Exhibit 10.12(c)
SECOND AMENDED AND RESTATED SEVERANCE AGREEMENT
This Second Amended and Restated Severance Agreement (the
"Agreement") is made and entered into as of this ____ day of
_________, 200__ (the "Effective Date"), by and between Atlantic
Coast Airlines Holdings, Inc., a Delaware corporation ("ACAH")
and Atlantic Coast Airlines, a California corporation ("ACA"),
(ACAH and ACA are herein collectively referred to as the
"Company") and _____________ ("Employee").
Witnesseth That:
Whereas, the Company and Employee are parties to a Severance
Agreement (last restated as of _______________), and desire to
further amend and restate the terms of said agreement 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 _______________________. Employee shall generally be
responsible for ___________________________________ for the
Company and of any other entity(ies) to which the Company's
obligations under this Agreement shall be assigned pursuant to
Paragraph 13. 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 shall terminate on November 30, 2002, unless further
extended as hereinafter set forth. On December 1, 2002, 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. Salary. An annual base salary of ____________________
Thousand Dollars ($_________) shall be paid to Employee.
Beginning December 1, 2002, the amount of Employee's base salary
shall be adjusted as determined by the Compensation Committee of
the Board of Directors of the Company (the "Compensation
Committee"). 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. Management Incentive Plan and Executive Bonuses. 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. Deferred Compensation.
(i) Employee will be entitled to deferred compensation under an
unfunded and non-tax qualified arrangement ("Deferred
Compensation") as described in this Paragraph 5.C., 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 Employee 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 Employee shall equal $_________, which is the amount
of the Company's Deferred Compensation "contributions" under the
Severance Agreement between the Company and Employee, as such was
amended from time to time, through the Effective Date. After the
Effective Date, the Company will credit Deferred Compensation at
the rate of _________ percent (___%) of Employee's annual base
salary. Deferred Compensation will be based on Employee's 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 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. No interest or
rate of return or other appreciation or depreciation of value
shall accrue or be payable on amounts credited to Employee as
Deferred Compensation pursuant to this Paragraph 5.C. unless the
Company elects otherwise.
(ii) Vesting of Deferred Compensation 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 (as defined
below). 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 and determined
under Paragraph
12 of this Agreement) of the Company, Employee 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 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 Company shall pay to Employee
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.C. The Company shall
make this payment in cash within thirty (30) days following the
Deferred Compensation Ending Date, 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 Employee to the Company.
D. Split Dollar Life Insurance. The Company shall advance
amounts to fund payment of the premiums under a split dollar life
insurance arrangement covering Employee as provided in this
Paragraph 5.D. 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
Employee 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 Employee's behalf equals the amount set forth herein.
(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 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 ________ percent
(___%) of Employee's annual base salary in effect on January 1 in
each year the Company is obligated to fund the premium as
described herein. Provided that Employee remains employed with
the Company as of January 1 in a year, the Company shall, except
as provided in Paragraph 5.D.(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.D. 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 Employee's 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 where Employee's
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 Employee's
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 this Paragraph 5.D. in
each year until the Split Dollar Release Date. Upon the Split
Dollar Release Date, the following shall occur:
(a) Employee 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.D., without interest thereon. The Company may, at its option,
collect such amount from any amounts it or any of its affiliates
owes to Employee. Upon receipt of such payment the Company shall
release 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 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.D. 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
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
Employee.
E. Discretionary Compensation. 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 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 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
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 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 shall provide that if a Corporate Change occurs, then
effective as of a date selected by the Compensation Committee,
the Compensation Committee (which for purposes of the Corporate
Changes described in clauses (iii) and (v) of the definition of
Corporate Change herein shall be the Compensation 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
Compensation 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 Compensation Committee,
and in such event the Compensation 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 Compensation
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 Compensation 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 Compensation 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 retains full discretion
of whether to grant any Stock Options, and if so whether the
terms provided herein will apply to said Stock Options.
9. Deductions. Deductions shall be made from any component of
Employee's 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. 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"). In the event Employee's employment with Company is
terminated without cause, 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 provided that any amounts due as Severance
Compensation shall be reduced as provided in Paragraph 12.C. 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 from the beginning of the bonus period through the
Termination Date, to the total 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 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,
Employee 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 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, the Company shall pay Employee an amount equal
to his vested interest under the Deferred Compensation as
provided in Paragraph 5.C. 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 Employee to the Company.
(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, with all contributions to be fully
vested. At the end of the Severance Period, the Company shall
pay Employee an amount equal to 100% of the Deferred Compensation
as provided in Paragraph 5.C. 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. 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 Employee to the Company.
(v) Insurance Programs. In the event Employee's 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, or, if Employee's
employment with the Company is terminated upon or within twelve
months following a Change in Control, at the end of the Severance
Period, Employee 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.D., without interest
thereon, and upon receipt of such payment the Company shall
release 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 total of all premiums paid by the Company on
the split dollar policy(ies) acquired pursuant to Paragraph 5.D.
Alternatively, if the Company elects to pay the Deferred
Compensation to Employee 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
Employee 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.D., 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, 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
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 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 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
11.B 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 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 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 Compensation Committee. The Compensation
Committee 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 lump sum bonus payout. This payout shall consist of
a payment in the amount calculated by the formula [(x + y) * z]
where (x) is Employee's base salary earned in the year of the Change
in Control from January 1 to the date 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 salary 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. the
payments provided for under this Paragraph 12.B.(ii) will be paid
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, within thirty days following the
Change in Control and 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 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, for two
full years following the Change of Control, the premiums due on
any disability insurance policy as was provided to Employee 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 Compensation. All other compensation separately
provided in this Agreement as due upon a Change in Control.
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.
D. 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 _____________ 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.
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.
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
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
Employee has hereunto set his hand as of the day and year first
above written.
WITNESS:
________________________________ _____________________________
Employee
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
HOLDINGS, INC.
_______________________________ BY:________________________
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:________________________
