EXHIBIT 10.17.1
EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the
"Agreement") is made and entered into as of the 1st day of February, 2003, by
and between Wakelee Smith (hereinafter referred to as "Employee") and Atlas Air
Worldwide Holdings, Inc., a Delaware corporation (hereinafter referred to as
"Atlas" or the "Company").
WHEREAS, Atlas believes that it is in the best interests of Atlas to
retain the services of the Employee and the Employee desires an affiliation with
Atlas, on the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, Employee warrants that Employee is entering voluntarily
into this Agreement, and that no promises or inducements for this Agreement have
been made outside of the terms and conditions referred to herein, and Employee
enters into this Agreement without reliance upon any statement or representation
by Atlas or any other person, concerning any fact material hereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. DEFINITIONS
1.1 For purposes of this Agreement, "CAUSE" as used herein means
(i) any act or acts of material dishonesty taken by the Employee, (ii) the
failure of the Employee to comply
with any of the Employee's obligations within ten (10) days of written notice
from Atlas, (iii) any violation by Employee of Atlas corporate policies as set
forth in the Employee Compliance Manual, Employee Handbook or related corporate
policies of which Employee has received written notice; provided that, if such
violation is subject to cure, Employee shall have ten (10) days within which to
cure such violation after receipt of written notice thereof, or (iv) the
conviction of or "no contest" plea by the Employee to any misdemeanor of moral
turpitude or any felony.
1.2 "EMPLOYMENT PERIOD" shall be defined as the period commencing
on the date hereof and extending until January 31, 2008, subject to earlier
termination as set forth in Section 4 below and extension as provided in the
next succeeding sentence. On February 1, 2008 and on each anniversary
thereafter, the Employment Period shall be automatically extended for an
additional one year unless Atlas gives notice in writing to the Employee or the
Employee gives notice in writing to Atlas at least three months prior to
February 1, 2008 or such anniversary, as the case may be, that the Employment
Period is not to be so extended.
1.3 "PERMANENT DISABILITY" as used herein shall be deemed to have
been sustained by Employee if Employee shall have been continuously disabled
from performing the duties assigned to Employee during the Employment Period for
a period of six (6) consecutive calendar months, and such Permanent Disability
shall be deemed to have commenced on the day following the end of such six (6)
consecutive calendar months.
1.4 "CONFIDENTIAL OR PROPRIETARY" as used herein shall refer to
all information relative to the plans, structure and practices, including
information relating to its customers, contracts and aircraft of Holdings (as
defined below) or any affiliate or subsidiary thereof, except:
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(a) information that is or becomes a matter of public knowledge
through no fault of the Employee; or
(b) information rightfully received by the Employee from a third
party without a duty of confidentiality; or
(c) information disclosed to Employee with Atlas' prior approval
for public dissemination.
1.5 "GOOD REASON" as used herein means (i) a reduction during the
term of this Agreement in either the Employee's Base Annual Salary or
eligibility to participate in bonus pro-grams or other benefits universally
offered to similarly situated executives, (ii) a substantial and material
reduction in the Employee's title or job responsibilities from the Employee's
then current title or job responsibilities, and (iii) any reduction, within
twelve (12) months following a Change of Control, in the Employee's title or job
responsibilities from the Employee's title or job responsibilities. For purposes
of this Section 1.5, "Change of Control" shall mean the acquisition by any
person, entity or "group" within the meaning of Section 13(d) (3) or 14(d) (2)
of the Securities Exchange Act of 1934 (the "Exchange Act") (excluding, for this
purpose, (x) the Estate of Michael Chowdry, Chowdry Limited Partnership,
Chowdry, Inc., the Chowdry Foundation and Linda H. Chowdry and her family
members and (y) any employee benefit plan of Atlas, Holdings or its affiliates)
of beneficial owner-ship, within the meaning of Rule 13(d) (c) promulgated under
the Exchange Act, of greater than fifty percent (50%) of the combined voting
power of the outstanding voting securities of Holdings entitled to vote
generally in the election of directors.
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2. EMPLOYMENT AND OBLIGATIONS OF EMPLOYEE
Atlas and Employee agree to the following rights, obligations and
duties with respect to employment:
2.1 EMPLOYMENT. During the Employment Period, Atlas agrees to
employ the Employee as Vice President, Corporate Planning. The scope of
Employee's responsibilities shall be as determined by the Board of Directors
and/or appropriate officers of Atlas. If the Board of Directors of Atlas
requests Employee to serve in any capacity for Atlas or any of its respective
subsidiaries or affiliates, Employee agrees that Employee shall serve in such
capacity, without any additional compensation.
2.2 OBLIGATIONS OF EMPLOYEE. During the Employment Period, the
Employee agrees, except when prevented by illness or Permanent Disability or
during a period of vacation, to devote substantially all of Employee's business
time and attention to the good faith performance of the duties contemplated.
3. COMPENSATION
During the Employment Period, Atlas will pay Employee as follows:
3.1 BASE ANNUAL SALARY. Atlas will pay Employee a base annual
salary (the "Base Annual Salary") of Two Hundred Twenty Thousand (USD $
220,000.00) Dollars per annum, payable in semimonthly installments. The Company
shall review Base Salary not less frequently than annually for increases,
including among other considerations, EMPLOYEE's performance, it being
understood that any increases shall be at the discretion of the Company.
3.2 INCENTIVE BONUS PAYMENTS. Employee will be eligible to receive
an annual incentive bonus under the annual executive incentive program at a
target of 501 of Base Salary
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(or such percentage offered to similarly situated executives of the Company)
based on performance, including financial and individual performance for each
calendar year (prorated accordingly for 2003) during the Employment Period upon
approval of the Compensation Committee of the Board of Directors of Atlas (the
"Compensation Committee"). Employee will also be able, subject to eligibility
requirements as set forth in each respective program, to participate in the
Company's, Deferred Compensation Plan, Annual Stock Option Plan, Employee Stock
Purchase Plan, Profit Sharing and 401(k) Plan, or other plans offered to
similarly situated executives, the details of which have already been provided
to Employee. Employee shall also be entitled to a sign on bonus of Twenty
Thousand ($USD 20,000.00) Dollars payable within thirty (30) days of the date of
this Agreement.
3.3 BENEFITS. Employee and Employee's dependents shall be entitled
to participate in the Atlas health insurance plan, and Atlas will contribute to
Employee's monthly premium as provided by such plan. Atlas reserves the right to
discontinue participation in any health insurance plan at any time with the
understanding that Atlas will comply in full measure with all state and federal
laws regarding the changes of insurance coverage by private employers and
notification under the Consolidated Omnibus Budget Reconciliation Act. Employee
also shall be entitled, to the same extent and at a level commensurate with the
corporate officers of Atlas, to participate in any other benefit plans or
arrangements of Atlas.
3.4 FRINGE BENEFITS. Employee also will be entitled to
professional and personal use of a company vehicle initially blue-book valued at
up to, or actual purchase price not to exceed, $40,000. Atlas will be
responsible for all expenses related to the vehicle, except for the costs of
fuel. In the event Employee's employment terminates, with or without Cause,
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Employee shall, within thirty (30) days of the date of termination, return the
company vehicle to Atlas together with all keys, owners manual(s) and
maintenance records.
3.5 STOCK OPTIONS. Employee shall be entitled to an initial stock
option grant of 11,250 shares of Common Stock of Holdings. These options shall
vest ratably (i.e. 25% per year) at the end of each of the first four years of
employment, subject to certain vesting rules established by the Board of
Directors or provided in the applicable Stock Option Agreement that will be
provided to Employee. The option exercise price shall be the stock price of
Holdings as of the close of trading on the last business day immediately prior
to the date of this Agreement. All other terms of this grant are contained in
the Stock Option Agreement. Employee shall also be eligible to participate in
the Atlas Annual Incentive Compensation Plan, that is targeted to deliver
additional 11,250 options annually in accordance with the Plan.
4. TERMINATION OF EMPLOYMENT PERIOD
The Employment Period shall terminate under the following terms and
conditions:
4.1 AT WILL ARRANGEMENT. Atlas may terminate the Employment Period
upon written notice to the Employee at any time and for any reason. Atlas and
Employee expressly understand and agree that the employment relationship is
at-will. Atlas is entitled to sever the employment relationship for any reason.
Employee hereby agrees to give Atlas at least three months prior written notice
of Employee's voluntary termination of employment for other than Good Reason.
4.2 RIGHTS FOLLOWING TERMINATION.
(a) If the Employment Period is terminated by Atlas for reasons
other than Cause (including the giving of notice by Atlas pursuant to Section
1.2 hereof of Atlas' election
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not to extend the Employment Period) or if the Employment Period is terminated
by the Employee for Good Reason, and subject to Employee's execution of a
release upon terms and conditions acceptable to Atlas, the Employee shall be
entitled to: (i) receive 18 months severance based on Employee's monthly salary;
and (ii) continued coverage and rights and benefits available under the employee
benefit programs of Atlas as provided in Section 3.3 above for a period of 12
months from the date of termination subject to the Employee paying the same
portion for the premiums for such coverage as he paid during his employment with
the Company; PROVIDED, HOWEVER, that any such continued coverage shall cease in
the event Employee obtains comparable coverage in connection with subsequent
employment, and to the extent Atlas is unable to continue such coverage, Atlas
shall provide the Employee with economically equivalent benefits determined on
an after-tax basis.
(b) Upon the death or Permanent Disability of the Employee, the
Employment Period shall terminate and the Employee's Base Annual Salary which is
accrued for the current pay period but unpaid as of the date of such death or
Permanent Disability shall be paid to the Employee or Employee's personal
representative. In addition, upon the death or Permanent Disability of the
Employee, Employee or Employee's personal representative shall be entitled to
the compensation and benefits as set forth in Section 4.2 (a) (i) and (ii)
above.
(c) If the Employment Period is terminated by Atlas for Cause or
by the Employee for other than Good Reason (including the giving of notice by
Employee pursuant to Section 1.2 hereof of Employee's election not to extend the
Employment Period), the Employee shall be entitled to receive Employee's Base
Annual Salary which is accrued for the current pay period but unpaid as of the
date of termination.
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4.3 NON-COMPETITION PROVISION. (a) Employee covenants and agrees
that Employee will not, at any time, reveal, divulge or make known to any third
party any confidential or proprietary records, data, trade secrets, pricing
policies, strategy, rate structure, personnel policy, management methods,
financial reports, methods or practice of obtaining or doing business, or any
other confidential or proprietary information of Atlas, or any of its
subsidiaries or affiliates (collectively the "Atlas Companies" and each, an
"Atlas Company") which is not in the public domain.
(b) In addition, Employee covenants and agrees that, at no time
before eighteen (18) months after Employee's termination of employment with
Atlas, will Employee engage in any of the following activities directly or
indirectly, for any reason, whether for Employee's own account or for the
account of any other person, firm, corporation or other organization:
(i) solicit, employ or otherwise interfere with any of the
Atlas Companies' contracts or relation- ships with any
client, employee, officer, director or any independent
contractor whether the person is employed by or
associated with an Atlas Company on the date of this
Agreement or at any time thereafter; or
(ii) solicit, accept or otherwise interfere with any of the
Atlas Companies' contracts or relationships with any
independent contractor, customer, client or supplier, or
any person who is a bona fide prospective independent
contractor, customer, client or supplier of an Atlas
Company.
(c) In addition, Employee covenants and agrees that, at no time
before eighteen (18) months after Employee's termination of employment with
Atlas, will Employee directly or indirectly, for any reason, whether for
Employee's own account or for the account of any other person, firm, corporation
or other organization, accept employment with, or give advice to, (i) any air
cargo carrier, (ii) any air cargo division or cargo-affiliate of any other
airline
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or (iii) any company that leases cargo aircraft as a significant part of its
business on an ACMI, wet lease, charter or dry lease basis. The parties agree d
intend that breach of this non-competition clause shall a subject Employee to
the full measure of contract and equitable damages.
5. DISPUTE RESOLUTION AND CHOICE OF LAW
5.1 NEGOTIATION. If a dispute between the Parties arises under
this Agreement, the Parties shall negotiate in good faith in an attempt to
resolve their differences. The obligation of the Parties to negotiate in good
faith shall commence immediately, and shall continue for a period of at least
thirty (30) days ("Negotiation")
If Negotiation fails to resolve a dispute between the Parties within
the first thirty (30) days, either Party may proceed to demand mediation
("Mediation"). Upon agreement of both Parties, arbitration may be initiated
immediately, in lieu a of Mediation.
5.2 MEDIATION. If a dispute between the Parties arises under this
Agreement and has not been resolved under the Negotiation procedures described
herein, either Party may require, by written notice to the other Party, that
Negotiation be facilitated by a single mediator, to be selected by the Parties
(the "Mediator").
The Parties shall select the Mediator within ten (10) days after
receipt of notice. If the Parties are unable to agree on the Mediator, the
Mediator shall be selected by Atlas, but the selected Mediator shall be
independent of Atlas and its affiliates. The fees of the Mediator shall be
divided equally between the Parties.
With the assistance of the Mediator, the Parties shall continue
Negotiation in good faith for a period not to exceed thirty (30) days. If the
Parties are unable to reach agreement
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during this period, the Mediator shall be discharged and the Parties'
obligations under this Mediation section shall be deemed satisfied.
5.3 ARBITRATION. Subject to the duty to negotiate and mediate set
forth above, all disputes, claims, or causes of action arising out of or
relating to this Agreement or the validity, interpretation, breach, violation,
or termination thereof not resolved by Mediation, shall be finally and solely
determined and settled by arbitration, to be conducted in the State of New York,
USA, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") in effect at the date of arbitration
("Arbitration"). This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to principles of
conflict of laws.
Any Arbitration commenced pursuant to this Agreement shall be
conducted by a single neutral arbitrator, who shall have a minimum of three (3)
years of commercial experience (the "Arbitrator"). The Parties shall meet within
ten (10) days of failure to resolve by Mediation to attempt to agree on an
Arbitrator. Absent agreement at this meeting, the Arbitrator shall be selected
by AAA. Such Arbitrator shall be free of any conflicts with Atlas and shall hold
a hearing within thirty (30) days of the notice to Employee.
If the terms and conditions of this Agreement are inconsistent with
the Commercial Arbitration Rules of the AAA, the terms and conditions of this
Agreement shall control.
The Parties hereby consent to any process, notice, or other
application to said courts and any document in connection with Arbitration may
be served by (i) certified mail, return receipt requested; (ii) by personal
service; or (iii) in such other manner as may be permissible under the rules of
the applicable court or Arbitration tribunal; PROVIDED, HOWEVER, a
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treasonable time for appearance is allowed. The Parties further agree that
Arbitration proceedings must be instituted within one (1) year after the
occurrence of any dispute, and failure to institute Arbitration proceedings
within such time period shall constitute an absolute bar to the institution of
any proceedings and a waiver of all claims.
The Parties shall equally divide all costs and expenses incurred in
such proceeding and related legal proceedings unless determined otherwise by the
arbitrator.
The Judgment of the Arbitrator shall be final and either Party may
submit such decision to courts for enforcement thereof.
6. SEVERABILITY AND ENFORCEABILITY
It is expressly acknowledged and agreed that the covenants and
provisions hereof are separable; that the enforceability of one covenant or
provision shall in no event affect the full enforceability of any other covenant
or provision herein. Further, it is agreed that, in the event any covenant or
provision of this Agreement is found by any court of competent jurisdiction or
Arbitrator to be unenforceable, illegal or invalid, such invalidity, illegality
or unenforceability shall not affect the validity or enforceability of any other
covenant or provision of this Agreement. In the event a court of competent
jurisdiction or an Arbitrator would otherwise hold any part hereof unenforceable
by reason of its geographic or business scope or duration, said part shall be
construed as if its geographic or business scope or duration had been more
narrowly drafted so as not to be invalid or unenforceable.
7. MISCELLANEOUS
7.1 NO MITIGATION. The amounts to be paid to Employee are net to
Employee, without any reduction or duty to mitigate, except for taxes, other
governmental charges or
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amounts owed to Atlas by Employee, and all payments to be made hereunder shall
be net of all applicable income and employment taxes required to be withheld
therefrom.
7.2 PRO-RATION. In the event the Employment Period is terminated
in the middle of any calendar month, the amount due for such month shall be
pro-rated on a daily basis.
7.3 NO WAIVER EXCEPT IN WRITING. No waiver or modification of a
this Agreement or any of the terms and conditions set forth herein shall be
effective unless submitted to a writing duly executed by the parties.
7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
Atlas and any successor thereto, whether by reason of merger, consolidation or
otherwise. The duties and obligations of Employee may not be assigned by
Employee.
7.5 CONFIDENTIALITY OF TERMS. Atlas and Employee agree that the
terms and conditions of this Agreement are confidential and that they will not
disclose the terms of this Agreement to any third parties, other than the
Employee's spouse, their attorneys, auditors, accountants or as required by law
or as may be necessary to enforce this Agreement.
7.6 FULL UNDERSTANDING. Employee declares and represents that
Employee has carefully read and fully understands the terms of this Agreement,
has had the opportunity to obtain advice and assistance of counsel with respect
thereto, and knowingly and of Employee's own free will, without any duress,
being fully informed and after due deliberation, voluntarily accepts the terms
of this Agreement and represents that the execution, delivery and performance of
this Agreement does not violate any agreement to which Employee is subject.
7.7 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all
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prior agreements, arrangements, and understandings between the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
on the date and year first above written.
WAKELEE SMITH ATLAS AIR WORLDWIDE HOLDINGS, INC.
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AMENDMENT TO EMPLOYMENT AGREEMENT OF
WAKELEE SMITH
WHEREAS, by this Amendment dated as of January 29, 2004 (the
"Amendment") ATLAS AIR WORLDWIDE HOLDINGS, INC. ("ATLAS") and Wakelee Smith
("Employee") wish to update, amend and modify provisions of the Employment
Agreement between them dated February 1, 2003, (hereafter referred to as the
"AGREEMENT") as set forth herein.
Now, therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged, the terms and conditions of the above-referenced
AGREEMENT are updated, amended and modified as follows:
1.0 Effective February 1, 2004, Employee's job title as set forth in
Article 2.1 of the Agreement shall be changed to Senior Vice
President, Corporate Planning and Development
2.0 Section 3 of the Agreement is amended by striking "ATLAS" in line 1
and replacing it with "Atlas Air, Inc., a wholly-owned subsidiary of
ATLAS".
3.0 Section 3.1 is amended by striking "ATLAS" in line 1 and replacing
it with "Atlas Air, Inc., a wholly-owned subsidiary of ATLAS". In
addition, effective February 1, 2004, Employee's Base Annual Salary
shall be increased to $260,000 per annum. Effective June 30, 2004,
Employee's Base Annual Salary shall be increased to $280,000.00 per
annum, it being understood that the second installment of Key
Employee Retention Program which is payable on or about July 1,
2004, shall be paid Employee based on a $280,000 Base Annual Salary.
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With the exception of the amendments and modifications reflected in
Paragraphs 1.0 through 3.0 of this AMENDMENT, the AGREEMENT otherwise remains in
full force and effect.
AGREED TO AND ACCEPTED BY:
EMPLOYEE
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WAKELEE SMITH Date
ATLAS AIR WORLDWIDE HOLDINGS, INC.
By:
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Name: Date
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AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT OF
WAKELEE SMITH
WHEREAS, by this Amendment No. 2 dated as of June 15, 2004 (the
"Amendment No. 2") ATLAS AIR WORLDWIDE HOLDINGS, INC. ("ATLAS") and Wakelee
Smith ("Employee") wish to update, amend and modify provisions of the Employment
Agreement between them dated February 1, 2003, (hereafter referred to as the
"AGREEMENT") as set forth herein.
Now, therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged, the terms and conditions of the above-referenced
AGREEMENT are updated, amended and modified as follows:
1.0 Effective June 16, 2004, Employee's job title as set forth in
Article 2.1 of the Agreement shall be changed to Senior Vice
President & Chief Operating Officer.
2.0 Effective June 16, 2004, Employee's Base Annual Salary shall be
increased to $300,000 per annum, it being understood that the second
installment of Key Employee Retention Program which is payable on or
about August 29, 2004, shall be paid Employee based on Employee's
$300,000 Base Annual Salary.
3.0 The Agreement is amended to add Article 4.1.1 as follows:
"4.1.1 Notwithstanding Article 1.5(i) and (ii), 4.2(a), or any other
provision to the contrary, if the Company relocates its corporate
headquarters from Purchase, New York, and Employee elects not to
relocate his principal residence to the new location, the
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Company may (i) restore Employee to his previous title or other
Senior Vice President position in the Company's discretion, and
Employee's compensation package (including Base Annual Salary, bonus
and benefits) shall be set at the level as of June 16, 2004, it
being understood that (A) Employee shall be required to spend a
reasonable amount of office time at the Company's new location as
requested by the CEO, and (B) any such change in title or
compensation shall not be deemed to constitute Good Reason, or (ii)
terminate Employee's employment and the Employment Agreement without
further payment or recourse, and, subject to Employee executing a
release satisfactory to the Company, the Company will pay Employee
nine (9) months salary as severance.
With the exception of the amendments and modifications reflected in
Paragraphs 1.0 through 3.0 of this AMENDMENT, the AGREEMENT otherwise remains in
full force and effect.
AGREED TO AND ACCEPTED BY:
EMPLOYEE
/s/ Wakelee Smith 6/21/04
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WAKELEE SMITH Date
ATLAS AIR WORLDWIDE HOLDINGS, INC.
By: /s/ John Dietrich 6/21/04
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Name: John Dietrich Date
SVP
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