Exhibit 10.12(c)
AMENDED AND RESTATED SEVERANCE AGREEMENT
This Amended And Restated Severance Agreement (the
"Agreement") was executed by the parties as of the date set forth
on the signature page (the "Signature Date") and was authorized
and effective as of November 17, 2003 (the "Effective Date"), by
and between FLYi, Inc., a Delaware corporation ("FLYi") and
Independence Air, Inc., a California corporation, and Xxxxxxx X.
Xxxxxxx ("Xxxxxxx").
Witnesseth That:
Whereas, Xxxxxxx is currently employed by the Company
as Executive Vice President, Chief Financial Officer, Treasurer
and Assistant Secretary, and in connection with such employment
entered into a Severance Agreement (last restated as of December
28, 2001) with the Company; and
Whereas, the Company wishes to assure itself of the
continued services of Xxxxxxx; and
Whereas, on November 17, 2003, the Compensation
Committee of the Board of Directors of FLYi determined that the
best interests of the Company would be served by amending and
restating the terms and conditions of and benefits provided under
the then-existing Amended and Restated Severance Agreement with
Xxxxxxx;
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 Xxxxxxx and
Xxxxxxx 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. For purposes
of this Agreement, as used in the definition of Change in
Control, "Company" shall mean FLYi, Inc., and as used elsewhere
in this Agreement shall mean FLYi, Inc. and its subsidiaries, and
shall also mean any successor to FLYi, Inc., including without
limitation any corporation or other entity into which it is
merged or which acquires all or substantially all of its
outstanding common stock or assets.
2. Duties Xxxxxxx shall serve the Company in the
capacities of Executive Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary. Xxxxxxx shall generally be
responsible for supervising and directing the financial affairs
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. Xxxxxxx shall otherwise be responsible
for carrying out all such other duties and services for the
Company commensurate with Xxxxxxx'x position, as may be designed
from time to time by the Chief Executive Officer of the Company
(the "CEO").
3. Term of Employment Xxxxxxx'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 Xxxxxxx'x
employment has previously been terminated or unless Xxxxxxx or
the Company has provided notice of intention to terminate
Xxxxxxx'x employment pursuant to the terms of Paragraph 10 below,
in which case Xxxxxxx'x term of employment under this Agreement
will be extended to the pending Termination Date.
4. Extent of Service Xxxxxxx 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 Xxxxxxx, and Xxxxxxx agrees to accept
from Company, in full payment for services rendered by Xxxxxxx
and work to be performed by him under the terms of this
Agreement, the following:
A. Salary. An annual base salary as of the
Effective Date of onehundred ninety-three thousand five hundred
dollars ($193,500), which as of April 1, 2004 was increased to an
annual base salary of two hundred fifteen thousand dollars
($215,000). Commencing on October 1, 2005 and on each October 1
thereafter, the amount of Xxxxxxx'x base salary shall be
increased as determined by the Compensation Committee of the
Board of Directors of the Company (the "Compensation Committee").
Xxxxxxx'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).
B. Management Incentive Plan. Xxxxxxx shall
participate in the Company's Management Incentive Program, or any
successor bonus plan or program for management employees.
C. Executive Bonuses. Xxxxxxx shall be eligible
for an additional annual bonus under an executive performance
bonus plan currently known as Senior Management Incentive Plan
("SMIP") for so long as the Board of Directors determines to
maintain such plan. Under such plan, each calendar year, Xxxxxxx
shall be entitled to receive a bonus equal to a 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 prior to the
commencement of each plan year. The bonus amount each year shall
be paid in cash, stock, options or such other form as the
Compensation Committee provides, paid at the time period provided
under such plan, at the same time and in the same form as paid
generally to other eligible employees, except to the extent that
this Agreement provides otherwise.
D. Deferred Compensation.
(i) Xxxxxxx will be entitled to deferred
compensation under an unfunded and non-tax qualified arrangement
("Deferred Compensation") as described in this Paragraph 5.D.,
which shall supercede and control over all prior deferred
compensation arrangements. The amounts credited as Deferred
Compensation will be recorded as a bookkeeping entry representing
a general unsecured obligation of the Company and Xxxxxxx shall
not have a claim to any specific assets of the Company in
satisfaction of the amounts, if any, payable as Deferred
Compensation. As of the Effective Date, the balance in the
Deferred Compensation account recorded for Xxxxxxx equaled
$429,900 and as of the Signature Date the balance in the Deferred
Compensation account recorded for Xxxxxxx equaled $591,150, which
is the amount of the Company's Deferred Compensation
"contributions" under the Severance Agreement between the Company
and Xxxxxxx, as such was amended from time to time, through such
respective dates. After the Signature Date, the Company will
credit Deferred Compensation at the rate of seventy-five percent
(75%) of Xxxxxxx'x annual base salary. Deferred Compensation
will be based on Xxxxxxx'x annual base salary in effect on
January 1 in each year, and will be credited as of January 1 in
each year. The Company may provide the Deferred Compensation
through a benefit plan so long as (1) the amount credited by the
Company on Xxxxxxx'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 Xxxxxxx as
set forth herein. No interest or rate of return or other
appreciation or depreciation of value shall accrue or be payable
on amounts credited to Xxxxxxx as Deferred Compensation pursuant
to this Paragraph 5.D. unless the Company elects otherwise.
(ii) Vesting of Deferred Compensation will be
based upon "Years of Service," with Xxxxxxx to be credited with
one Year of Service for completion of each twelve (12)
consecutive month period of employment with the Company beginning
on the first day of Xxxxxxx'x employment with the Company and
ending on the Deferred Compensation Ending Date (as defined
below). (That is, Xxxxxxx will continue to be credited with
Years of Service during any applicable Severance Period, as
further provided in Paragraph 10.E.(iv) hereof.) Xxxxxxx will
become vested in the Deferred Compensation based on the following
schedule:
PERCENTAGE
YEARS OF SERVICE 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 and determined
under Paragraph 8.B.(ii) of this Agreement) of the Company,
Xxxxxxx shall become immediately 100% vested in his Deferred
Compensation amount notwithstanding the above vesting schedule.
(iii) The "Deferred Compensation Ending Date"
shall mean the Termination Date (as defined below) if Xxxxxxx'x
employment with the Company is terminated at any time under
circumstances that do not entitle him to Severance Compensation
pursuant to Paragraph 10 of this Agreement, or shall mean the
last day of the Severance Period (as defined in Paragraph 10) if
Xxxxxxx is entitled to Severance Compensation. During a
Severance Period, Deferred Compensation shall continue to accrue
and vest pursuant to the terms of Paragraph 10.E.(iv) hereof.
Upon the Deferred Compensation Ending Date, the Company shall pay
to Xxxxxxx whatever Deferred Compensation amount is equal to the
applicable vested percentage of the total amount then credited to
his account pursuant to this Paragraph 5.D., provided that if
Xxxxxxx'x employment with the Company is terminated under
circumstances in which he is entitled to Severance Compensation
other than termination upon or within twelve months following a
Change in Control, the Company shall pay to Xxxxxxx as of the
Split Dollar Release Date an interim payment of whatever Deferred
Compensation Amount is equal to the applicable vested percentage
of the total amount then credited to his account pursuant to this
Paragraph 5.D. and thereafter at the Deferred Compensation Ending
Date shall pay to Xxxxxxx whatever additional Deferred
Compensation amounts that are or have been credited to and vested
in his account. The Company shall make any payment required
under this Paragraph 5.D. in cash within thirty (30) days
following the date such payment is due pursuant to this Paragraph
5.D., provided that the Company shall have a right of set-off
against, and may reduce the amount payable as Deferred
Compensation by, any amount owed or payable by Xxxxxxx to the
Company.
E. Split Dollar Life Insurance. The following
provisions maintain and continue the split dollar life insurance
funding commitments of the Company as provided in Paragraph 5.D
of Xxxxxxx'x prior Severance Agreement entered into as of
December 28, 2001. The Company shall advance amounts to fund
payment of the premiums under a split dollar life insurance
arrangement covering Xxxxxxx as provided in this Paragraph 5.E.
As of the date hereof, the split dollar life insurance
arrangement is provided under a policy or policies with Phoenix
Home Life Mutual (such policies and agreements related thereto,
the "Split Dollar Agreement"). The Company shall continue to
abide by the terms of the Split Dollar Agreement with Xxxxxxx in
force on the date of this Agreement, but, subject to the
foregoing, the Company may implement a substitute Split Dollar
Agreement so long as the amount of premiums funded by the Company
on Xxxxxxx'x behalf equals the amount set forth herein.
(i) Xxxxxxx 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 paid by
the Company toward the premiums for the policy.
(ii) The Company shall pay the annual premium due
on the policy in an amount specified in this Agreement, as
amended from time to time. From and after the Effective Date,
the amount of the annual premium the Company pays shall equal
$146,250 (which is seventy-five percent (75%) of Xxxxxxx'x
annual base salary in effect on July 29, 2002) in each year the
Company is obligated to fund the premium as described herein.
Provided that Xxxxxxx remains employed with the Company as of
January 1 in a year, the Company shall, except as provided in
Paragraph 5.E.(iii) below, for such year 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 this
Paragraph 5.E. During any Severance Period, the Company's
obligation to pay the annual premium due on the split dollar
insurance policy shall end on the Termination Date unless
Xxxxxxx'x employment is terminated upon or within twelve months
following a Change in Control, in which case said payments will
continue through the Severance Period.
(iii) The "Split Dollar Release Date" shall
mean (a) the Termination Date (as defined below, except that for
purposes of this provision, if Xxxxxxx'x employment with the
Company is terminated under the circumstances set forth in
Paragraph 10(C)(i) hereof, then notwithstanding anything in that
paragraph the Split Dollar Release Date shall be the thirtieth
(30th) day following the date of receipt of the notice provided
for therein) except where Xxxxxxx'x employment with the Company
is terminated upon or within twelve months following a Change in
Control, or (b) the last day of the Severance Period (as defined
in Paragraph 10), if Xxxxxxx'x employment with the Company is
terminated upon or within twelve months following a Change in
Control. The Company shall fund payment of the premiums as
provided in the Paragraph 5.E. in each year until the Split
Dollar Release Date. Upon the Split Dollar Release Date, the
following shall occur:
(a) Xxxxxxx shall pay to the Company an
amount equal to the total of all premiums paid by the Company on
the split dollar policy(ies) acquired pursuant to his employment
with the Company to the date hereof or subsequently pursuant to
this Paragraph 5.E., without interest thereon. The Company may,
at its option, collect such amount from any amounts it or any of
its affiliates owes to Xxxxxxx and/or from any amounts it or any
of its affiliates are obligated to pay Xxxxxxx in the future
pursuant to this Agreement. Upon receipt of such payment the
Company shall release its interest in the policy, or a portion
thereof, on Xxxxxxx'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 the
released interest equals the total of all premiums paid by the
Company on the split dollar policy(ies) acquired pursuant to this
Paragraph 5.E. 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 Xxxxxxx 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 interest as acquired by collateral assignment of
the policy pursuant to the Split Dollar Agreement and related
Collateral Assignment Agreement.
(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
have no further obligation to pay any premium on the policy under
the Split Dollar Agreement which has a due date after the Split
Dollar Release Date and such obligation shall be transferred to
Xxxxxxx.
F. Discretionary Compensation. The Company may
pay Xxxxxxx discretionary compensation, bonuses and benefits in
addition to those provided for herein in such amounts and at such
times as the Compensation Committee shall determine.
G. Compensation Upon a Change in Control. Upon
a Change in Control, whether or not Xxxxxxx'x employment has
terminated, Xxxxxxx 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 Xxxxxxx'x annual base salary in effect at the time of the
Change in Control.
(ii) Bonus. For all bonus plans in which
Xxxxxxx is participating as of a Change in Control, the Company
shall pay to Xxxxxxx a lump sum bonus payout. This payout shall
consist of a payment in the amount calculated by the formula [(x
+ y) * z] where (x) is Xxxxxxx'x base salary earned in the year
from January 1 to the date of the Change in Control, (y) is the
amount which is three times Xxxxxxx'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 salary that Xxxxxxx 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. The
payments provided for under this Paragraph 5.G.(ii) will be paid
within thirty days following the Change in Control in cash or in
such other form as bonus amounts generally are paid to eligible
employees, or in a combination thereof, as determined by the
Compensation Committee, whose determination and valuation of any
non-cash compensation shall be final and binding, and shall be
considered to be full compensation for all amounts due to Xxxxxxx
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, other
than pursuant to any arrangements as provided in Paragraph
5.G.(iv) below. Notwithstanding the above, any bonus due to
Xxxxxxx for years (or any other applicable bonus period)
completed prior to the date on 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 Xxxxxxx'x reaching age 65, the
premiums due on any disability insurance policy as was provided
to Xxxxxxx 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 Benefits Upon a Change in Control.
Xxxxxxx shall receive all of the other benefits separately
provided herein or in other agreements as occurring upon a Change
in Control. These include, without limitation, vesting of
unvested stock options and restricted stock. In the event a
Change in Control occurs, Xxxxxxx shall be entitled to the
insurance benefits provided upon Change in Control 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 Xxxxxxx'x employment, even if
Xxxxxxx'x employment is subsequently terminated in a fashion that
does not give rise to Severance Compensation.
(v) 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 Xxxxxxx under any other
agreement in connection with a Change in Control, any state,
local or federal taxing authority imposes any taxes on Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx (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 Xxxxxxx 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 Xxxxxxx as a result of the Parachute Tax Reimbursement being
paid or payable to Xxxxxxx and/or as a result of the additional
amounts paid or payable to Xxxxxxx pursuant to this sentence,
such that after payment of such additional taxes Xxxxxxx 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 Xxxxxxx.
H. Employment or Termination Following a Change
in Control. Provided that he remains employed and the parties
have not otherwise agreed to amend this Agreement, following a
Change in Control Xxxxxxx'x employment shall continue on the
terms set forth in this Agreement and Xxxxxxx shall remain
subject to this Agreement, and be entitled to receive the
compensation, payments and benefits provided for in this
Agreement. In the event that Xxxxxxx'x employment is terminated
upon or within one year following the Change in Control, such
that Xxxxxxx would be entitled to Severance Compensation, any
amounts due at the time of termination as Severance Compensation
under Paragraphs 10.E.(i) and 10.E.(ii) herein shall be reduced
by any amounts paid under Paragraph 5.G.(i) and 5.G.(ii) at the
time of Change in Control (under no circumstances would Xxxxxxx
be required to repay the amounts paid to Xxxxxxx under Paragraph
5.G(i) and 5.G.(ii)), but Xxxxxxx will be entitled to all other
Severance Compensation as provided in Paragraph 10.E. herein. In
the event that Xxxxxxx'x employment is terminated more than one
year following the Change in Control, Xxxxxxx will be entitled to
all payments and benefits provided for herein with respect to
such termination of employment.
6. Benefits
A. The Company shall pay for or provide Xxxxxxx
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 Xxxxxxx'x dependents).
B. The Company agrees to promptly reimburse
Xxxxxxx for any otherwise unreimbursed health or medical
insurance premiums and/or uncovered medical expenses up to
$10,000 per calendar year under a written medical reimbursement
plan maintained for Xxxxxxx and other key executive employees.
If such payments are taxable to Xxxxxxx, the Company shall pay
Xxxxxxx 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. Xxxxxxx 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. Xxxxxxx shall also be
eligible to participate in any stock option, restricted stock,
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.
D. The Company agrees to reimburse Xxxxxxx for
the cost of investment and tax planning services up to $5,000
incurred during each calendar year. If such payments are taxable
to Xxxxxxx, the Company shall pay Xxxxxxx 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 Xxxxxxx, 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 Xxxxxxx in performing his duties
pursuant to this Agreement.
8. Stock Options The Company may from time to time
grant to Xxxxxxx options under FLYi's stock option plan to
purchase shares of the common stock of FLYi at the price per
share at the closing of the trading market on the last business
date prior to such grant. Any such grant will be pursuant to the
terms of the Stock Option Agreement being utilized at the time of
the grant for stock options granted to Executive Vice Presidents
of the FLYi, except that options granted to Xxxxxxx shall contain
terms relating to the consequences of a Change in Control that
are no less favorable to Xxxxxxx than the terms contained in the
form of Stock Option Agreement granted to Xxxxxxx on June 26,
2000. The Compensation Committee retains full discretion of
whether to grant any stock options.
9. Deductions Deductions shall be made from any
component of Xxxxxxx'x compensation provided pursuant to this
Agreement or otherwise 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 Xxxxxxx'x employment with the Company
shall be terminated only in accordance with the following
provisions:
A. Disability.
(i) In the event Xxxxxxx shall become
mentally or physically disabled so as to have been unable to
perform his duties hereunder for six (6) consecutive months,
subject to Xxxxxxx'x right to return to work as provided below,
Company shall have the right to terminate Xxxxxxx'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 Xxxxxxx with Severance Compensation as
provided in Paragraph 10.E. herein. Such six-month period shall
be deemed to have commenced on the date when Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx on
the basis of disability, it shall give written notice to him.
Xxxxxxx'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 Xxxxxxx'x rights under any disability
insurance or similar policy, whether maintained by the Company,
Xxxxxxx or another party. The Company may utilize a disability
policy to fund, in whole or in part, the compensation that would
be due to Xxxxxxx 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 Xxxxxxx.
(iii) For purposes of this Agreement,
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx'x
employment with the Company), Xxxxxxx 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
Xxxxxxx is subject to any disability, the issue shall be
submitted to a Board of Arbiters (whose decision shall be binding
on the Company and Xxxxxxx) 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; a second Specialist shall be
appointed by Xxxxxxx 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 Xxxxxxx is not
subject to any disability for purposes of this Agreement, Xxxxxxx
shall return to work under the provisions hereof. Such
Specialists may physically examine Xxxxxxx, 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 Xxxxxxx can
return to work hereunder on a part-time basis, the parties agree
to use good faith efforts to negotiate the terms of Xxxxxxx'x
return to work.
(vii) During any period in which Xxxxxxx
is disabled but his employment shall not have been terminated,
Xxxxxxx 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 Xxxxxxx. Any mandatory option grants as
provided herein shall be deferred until such time as the
disability period ends.
(viii) During any period in which Xxxxxxx
is disabled but his employment shall not have been terminated,
Xxxxxxx 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) Xxxxxxx'x employment with Company shall
terminate immediately upon Xxxxxxx'x death; provided, however,
that Company shall be obligated to provide the Severance
Compensation as specified in Paragraph 10.E. herein to Xxxxxxx'x
estate, heirs or beneficiaries.
(ii) Nothing contained herein shall be
construed to affect Xxxxxxx'x rights under any life insurance or
similar policy, whether maintained by Company, Xxxxxxx 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 Xxxxxxx'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 Xxxxxxx.
(i) Other than Following a Change in
Control. Xxxxxxx 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, Xxxxxxx (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. Xxxxxxx 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 Xxxxxxx'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
Xxxxxxx 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.B. of this Agreement,
Company shall be obligated to provide Xxxxxxx with Severance
Compensation as provided in Paragraph 10.E. herein; provided that
payments made as separately provided in Paragraph 5.H. 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 Xxxxxxx'x employment under this Agreement at any
time by giving Xxxxxxx 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"). In the event Xxxxxxx'x employment with
Company is terminated without cause, Company shall be obligated
to provide Xxxxxxx with Severance Compensation as provided in
Paragraph 10.E. herein. At the option of Company, Xxxxxxx'x
employment shall be immediately terminated upon the Company
giving such notice, in which case Xxxxxxx 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 Xxxxxxx'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.B. of this Agreement, shall automatically be deemed
to be a termination without cause provided that any amounts due
as Severance Compensation shall be reduced as provided in
Paragraph 5.H. 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
Xxxxxxx'x employment under this Agreement immediately for
"cause". In such event, the Company shall not be liable to
Xxxxxxx 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 Xxxxxxx'x duties hereunder, (ii) commission of an
act of theft, fraud, dishonesty or personal misconduct by
Xxxxxxx, which act is harmful to Company, (iii) breach of any
provision of this Agreement if such breach has not been cured by
Xxxxxxx (or if Xxxxxxx 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 Xxxxxxx written notice of such breach. Any
termination under this Paragraph 10.D.(ii) shall take effect
immediately upon the Company giving Xxxxxxx 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 Xxxxxxx
upon the occurrence of any of the events described elsewhere in
this Agreement as providing for Xxxxxxx'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 Xxxxxxx'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. Benefits extending to Xxxxxxx'x spouse shall
refer to Xxxxxxx'x spouse as of the date such benefits are
extended or, after Xxxxxxx'x death, to Xxxxxxx'x spouse as of the
date of his death. The compensation and benefits to be provided
as Severance Compensation are as follows:
(i) Severance Pay. Throughout the Severance
Period, Xxxxxxx 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
Xxxxxxx is participating as of the Termination Date, the Company
shall pay to Xxxxxxx a lump sum bonus payout. This payout shall
consist of a payment in the amount calculated by the formula [(x
+ y) * z] where (x) is Xxxxxxx'x base salary earned in the year
from January 1 to the Termination Date, (y) is the amount which
is two times Xxxxxxx'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 salary that Xxxxxxx was paid
during any one of the five years immediately preceding the year
in which the Termination Date occurred, but which shall not be
greater than the maximum percentage of base salary that Xxxxxxx
was eligible to earn during the year in which the Termination
Date occurred assuming all targets were met in full, whether or
not said targets actually were met. The payments provided for
under this Paragraph 10.E.(ii) will be paid within thirty days
following the Termination Date in cash or in such other form as
bonus amounts generally are paid to eligible employees, or in a
combination thereof, as determined by the Compensation Committee,
whose determination and valuation of any non-cash compensation
shall be final and binding, and shall be considered to be full
compensation for all amounts due to Xxxxxxx 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 Xxxxxxx for years (or any other
applicable bonus period) completed prior to the Termination Date
but not yet paid shall be paid in addition to the bonus described
herein. If such bonus for prior years is in the form of
restricted stock, such bonus will be considered earned to the
extent that applicable vesting targets have been met as of the
Termination Date, whether the confirmation that the targets have
been met occurs before or after the Termination Date. If such
targets have been met but the stock has not yet been distributed,
Xxxxxxx will be entitled to receive the stock, or, at the option
of the Company, the cash equivalent thereof, no later than the
date the stock was due to be distributed had the termination not
occurred. Any such stock for which targets have not been met
will be forfeited.
(iii) Stock Options. All options to
purchase shares of FLYI stock that have been granted to Xxxxxxx
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), the terms of exercise, payment and
expiration shall be as provided in each option agreement.
(iv) Deferred Compensation. The Deferred
Compensation program will continue throughout the Severance
Period, including Xxxxxxx'x accumulation of Years of Service for
vesting purposes, and including the Company's continuation of
contributions. Alternatively, the Company may elect to pay such
amounts to Xxxxxxx 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. At the end of the Severance Period, the
Company shall pay Xxxxxxx an amount equal to his vested interest
under the Deferred Compensation as provided in Paragraph
5.D.(iii), reduced for any interim payments made pursuant to such
Paragraph. Notwithstanding the foregoing, the Company shall have
a right of set-off against, and may reduce the amount payable as
Deferred Compensation by, any amount owed or payable by Xxxxxxx
to the Company.
(v) Insurance Programs. In the event
Xxxxxxx'x employment with the Company is terminated upon or
within twelve months following a Change in Control, 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 this Agreement for the Severance Period. On the
Termination Date (except that for purposes of this provision, if
Xxxxxxx'x employment is terminated under the circumstances set
forth in Paragraph 10(C)(i) hereof, then notwithstanding anything
in that provision, the Termination Date for purposes of this
Paragraph shall be the thirtieth (30th) day following the date of
receipt of the notice provided for therein), or, if Xxxxxxx'x
employment with the Company is terminated upon or within twelve
months following a Change in Control, at the end of the Severance
Period, Xxxxxxx shall pay to the Company an amount equal to the
total of all premiums paid by the Company on the split dollar
policy(ies) acquired pursuant to Paragraph 5.E., without interest
thereon, and upon receipt of such payment the Company shall
release its interest in the policy, or a portion thereof, on
Xxxxxxx'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 total of all premiums paid by the Company on the split
dollar policy(ies) acquired pursuant to Paragraph 5.E.
Alternatively, if the Company elects to pay the Deferred
Compensation to Xxxxxxx within fifteen (15) days after the
Termination Date pursuant to Paragraph 10.E.(iv) above, the
Company at the time of such payment may demand payment from
Xxxxxxx of an amount equal to the total of all premiums paid by
the Company on the split dollar policy(ies) acquired pursuant to
Paragraph 5.E., without interest thereon, and upon receipt of
such payment release its interest in the policy, or portion
thereof, acquired pursuant to the terms of the Split Dollar
Agreement, and any or all of the paid up additions standing to
the credit of such policy, if any, and thereafter the Company
shall be under no obligation to pay any further premiums under
the Split Dollar Agreement. 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
Xxxxxxx'x dependents) shall continue to be paid for by the
Company during the Severance Period or, in the event of Xxxxxxx'x
termination upon or following a Change of Control of the Company
as defined in Paragraph 8.B., for the longer of the Severance
Period or the remainder of Xxxxxxx'x and his spouse's life, and
including children to age 21 as per coverage provided prior to
the Change in Control. Provided, however, if such coverage
cannot be continued during the Severance Period or until
Xxxxxxx'x and his spouse's death, as the case may be, under the
terms of such policies or plans, the Company shall reimburse
Xxxxxxx for the cost of comparable coverage under individually
obtained policies or for COBRA coverage, or shall make other
arrangements to assure that Xxxxxxx 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 Xxxxxxx
for any otherwise unreimbursed health and medical insurance
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 FLYi, Inc. and
its subsidiaries flight pass privileges currently granted to
Xxxxxxx will continue for the Severance Period. Xxxxxxx 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. Xxxxxxx shall not be entitled
to travel benefits on any other airline.
(ix) Deductions for Taxes. Subject to
Paragraph 5.G.(v), any compensation due to Xxxxxxx 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 Xxxxxxx is an employee of the Company, and continuing
thereafter for twelve months following any termination of
Xxxxxxx'x employment, or with respect to the provisions of (i),
below, for the longer of such twelve month period or for such
period as Xxxxxxx is receiving Severance Compensation, Xxxxxxx
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. Xxxxxxx
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 Xxxxxxx'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
Xxxxxxx'x 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. Xxxxxxx 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 Xxxxxxx in violation of his agreements under this Paragraph
11.B or (ii) Xxxxxxx 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. Xxxxxxx 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 Xxxxxxx 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
Xxxxxxx.
D. Injunctive Relief. Without intending to
limit the remedies available to the Company, Xxxxxxx acknowledges
that a breach of any of the covenants contained 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 Xxxxxxx 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 Xxxxxxx, is a personal contract and the rights and
interests of Xxxxxxx 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
Xxxxxxx, that Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 the terms of the Severance Agreement
between the parties dated as of December 28, 2001 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 Xxxxxxx, and contains all the covenants and
agreements among the parties with respect to such subject matter.
Notwithstanding the foregoing, to the extent that the Company's
Deferred Compensation contributions or any other compensation or
benefit provided for hereunder was paid, granted, credited or
funded under and pursuant to an earlier version of this Agreement
with respect to service prior to the Effective Date and at rates
provided for under such earlier version, then such compensation
or benefit need not be again paid, granted or funded,
respectively, pursuant to this Agreement. This Agreement shall
be construed in accordance with the laws of the Commonwealth of
Virginia, without regard to principles of conflicts of law.
Xxxxxxx 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 Xxxxxxx In the event of a termination
of employment by Xxxxxxx 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, Xxxxxxx 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 Paragraph 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 Xxxxxxx, to the most recent address indicated for
Xxxxxxx'x residence in the personnel records of Company, unless
Xxxxxxx gives written notice that such notices are to be
delivered to another address.
If to Independence Air or the Company:
FLYi, Inc.
Independence Air, Inc.
00000 Xxxxxxxx Xxxxx
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 Xxxxxxx
has hereunto set his hand as of the day and year written below,
with such Agreement to be effective as of the Effective Date set
forth herein.
WITNESS:
________________________________
_____________________________
Xxxxxxx X. Xxxxxxx
Dated: December __, 2004
COMPANY:
ATTEST: FLYi, Inc.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary Chairman & Chief
Executive Officer
Dated: December __, 2004
ATTEST: Independence Air, Inc.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Secretary Chairman & Chief
Executive Officer
Dated: December __, 2004
