SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
December 30,2004
FLYi, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21976 13-3621051
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
45200 Business Court, Dulles, VA 20166
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(703) 650-6000
N/A
(Former Name or Former Address, if Changed Since Last Report)
1.01. Entry into a Material Definitive Agreement.
FLYi, Inc. (the "Company") has executed agreements with certain
of its executive officers on terms approved in Fall 2003 by the
Compensation Committee. The agreements previously were
described in the Company's proxy statement filed with the
Securities and Exchange Commission on April 27, 2004, and are
described further below.
The Company executed an agreement with Richard J. Surratt (the
"Surratt Agreement"), under which he serves as Executive Vice
President, Chief Financial Officer, Treasurer and Assistant
Secretary. The Surratt Agreement is substantially similar to an
agreement that the Company has with Thomas J. Moore, the
Company's President and Chief Operating Officer. The Surratt
Agreement provides for a one-year term that is continuously
extended unless terminated. The Surratt Agreement provides for a
minimum annual base salary of $193,500, which amount may be
increased from time to time by the Board's Compensation Committee
and currently is $215,000. The Surratt Agreement further
provides for a deferred compensation accrual at a rate of 75% of
the annual base salary subject to nine year graduated vesting,
with benefits under the deferred compensation arrangement being
applied in part to indirectly finance an insurance policy for Mr.
Surratt's benefit, and provides that Mr. Surratt shall
participate in any bonus plan provided to executive officers
generally and in employee benefit and medical plans and other
arrangements as the Compensation Committee shall determine.
Under the deferred compensation program, participating executive
officers will receive upon termination of employment an amount
equal to the specified vested percentage (which shall be 100%
upon a change in control) of the executive officer's annual
accruals as provided under his employment agreement. These
amounts are applied against amounts payable under Company-paid
life insurance policies obtained prior to July 2002 for the
executive officer.
Under the Surratt Agreement, if Mr. Surratt's employment is
terminated by the Company without cause, or if he terminates his
own employment with good reason (including any termination by the
Company or by Mr. Surratt within twelve months after a change in
control), or upon Mr. Surratt's death or disability, then:
(1) all of Mr. Surratt's options become immediately exercisable;
(2) he is paid a lump sum amount calculated by the formula [(x +
y) * z] where (x) is Surratt's base salary earned in the year
from January 1 to the Termination Date, (y) is the amount which
is two times Surratt's 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 Surratt was paid
during any one of the five years immediately preceding the year
in which the Termination Date occurred his year-to-date bonus
plus two times his annual bonus; (3) he will continue to benefit
from deferred compensation contributions and vesting for 24
months; and (4) he is provided with insurance and flight pass
benefits for 24 months. Upon a change in control of the Company,
as defined in the Surratt Agreement, Mr. Surratt would receive
(1) an amount equal to three times his annual salary, (2) a lump
sum bonus payout in the amount calculated by the formula [(x + y)
* z] where (x) is Surratt's 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 Surratt'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 Surratt was eligible to earn during the year in which the
Change in Control occurred assuming all targets were met in full;
(3) the Company will prepay, to the time of Surratt's reaching
age 65, the premiums due on any disability insurance policy as
was provided to Surratt as of the time of Change in Control; and
(4) a tax gross-up/make-whole payment in the event that the
payments or benefits to Mr. Surratt in connection with a Change
in Control are treated as "parachute payments" under Section 280G
of the Internal Revenue Code. For 12 months following any
termination of employment, Mr. Surratt would be subject to a
nonsolicitation, non-competition, and confidentiality provision.
Under separate agreements between the Company and Mr. Brown and
Mr. Nordling (collectively, the "Officer Agreements"), the
Company agreed to employ Mr. Brown as Senior Vice President -
Operations and Mr. Nordling as Senior Vice President - Marketing,
each for a one year term. The Officer Agreements provide for
automatic twelve-month extensions unless earlier terminated, and
for annual base salaries, which may be and, for officers subject
to Officer Agreements in the past, have been increased from time
to time by the Compensation Committee to amounts above that
specified in the original agreements. The Officer Agreements
provide that Messrs. Brown and Nordling shall participate in any
bonus plan provided to executive officers generally, and in
employee benefit and medical plans and other arrangements as the
Compensation Committee shall determine. In the event of
termination by the Company "without cause," the terminated
officer shall receive his full base salary and medical insurance
coverage for a period of twelve months, and a portion of any
annual bonus shall be prorated to the date of termination.
Change in control provisions are similar to the Surratt Agreement
except that compensation would be at a rate of two years of base
pay and bonus.
Item 5.02 Departure of Directors or Principal Officers; Election
of Directors; Appointment of Principal Officers.
(b) Director resignation.
The Company announced that Mr. William Anthony (Tony) Rice has
resigned from the Company's board of directors, effective January
7, 2005. The Company and Mr. Rice stated that Mr. Rice resigned
to avoid any appearance of conflict with aircraft manufacturers
and lenders as the Company works to address its liquidity issues.
The Company's Board of Directors has appointed James C. Miller
III to serve as chair of the Board's Audit Committee and named
director Susan MacGregor Coughlin to the Board's Audit Committee.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this current report to be signed
on its behalf by the undersigned hereunto duly authorized.
FLYi, Inc.
Date: January 6, 2005 By: /S/ David W. Asai
David W. Asai
Vice President and Controller
(Principal Accounting Officer)