subsidiaries or
affiliated companies, including but not limited to commercial,
operational, marketing, pricing, or financial information including
costs, strategies, forecasts or trade secrets, acquisition strategies or
candidates or personnel acquisition plans ("confidential
information") which will have been obtained by the Executive during or
by reason of his employment by the Company or by any of its subsidiaries
or affiliated companies and which will not be public knowledge. During
and after the end of the term of employment, the Executive will not,
without the prior written consent of the Company or unless required to
do so by reason of a court order or subpoena (in which case the
Executive will give Company prompt notice of any such other subpoena or
order, or request therefore, so as to provide Company the maximum
opportunity to contest the same), communicate or divulge any such
confidential information to anyone other than the Company or those
designated by it, except that while employed by the Company in the
business of and for the benefit of the Company the Executive may provide
confidential information as appropriate to those persons who in the
Executive's judgment have a need to know such confidential information.
(c) he will not for a period of two years following the
effective date of his termination discuss or disclose to the media or
Company personnel the circumstances or terms of his termination of
employment.
(d) he will not publicly disparage or denigrate the Company
or any of its officers, directors or practices.
To the extent that any covenant or agreement contained in this
Section 8 is determined by a Court to be invalid or unenforceable in any
respect or to any extent, the covenant or agreement will not be rendered
void, but instead will be automatically amended to such lesser scope or
to such lesser extent as will grant the Company the maximum restriction
on the Executive's conduct and activities permitted by applicable law in
such circumstances.
9. No Assignment. This Agreement is personal to the Executive
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and without the Company's prior written consent it will not be
assignable by the Executive other than by will or the laws of descent
and distribution. This Agreement will inure to the benefit of and be
enforceable by the legal representatives of the Executive's estate, and
otherwise is freely assignable by the Company.
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10. Assistance. For a period of three (3) years following
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termination of employment as CEO and President (including if the
Executive returns to service as a pilot for the Company), the Executive
will, upon reasonable notice, make himself available for consultation
with Company counsel, to meet with Company counsel and prepare to
testify as a witness or deponent, and to testify as a witness at a
trial, deposition or proceeding, concerning any legal matter involving
or affecting the Company. The Company will pay for all reasonable and
necessary out of pocket travel and telephone costs and expense incurred
by the Executive in connection with any such activity.
11. Expenses. The Executive will receive reimbursement from the
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Company for all reasonable out-of-pocket expenses for any business
travel and business expenses incurred in the performance of his duties
under this Agreement, in accordance with the expense reimbursement
policies of the Company from time-to-time in effect.
12. Miscellaneous.
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(a) This Agreement will be governed by and be construed in
accordance with the internal laws of the State of Missouri, without
reference to principles of conflicts of laws. The captions of this
Agreement are not part of the provisions hereof and will have no force
or effect.
(b) Neither this Agreement nor any of its terms may be
amended, waived, added to or modified other than by written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(c) All notices and other communications hereunder will be
in writing and will be given by hand delivery to the other party or by
regular or registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xx. Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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If to the Company:
Trans World Airlines, Inc.
One City Centre
000 Xxxxx 0xx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: General Counsel
with a copy to:
Xxxxxxxxxxx X. Xxxxx, Esq.
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as either party will have furnished to the
other in writing in accordance herewith. Notice and communications will
be effective when actually received by the addressee.
(d) The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any
other provision of this Agreement.
(e) This Agreement contains the entire understanding
between the parties concerning the subject matter hereof and supersedes
all prior agreements (including the Employment Agreement dated as of
March 27, 1997, which is hereby superceded and cancelled as of the
effective date of this Agreement), understandings, discussions,
negotiations and undertakings, whether written or oral, among the
parties with respect thereto. The terms of any employee manual,
handbook, or any policy of the Company, will not modify, alter, or
invalidate any term of this Agreement nor alter the Employee's at will
status, and in case of any conflict between a term of this Agreement and
any such policy, handbook or manual, the terms of this Agreement
control, except for benefit plans and stock option awards described
herein (to the extent not otherwise provided in this Agreement).
(f) The Executive represents that he is not a party to any
agreement, or under any legal obligation, which could preclude or in any
way impair Executive's performance of the Executive's duties for the
Company. The Executive has not provided, and will not provide, to
Company any trade secret of another person whose secrecy he is obligated
to maintain.
(g) Notwithstanding any provision hereof to the contrary,
nothing in this Agreement will be deemed to entitle the Executive to
employment beyond the term hereof.
(h) In the event of a dispute under this Agreement between
the Company and the Executive, the Company will advance to the Executive
all the Executive's reasonable legal fees and costs, subject to the
Executive's obligation to repay such amounts to the extent the Company
prevails in such dispute.
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(i) All reasonable legal fees and costs incurred by the
Executive in negotiating this Agreement will be paid for by the Company
upon submission to the Company of reasonable and customary invoices from
the Executive or the Executive's legal representatives.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
in its corporate name, and the Executive has hereunto set his hand, all
as of the day and year first above written.
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Xxxxxxx X. Xxxxxxx
TRANS WORLD AIRLINES, INC.
By:
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Name:
Title:
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