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Exhibit 10.63
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of June 25, 1999, by and between
CHAUTAUQUA AIRLINES, INC. (hereinafter referred to as the "Company"), a New York
corporation, and BRYAN K. BEDFORD (hereinafter referred to as the "Executive").
R E C I T A L S
WHEREAS, the Company desires to employ the Executive, and the Executive
is desirous of accepting such employment by the Company, upon the terms and
conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT. Subject to the satisfaction of the conditions set forth
in this Section 1, the Company agrees to employ the Executive, and the Executive
agrees to render his services to the Company, as its President and Chief
Executive Officer, during the Term (as defined below). In connection with his
employment as President and Chief Executive Officer, the Executive shall be
appointed to serve as a member as the Board of Directors of the Company. The
Executive shall render his services at the direction of the Board of Directors
of the Company at the Company's offices in Indianapolis, Indiana. The Executive
agrees to use his best efforts to promote and further the business, reputation
and good name of the Company and the Executive shall promptly and faithfully
comply with all instructions, directions, requests, rules and regulations made
or issued from time to time by the Company. This Agreement shall be subject to
the satisfaction of a satisfactory drug test (which the Company shall promptly
arrange) by the Executive.
2. TERM. The term of employment pursuant to this Agreement (the "Term")
shall commence on July 6, 1999 and continue until June 30, 2003; provided that
either party may terminate this Agreement by providing the other with 30 days
prior written notice of such termination. Notwithstanding the foregoing, this
Agreement may be terminated by the Company or by the Executive in the event that
"Cause" for such termination exists as provided in Section 7 below. In the event
(i) the Company terminates this Agreement or the Executive's employment other
than for Cause, or (ii) the Executive terminates this Agreement or the
Executive's employment for Cause, the Company shall pay the Executive Severance
Compensation as provided in Section 3(c) hereof. In the event the Company
terminates this Agreement or the Executive's employment for Cause, or in the
event the Executive terminates this Agreement or his employment other than for
Cause, the Executive shall not be entitled to any Severance Compensation or
other compensation of any kind following the effective date of such termination.
3. COMPENSATION. As full and complete compensation for all the
Executive's services hereunder, the Company shall pay the Executive the
compensation described below.
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(a) CASH COMPENSATION.
(i) During the Term, the Company shall pay the Executive an
annual base salary of $280,000 ("Base Salary"). In the event this
Agreement is terminated prior to the expiration of the Term, the
Company shall pay to the Executive, in addition to any Severance
Compensation payable under Section 3(c), any accrued but unpaid Base
Salary through the termination date.
(ii) In addition to the Base Salary, during the Term, the
Company shall pay to the Executive an annual bonus (a "Bonus") in the
amount of $140,000 or such greater amount as the board of directors of
the Company shall determine in its discretion. The Bonus shall be paid
each year during the Term at the end of the calendar year and shall be
prorated (x) for the 1999 calendar year for the period from the
commencement date of the Executive's employment through the end of such
calendar year, and (y) for the 2003 calendar year for the period from
January 1, 2003 through the end of the Term. In the event this
Agreement or the Executive's employment is terminated (x) by the
Company for Cause or (y) by the Executive other than for Cause, the
Executive shall not be entitled to any Bonus Compensation for such year
or any subsequent period. In the event this Agreement or the
Executive's employment is terminated (x) by the Company other than for
Cause, or (y) by the Executive for Cause, the Executive's right with
respect to a Bonus for the year in which such termination occurs shall
be governed by Section 3(c).
(b) EQUITY COMPENSATION.
(i) Concurrently with the execution and delivery of this
Agreement, the Company shall issue to the Executive, as compensation
and without cost to the Executive, options (the "Options") to purchase
120,000 shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), representing 6% of the shares of Common Stock
that are currently issued and outstanding. The Options shall have an
exercise price per share of $26.75, which is equivalent to an
enterprise value of $53.5 million. The Options shall vest and become
immediately exercisable as to 1/48 of the shares subject to the Options
on the last day of each month during the Term, subject to termination
as provided below. The Executive shall have the right to exercise any
vested Options at any time within 5 years after the date that such
Options became vested and any Options not exercised within such
deadline shall be deemed terminated and void.
(ii) In the event this Agreement or the Executive's employment
is terminated (x) by the Company for Cause, or (y) by the Executive
other than for Cause, the Options shall cease vesting as of the date
that the Company or the Executive provides notice of such termination,
and any unvested Options shall immediately terminate and become void.
In the event this Agreement or the Executive's employment is terminated
(x) by the Company other than for Cause, or (y) by the Executive for
Cause, the Options shall vest as and to the extent provided in Section
3(c) hereof.
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(iii) Notwithstanding anything to the contrary otherwise
contained herein, if at any time during the Term the Company shall, by
stock dividend, stock split, combination, reclassification or exchange,
or through merger, consolidation or otherwise, change its shares of
Common Stock into a different number, kind or class of shares or other
securities or property, then the Board of Directors may, in its sole
discretion, either make the Options immediately exercisable or arrange
for a successor or surviving corporation, if any, to grant replacement
options, or to adjust the number of shares covered by the Options and
the price of each share. The determination of the Board of Directors
shall be conclusive.
(iv) Notwithstanding anything to the contrary otherwise
contained herein, if at any time during the Term the Company shall
issue additional shares of Common Stock to any party that is affiliated
with Wexford Management LLC (an "Affiliate"), the Executive shall have
the right, but not the obligation, to purchase for the same
consideration and on the same terms that such shares of Common Stock
shall be issued to such Affiliate up to 6% of the shares issued to such
Affiliate. The grant of any stock options to any director or officer of
the Company shall not provide the Executive with any rights under this
Section 3(b)(iv).
(v) In the event Wexford Management LLC or any Affiliate has
the right to sell all or a portion of the shares of Common Stock of the
Company held by them in an public offering (whether an initial offering
or a subsequent offering), a private sale or other transaction, or to
register all or a portion of the shares of Common Stock of the Company
held by them, the Executive shall be offered the right to sell or
register as the case may be pro rata with Wexford and such Affiliate
all or a portion of the Shares of Common Stock for which he holds
vested Options.
(c) SEVERANCE COMPENSATION. In the event (i) the Company terminates this
Agreement or the Executive's employment other than for Cause, or (ii) the
Executive terminates this Agreement or his employment for Cause, the Company
shall pay to the Executive as Severance Compensation $560,000, provided that in
the event the remainder of the Term is less than 24 months, such Severance
Compensation shall be prorated for the remainder of the Term, but shall not be
less than $140,000. For example, if the Company terminates this Agreement other
than for Cause with 20 months remaining in the Term, the Company shall pay the
Executive Severance Compensation of $466,667. The Executive shall also receive
as Severance Compensation (i) subject to the next following sentence, an
immediate vesting of those Options that would have vested during the 24 months
after such termination, or such lesser period through the end of the Term, if
the Executive's employment had not been terminated, and (ii) continuation of
medical benefits for the lesser of 12 months or the remainder of the Term.
Notwithstanding the foregoing, in the event the Executive terminates this
Agreement or his employment for Cause as a result of a Change of Control (as
defined herein), all unvested Options shall immediately vest.
4. NO OTHER COMPENSATION. Except as otherwise expressly provided
herein, or in any other written document executed by the Company and the
Executive, no other compensation or other
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consideration shall become due or payable to the Executive on account of the
services rendered hereunder. The Company shall have the right to deduct and
withhold from the compensation payable to the Executive hereunder any amounts
required to be deducted and withheld under the provisions of any statute,
regulation, ordinance, order or any other amendment thereto, heretofore or
hereafter enacted, requiring the withholding or deduction of compensation.
5. BENEFITS.
(a) MEDICAL & 401K BENEFITS. The Company agrees that the Executive shall be
entitled to participate in any retirement, 401K, disability, medical, pension,
profit sharing, group insurance, or any other plan or arrangement, or in any
other benefits now or hereafter generally available to executives of the
Company, in each case to the extent that the Executive shall be eligible under
the general provisions thereof, provided that the Company shall waive any
waiting period for participation in any such plan.
(b) REIMBURSEMENT OF LIVING EXPENSES. Prior to the Executive's relocation to
Indianapolis, Indiana, which shall take place no later than August 15, 1999, the
Company will pay for or reimburse the Executive for all travel, hotel and other
documented out-of-pocket expenses reasonably incurred by him and his immediate
family in connection with the performance of his duties hereunder in
Indianapolis.
(c) RELOCATION EXPENSES. The Company shall pay for or reimburse the Executive
for all out-of-pocket relocation expenses reasonably incurred by him and his
immediate family in connection with his relocation to Indianapolis, including,
without limitation, moving costs, brokerage commission costs, any loss incurred
on the sale of the Executive's current home not to exceed $25,000, and a state
and federal tax "gross up" on such relocation expenses, provided that such
expenses shall not exceed $125,000 in the aggregate.
6. VACATION. The Executive shall be entitled to take three weeks of
paid vacation which shall accrue monthly during each 12 months of the
Executive's employment hereunder, and which vacation shall be taken on dates to
be selected by mutual agreement of the Company and the Executive.
7. TERMINATION FOR CAUSE.
(a) TERMINATION FOR CAUSE BY THE COMPANY. The Company, by written notice to the
Executive, may immediately terminate this Agreement and the Executive's
employment hereunder for Cause. As used herein, a termination by the Company
"for Cause" shall mean that the Executive has (i) willfully or materially
refused to perform a material part of his duties hereunder, (ii) materially
breached the provisions of Sections 8, 9 or 10 hereof, (iii) acted fraudulently
or dishonestly in his relations with the Company, (iv) committed larceny,
embezzlement, conversion or any other act involving the misappropriation of
Company funds or assets in the course of his employment, or (v) been indicted or
convicted of any felony or other crime involving an act of moral turpitude.
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(b) TERMINATION FOR CAUSE BY THE EXECUTIVE. The Executive, by 20 business days
prior written notice to the Company, may terminate this Agreement and his
employment hereunder for Cause, provided that the Company shall have the right
to cure such Cause within such 20 business day period. As used herein, a
termination by the Executive "for Cause" shall mean that (i) the Company has
materially diminished the duties and responsibilities of the Executive, (ii) the
Company has required the Executive to relocate his residence from Indianapolis
to another location without the consent of the Executive or (iii) a Change of
Control has occurred. As used herein, a "Change of Control" shall mean a
transaction, other than a public offering (whether an initial offering or a
subsequent offering) of Common Stock of the Company, as a result of which the
number of shares of Common Stock of the Company collectively owned by Wexford
and its Affiliates is not greater than the number of shares of Common Stock
owned by any other shareholder of the Company.
8. CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges
that he shall receive in the course of his employment hereunder certain
confidential information and trade secrets concerning the Company's business and
affairs which may be of great value to the Company. The Executive therefore
agrees that he will not disclose any such information relating to the Company,
the Company's personnel or its operations other than in the ordinary course of
business or in any way use such information in any manner which could adversely
affect the Company's business. For purposes of this Agreement, the terms "trade
secrets" and "confidential information" shall include any and all information
concerning the business and affairs of the Company and any division, subsidiary
or other affiliate of the Company that is not generally available to the public.
9. NON-COMPETITION. The Executive agrees that without the prior written
consent of Wexford Management LLC ("Wexford") during the Term and for a period
of 12 months following the termination or expiration of this Agreement, he will
not participate as an advisor, partner, joint venturer, investor, lender,
consultant or in any other capacity in any business transaction or proposed
business transaction (a) with respect to which the Executive had a material
personal involvement on behalf of the Company during the last 12 months of his
employment with the Company, or (b) that could reasonably be expected to
interfere with the Company's business or operations as of the date of such
termination or expiration. For these purposes, the mere ownership by the
Executive of securities of a public company not in excess of 2% of any class of
such securities shall not be considered to be competition with the Company.
10. NON-SOLICITATION. The Executive agrees that during the Term, and
for a period of 12 months following the termination or expiration of this
Agreement, he shall not, without the prior written consent of the Company,
directly or indirectly, employ or retain, or have or cause any other person or
entity to employ or retain, any person who was employed by the Company or any of
it subsidiaries or affiliates while the Executive was employed by the Company,
provided that this provision shall not apply to any employee of the Company with
whom the Executive had a prior business relationship, who was recruited by the
Executive and whose employment with the Company commenced during the period from
the date of this Agreement through September 30, 1999.
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11. BREACH OF THIS AGREEMENT. If the Executive commits a breach, or
threatens to commit a breach, of any of the provisions of Sections 8, 9 or 10 of
this Agreement, then the Company shall have the right and remedy to have those
provisions specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed by the Executive that the rights and privileges of
the Company granted in Sections 8, 9 and 10 are of a special, unique and
extraordinary character and any such breach or threatened breach will cause
great and irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company.
12. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing (including facsimile, telegraphic, telex or cable
communication) and shall be deemed to have been duly given when delivered by
hand, faxed or mailed, certified or registered mail, return receipt requested
and postage prepaid:
If to the Company: Chautauqua Airlines, Inc.
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, CT 06830
Fax: (203) 862-7312
Attention: Joseph Jacobs, fax 203-862-7320
and Arthur Amron, fax 203-862-7312
If to the Executive: Bryan K. Bedford
11495 Bluestem Lane
Eden Prairie, MN 55347
Fax: (612) 914-9044
13. APPLICABLE LAW. This Agreement was negotiated and entered into
within the State of Indiana. All matters pertaining to this Agreement shall be
governed by the laws of the State of Indiana applicable to contracts made and to
be performed wholly therein. Nothing in this Agreement shall be construed to
require the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement and any material present or
future statute, law, governmental regulation or ordinance as a result of which
the parties have no legal right to contract or perform, the latter shall
prevail, but in such event the provision(s) of this Agreement affected shall be
curtailed and limited only to the extent necessary to bring it or them within
the legal requirements.
14. ENTIRE AGREEMENT; MODIFICATION; CONSENTS AND WAIVERS. This
Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements or
understandings, written or oral, between the parties with respect to the subject
matter hereof. No interpretation, change, termination or waiver of or extension
of time for performance under any provision of this Agreement shall be binding
upon any party unless in writing and signed by the party intended to be bound
thereby. Except as otherwise provided in this Agreement, no waiver of or other
failure to exercise any right under or default or extension of time for
performance under any provision or this Agreement shall affect the right of
any party to exercise
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any subsequent right under or otherwise enforce said provision or any other
provision hereof or to exercise any right or remedy in the event of any other
default, whether or not similar.
15. SEVERABILITY. The parties acknowledge that, in their view, the
terms of this Agreement are fair and reasonable as of the date signed by them,
including as to the scope and duration of post-termination activities.
Accordingly, if any one or more of the provisions contained in this Agreement
shall for any reason, whether by application of existing law or law which may
develop after the date of this Agreement, be determined by an arbitrator or
court of competent jurisdiction to be excessively broad as to scope of activity,
duration or territory, or otherwise unenforceable, the parties hereby jointly
request such court to construe any such provision by limiting or reducing it so
as to be enforceable to the maximum extent in favor of the Company compatible
with then-applicable law. If any one or more of the terms, provisions, covenants
or restrictions of this Agreement shall nonetheless be determined by an
arbitrator or court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
16. ASSIGNMENT. The Company may, at its election, assign this Agreement
or any of its rights hereunder. This Agreement may not be assigned by the
Executive.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
18. ARBITRATION. Each of the parties hereby irrevocably and
unconditionally consents to arbitrate any dispute arising out of or relating in
any manner to this Agreement or the employment relationship contemplated hereby
or the termination thereof, or any alleged breach of any term or provision of
this Agreement. Such arbitration shall be conducted by a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. Judgement may be entered on the arbitrator's award in any federal or
state court in Indiana (and the parties expressly consent to the jurisdiction of
such court), or in any other court having jurisdiction. Each of the Parties
agrees that in any arbitration arising out of or relating to this Agreement or
the employment relationship contemplated hereby or the termination thereof, or
any alleged breach of any term or provision of this Agreement or in any action
to enter judgment on an award in such arbitration each party shall bear its own
fees and expenses.
19. SURVIVAL. The provisions of Sections 8 through 18 of this Agreement
shall survive any expiration or termination of this Agreement.
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IN WITNESS WHEREOF, that parties hereto have executed this Employment
Agreement as of the date first above written.
CHAUTAUQUA AIRLINES, INC.
By:
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Name:
Title:
BRYAN K. BEDFORD
/s/ Bryan K. Bedford
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