<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
--------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 2-89530
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Florida East Coast Industries, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Florida 59-2349968
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Malaga Street, St. Augustine, FL 32084
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (904) 829-3421
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at March 31, 1999
----- -----------------------------
Common Stock-no par value 36,338,860 shares
Collateral Trust 5% Bonds $11,956,100
<PAGE> 2
FLORIDA EAST COAST INDUSTRIES, INC.
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
Index Page Numbers
----- ------------
<S> <C> <C>
Consolidated Condensed Balance Sheets -
March 31, 1999 and December 31, 1998 2
Consolidated Condensed Statements of Income -
Quarter Ended March 31, 1999 and 1998 3
Consolidated Statements of Cash Flows -
Quarter Ended March 31, 1999 and 1998 4
Notes to Consolidated Condensed Financial Statements 5-8
Item 2. Management's Discussion and Analysis of the Consolidated
Financial Condition and Results of Operations
Comparison of First Quarter 1999 versus First Quarter 1998 9-12
Changes in Financial Condition, Liquidity and Capital Resources 12
Item 3. Quantitative and Qualitative Disclosure about Market Risk 13
Part II
OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 14-15
Item 6. Exhibits and Reports on Form 8-K 15-16
</TABLE>
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31 December 31
------------- ----------------
1999 1998
------------- ----------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 65,928 $ 14,450
Short-term investments 43,146 36,471
Accounts receivable (net) 29,193 29,282
Materials and supplies 9,623 10,131
Other current assets 10,412 10,482
------------- ----------------
Total current assets 158,302 100,816
Other Investments 24,355 34,502
Properties, Less Accumulated Depreciation and Amortization 699,756 720,891
Other Assets and Deferred Charges 13,880 11,546
------------- ----------------
Total Assets $ 896,293 $ 867,755
============= ================
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 26,433 $ 26,559
Income taxes 10,810 1,446
Accrued property taxes 3,239 308
Accrued casualty and other reserves 4,992 4,992
Other accrued liabilities 2,468 2,998
------------- ----------------
Total current liabilities 47,942 36,303
Deferred Income Taxes 133,979 133,463
Accrued Casualty and Other Long-Term Liabilities 12,183 11,158
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized;
37,137,944 shares issued; 36,338,860 and 36,286,360 shares 62,343 62,000
outstanding at March 31, 1999 and 1998, respectively.
Retained earnings 649,975 634,126
Accumulated other comprehensive income-unrealized gain on securities (net) 667 1,217
Restricted stock deferred compensation (1,441) (1,157)
Treasury stock at cost (799,084 shares) (9,355) (9,355)
------------- ----------------
Total shareholders' equity 702,189 686,831
------------- ----------------
Total Liabilities and Shareholders' Equity $ 896,293 $ 867,755
============= ================
</TABLE>
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
1999 1998
-------------- ---------------
<S> <C> <C>
Transportation:
Transportation Revenues $ 46,928 $ 46,808
Transportation Operating Expenses (36,732) (38,106)
--------------- ----------------
Transportation Income $ 10,196 $ 8,702
--------------- ----------------
Realty:
Realty Operating Revenues $ 13,216 $ 9,680
Realty Operating Expenses (8,803) (7,754)
Realty Sales 50,405 269
Cost of Sales (39,080) (71)
--------------- ----------------
Realty Income $ 15,738 $ 2,124
--------------- ----------------
Corporate General & Administrative $ (911) $ (572)
--------------- ----------------
Operating Profit $ 25,023 $ 10,254
Other Income (net) $ 1,772 $ 3,017
--------------- ----------------
Income before Income Taxes $ 26,795 $ 13,271
Provision for Income Taxes:
Current $ (9,298) $ (4,727)
Deferred (741) (257)
--------------- ----------------
Total Income Taxes $ (10,039) $ (4,984)
--------------- ----------------
Net Income $ 16,756 $ 8,287
--------------- ----------------
Per Share Data:
Basic & Diluted Net Income Per Share $ 0.46 $ 0.23
=============== ================
Average shares outstanding, basic 36,334,693 36,286,360
Average shares outstanding, assuming dilution 36,353,956 36,286,360
</TABLE>
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
1999 1998
---------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 16,756 $ 8,287
Adjustments to reconcile net income to cash
generated by operating activities:
Depreciation and amortization 6,906 6,539
Loss (gain) on sales and other disposition of properties (11,271) (389)
Purchase of trading investments (net) (8,265) 0
Realized gains on investments (365) (1,286)
Deferred taxes 741 257
Stock compensation plans 60 0
Changes in operating assets and liabilities:
Accounts receivable 89 3,456
Other current assets 578 481
Other assets and deferred charges (2,334) (1,676)
Accounts payable (126) 1,230
Income taxes payable 9,364 3,973
Accrued property taxes 2,931 2,575
Other current liabilities (530) (552)
Reserves and other long-term liabilities 1,025 18
----------- ------------
Net cash generated by operating activities 15,559 22,913
----------- ------------
Cash Flows from Investing Activities:
Purchases of properties (21,923) (14,823)
Purchases of investments:
Available-for-sale (23,559) (6,295)
Maturities and redemption of investments:
Available-for-sale 34,885 9,295
Proceeds from disposition of assets 47,423 327
----------- ------------
Net cash used in investing activities 36,826 (11,496)
----------- ------------
Cash Flows from Financing Activities:
Payment of dividends (907) (907)
----------- ------------
Net cash provided by and (used in) financing activities $ (907) $ (907)
----------- ------------
Net Increase in Cash and Cash Equivalents $ 51,478 $ 10,510
Cash and Cash Equivalents at Beginning of Year 14,450 30,845
----------- ------------
Cash and Cash Equivalents at End of Year $ 65,928 $ 41,355
=========== ============
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 11 $ 11
=========== ============
Cash paid for interest $ 89 $ 86
=========== ============
</TABLE>
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
recurring accruals) considered necessary to present fairly the financial
position as of March 31, 1999 and December 31, 1998, and the results of
operations and cash flows for the three-month periods ended March 31, 1999 and
March 31, 1998.
Note 2. The results of operations for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the full
year.
Note 3. The Company is a defendant in a number of lawsuits arising in the
ordinary course of business, including bodily injury claims and contract claims.
While management of the Company cannot predict the outcome of such litigation
and other proceedings, management does not expect these matters to have a
materially adverse effect on the consolidated financial condition, cash flows or
results of operations of the Company. The Company does carry comprehensive
liability insurance for such claims, but maintains a significant self-insured
retention amount consistent with the transportation industry's standards.
The Company is subject to proceedings arising out of environmental laws and
regulations, which primarily relate to the disposition by others of used oil
generated by the Company.
The Company is currently a party to, or involved in legal proceedings directed
at the cleanup of three designated Superfund sites. The Company's involvement in
these sites is attributed to the sale or delivery of non-RCRA used oil to
various parties, which delivered the oil to sites that have now become Superfund
sites. Used oil is not a regulated hazardous waste. Although the Company does
not believe it has legal liability for the expenses of assessing or remediating
the sites, it has accrued its estimated share of the total cleanup costs for
these sites. Based upon management's evaluation of the other potentially
responsible parties, the Company does not expect to incur additional amounts
even though the Company has joint and several liability. Other proceedings
involving environmental matters, such as alleged discharge of oil or waste
material into water or soil, are pending against the Company. It is difficult to
quantify future environmental costs because many issues relate to actions by
third parties or changes in environmental regulation. However, based on
information presently available, management believes that the ultimate
disposition of currently known matters will not have a material effect on the
financial position, liquidity or results of operations of the Company.
Gran Central Corporation, a wholly-owned subsidiary of the Company, entered into
an agreement with the State of Florida Department of Transportation to furnish
all land necessary for the construction of the NW 106th Street Interchange on
the Homestead Extension of the Florida Turnpike, and to subsidize any annual
operating deficit of the Department for 15 years related to the interchange
which is not covered by toll revenues. The maximum assessment amount over the
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15 years would be approximately $9.3 million with no annual assessment to exceed
$1.1 million. No assessment or related accruals to this agreement have been made
to date.
Note 4. Comprehensive Income
On January 1, 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting and presentation of comprehensive income and
its components in a full set of financial statements. Comprehensive income for
the three months ended March 31, 1999 and 1998 was $16.2 and $9.0 million,
respectively. This amount differs from net income due to changes in the net
unrealized holding gains generated from available-for-sale securities.
Note 5. Earnings Per Share
The following weighted-average number of shares of common stock were used in the
calculations for earnings per share. The diluted weighted-average number of
shares includes the net shares that would be issued upon the exercise of stock
options and restricted shares (using the treasury stock method).
1999 1998
---- ----
Basic:
Quarter 36,334,693 36,286,360
Diluted:
Quarter 36,353,956 36,286,360
Note 6. Reclassification
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
The Company has reformatted the Consolidated Condensed Statements of Income to
present revenues and expenses by line of business.
Note 7. Segment Information
During 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information." SFAS
131 provides guidance for reporting information about operating segments and
other geographic information based on a management approach.
Under the provisions of SFAS 131, the Company determined it has three reportable
operating segments. These are the transportation rail segment, transportation
trucking segment and realty segment. The transportation rail segment provides
rail transportation for a variety of commodities along the East Coast of Florida
between Jacksonville and Miami. The transportation-trucking segment provides
truckload transportation for a wide range of general commodities throughout
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the Midwest and Southeastern United States. The realty segment is engaged in the
development, leasing, management, operation and sales of its commercial and
industrial property.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates the
transportation segment's performance based on operating profit or loss from
operations before other income and income taxes. Operating profit is operating
revenue less directly traceable costs and expenses. The Company evaluates the
realty segment based on operating profit and EBITDA. EBITDA is defined as
earnings before interest expense, income taxes, depreciation and amortization.
EBITDA excludes other income. EBITDA is considered a key financial measurement
in the realty industry.
Intersegment revenues for transactions between the transportation rail and
transportation trucking segments are based on quoted rates, which are believed
to approximate the cost that would have been incurred had similar services been
obtained from an unrelated third party.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.
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Information by industry segment follows (in thousands):
<TABLE>
<CAPTION>
First Quarter 1999 First Quarter 1998
------------------ ------------------
<S> <C> <C>
Operating Revenues
Transportation-Rail $ 39,788 $ 39,895
Transportation-Trucking 7,140 6,913
Realty:
Realty-Rents & Other 13,216 9,680
Realty Sales (gross) 50,405 269
--------- ---------
Total Revenues (consolidated) $ 110,549 $ 56,757
Intersegment:
Transportation-Rail $ 1,157 $ 1,052
Realty 139 27
--------- ---------
Total Segment Operating Revenues $ 111,845 $ 57,836
========= =========
Operating Profit (Loss) - Segment & Consolidated
Transportation-Rail $ 10,282 $ 8,745
Transportation-Trucking (98) (46)
Realty 15,750 2,127
--------- ---------
Segment Operating Profit 25,934 10,826
Corporate General & Administrative (911) (572)
Other Income (net) $ 1,772 $ 3,017
--------- ---------
Net Income before Taxes $ 26,795 $ 13,271
========= =========
EBITDA-Realty $ 18,818 $ 4,985
========= =========
</TABLE>
Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Statements
This "Management's Discussion and Analysis" contains forward-looking statements
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended. These forward-looking statements represent the Company's present
expectations or beliefs concerning future events. The Company cautions that such
statements are necessarily based on certain assumptions which are subject to
risks and uncertainties, including, but not limited to, changes in general
economic conditions and changing competition which could cause actual results to
differ materially from those indicated. Important factors that could cause such
differences include, but
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are not limited to, contractual relationships, industry competition, regulatory
developments, natural events, such as weather conditions, floods and
earthquakes, forest fires, the effects of adverse general economic conditions,
changes in the real estate markets and interest rates, fuel prices, changes in
telecommunications technology and the ultimate outcome of environmental
investigations or proceedings and other types of claims and litigation.
Comparison of First Quarter 1999 versus First Quarter 1998
Revenues
Transportation
Operating revenues in the Company's transportation segments for the first
quarter 1999 were approximately $46.9 million, an increase of approximately $.1
million from $46.8 million for the first quarter 1998.
A robust Florida economy continues to support increases in carload traffic
offset by decreases in intermodal traffic. FECR handled 40,850 rail carloads in
the first quarter 1999, an increase of 4,692 carloads, or 13%. The railroad
handled 68,484 intermodal units in the first quarter 1999 versus 79,349 units in
the first quarter 1998, a decrease of 10,865, or 13.7%. Carload traffic
increases were comprised of increases in aggregate of 13.9%, automotive of 5.6%
and all other traffic of 14.9%. The reduction in intermodal business included a
17.2% decrease in containers and a 12.3% decrease in trailers handled. The
decline is attributed, in part, to service redesign by a connecting carrier,
along with offshore competition for containers destined to South America now
being transshipped at Freeport, Bahamas.
Revenues in the trucking segment of the Company increased approximately $230,000
or 3.3% from $6.9 million to $7.1 million when compared to first quarter 1998.
This increase was primarily attributable to an increase in shipments between the
trucking operation and FECR of 15.8%.
Realty
Revenues from realty operations increased approximately $13.6 million in first
quarter 1999 versus the same period 1998.
Sales
Net gain from property sales rose approximately $11.3 million and was primarily
represented by the sale of two large properties in South Florida. These two
dispositions included approximately 1.2 million square feet of leasable space in
two industrial parks. The remaining sales for the quarter included approximately
810 acres of undeveloped land parcels in Manatee County, Florida. The sales of
properties during the first quarter 1999 produced approximately $.19 per share
of net income after-tax.
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Rental Operations
Rental revenue increased approximately $3.5 million in the first quarter 1999
compared to first quarter 1998.
Rental revenue generated by the Company's Gran Central Corporation subsidiary
was $12.7 million, an increase of 38.8% over the prior period. "Same store"
occupancy increased to 91% at March 31, 1999 from 87% at March 31, 1998. New
properties totaling 550,000 square feet were added to the portfolio in the first
quarter. Rental revenues generated by the Company's railway subsidiary increased
$106,000, or 18.6%.
Summary of Operating Revenues
First Quarter 1999 vs. First Quarter 1998
(in thousands)
<TABLE>
<CAPTION>
First Quarter Ending 3/31
Transportation Operating Revenues 1999 1998 % Change
- --------------------------------- ------- ------- --------
<S> <C> <C> <C>
Rail Revenues $39,788 $39,896 (.3)
Trucking Revenues 7,140 6,912 3.3
------- ------- -----
Total Transportation Revenues $46,928 $46,808 .3
Realty Operating Revenues
- -------------------------
Realty Rental Revenues $13,216 $ 9,680 36.5
Net Gain on Realty Sales 11,325 198 --
------- ------- -----
Total Realty Revenues $24,541 $ 9,878 148.4
</TABLE>
Expenses
Operating expenses overall remained approximately the same for the first three
months of 1999 compared to 1998. Operating expenses for transportation services
decreased by approximately $1.4 million, while operating expenses for realty and
corporate general and administrative increased by $1.0 million and $.3 million,
respectively.
Transportation
The Railway's operating expenses decreased by approximately $1.5 million, or
3.6% in the first quarter 1999 compared to 1998. This $1.5 million decrease
represented decreases of approximately $.6 million in freight car repairs and
maintenance, $.6 million in fuel costs, $1.0 million in personal injury
accruals, and $.6 million in health and welfare benefits offset by increases of
$.6 million represented by accruals for bonuses and pension benefits, $.3
million in equipment rents and $.4 million for various other operating expenses.
The trucking segment's operating expenses increased approximately $.2 million in
the first quarter 1999 over 1998.
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Realty
Exclusive of sales, realty's operating expenses increased approximately $1.0
million, or 13.5% in the first three months of 1999 versus 1998. Based on same
store performance, operating expenses increased only approximately $.1 million,
while expenses relating to new properties increased approximately $.5 million.
The operating expenses relating to undeveloped properties decreased by
approximately $.3 million, while realty corporate overhead increased by
approximately $.4 million.
Corporate
Corporate general and administrative expenses increased by approximately $.3
million in first quarter 1999 over 1998. This increase was comprised of
increases of $.1 million in salary and wages and $.2 million in pension costs.
Summary of Operating Expenses
First Quarter 1999 vs. First Quarter 1998
(in thousands)
<TABLE>
<CAPTION>
First Quarter Ending 3/31
Transportation Operating Expenses 1999 1998 % Change
- --------------------------------- ---- ---- --------
<S> <C> <C> <C>
Compensation & Benefits $11,870 $12,346 (3.9)
Materials 2,920 3,086 (5.4)
Purchased Services 6,885 6,851 0.5
General Expenses 720 652 10.4
Repairs Billed to/by Others (342) 481 (171.1)
Taxes & Licenses 1,163 1,145 1.6
Fuel 1,985 2,676 (25.8)
Equipment Rents (net) 869 510 70.4
Depreciation 3,692 3,648 1.2
Casualty & Insurance 1,037 1,623 (36.1)
General & Administrative 5,933 5,088 16.6
------- ------- -------
Total Transportation Operating Expenses $36,732 $38,106 (3.6)
------- ------- -------
</TABLE>
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<TABLE>
<CAPTION>
Realty Operating Expenses 1999 1998 % Change
- ------------------------- ---- ---- --------
<S> <C> <C> <C>
Property Management & Maintenance $ 564 $ 392 43.9
Purchased Services 525 439 19.6
General Expenses 1,304 1,058 23.3
Repairs & Maintenance 66 233 (71.7)
Property Taxes 2,276 1,912 19.0
Depreciation 2,787 2,666 4.5
Casualty & Insurance 69 (91) (175.8)
General & Administrative 1,212 1,145 5.9
------- ------- ------
Total Realty Operating Expenses $ 8,803 $ 7,754 13.5
------- ------- ------
Corporate General & Administrative $ 911 $ 572 59.3
------- ------- ------
Total Consolidated Operating Expenses $46,446 $46,432 .0
======= ======= ======
</TABLE>
Other Income
Other income decreased approximately $1.2 million in first quarter 1999 versus
1998. These decreases were comprised of $.1 million in gains on disposition of
properties, with the balance resulting from a decrease in investment income as
the Company liquidated certain cash investments to fund capital expenditures for
transportation projects and new building construction.
Income tax expenses increased to $10.0 million in first quarter 1999 from $5.0
million in 1998, an increase of approximately $5.0 million. Of the $5.0 million
increase, approximately $4.2 million was related to the sale of realty
properties.
Net income for first quarter 1999 was $16.8 million, or $.46 per basic and
diluted earnings per share, an increase of $8.5 million, or $.23 per share over
first quarter 1998.
Financial Condition, Liquidity and Capital Resources
FECI's principal sources of liquidity include cash generated from operations;
earnings on invested cash; and earnings on its investment portfolios.
Current cash generations are used for capital expenditures in the transportation
and realty segments and for payment of dividends.
Cash and short-term investments increased approximately $58.2 million to $109.1
million at March 31, 1999 from $50.9 million on December 31, 1998. This increase
was primarily attributed to the closing on sales of two industrial parks in the
Miami area at the end of the first quarter. The investment portfolio decreased
approximately $10.1 million from $34.5 million on December 31, 1998 to $24.4
million on March 31, 1999 as the Company liquidated cash equivalent investments
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to fund capital expenditures, including transportation projects and new
commercial and industrial building construction. The Company's working capital
position changed from 2.78 to 1.00 on December 31, 1998 to 3.30 to 1.00 on March
31, 1999.
Current liabilities increased $11.6 million from year-end 1998 to first quarter
1999. This increase was primarily attributable to increases of $9.4 million in
income taxes, and $2.9 million in estimated property taxes offset by decreases
in other liabilities of $.7 million. The increase in income taxes was the result
of the properties sold during the first quarter 1999. The increase in estimated
property taxes was primarily attributable to the payment of those taxes in
November 1998, thereby reducing the liability to approximately $.3 million.
Management believes that the cash generated from operations, the Company's
liquid resources, and borrowing capacity, if appropriate, will be sufficient to
fund the costs of operations, all anticipated capital expenditures, and other
obligations of the Company.
Item 3
Quantitative and Qualitative Disclosure about Market Risk
The Company's primary market risk exposure is interest rate risk related
primarily to the Company's investment portfolio. The portfolio is materially
comprised of fixed rate municipal securities with active secondary or resale
markets to ensure portfolio liquidity. The Company does not use derivative
financial instruments to hedge its investment portfolio. The Company manages its
interest rate exposure by monitoring the effects of market changes in interest
rates.
PART II
Item 1
Legal Proceedings
There are no new legal or regulatory proceedings pending or known to be
contemplated which, in Management's opinion, are other than normal and
incidental to the kinds of businesses conducted by the Company.
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Item 5
Other Information
FEC Telecom, Inc.
On May 7, 1999, the Company announced the formation of a wholly-owned
subsidiary, FEC Telecom, Inc., a Delaware company. This Company intends to enter
the wholesale carrier's carrier telecommunications bandwidth business. FEC
Telecom, Inc. will be based in Orlando, Florida and will utilize the Company's
telecommunications assets, which include 12,600 fiber miles of dark fiber cable
and conduit comprising a 780-mile telecommunication loop in Florida, including
along the Company's railroad right-of-way extending from Jacksonville to Miami
and in a northwesterly direction through Naples, Fort Myers, Sarasota, Tampa and
turning easterly to Orlando and connecting with the railroad right-of-way
corridor at Daytona Beach.
The nature and amount of capital expenditures required to transform the dark
fiber to active capacity will depend on the needs and service requirements of
the Company's telecommunications customers, as well as the nature of
relationships with such companies which may include in kind property and
technology exchanges.
Year 2000 Compliance
The Company continues to take the necessary action, both with in-house
resources, as well as external consulting services, to resolve anticipated Year
2000 issues related to certain of its computer systems. Overall, the Company's
Year 2000 Project efforts are proceeding on schedule. Management believes that
the four phases of Inventory, Assessment, Conversion and Implementation are
approximately 100%, 90%, 60% and 40% complete, respectively, as of March 31,
1999, and anticipates that all mission critical systems should be Year 2000
capable by the third quarter 1999. The Company's readiness efforts continue to
be focused on the continued safe operation of its transportation system,
employee safety, and the safety of the general public and the environments in
which the Company operates.
In mid-1998, the Company determined to revamp and modernize its information
systems and management thereof. The Company expects to spend approximately $9.3
million for this effort, which is also addressing Year 2000 issues. This amount
includes $2.6 million to upgrade or replace computer hardware; $2.5 million for
external consulting service, including remediation efforts, and $4.2 million for
software replacements and upgrades. As of March 31, 1999, the Company has
committed or expended approximately $5.0 million of the total anticipated
information systems upgrade, including $1.6 million for hardware, $1.8 million
for external services, and $1.6 million for software upgrades.
During first quarter 1999, the Year 2000 project team accomplished the following
key activities:
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- -- Completed corporate wide inventory and assessment
- -- Remediated and unit tested legacy applications
- -- Implemented a Y2K "Clean Management" change control process
- -- Identified key suppliers and vendors
- -- Over 50% completed with conversion
- -- Started development of a Year 2000 Business Continuity Plan
- -- Completed first stage vendor management
- -- Upgraded all "mission critical" components to compliant hardware
- -- Implemented Stage 1 of new production systems
Management is making every effort to ensure that the Year 2000 problem will not
have any adverse affect on the Company's daily operations and, as such, the
Company is developing contingency plans related to the Year 2000 event. The
Company maintains a current status of the overall Year 2000 activities on the
corporate web site, which can be found at WWW.FECI.COM.
Item 6
Exhibits and Reports on Form 8-K
(a) Exhibit 10. Employment Agreement, Basic Stock Option Agreement, Restricted
Stock Agreement and Supplemental Stock Option Agreement between FEC
Industries and Robert W. Anestis dated October 30, 1998, effective January
1, 1999.
(b) Exhibit 10. Employment Agreement, Basic Stock Option Agreement, Restricted
Stock Agreement and Supplemental Stock Option Agreement between FEC
Industries and Robert F. MacSwain dated February 2, 1999.
(c) Exhibit 10. Employment Agreement, Basic Stock Option Agreement, Restricted
Stock Agreement and Supplemental Stock Option Agreement between FEC
Industries and Heidi J. Eddins dated February 2, 1999.
(d) Exhibit 10. Employment Agreement, Basic Stock Option Agreement, Restricted
Stock Agreement, Restricted Stock Agreement (Signing Bonus) and
Supplemental Stock Option Agreement between FEC Industries and John D.
McPherson dated February 2, 1999.
(e) Agreement for Professional Services between FEC Industries and Carl F.
Zellers, Jr. dated January 1, 1999.
Exhibit 27. Financial Data Schedule (for SEC use only)
Reports on Form 8-K
(a) Filed January 11, 1999:
Press Release prepared to urge stockholders to reject unsolicited tender
offer by IG Holdings, Inc. to purchase up to 4% of FECI's common stock.
Page 15
<PAGE> 17
(b) Filed February 24, 1999:
Press Release issued to announce the appointments of Robert F. MacSwain as
Executive Vice President-Special Projects and Heidi J. Eddins as Senior
Vice President, General Counsel and Secretary.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLORIDA EAST COAST INDUSTRIES, INC.
(Registrant)
Date: May 17, 1999 /s/ T.N. Smith
------------ -----------------------------------
T.N. Smith, Vice President
Date: May 17, 1999 /s/ G.P. West
------------ -----------------------------------
G.P. West, Treasurer
Page 16
<PAGE> 1
EXHIBIT 10.a
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
between
ROBERT W. ANESTIS
and
FLORIDA EAST COAST INDUSTRIES, INC.
- --------------------------------------------------------------------------------
October 30, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Employment Period................................................... 1
2. Terms of Employment................................................. 1
(a) Position and Duties........................................ 1
(b) Compensation............................................... 2
3. Early Termination of Employment..................................... 6
(a) Death or Disability........................................ 6
(b) Cause...................................................... 6
(c) Good Reason................................................ 6
(d) Termination for Other Reasons.............................. 7
(e) Notice of Termination...................................... 7
(f) Date of Termination........................................ 7
4. Obligations of FECI upon Early Termination.......................... 8
(a) Accelerating Event......................................... 8
(b) Good Reason; Other than for Cause, Death or Disability..... 8
(c) Death...................................................... 9
(d) Cause; Other Than for Good Reason.......................... 9
(e) Disability................................................. 9
(f) Nondisclosure to Media..................................... 9
5. Change in Control................................................... 9
(a) Defined.................................................... 9
(b) Accelerating Event......................................... 10
(c) Supplemental Payment to Executive.......................... 10
6. Nonexclusivity of Executive's Rights................................ 10
7. Confidential Information............................................ 11
8. Non-Compete; Non-Solicitation....................................... 11
9. Remedies for Executive's Breach..................................... 12
10. Dispute Resolution.................................................. 12
11. No Conflicting Obligations of Executive............................. 13
12. Certain Obligations of FECI Regarding Stock Awards.................. 13
13. Indemnity of Executive.............................................. 13
14. Successors.......................................................... 14
15. Miscellaneous....................................................... 14
TAB A Undertaking by Majority Shareholder Regarding Approval of Restricted
Stock & Stock Options
<PAGE> 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 30, 1998, between ROBERT W. ANESTIS, an individual (the "Executive"),
and FLORIDA EAST COAST INDUSTRIES, INC. ("FECI"), a Florida corporation, recites
and provides as follows:
WHEREAS, the Board of Directors of FECI (the "Board") desires
that FECI retain the services of the Executive, and the Executive desires to be
employed with FECI, all on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, FECI and the Executive agree as follows:
1. Employment Period. FECI hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by FECI, in
accordance with the terms and provisions of this Agreement, for the period
commencing on January 1, 1999 (the "Effective Date") and ending at midnight on
December 31, 2003 (the "Employment Period").
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall
serve as Chairman, President and Chief Executive Officer of FECI and shall have
such authority and perform such executive duties as are commensurate with his
position as Chairman, President and Chief Executive Officer with respect to FECI
and its subsidiaries. The Executive shall serve as a member of the Board, as
Chairman of the Board, as a member of the Executive Committee of the Board, and
as a member of such other committees of the Board to which he may be appointed,
throughout the Employment Period. The Executive's services shall be performed at
FECI's headquarters in St. Augustine, Florida and other facilities of the
Corporation.
(ii) During the Employment Period, and excluding any
periods of vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of FECI and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Compensation Committee of the Board
(the "Compensation Committee,") in each instance, which approval shall not be
unreasonably withheld, (B) deliver lectures or fulfill speaking engagements and
(C) manage personal investments, so long as such activities do not materially
interfere with the performance of the Executive's responsibilities as an
employee of FECI in accordance with this Agreement. Without limiting the
foregoing, the Executive may continue his service as a Director of Vector
Distributors, Inc., a privately held distributor of building products, a
consultant to Herzog Contracting Corporation, a privately held company, in
<PAGE> 4
connection with a proposed venture relating to public transit (which engagement
is expected to be substantially completed by December 31, 1998), a member of the
Yale University Development Board, a fund-raising group, a Director of Champion
Enterprises, Inc., a publicly held company, and as a member of the Advisory
Board of CHB Capital Partners, a privately held leveraged buy-out fund, and
retain for his account all compensation and benefits relating thereto. Further,
the Executive may undertake the winding up of the affairs of Anestis & Company,
which winding up is expected to be substantially completed by December 31, 1998.
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive a base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis, at the annual rate of not
less than Four Hundred Thousand Dollars ($400,000) per year. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually by
the Compensation Committee. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced and the term "Annual Base Salary" as
used in this Agreement shall mean the Annual Base Salary as so increased.
(ii) Short-Term Incentive Bonus. In addition to
Annual Base Salary, the Executive shall participate in an annual incentive bonus
plan. Such plan shall provide the Executive with the opportunity to earn a bonus
based on satisfaction of performance criteria. The incentive bonus plan shall be
structured such that the Executive shall receive up to fifty percent (50%) of
Annual Base Salary for attainment of certain target performance goals (prorated
for any partial year of employment), with a maximum bonus of one hundred percent
(100%) of Annual Base Salary for extraordinary performance (prorated for any
partial year of employment). The Compensation Committee will establish the
performance criteria and goals in consultation with the Executive.
Notwithstanding the foregoing, in no event shall the annual bonus earned with
respect to the period between the Effective Date and December 31, 1999 be less
than thirty percent (30%) of the Annual Base Salary earned during such period.
The bonus payable pursuant to this Section 2(b)(ii) for any fiscal year shall be
paid to the Executive no later than the 30th day following the issuance of the
audited financial statements of FECI for such year.
(iii) Restricted Stock. The Executive shall receive a
grant of restricted stock for forty thousand (40,000) shares of FECI common
stock. Such shares shall be subject to restrictions which shall provide that the
Executive shall not transfer such shares during the restriction period and shall
forfeit such shares if during the restriction period he is discharged by FECI
for Cause (as hereinafter defined in Section 3(b)) or resigns from employment
with FECI without Good Reason (as hereinafter defined in Section 3(c)). The
restriction period shall lapse with respect to such shares in equal annual
installments on the first through fifth anniversaries of the Effective Date.
Notwithstanding the foregoing, the restriction period shall lapse immediately as
to all such shares in the event that an Accelerating Event (as hereinafter
defined in Section 4(a)) occurs. The Executive shall be entitled to receive any
dividends or other distributions payable with respect to such shares of
restricted stock beginning on the date of award of such shares. Such stock award
shall be evidenced by a written restricted stock award
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<PAGE> 5
agreement between FECI and the Executive, the terms of which shall be agreed to
by the parties in good faith as soon as practical.
(iv) Long-Term Incentives: Basic Stock Options. The
Executive shall receive a grant of nonstatutory stock options on four hundred
thousand (400,000) shares of FECI common stock. The options shall have a term of
ten (10) years (subject to earlier expiration as hereinafter provided), shall
have an exercise price equal to 100% of the fair market value, as of the close
of trading on the date of this Agreement (being $29.9375), of the shares of
common stock subject to such stock options, and shall vest and become
exercisable in five (5) equal annual installments on the first through the fifth
anniversaries of the Effective Date; provided, however, that such stock options
shall vest immediately and become exercisable in their entirety in the event
that an Accelerating Event (as hereinafter defined in Section 4(a)) occurs. To
the extent not previously exercised, all such stock options shall expire
immediately following the Date of Termination (as hereinafter defined in Section
3(f)); provided, however, that the Executive, or his heirs or legal
representatives in the event of the Executive's death, may exercise all or any
part of such stock options as were exercisable as of the close of business on
the Date of Termination for a period of two (2) years following such Date of
Termination in the event (i) an Accelerating Event (as hereinafter defined in
Section 4(a)) occurs; or (ii) the Executive retires at normal retirement age
under any retirement plan of FECI. Such stock options shall include a provision
for adjustment in the option price to reflect any extraordinary distribution
made with respect to the common stock during the term of the options. In the
event of a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock options shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.
(v) Long Term Incentives: Supplemental Stock Options.
The Executive shall receive a grant of non-statutory stock options on one
hundred thousand (100,000) shares of FECI common stock. The options shall have a
term of ten (10) years (subject to earlier expiration as hereinafter provided),
shall have an exercise price equal to one hundred percent (100%) of the fair
market value, as of the close of trading on the date of this Agreement (being
$29.9375), of the shares of common stock subject to such stock options, and
shall vest and become exercisable immediately upon the earlier of (i) the first
date as of which the average closing price of a share of FECI common stock over
twenty (20) consecutive trading days is not less than Fifty Dollars ($50.00);
(ii) the occurrence of an Accelerating Event (as hereinafter defined in Section
4(a)); or (iii) the fifth anniversary of the Effective Date. To the extent not
previously exercised, all such stock options shall expire immediately following
the Date of Termination (as hereinafter defined in Section 3(f)); provided,
however, that the Executive, or his heirs or legal representatives in the event
of the Executive's death, may exercise all or any part of such stock option as
was exercisable as of the close of business on the Date of Termination for a
period of two (2) years following such Date of Termination in the event (i) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(ii) the Executive retires at normal retirement age under any retirement plan of
FECI. Such stock options shall include a provision for adjustment in the option
price to reflect any extraordinary distribution
3
<PAGE> 6
made with respect to the common stock during the term of the options. In the
event of a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock option shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.
(vi) Long-Term Incentives: Other. During the
Employment Period, the Executive shall be entitled to participate in long-term
incentive plans and programs applicable generally to other peer executives of
FECI and its affiliated companies. Such participation shall commence with
respect to FECI's 1999 fiscal year. The size and criteria for such awards shall
be generally consistent with prevailing compensation practices as they relate to
Chief Executive Officers of similarly sized publicly held companies and in any
event not less favorable to the Executive than FECI's recent past practice. As
used in this Agreement, the term "affiliated companies" shall mean any company
controlled by FECI.
(vii) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all savings
and retirement plans, practices, policies and programs applicable generally to
other peer executive of FECI and its affiliated companies.
(viii) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family and dependents, as the case
may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by
FECI and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of FECI and its affiliated
companies.
(ix) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
employment-related expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of FECI and its affiliated
companies as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and its affiliated companies.
(x) Relocation Expense. FECI shall make the Executive
whole by reimbursing him for all reasonable costs associated with his relocation
from Connecticut to the St. Augustine, Florida, area. Such costs shall include,
without limitation, closing costs associated with the sale of the Executive's
Connecticut residence and closing costs associated with the Executive's purchase
and financing of a new primary residence in Florida. For purposes of this
Section, "closing costs" shall mean loan origination fees, loan discount fees,
appraisal fees, credit report fees, assumption fees, settlement or closing fees,
title examination fees, title insurance binder, document preparation fees,
notary fees, attorneys' fees, real estate brokers' commissions, title insurance
fees, recording fees, tax stamps, transfer taxes, survey fees and costs of pest,
radon and home inspections. FECI shall also arrange for and pay for the move
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<PAGE> 7
of the Executive's household goods and personal effects (including packing and
unpacking charges) from his Connecticut residence to his new primary residence
in Florida. FECI shall pay for the Executive's reasonable temporary living costs
in the St. Augustine area for up to eight months (or such later time as may be
requested by the Executive and approved by the Compensation Committee, which
approval shall not be unreasonably withheld) until Executive is moved into his
new residence in Florida. FECI will pay the costs associated with a reasonable
number of trips to St. Augustine for the Executive and his spouse to look for a
new residence. FECI shall also pay for the Executive's costs to visit his family
prior to the relocation of his family to the St. Augustine area. In addition, in
the event that the Executive's Connecticut residence is placed on the market for
sale at a reasonable price and is not sold within ninety (90) days after being
placed on the market, at the Executive's request FECI shall provide the
Executive with an interest-free bridge loan for a term of up to twelve (12)
months for an amount up to the asking price of the Connecticut residence, which
loan shall be repayable upon the earlier of five (5) days following the closing
of the sale of the Connecticut residence or the first anniversary of the making
of such loan. In addition, FECI shall pay the Executive an amount determined by
its accountants equal to the Executive's federal, state and local taxes on the
foregoing reimbursement and imputed interest under the aforesaid loan (the "Tax
Gross-up") and the federal, state and local taxes on the Tax Gross-up, all to
the end that the Executive be held harmless, on an after-tax basis, from the tax
impact thereof.
(xi) Fringe Benefits. During the Employment Period,
the Executive and/or the Executive's family and dependents shall be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of FECI and its affiliated companies as in effect generally from
time to time after the Effective Date with respect to other peer executives of
FECI and its affiliated companies.
(xii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, and to facilities and equipment, at least equal to the
most favorable of the foregoing provided generally from time to time after the
Effective Date with respect to other peer executives of FECI and its affiliated
companies.
(xiii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of FECI and its affiliated
companies as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and its affiliated companies.
(xiv) Car Allowance. During the Employment Period,
the Executive shall be entitled to a car allowance in accordance with FECI's car
allowance policy, in lieu of expenses associated with the operation of his
automobile.
(xv) Golden Parachute Excise Tax. If FECI determines
that any amounts payable under this Agreement are subject to the excise tax
imposed under Code Section 4999 on "excess parachute payments", FECI will
compute the excise tax imposed under Code Section 4999 and shall pay that amount
to the Executive, including any federal, state, local and
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<PAGE> 8
excise taxes imposed on the foregoing payment under this Section 4(f). The
determination will be made before the taxes are due and payable by the
Executive, to the extent possible. The calculations under this Section will be
made in a manner consistent with the requirements of Code Sections 280G and
4999, as in effect at the time the calculations are made.
(xvi) Right to Change Plans. FECI shall not be
obligated to institute, maintain or refrain from changing, amending or
discontinuing any benefit plan, program, or perquisite referred to in Sections
2(b)(vii), 2(b)(viii) and 2(b)(xi), so long as such changes are similarly
applicable to other FECI executives.
3. Early Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If FECI determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of disability
set forth below), it may give to the Executive notice of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with FECI shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that,
within the thirty (30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with FECI on a full-time basis for one hundred eighty (180)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
FECI or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. FECI may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean (i) a material breach by the Executive of the Executive's obligations
under this Agreement (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the Executive's
part, which is committed in bad faith or without reasonable belief that such
breach is in the best interests of FECI and which is not remedied in a
reasonable period of time after receipt of notice from FECI specifying such
breach; (ii) the conviction of the Executive for committing an act of fraud,
embezzlement, theft or other act constituting a felony or the guilty or nolo
contendere plea of the Executive to such a felony; (iii) insubordination or the
willful engaging by Executive in gross misconduct or the willful violation of an
FECI policy which results in material and demonstrable injury to FECI; or (iv) a
material act of dishonesty or breach of trust on the part of the Executive
resulting or intending to result directly or indirectly in material personal
gain or enrichment at the expense of FECI. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for FECI shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests
of FECI.
(c) Good Reason. The Executive may terminate his employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, in
the absence of the
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consent of the Executive, a reasonable determination by the Executive that any
of the following has occurred:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, or any other
action by FECI which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated
and insubstantial action not taken in bad faith and which is remedied by FECI
promptly after receipt of notice thereof given by the Executive; or
(ii) any failure by FECI to comply with any of the
provisions of this Agreement applicable to it, other than any isolated and
insubstantial failure not occurring in bad faith and which is remedied promptly
after notice thereof from the Executive.
(d) Termination for Other Reasons. FECI may terminate the
employment of the Executive without Cause by giving notice to the Executive at
least sixty (60) days prior to the Date of Termination. The Executive may resign
from his employment without Good Reason hereunder by giving notice to FECI at
least sixty (60) days prior to the Date of Termination.
(e) Notice of Termination. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such
notice, unless otherwise required by Section 3(f)). The failure by the Executive
or FECI to set forth in the Notice of Termination any fact or circumstance shall
not waive any right of the Executive or FECI hereunder or preclude the Executive
or FECI from asserting such fact or circumstance in enforcing the Executive's or
FECI's rights hereunder.
(f) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated by FECI for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any permitted later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by FECI other than for Cause or Disability
or by the Executive other than for Good Reason, the Date of Termination shall be
the sixtieth (60th) day following the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, and (iii)
if the Executive's employment is terminated by reason of the Executive's death
or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
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4. Obligations of FECI upon Early Termination.
(a) Accelerating Event. As used in this Agreement, the term
"Accelerating Event" shall mean any of the following: (i) the Executive's
employment terminates under the circumstances described in Section 3(a), (ii)
the Executive is discharged without Cause, (iii) the Executive resigns with Good
Reason, or (iv) a Change in Control (as defined in Section 5(a)) occurs.
(b) Good Reason; Other than for Cause, Death or Disability.
If, during the Employment Period, FECI shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:
(i) FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days after the Date of Termination the sum of (A) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid; (B) to the extent not theretofore paid, any annual bonus
payable to the Executive for any prior completed fiscal year; (C) the product of
(x) the greater of any annual bonus paid or payable, including by reason of any
deferral, to the Executive (annualized for any fiscal year consisting of less
than twelve (12) full months or for which the Executive has been employed for
less than twelve (12) full months) for the most recently completed fiscal year
during the Employment Period, if any, and the average annualized (annualized for
any fiscal year consisting of less than twelve (12) full months or with respect
to which the Executive has been employed for less than twelve (12) full months)
bonus paid or payable, including by reason of any deferral, to the Executive by
FECI and its affiliated companies in respect of the three (3) fiscal years
immediately preceding the fiscal year in which the Date of Termination occurs
(such greater amount shall be hereinafter referred to as the "Highest Annual
Bonus") and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365; (D) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) to the extent not
theretofore paid; and (E) any accrued vacation pay, expense reimbursement and
any other entitlements accrued by the Executive under Section 2(b), to the
extent not theretofore paid (the sum of the amount described in clauses (A),
(B), (C), (D) and (E) shall be hereinafter referred to as the "Accrued
Obligations"); and
(ii) FECI shall pay to the Executive in twenty-four
(24) monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to twice the sum of the Executive's Annual Base
Salary and Highest Annual Bonus (without duty of mitigation); and
(iii) If a Change in Control (as defined in Section
5(a)) occurs within one hundred twenty (120) days following the Date of
Termination, FECI shall pay to the Executive the supplemental payment referred
to in Section 5(c) notwithstanding that the Date of Termination preceded the
Change in Control.
(iv) For the remainder of the Employment Period (as
it would continue but for such early termination), or such longer period as any
plan, program, practice or policy may provide, FECI shall continue benefits to
the Executive and/or the Executive's family and dependents at least equal to
those which would have been provided to them in accordance
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with the plans, programs, practices and policies described in Section 2(b)(viii)
if the Executive's employment had not been terminated, in accordance with the
most favorable plans, practices, programs or policies of FECI and its affiliated
companies as in effect generally at any time thereafter with respect to other
peer executives of FECI and its affiliated companies and their families
("Welfare Benefit Continuation"). If the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits), the Executive shall
be considered to have remained employed until the end of the Employment Period
(as it would continue but for such early termination) and to have retired on the
last day of such period.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligation to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and the timely payment or provision of the Welfare Benefit
Continuation.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive the Accrued Obligations and the amount of any
compensation previously deferred by the Executive, in each case to the extent
theretofore unpaid, all of which shall be paid in cash within thirty (30) days
of the Date of Termination.
(e) Disability. If the Executive's employment shall be
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligation to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of the Welfare Benefit Continuation. Accrued Obligations shall be paid
to the Executive in a lump sum in cash within thirty (30) days of the Date of
Termination. The Executive shall be entitled after the Disability Effective Date
to receive disability and other benefits as in effect at the Disability
Effective Date with respect to other peer executives of FECI and its affiliated
companies and their families.
(f) Nondisclosure to Media. After the Date of Termination or
the end of Employment Period, the Executive and FECI agree that they will not
discuss the Executive's employment and resignation or termination (including the
terms of this Agreement) with any representatives of the media, either directly
or indirectly, without the consent of the other party hereto.
5. Change in Control.
(a) Defined. For purposes of this Agreement, a "Change in
Control" of FECI shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have occurred:
9
<PAGE> 12
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by FECI's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of FECI
as of the date hereof, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of FECI); or
(iii) FECI merges or consolidates with any other
corporation, including The St. Joe Company or any subsidiary thereof, or FECI
adopts, and the stockholders approve, if necessary, a plan of complete
liquidation of FECI, or FECI sells or disposes of substantially all of its
assets.
(b) Accelerating Event. A Change in Control shall be an
Accelerating Event as defined in Section 4(a).
(c) Supplemental Payment to Executive. Upon a Change in
Control, FECI shall pay to the Executive in a lump sum in cash within thirty
(30) days of the date of such Change in Control, an amount equal to the excess,
if any, of Five Million Dollars ($5,000,000) over the sum of (i) the current
fair market value of all restricted FECI stock granted under Section 2(b)(iii)
on which restrictions have lapsed (including any lapse due to the Change in
Control), (ii) the sum of the difference between the fair market value of the
FECI stock subject to each stock option granted under Section 2(b)(iv) or
Section 2(b)(v) which is vested (including any vesting due to the Change in
Control) over the exercise price of such options, and (iii) the amount payable
to Executive under Section 4(b)(ii). As used in this Section, fair market value
shall mean the fair market value of FECI stock as of the close of trading on the
date of the Change in Control.
6. Nonexclusivity of Executive's Rights. Except as provided in
Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by FECI or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with FECI or any of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with FECI or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
10
<PAGE> 13
7. Confidential Information.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of FECI all secret or confidential information, knowledge or data
relating to FECI or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by FECI or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with FECI, the Executive shall not,
without the prior written consent of FECI or except as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than FECI and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
(b) All records, files, memoranda, reports, price lists,
customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to the business of FECI, which
Executive shall use or prepare or otherwise have in his possession in the course
of, or as a result of, his employment hereunder shall, as between the parties
hereto, remain the sole property of FECI. Executive shall use such materials
solely for the benefit of FECI and shall not divulge any such materials other
than in furtherance of FECI's interests. Executive hereby agrees that he will
return all such materials, including copies, to FECI upon demand, or upon the
cessation of his employment.
(c) Any termination of the Executive's employment hereunder or
of this Agreement shall have no effect on the continuing operation of this
Section 7.
8. Non-Compete; Non-Solicitation.
(a) Except as is set forth below, for a period commencing on
the Effective Date hereof and ending on the first anniversary of the date the
Executive ceases to be employed by FECI (the "Non-Competition Period"), the
Executive shall not, directly or indirectly, either for himself or any other
person, own, manage, control, materially participate in, invest in, permit his
name to be used by, act as consultant or advisor to, render material services
for (alone or in association with any person, firm, corporation or other
business organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of FECI's business at the date the Executive
ceases to be employed by FECI (collectively, a "Competitor"); provided, however,
that the restrictions set forth above shall immediately terminate and shall be
of no further force or effect (i) in the event of a default by FECI of the
performance of any of the obligations hereunder, which default is not cured
within ten (10) days after notice thereof, or (ii) if the Executive's employment
has been terminated by FECI other than for Cause, or (iii) if the Executive
resigns for Good Reason provided that the Executive gives written notice to FECI
whenever during the Non-Competition Period that he desires to accept employment
with a Competitor; and that the payment specified in Section 4(b)(ii) hereof
shall be mitigated by the amount of salary and pro rata target bonus payable to
the Executive by the Competitor based on the Executive?s initial terms of
employment and attributable to
11
<PAGE> 14
employment during the Non-Competition Period. Nothing herein shall prohibit the
Executive from being a passive owner of not more than five percent (5%) of the
equity securities of an enterprise engaged in such business which is publicly
traded, so long as he has no active participation in the business of such
enterprise.
(b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of FECI to leave the employ of FECI, or in any way
interfere with the relationship between FECI and an employee of FECI except in
the proper exercise of the Executive's authority, or (ii) in any way interfere
with the relationship between FECI and any customer, supplier, licensee or other
business relation of FECI.
(c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
(d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against FECI or any of its affiliates,
whether or not predicated upon the terms of this Agreement, shall not constitute
a defense to the enforcement of these covenants.
9. Remedies for Executive's Breach. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then FECI may thereafter terminate the payment of any post-termination
benefits hereunder, and FECI will have no further obligation to Executive under
this Agreement. The parties acknowledge that any violation of Section 7 or 8 can
cause substantial and irreparable harm to FECI. Therefore, FECI shall be
entitled to pursue any and all legal and equitable remedies, including but not
limited to any injunctions.
10. Dispute Resolution. Any dispute or controversy arising under
or in connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any questions, claims
or other matters arising under this Agreement or any claim that FECI has in any
way violated the non-discrimination and/or other provisions of Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act
of 1967, as amended; the Americans with Disabilities Act; the Family and Medical
Leave Act; the Employee Retirement Income Security Act of 1974, as amended; and,
in general, any federal law or the law of the State of Florida. Such proceeding
shall be conducted by final and binding arbitration before a panel of one or
more arbitrators under the administration of the American Arbitration
Association, and in a location mutually agreed to by the Executive and FECI. The
Federal and State courts located in the United States of America are hereby
given jurisdiction to render judgment upon, and to enforce, each arbitration
award, and the parties hereby expressly consent and submit to the jurisdiction
of such courts. Notwithstanding the foregoing, in the event that a violation of
the Agreement would cause irreparable injury, FECI
12
<PAGE> 15
and the Executive agree that in addition to the other rights and remedies
provided in this Agreement (and without waiving their rights to have all other
matters arbitrated as provided above) the other party may immediately take
judicial action to obtain injunctive relief.
11. No Conflicting Obligations of Executive. Executive represents
and warrants that he is not subject to any duties or restrictions under any
prior agreement with any previous employer or other person, and that he has no
rights or obligations except as previously disclosed to FECI which may conflict
with the interests of FECI or with the performance of the Executive's duties and
obligations under this Agreement. Executive agrees to notify FECI immediately if
any such conflicts occur in the future.
12. Certain Obligations of FECI Regarding Stock Awards. At its
expense, and as soon as practicable hereafter, with respect to the shares of
common stock described in Section 2(b)(iii) and the shares of common stock
issuable upon exercise of the stock options described in Section 2(b)(iv) and
2(b)(v), FECI shall (i) seek the approval of its shareholders with regard to the
grant of such restricted stock and stock options, (ii) register such shares
under the Securities Act of 1933, as amended, on Form S-8, (iii) qualify such
shares for issuance under all applicable state securities laws and (iv) ensure
that such shares are listed for trading on the New York Stock Exchange.
Notwithstanding any other provision of this Agreement to the contrary, FECI
shall be under no obligation to issue any shares of common stock to the
Executive pursuant to this Agreement until, in accordance with the immediately
preceding sentence, such shares are so registered and qualified and either (x)
FECI is able to repurchase in the open market or private transactions, on a
legal, practical and prudent basis, a number of shares of common stock equal to
the number issuable to the Executive or (y) shares of common stock which are
listed for trading on the New York Stock Exchange are otherwise available for
issuance by FECI hereunder. In this regard, The St. Joe Company, being the
holder of a majority of the outstanding shares of the capital stock, has given
its approval of the grant of such shares and options and its commitment to vote
its shares in favor thereof, which approval and commitment is attached hereto as
Exhibit "A." With respect to the shares of common stock described in Section
2(b)(iii), in the event that the issuance of any such shares to the Executive
shall be delayed by reason of the provisions of this Section, FECI shall pay to
the Executive in cash on the date of issuance of such shares in the amount or
cash-equivalent thereof that would have been paid to the Executive as dividends
or other distributions payable with respect to such shares had such issuance not
been so delayed.
13. Indemnity of Executive. FECI shall indemnify and defend the
Executive against all claims relating to the performance of his duties hereunder
to the fullest extent permitted by FECI's Articles of Incorporation and Bylaws,
the relevant provisions of which shall not be amended in their application to
the Executive to be any less favorable to him than as at present, except as
required by law. During the Employment Period, FECI shall maintain in effect
uninterrupted standard directors and officers liability insurance coverage
insuring the Executive against such claims, with limits of coverage of not less
than $10,000,000 per occurrence and without deductibles, which insurance shall
include a standard SEC coverage endorsement.
13
<PAGE> 16
14. Successors.
(a) This Agreement is personal to the Executive and without
the prior consent of FECI shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon FECI and its successors and assigns.
(c) FECI will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of FECI to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FECI would be required to perform it if no such succession had taken place. As
used in this Agreement, "FECI" shall mean FECI as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopier,
or by courier, addressed as follows:
If to the Executive to: If to FECI to:
---------------------- -------------
Robert W. Anestis. Florida East Coast Industries, Inc.
23 White Oak Lane. One Malaga Street
Weston, CT 06883. St. Augustine, FL 32084
Facsimile: 203/222-9072 Attention: Corporate Secretary
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law or in
equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.
14
<PAGE> 17
(d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(e) FECI may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) The Executive's or FECI's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or FECI may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(g) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law, except as
provided in Section 2(b)(xvi).
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, FECI has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
Company:
FLORIDA EAST COAST INDUSTRIES, INC.
By
-----------------------------------------
President
Executive:
-----------------------------------------
Robert W. Anestis
15
<PAGE> 18
------------------------------------------------------------------------
UNDERTAKING BY MAJORITY SHAREHOLDER REGARDING APPROVAL OF
RESTRICTED STOCK & STOCK OPTIONS
------------------------------------------------------------------------
October 30, 1998
Robert W. Anestis
191 Post Road West
Westport, CT 06880
Re: Florida East Coast Industries, Inc.
Approval of Restricted Stock & Stock Options
--------------------------------------------
Dear Mr. Anestis:
Reference is made to that certain Employment Agreement of even
date herewith between you and Florida East Coast Industries, Inc. ("FECI"). The
undersigned owns 54.0% of the outstanding voting shares of capital stock of
FECI.
As an inducement to you to enter into the aforesaid Employment
Agreement, the undersigned irrevocably and unconditionally approves of (i) the
restricted stock to be issued to you pursuant to Section 2(b)(iii) of the
aforesaid Employment Agreement and (ii) the stock options to be granted to you
pursuant to Sections 2(b)(iv) and 2(b)(v) of the aforesaid Employment Agreement.
The undersigned irrevocably and unconditionally agrees to vote in favor of any
corporate action necessary to implement the foregoing grants of restricted stock
and stock options.
Very truly yours,
THE ST. JOE COMPANY
By
---------------------------------
cc: Corporate Secretary
Florida East Coast Industries, Inc.
-----------------------------------------------------------------
<PAGE> 19
BASIC STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT W. ANESTIS
October 30, 1998
<PAGE> 20
THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
400,000 shares of the Company's Common Stock. The exercise price of the
NSO is $29.9375 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. One-fifth of the NSO, 80,000 shares,
shall vest on and may be exercised at any time on or after
October 30, 1999. Another one-fifth of the NSO, 80,000 shares,
shall vest on and may be exercised at any time on or after
October 30, 2000. Another one-fifth of the NSO, 80,000 shares,
shall on vest and may be exercised at any time on or after
October 30, 2001. Another one-fifth of the NSO, 80,000 shares,
shall vest on and may be exercised at any time on or after
October 30, 2002. The remaining one-fifth of the NSO, 80,000
shares, shall vest on and may be exercised at any time on or
after October 30, 2003. In addition, all of the NSO shall vest
on and may be exercised at any time on or after an
Accelerating Event (as defined in Section 4(a) of the
Employment Agreement). The vesting of any portion of the NSO
is conditioned on the Employee's
1
<PAGE> 21
continued employment by the Company or a parent or subsidiary
of the Company as of the relevant vesting date.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) November 1,
2008, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), or (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following a Change in Control (as
defined in Section 5(a) of the Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation, then the person to whom the Employee's rights
under the NSO shall have passed by will or by the laws of
distribution may exercise any of the NSO within two years
after the Employee's death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
2
<PAGE> 22
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock, and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as necessary or advisable, and (iii) receipt by the Company
of advice by counsel that all applicable legal requirements have been
complied with.
3
<PAGE> 23
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
4
<PAGE> 24
If to the Employee to: If to the Company to:
Robert W. Anestis Florida East Coast Industries, Inc.
23 White Oak Lane One Malaga Street
Weston, CT 06883 St. Augustine, FL 32084
Facsimile: 203/222-9072 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this
Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
5
<PAGE> 25
By /s/ C. F. Zellers, Jr.
-------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert W. Anestis
- --------------------------------
ROBERT W. ANESTIS
6
<PAGE> 26
RESTRICTED STOCK AGREEMENT
Between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT W. ANESTIS
October 30, 1998
<PAGE> 27
THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(iii) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, forty
thousand (40,000) shares of the Company's Common Stock (the "Restricted
Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
Anniversary Unrestricted
Date Percentage
--------------- ---------------
First 20%
Second 40%
Third 60%
1
<PAGE> 28
Anniversary Unrestricted
Date Percentage
--------------- ---------------
Fourth 80%
Fifth 100%
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or by the Employee without Good Reason (as defined in
Section 3(c) of the Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a
2
<PAGE> 29
particular date, fair market value will be computed as of the last date
preceding such date on which a sale was reported.
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
3
<PAGE> 30
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
Robert W. Anestis Florida East Coast Industries, Inc.
23 White Oak Lane One Malaga Street
Weston, CT 06883 St. Augustine, FL 32084
Facsimile: 203/222-9072 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
4
<PAGE> 31
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Employee or the
Company may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ C. F. Zellers, Jr.
------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert W. Anestis
- --------------------------------
ROBERT W. ANESTIS
5
<PAGE> 32
SUPPLEMENTAL STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT W. ANESTIS
October 30, 1998
<PAGE> 33
THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
100,000 shares of the Company's Common Stock. The exercise price of the
NSO is $29.9375 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. The NSO shall vest and become
exercisable immediately upon the earlier of (i) the first date
as of which the average closing price of a share of the
Company's Common Stock over twenty (20) consecutive trading
days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as defined in Section
4(a) of the Employment Agreement); or (iii) December 1, 2003.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) November 1,
2008, (ii) two years following the effective date that the
1
<PAGE> 34
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following a Change in Control (as
defined in Section 5(a) of the Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation and at a time when any portion of the NSO is
vested and exercisable, then the person to whom the Employee's
rights under the NSO shall have passed by will or by the laws
of distribution may exercise any of the vested and exercisable
portion of the NSO within two years after the Employee's
death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
2
<PAGE> 35
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as necessary or advisable, and (iii) receipt by the Company
of advice by counsel that all applicable legal requirements have been
complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the
3
<PAGE> 36
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
Robert W. Anestis Florida East Coast Industries, Inc.
23 White Oak Lane One Malaga Street
Weston, CT 06883 St. Augustine, FL 32084
Facsimile: 203/222-9072 Attention: Treasurer
Facsimile: 904/396-4042
4
<PAGE> 37
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this
Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ C. F. Zellers, Jr.
-------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
5
<PAGE> 38
/s/ Robert W. Anestis
- --------------------------------
ROBERT W. ANESTIS
6
<PAGE> 1
EXHIBIT 10.b
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
between
ROBERT F. MacSWAIN
and
FLORIDA EAST COAST INDUSTRIES, INC.
- --------------------------------------------------------------------------------
February 2, 1999
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Employment Period.................................................... 1
2. Terms of Employment.................................................. 1
(a) Position and Duties......................................... 1
(b) Compensation................................................ 2
3. Termination of Employment............................................ 6
(a) Death or Disability......................................... 6
(b) Cause....................................................... 6
(c) Good Reason................................................. 6
(d) Termination for Other Reasons............................... 7
(e) Notice of Termination....................................... 7
(f) Date of Termination......................................... 7
4. Obligations of FECI upon Termination................................. 7
(a) Accelerating Event.......................................... 7
(b) Good Reason; Other than for Cause, Death or Disability...... 7
(c) Death....................................................... 8
(d) Cause; Other Than for Good Reason........................... 8
(e) Disability.................................................. 8
(f) Nondisclosure to Media...................................... 9
5. Change in Control.................................................... 9
(a) Defined..................................................... 9
(b) Entitlement to Benefits..................................... 9
(c) Accelerating Event.......................................... 10
(d) Supplemental Payment to Executive........................... 10
6. Non-Exclusivity of Executive's Rights................................ 10
7. Confidential Information............................................. 10
8. Non-Compete; Non-Solicitation........................................ 10
9. Remedies for Executive's Breach...................................... 11
10. Dispute Resolution................................................... 12
11. No Conflicting Obligations of Executive.............................. 12
12. Certain Obligations of FECI Regarding Stock Awards................... 12
13. Indemnity of Executive............................................... 13
14. Successors........................................................... 13
15. Miscellaneous........................................................ 13
<PAGE> 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
February 2, 1999, between ROBERT F. MacSWAIN, an individual (the "Executive"),
and FLORIDA EAST COAST INDUSTRIES, INC. ("FECI"), a Florida corporation, recites
and provides as follows:
WHEREAS, the Board of Directors of FECI (the "Board") desires
that FECI retain the services of the Executive, and the Executive desires to be
employed with FECI, all on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, FECI and the Executive agree as follows:
1. Employment Period. FECI hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by FECI, in
accordance with the terms and provisions of this Agreement, for the period
commencing on the date hereof (the "Effective Date") and continuing until
terminated by either party hereto (the "Employment Period").
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall
serve as Executive Vice President - Special Projects of FECI and shall have such
authority and perform such executive duties as are commensurate with such
positions and as are otherwise assigned by the Board.
(ii) The Executive's services shall be performed at
FECI's headquarters in St. Augustine, Florida and other facilities of FECI and
its subsidiaries.
(iii) During the Employment Period, and excluding any
periods of vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of FECI and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Chief Executive Officer of FECI, in
each instance, which approval shall not be unreasonably withheld, (B) deliver
lectures or fulfill speaking engagements and (C) manage personal investments, so
long as such activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of FECI in accordance with this
Agreement.
<PAGE> 4
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive a base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis, at the annual rate of not
less than Two Hundred Twenty-Five Thousand Dollars ($225,000) per year. During
the Employment Period, the Annual Base Salary shall be reviewed at least
annually by the Compensation Committee of the Board (the "Compensation
Committee"). Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced and the term "Annual Base Salary" as used in this
Agreement shall mean the Annual Base Salary as so increased.
(ii) Short-Term Incentive Bonus. In addition to
Annual Base Salary, during the Employment Period the Executive shall participate
in an annual incentive bonus plan. Such plan shall provide the Executive with
the opportunity to earn a bonus based on achievement of performance criteria.
The incentive bonus plan shall be structured such that the Executive shall
receive up to fifty percent (50%) of Annual Base Salary for attainment of
certain target performance goals (prorated for any partial year of employment),
with a maximum bonus of one hundred percent (100%) of Annual Base Salary for
extraordinary performance (prorated for any partial year of employment). The
Compensation Committee will establish the performance criteria and goals in
consultation with the Executive. The bonus payable pursuant to this Section
2(b)(ii) for any fiscal year shall be paid to the Executive no later than the
thirtieth (30th) day following the issuance of the audited financial statements
of FECI for such year.
(iii) Long-Term Incentives: Restricted Stock. The
Executive shall receive a grant of restricted stock for seven thousand five
hundred (7,500) shares of FECI common stock issued under the FECI 1998 Stock
Incentive Plan. Such shares shall be subject to restrictions which shall provide
that the Executive shall not transfer such shares during the restriction period
and shall forfeit such shares if during the restriction period he is discharged
by FECI for Cause (as hereinafter defined in Section 3(b)) or resigns from
employment with FECI without Good Reason (as hereinafter defined in Section
3(c)). The restriction period shall lapse with respect to such shares in equal
annual installments on the first through fifth anniversaries of the Effective
Date. Notwithstanding the foregoing, the restriction period shall lapse
immediately as to all such shares in the event that an Accelerating Event (as
hereinafter defined in Section 4(a)) occurs. The Executive shall be entitled to
receive any dividends or other distributions payable with respect to such shares
of restricted stock beginning on the date of award of such shares. Such stock
award shall be evidenced by a written restricted stock award agreement between
FECI and the Executive, the terms of which shall be agreed to by the parties in
good faith as soon as practical.
(iv) Long-Term Incentives: Basic Stock Options. The
Executive shall receive a grant of non-statutory stock options on thirty-seven
thousand five hundred (37,500) shares of FECI common stock issued under the FECI
1998 Stock Incentive Plan. The options shall have a term of ten (10) years
(subject to earlier expiration as hereinafter provided), shall have an exercise
price equal to one hundred percent (100%) of the fair market value, as of the
close of trading on the date of this Agreement (being $27.4375) of the shares of
common stock subject to such stock options, and shall vest and become
exercisable in five (5)
2
<PAGE> 5
equal annual installments on the first through the fifth anniversaries of the
Effective Date; provided, however, that such stock options shall vest
immediately and become exercisable in their entirety in the event that an
Accelerating Event (as hereinafter defined in Section 4(a)) occurs. To the
extent not previously exercised, all such stock options shall expire immediately
following the Date of Termination (as hereinafter defined in Section 3(f));
provided, however, that the Executive, or his heirs or legal representatives in
the event of the Executive's death, may exercise all or any part of such stock
options as were exercisable as of the close of business on the Date of
Termination for a period of two (2) years following such Date of Termination in
the event (i) an Accelerating Event (as hereinafter defined in Section 4(a))
occurs; or (ii) the Executive retires at normal retirement age under any
retirement plan of FECI. Such stock options shall include a provision for
adjustment in the option price to reflect any extraordinary distribution made
with respect to the common stock during the term of the options. In the event of
a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock options shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.
(v) Long Term Incentives: Supplemental Stock Options.
The Executive shall receive a grant of non-statutory stock options on
thirty-seven thousand five hundred (37,500) shares of FECI common stock issued
under the FECI 1998 Stock Incentive Plan. The options shall have a term of ten
(10) years (subject to earlier expiration as hereinafter provided), shall have
an exercise price equal to one hundred percent (100%) of the fair market value,
as of the close of trading on the date of this Agreement (being $27.4375) of the
shares of common stock subject to such stock options, and shall vest and become
exercisable immediately upon the earlier of (i) the first date as of which the
average closing price of a share of FECI common stock over twenty (20)
consecutive trading days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(iii) the fifth anniversary of the Effective Date. To the extent not previously
exercised, all such stock options shall expire immediately following the Date of
Termination (as hereinafter defined in Section 3(f)); provided, however, that
the Executive, or his heirs or legal representatives in the event of the
Executive's death, may exercise all or any part of such stock option as was
exercisable as of the close of business on the Date of Termination for a period
of two (2) years following such Date of Termination in the event (i) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(ii) the Executive retires at normal retirement age under any retirement plan of
FECI. Such stock options shall include a provision for adjustment in the option
price to reflect any extraordinary distribution made with respect to the common
stock during the term of the options. In the event of a capital adjustment
resulting from a stock dividend, stock split, reorganization, merger,
consolidation, spinoff, a combination or exchange of shares or other transaction
having a similar substantive effect, the number shares of stock subject to the
stock options and the option price shall be equitably adjusted. Such stock
option shall be evidenced by a written stock option award agreement between FECI
and the Executive, the terms of which shall be agreed to by the parties in good
faith as soon as practical.
3
<PAGE> 6
(vi) Long-Term Incentives: Subsequent Option Grants.
During the Employment Period, the Executive shall be entitled to participate in
long-term equity incentive plans and programs applicable generally to other peer
executives of FECI. Such participation shall commence with respect to FECI's
1999 fiscal year. Such plans and programs shall be structured such that the
Executive shall receive option grants with targeted annual grant value (using
valuation methods consistent with those used by FECI for financial reporting
purposes) between seventy-five percent (75%) and one hundred percent (100%) of
Annual Base Salary for attainment of certain target performance goals (prorated
for any partial year of employment). The Compensation Committee will establish
the performance criteria and goals in consultation with the Executive.
(vii) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all savings
and retirement plans, practices, policies and programs applicable generally to
other peer executive of FECI.
(viii) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family and dependents, as the case
may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by
FECI (including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of FECI.
(ix) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
employment-related expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of FECI as in effect generally
from time to time after the Effective Date with respect to other peer executives
of FECI.
(x) Relocation Expense. FECI shall make the Executive
whole by reimbursing him for all reasonable costs associated with his relocation
from Canton, Massachusetts, to the St. Augustine, Florida, area, whether
incurred before or after the Effective Date, but only to the extent that such
costs are incurred prior to the first anniversary of the Effective Date. Such
costs shall include, without limitation, closing costs associated with the sale
of the Executive's Canton residence and closing costs associated with the
Executive's purchase and financing of a new primary residence in the St.
Augustine area. For purposes of this Section, "closing costs" shall mean loan
origination fees, appraisal fees, credit report fees, assumption fees,
settlement or closing fees, title examination fees, title insurance binder,
document preparation fees, notary fees, attorneys' fees, real estate brokers'
commissions, title insurance fees, recording fees, tax stamps, transfer taxes,
survey fees and costs of pest, radon and home inspections. FECI shall also
arrange for and pay for the move of the Executive's household goods and personal
effects (including packing and unpacking charges) from his Canton residence to
his new primary residence in Florida. FECI shall pay for the Executive's
reasonable temporary living costs in the St. Augustine area for up to three (3)
months (or such later time as may be requested by the Executive and approved by
the Chief Executive Officer of FECI, which approval shall not be unreasonably
withheld) until Executive is moved into his new
4
<PAGE> 7
residence in Florida. FECI will pay the costs associated with a reasonable
number of trips to St. Augustine for the Executive and his spouse to look for a
new residence. In addition, in the event that the Executive's Canton residence
is placed on the market for sale at a reasonable price and is not sold within
ninety (90) days after being placed on the market, at the Executive's request
FECI shall provide the Executive with an interest-free bridge loan for a term of
up to twelve (12) months for an amount up to the asking price of the Canton
residence, which loan shall be repayable upon the earlier of five (5) days
following the closing of the sale of the Canton residence or the first
anniversary of the making of such loan. In addition, FECI shall pay the
Executive an amount determined by its accountants equal to the Executive's
federal, state and local taxes on the foregoing reimbursement and imputed
interest under the aforesaid loan (the "Tax Gross-up") and the federal, state
and local taxes on the Tax Gross-up, all to the end that the Executive be held
harmless, on an after-tax basis, from the tax impact thereof.
(xi) Fringe Benefits. During the Employment Period,
the Executive and/or the Executive's family and dependents shall be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of FECI as in effect generally from time to time after the
Effective Date with respect to other peer executives of FECI.
(xii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office and support staff at least
equal to the most favorable of the foregoing provided generally from time to
time after the Effective Date with respect to other peer executives of FECI.
(xiii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of FECI as in effect generally
from time to time after the Effective Date with respect to other peer executives
of FECI.
(xiv) Car Allowance. During the Employment Period,
the Executive shall be entitled to a car allowance in accordance with FECI's car
allowance policy, in lieu of expenses associated with the operation of his
automobile.
(xv) Golden Parachute Excise Tax. If FECI determines
that any amounts payable under this Agreement are subject to the excise tax
imposed under Code Section 4999 on "excess parachute payments," FECI will
compute the excise tax imposed under Code Section 4999 and shall pay that amount
to the Executive, including any federal, state, local and excise taxes imposed
on the foregoing payment under this Section 2(b)(xv). The determination will be
made before the taxes are due and payable by the Executive, to the extent
possible. The calculations under this Section will be made in a manner
consistent with the requirements of Code Sections 280G and 4999, as in effect at
the time the calculations are made.
(xvi) Right to Change Plans. FECI shall not be
obligated to institute, maintain or refrain from changing, amending or
discontinuing any benefit plan, program, or perquisite referred to in Sections
2(b)(vii), 2(b)(viii) and 2(b)(xi), so long as such changes are similarly
applicable to other FECI executives.
5
<PAGE> 8
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If FECI determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of disability set forth below), it may give
to the Executive notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with FECI shall terminate
upon a date selected by FECI. and set forth in such notice (the "Disability
Effective Date"), provided that, prior to such date, the Executive shall not
have returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with FECI on a full-time basis for one hundred eighty (180)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
FECI or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. FECI may terminate the Executive's employment for
Cause. For purposes of this Agreement, "Cause" shall mean (i) a material breach
by the Executive of the Executive's obligations under this Agreement (other than
as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of FECI and which is not remedied in a reasonable period of time after
receipt of notice from FECI specifying such breach; (ii) the conviction of the
Executive for committing an act of fraud, embezzlement, theft or other act
constituting a felony or the guilty or nolo contendere plea of the Executive to
such a felony; (iii) insubordination or the willful engaging by Executive in
gross misconduct or the willful violation of an FECI policy which results in
material and demonstrable injury to FECI; or (iv) a material act of dishonesty
or breach of trust on the part of the Executive resulting or intending to result
directly or indirectly in material personal gain or enrichment at the expense of
FECI. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
FECI shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of FECI.
(c) Good Reason. The Executive may terminate his employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, in
the absence of the consent of the Executive, a reasonable determination by the
Executive that any of the following has occurred:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, or any other
action by FECI which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated
and insubstantial action not taken in bad faith and which is remedied by FECI
promptly after receipt of notice thereof given by the Executive; or
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<PAGE> 9
(ii) any failure by FECI to comply with any of the
provisions of this Agreement applicable to it, other than any isolated and
insubstantial failure not occurring in bad faith and which is remedied promptly
after notice thereof from the Executive.
(d) Termination for Other Reasons. FECI may terminate the
employment of the Executive without Cause by giving notice to the Executive,
which notice shall set forth the Date of Termination. The Executive may resign
from his employment without Good Reason hereunder by giving notice to FECI at
least thirty (30) days prior to the Date of Termination.
(e) Notice of Termination. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) in the case
of a termination under Section 3(b) or 3(c), to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated (the failure by the Executive or FECI to set forth in the Notice of
Termination any fact or circumstance shall not waive any right of the Executive
or FECI hereunder or preclude the Executive or FECI from asserting such fact or
circumstance in enforcing the Executive's or FECI's rights hereunder), and (iii)
if the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice, unless otherwise
required by Section 3(f)).
(f) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated by FECI due to the Executive's
Disability, the Date of Termination shall be the Disability Effective Date, (ii)
if the Executive's employment is terminated by reason of the Executive's death,
the Date of Termination shall be the date of death of the Executive, and (iii)
in all other cases, the date of receipt of the Notice of Termination or any
permitted later date specified therein, as the case may be.
4. Obligations of FECI upon Termination.
(a) Accelerating Event. As used in this Agreement, the term
"Accelerating Event" shall mean any of the following: (i) the Executive's
employment terminates under the circumstances described in Section 3(a), (ii)
the Executive is discharged without Cause, (iii) the Executive resigns with Good
Reason, or (iv) the accrual of Change in Control Entitlements (as defined in
Section 5(b)).
(b) Good Reason; Other than for Cause, Death or Disability.
If, during the Employment Period, FECI shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:
(i) FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days after the Date of Termination the sum of (A) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid; (B) to the extent not theretofore paid, any annual bonus
payable to the Executive for any prior completed fiscal year; (C) any
compensation previously deferred by the Executive (together with any accrued
interest or
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<PAGE> 10
earnings thereon) to the extent not theretofore paid; and (D) any accrued
vacation pay, expense reimbursement and any other entitlements accrued by the
Executive under Section 2(b), to the extent not theretofore paid (the sum of the
amount described in clauses (A), (B), (C) and (D) shall be hereinafter referred
to as the "Accrued Obligations"); and
(ii) FECI shall pay to the Executive in eighteen (18)
monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to the sum of one hundred fifty percent (150%) of
the Executive's Annual Base Salary plus fifty percent (50%) of the payment made
under Section 2(b)(ii), if any, with respect to the most recently completed
fiscal year of FECI; and
(iii) For eighteen (18) months following the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, FECI shall continue benefits to the Executive and/or the Executive's
family and dependents at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 2(b)(iii) if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs or policies of
FECI as in effect generally at any time thereafter with respect to other peer
executives of FECI and their families ("Welfare Benefit Continuation"). If the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate without further
obligation to the Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations (which shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within thirty (30)
days of the Date of Termination) and the timely payment or provision of the
Welfare Benefit Continuation.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason, this Agreement shall terminate without further
obligation to the Executive other than the obligation to pay to the Executive
the Accrued Obligations and the amount of any compensation previously deferred
by the Executive, in each case to the extent theretofore unpaid, all of which
shall be paid in cash within thirty (30) days of the Date of Termination.
(e) Disability. If the Executive's employment shall be
terminated by reason of the Executive's Disability, this Agreement shall
terminate without further obligation to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of the Welfare Benefit
Continuation. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination. The Executive shall
be entitled after the Disability Effective Date to receive disability and other
benefits as in effect at the Disability Effective Date with respect to other
peer executives of FECI and their families.
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<PAGE> 11
(f) Nondisclosure to Media. After the Date of Termination, the
Executive and FECI agree that they will not discuss the Executive's employment
and resignation or termination (including the terms of this Agreement) with any
representatives of the media, either directly or indirectly, without the consent
of the other party hereto.
5. Change in Control.
(a) Defined. For purposes of this Agreement, a "Change in
Control" of FECI shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have occurred:
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by FECI's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of FECI
as of the date hereof, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of FECI); or
FECI merges or consolidates with any other corporation, including The St. Joe
Company or any subsidiary thereof, or FECI adopts, and the stockholders approve,
if necessary, a plan of complete liquidation of FECI, or FECI sells or disposes
of substantially all of its assets.
(b) Entitlement to Benefits. The Executive shall be entitled
to certain additional benefits upon a Change in Control if:
(i) within two (2) years following a Change in
Control, FECI either (A) substantially reduces the duties or responsibilities of
the Executive from those in effect immediately prior to such occurrence or (B)
reduces the Annual Base Salary other than a reduction which is a part of an
organization-wide salary reduction plan; or
(ii) within the period which is the last ninety (90)
days of the first year after the occurrence of a Change in Control, the
Executive voluntarily resigns his employment hereunder for any reason.
The accrual of such entitlements is referred to herein as "Change in Control
Entitlement."
(c) Accelerating Event. A Change in Control Entitlement shall
be an Accelerating Event as defined in Section 4(a).
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<PAGE> 12
(d) Supplemental Payment to Executive. Upon the accrual of
Change in Control Entitlement, FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days of the date of such Change in Control, an amount
equal to two (2) times the Annual Base Salary.
6. Non-Exclusivity of Executive's Rights. Except as provided
in Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by FECI and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with FECI. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with FECI at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
7. Confidential Information.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of FECI all secret or confidential information, knowledge or data
relating to FECI or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by FECI or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with FECI, the Executive shall not,
without the prior written consent of FECI or except as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than FECI and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
(b) All records, files, memoranda, reports, price lists,
customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to the business of FECI, which
Executive shall use or prepare or otherwise have in his possession in the course
of, or as a result of, his employment hereunder shall, as between the parties
hereto, remain the sole property of FECI. Executive shall use such materials
solely for the benefit of FECI and shall not divulge any such materials other
than in furtherance of FECI's interests. Executive hereby agrees that he will
return all such materials, including copies, to FECI upon demand, or upon the
cessation of his employment.
(c) Any termination of the Executive's employment hereunder or
of this Agreement shall have no effect on the continuing operation of this
Section 7.
8. Non-Compete; Non-Solicitation.
(a) Except as is set forth below, for a period commencing on
the Effective Date hereof and ending on the first anniversary of the date the
Executive ceases to be employed by FECI (the "Non-Competition Period"), the
Executive shall not, directly or
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<PAGE> 13
indirectly, either for himself or any other person, own, manage, control,
materially participate in, invest in, permit his name to be used by, act as
consultant or advisor to, render material services for (alone or in association
with any person, firm, corporation or other business organization) or otherwise
assist in any manner any business which is a competitor of a substantial portion
of FECI's business at the date the Executive ceases to be employed by FECI
(collectively, a "Competitor"); provided, however, that the restrictions set
forth above shall immediately terminate and shall be of no further force or
effect (i) in the event of a default by FECI of the performance of any of the
obligations hereunder, which default is not cured within ten (10) days after
notice thereof, or (ii) if the Executive's employment has been terminated by
FECI other than for Cause, or (iii) if the Executive resigns for Good Reason
provided that the Executive gives written notice to FECI whenever during the
Non-Competition Period that he desires to accept employment with a Competitor;
and that the payment specified in Section 4(b)(ii) hereof shall be mitigated by
the amount of salary and pro rata target bonus payable to the Executive by the
Competitor based on the Executive's initial terms of employment and attributable
to employment during the Non-Competition Period. Nothing herein shall prohibit
the Executive from being a passive owner of not more than five percent (5%) of
the equity securities of an enterprise engaged in such business which is
publicly traded, so long as he has no active participation in the business of
such enterprise.
(b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of FECI to leave the employ of FECI, or in any way
interfere with the relationship between FECI and an employee thereof except in
the proper exercise of the Executive's authority, or (ii) in any way interfere
with the relationship between FECI and any customer, supplier, licensee or other
business relation thereof.
(c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
(d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against FECI or any of its affiliates,
whether or not predicated upon the terms of this Agreement, shall not constitute
a defense to the enforcement of these covenants.
9. Remedies for Executive's Breach. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then FECI may thereafter terminate the payment of any post-termination
benefits hereunder, and FECI will have no further obligation to Executive under
this Agreement. The parties acknowledge that any violation of Section 7 or 8 can
cause substantial and irreparable harm to FECI. Therefore, FECI shall be
entitled to pursue any and all legal and equitable remedies, including but not
limited to any injunctions.
11
<PAGE> 14
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement or any claim
that FECI has in any way violated the non-discrimination and/or other provisions
of Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination
in Employment Act of 1967, as amended; the Americans with Disabilities Act; the
Family and Medical Leave Act; the Employee Retirement Income Security Act of
1974, as amended; and, in general, any federal law or the law of the State of
Florida. Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to by the
Executive and FECI. The Federal and State courts located in the United States of
America are hereby given jurisdiction to render judgment upon, and to enforce,
each arbitration award, and the parties hereby expressly consent and submit to
the jurisdiction of such courts. Notwithstanding the foregoing, in the event
that a violation of the Agreement would cause irreparable injury, FECI and the
Executive agree that in addition to the other rights and remedies provided in
this Agreement (and without waiving their rights to have all other matters
arbitrated as provided above) the other party may immediately take judicial
action to obtain injunctive relief.
11. No Conflicting Obligations of Executive. Executive
represents and warrants that he is not subject to any duties or restrictions
under any prior agreement with any previous employer or other person, and that
he has no rights or obligations except as previously disclosed to FECI which may
conflict with the interests of FECI or with the performance of the Executive's
duties and obligations under this Agreement. Executive agrees to notify FECI
immediately if any such conflicts occur in the future.
12. Certain Obligations of FECI Regarding Stock Awards. At its
expense, and as soon as practicable hereafter, with respect to the shares of
common stock described in Section 2(b)(iii) and the shares of common stock
issuable upon exercise of the stock options described in Section 2(b)(iv) and
2(b)(v), FECI shall (i) seek the approval of its shareholders with regard to the
grant of such restricted stock and stock options, (ii) register such shares
under the Securities Act of 1933, as amended, on Form S-8, (iii) qualify such
shares for issuance under all applicable state securities laws and (iv) ensure
that such shares are listed for trading on the New York Stock Exchange.
Notwithstanding any other provision of this Agreement to the contrary, FECI
shall be under no obligation to issue any shares of common stock to the
Executive pursuant to this Agreement until, in accordance with the immediately
preceding sentence, such shares are so registered and qualified and either (x)
FECI is able to repurchase in the open market or private transactions, on a
legal, practical and prudent basis, a number of shares of common stock equal to
the number issuable to the Executive or (y) shares of common stock which are
listed for trading on the New York Stock Exchange are otherwise available for
issuance by FECI hereunder. With respect to the shares of common stock described
in Section 2(b)(iii), in the event that the issuance of any such shares to the
Executive shall be delayed by reason of the provisions of this Section, FECI
shall pay to the Executive in cash on the date of issuance of such shares in the
amount or cash-equivalent thereof that would have been paid to the Executive as
dividends or other distributions payable with respect to such shares had such
issuance not been so delayed.
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<PAGE> 15
13. Indemnity of Executive. FECI shall indemnify and defend
the Executive against all claims relating to the performance of his duties
hereunder to the fullest extent permitted by FECI's Articles of Incorporation
and Bylaws, the relevant provisions of which shall not be amended in their
application to the Executive to be any less favorable to him than as at present,
except as required by law. During the continuance of the Executive's employment
hereunder, FECI shall maintain in effect uninterrupted standard directors and
officers liability insurance coverage insuring the Executive against such
claims, with limits of coverage of not less than $10,000,000 per occurrence and
without deductibles, which insurance shall include a standard SEC coverage
endorsement.
14. Successors.
(a) This Agreement is personal to the Executive and without
the prior consent of FECI shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon FECI and its successors and assigns.
(c) FECI will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of FECI to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FECI would be required to perform it if no such succession had taken place. As
used in this Agreement, "FECI" shall mean FECI as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopier,
or by courier, addressed as follows:
If to the Executive to: If to FECI to:
---------------------- -------------
Robert F. MacSwain Florida East Coast Industries, Inc.
103 Shaw Farm Road One Malaga Street
Canton, MA 02021. St. Augustine, FL 32084
Facsimile: 781/821-4217 Attention: Corporate Secretary
Facsimile: 904/396-4042
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<PAGE> 16
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law or in
equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.
(d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(e) FECI may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) The Executive's or FECI's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or FECI may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(g) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law, except as
provided in Section 2(b)(xvi).
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, FECI has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
Company:
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------------
Chairman and Chief Executive Officer
Executive:
/s/ Robert F. MacSwain
---------------------------------------------
Robert F. MacSwain
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<PAGE> 17
BASIC STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT F. MacSWAIN
February 2, 1999
<PAGE> 18
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert F. MacSwain (the "Employee") is
made pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
thirty-seven thousand five hundred (37,500) shares of the Company's
Common Stock. The exercise price of the NSO is $27.4375 per share,
being the fair market value of the Company's Common Stock on the date
hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. One-fifth of the NSO, seven thousand
five hundred (7,500) shares, shall vest on and may be
exercised at any time on or after February 2, 2000. Another
one-fifth of the NSO, seven thousand five hundred (7,500)
shares, shall vest on and may be exercised at any time on or
after February 2, 2001. Another one-fifth of the NSO, seven
thousand five hundred (7,500) shares, shall on vest and may be
exercised at any time on or after February 2, 2002. Another
one-fifth of the NSO, seven thousand five hundred (7,500)
shares, shall vest on and may be exercised at any time on or
after
<PAGE> 19
February 2, 2003. The remaining one-fifth of the NSO, seven
thousand five hundred (7,500) shares, shall vest on and may be
exercised at any time on or after February 2, 2004. In
addition, all of the NSO shall vest on and may be exercised at
any time on or after an Accelerating Event (as defined in
Section 4(a) of the Employment Agreement). The vesting of any
portion of the NSO is conditioned on the Employee's continued
employment by the Company or a parent or subsidiary of the
Company as of the relevant vesting date.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), or (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following the accrual of Change in
Control Entitlement (as defined in Section 5(b) of the
Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation, then the person to whom the Employee's rights
under the NSO shall have passed by will or by the laws of
distribution may exercise any of the NSO within two years
after the Employee's death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales
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reported as of a particular date, fair market value will be computed as
of the last date preceding such date on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock, and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
3
<PAGE> 21
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as necessary or advisable, and (iii) receipt by the Company
of advice by counsel that all applicable legal requirements have been
complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
4
<PAGE> 22
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Robert F. MacSwain Florida East Coast Industries, Inc.
103 Shaw Farm Road One Malaga Street
Canton, MA 02021 St. Augustine, FL 32084
Facsimile: 781/821-4217 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 23
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
-----------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert F. MacSwain
- --------------------------------
ROBERT F. MacSWAIN
6
<PAGE> 24
RESTRICTED STOCK AGREEMENT
(Long Term Incentive)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT F. MacSWAIN
February 2, 1999
<PAGE> 25
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert F. MacSwain (the "Employee") is
made pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, seven
thousand five hundred (7,500) shares of the Company's Common Stock (the
"Restricted Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
Anniversary Unrestricted
Date Percentage
--------------- ---------------
First 20%
Second 40%
Third 60%
Fourth 80%
<PAGE> 26
Anniversary Unrestricted
Date Percentage
--------------- ---------------
Fifth 100%
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or by the Employee without Good Reason (as defined in
Section 3(c) of the Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a
2
<PAGE> 27
particular date, fair market value will be computed as of the last date
preceding such date on which a sale was reported.
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
3
<PAGE> 28
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Robert F. MacSwain Florida East Coast Industries, Inc.
103 Shaw Farm Road One Malaga Street
Canton, MA 02021 St. Augustine, FL 32084
Facsimile: 781/821-4217 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert
4
<PAGE> 29
any right the Employee or the Company may have hereunder, shall not be
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert F. MacSwain
- --------------------------------
ROBERT F. MacSWAIN
5
<PAGE> 30
SUPPLEMENTAL STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT F. MacSWAIN
February 2, 1999
<PAGE> 31
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert F. MacSwain (the "Employee") is
made pursuant to the provisions of Section 2(b)(vi) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
thirty-seven thousand five hundred (37,500) shares of the Company's
Common Stock. The exercise price of the NSO is $27.4375 per share,
being the fair market value of the Company's Common Stock on the date
hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. The NSO shall vest and become
exercisable immediately upon the earlier of (i) the first date
as of which the average closing price of a share of the
Company's Common Stock over twenty (20) consecutive trading
days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as defined in Section
4(a) of the Employment Agreement); or (iii) February 2, 2004.
<PAGE> 32
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following accrual of Change in Control
Entitlement (as defined in Section 5(b) of the Employment
Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation and at a time when any portion of the NSO is
vested and exercisable, then the person to whom the Employee's
rights under the NSO shall have passed by will or by the laws
of distribution may exercise any of the vested and exercisable
portion of the NSO within two years after the Employee's
death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
2
<PAGE> 33
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as
3
<PAGE> 34
necessary or advisable, and (iii) receipt by the Company of advice by
counsel that all applicable legal requirements have been complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail,
4
<PAGE> 35
return receipt requested, postage prepaid, or by telecopier, or by
courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Robert F. MacSwain Florida East Coast Industries, Inc.
103 Shaw Farm Road One Malaga Street
Canton, MA 02021 St. Augustine, FL 32084
Facsimile: 781/821-4217 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 36
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
-----------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert F. MacSwain
- --------------------------------
ROBERT F. MacSWAIN
6
<PAGE> 1
EXHIBIT 10.c
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
between
HEIDI J. EDDINS
and
FLORIDA EAST COAST INDUSTRIES, INC.
- --------------------------------------------------------------------------------
February 2, 1999
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Employment Period.................................................... 1
2. Terms of Employment.................................................. 1
(a) Position and Duties......................................... 1
(b) Compensation................................................ 2
3. Termination of Employment............................................ 6
(a) Death or Disability......................................... 6
(b) Cause....................................................... 6
(c) Good Reason................................................. 6
(d) Termination for Other Reasons............................... 7
(e) Notice of Termination....................................... 7
(f) Date of Termination......................................... 7
4. Obligations of FECI upon Termination................................. 7
(a) Accelerating Event.......................................... 7
(b) Good Reason; Other than for Cause, Death or Disability...... 7
(c) Death....................................................... 8
(d) Cause; Other Than for Good Reason........................... 8
(e) Disability.................................................. 8
(f) Nondisclosure to Media...................................... 9
5. Change in Control.................................................... 9
(a) Defined..................................................... 9
(b) Entitlement to Benefits..................................... 9
(c) Accelerating Event.......................................... 10
(d) Supplemental Payment to Executive........................... 10
6. Non-Exclusivity of Executive's Rights................................ 10
7. Confidential Information............................................. 10
8. Non-Compete; Non-Solicitation........................................ 11
9. Remedies for Executive's Breach...................................... 11
10. Dispute Resolution................................................... 12
11. No Conflicting Obligations of Executive.............................. 12
12. Certain Obligations of FECI Regarding Stock Awards................... 12
13. Indemnity of Executive............................................... 13
14. Successors........................................................... 13
15. Miscellaneous........................................................ 13
<PAGE> 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
February 2, 1999, between HEIDI J. EDDINS, an individual (the "Executive"), and
FLORIDA EAST COAST INDUSTRIES, INC. ("FECI"), a Florida corporation, recites and
provides as follows:
WHEREAS, the Board of Directors of FECI (the "Board") desires
that FECI retain the services of the Executive, and the Executive desires to be
employed with FECI, all on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, FECI and the Executive agree as follows:
1. Employment Period. FECI hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by FECI, in
accordance with the terms and provisions of this Agreement, for the period
commencing on or about March 1, 1999 (but in any event not later than March 15,
1999) (the "Effective Date") and continuing until terminated by either party
hereto (the "Employment Period").
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall
serve as Senior Vice President - General Counsel and Secretary of FECI and shall
have such authority and perform such executive duties as are commensurate with
such positions and as are otherwise assigned by the Board.
(ii) The Executive's services shall be performed at
FECI's headquarters in St. Augustine, Florida and other facilities of FECI and
its subsidiaries.
(iii) During the Employment Period, and excluding any
periods of vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of FECI and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Chief Executive Officer of FECI in
each instance, which approval shall not be unreasonably withheld, (B) deliver
lectures or fulfill speaking engagements and (C) manage personal investments, so
long as such activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of FECI in accordance with this
Agreement.
<PAGE> 4
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive a base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis, at the annual rate of not
less than One Hundred Eighty Thousand Dollars ($180,000) per year. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually by
the Compensation Committee of the Board (the "Compensation Committee"). Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced and the term "Annual Base Salary" as used in this Agreement shall
mean the Annual Base Salary as so increased.
(ii) Short-Term Incentive Bonus. In addition to
Annual Base Salary, during the Employment Period the Executive shall participate
in an annual incentive bonus plan. Such plan shall provide the Executive with
the opportunity to earn a bonus based on achievement of performance criteria.
The incentive bonus plan shall be structured such that the Executive shall
receive up to fifty percent (50%) of Annual Base Salary for attainment of
certain target performance goals (prorated for any partial year of employment),
with a maximum bonus of one hundred percent (100%) of Annual Base Salary for
extraordinary performance (prorated for any partial year of employment). The
Compensation Committee will establish the performance criteria and goals in
consultation with the Executive. The bonus payable pursuant to this Section
2(b)(iii) for any fiscal year shall be paid to the Executive no later than the
thirtieth (30th) day following the issuance of the audited financial statements
of FECI for such year. Notwithstanding the foregoing, the annual incentive bonus
with respect to 1999 shall be not less than Fifty Thousand Dollars ($50,000),
which minimum amount shall be paid to the Executive within five (5) days
following the Effective Date.
(iii) Long-Term Incentives: Restricted Stock. The
Executive shall receive a grant of restricted stock for five thousand (5,000)
shares of FECI common stock issued under the FECI 1998 Stock Incentive Plan.
Such shares shall be subject to restrictions which shall provide that the
Executive shall not transfer such shares during the restriction period and shall
forfeit such shares if during the restriction period she is discharged by FECI
for Cause (as hereinafter defined in Section 3(b)) or resigns from employment
with FECI without Good Reason (as hereinafter defined in Section 3(c)). The
restriction period shall lapse with respect to such shares in equal annual
installments on the first through fifth anniversaries of the Effective Date.
Notwithstanding the foregoing, the restriction period shall lapse immediately as
to all such shares in the event that an Accelerating Event (as hereinafter
defined in Section 4(a)) occurs. The Executive shall be entitled to receive any
dividends or other distributions payable with respect to such shares of
restricted stock beginning on the date of award of such shares. Such stock award
shall be evidenced by a written restricted stock award agreement between FECI
and the Executive, the terms of which shall be agreed to by the parties in good
faith as soon as practical.
(iv) Long-Term Incentives: Basic Stock Options. The
Executive shall receive a grant of non-statutory stock options on twenty-five
thousand (25,000) shares of FECI common stock issued under the FECI 1998 Stock
Incentive Plan. The options shall have a term of ten (10) years (subject to
earlier expiration as hereinafter provided), shall
2
<PAGE> 5
have an exercise price equal to one hundred percent (100%) of the fair market
value, as of the close of trading on the date of this Agreement (being
$27.4375), of the shares of common stock subject to such stock options, and
shall vest and become exercisable in five (5) equal annual installments on the
first through the fifth anniversaries of the Effective Date; provided, however,
that such stock options shall vest immediately and become exercisable in their
entirety in the event that an Accelerating Event (as hereinafter defined in
Section 4(a)) occurs. To the extent not previously exercised, all such stock
options shall expire immediately following the Date of Termination (as
hereinafter defined in Section 3(f)); provided, however, that the Executive, or
her heirs or legal representatives in the event of the Executive's death, may
exercise all or any part of such stock options as were exercisable as of the
close of business on the Date of Termination for a period of two (2) years
following such Date of Termination in the event (i) an Accelerating Event (as
hereinafter defined in Section 4(a)) occurs; or (ii) the Executive retires at
normal retirement age under any retirement plan of FECI. Such stock options
shall include a provision for adjustment in the option price to reflect any
extraordinary distribution made with respect to the common stock during the term
of the options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff, a
combination or exchange of shares or other transaction having a similar
substantive effect, the number shares of stock subject to the stock options and
the option price shall be equitably adjusted. Such stock options shall be
evidenced by a written stock option award agreement between FECI and the
Executive, the terms of which shall be agreed to by the parties in good faith as
soon as practical.
(v) Long Term Incentives: Supplemental Stock Options.
The Executive shall receive a grant of non-statutory stock options on
twenty-five thousand (25,000) shares of FECI common stock issued under the FECI
1998 Stock Incentive Plan. The options shall have a term of ten (10) years
(subject to earlier expiration as hereinafter provided), shall have an exercise
price equal to one hundred percent (100%) of the fair market value, as of the
close of trading on the date of this Agreement (being $27.4375), of the shares
of common stock subject to such stock options, and shall vest and become
exercisable immediately upon the earlier of (i) the first date as of which the
average closing price of a share of FECI common stock over twenty (20)
consecutive trading days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(iii) the fifth anniversary of the Effective Date. To the extent not previously
exercised, all such stock options shall expire immediately following the Date of
Termination (as hereinafter defined in Section 3(f)); provided, however, that
the Executive, or her heirs or legal representatives in the event of the
Executive's death, may exercise all or any part of such stock option as was
exercisable as of the close of business on the Date of Termination for a period
of two (2) years following such Date of Termination in the event (i) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(ii) the Executive retires at normal retirement age under any retirement plan of
FECI. Such stock options shall include a provision for adjustment in the option
price to reflect any extraordinary distribution made with respect to the common
stock during the term of the options. In the event of a capital adjustment
resulting from a stock dividend, stock split, reorganization, merger,
consolidation, spinoff, a combination or exchange of shares or other transaction
having a similar substantive effect, the number shares of stock subject to the
stock options and the option price shall be equitably adjusted. Such stock
option shall be evidenced by
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a written stock option award agreement between FECI and the Executive, the terms
of which shall be agreed to by the parties in good faith as soon as practical.
(vi) Long-Term Incentives: Subsequent Option Grants.
During the Employment Period, the Executive shall be entitled to participate in
long-term equity incentive plans and programs applicable generally to other peer
executives of FECI. Such participation shall commence with respect to FECI's
1999 fiscal year. Such plans and programs shall be structured such that the
Executive shall receive option grants with targeted annual grant value (using
valuation methods consistent with those used by FECI for financial reporting
purposes) between seventy-five (75%) and one hundred percent (100%) of Annual
Base Salary for attainment of certain target performance goals (prorated for any
partial year of employment). The Compensation Committee will establish the
performance criteria and goals in consultation with the Executive.
(vii) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all savings
and retirement plans, practices, policies and programs applicable generally to
other peer executive of FECI.
(viii) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family and dependents, as the case
may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by
FECI (including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of FECI.
(ix) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
employment-related expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of FECI as in effect generally
from time to time after the Effective Date with respect to other peer executives
of FECI.
(x) Relocation Expense. FECI shall make the Executive
whole by reimbursing her for all reasonable costs associated with her relocation
from Danielson, Connecticut, to the St. Augustine, Florida, area, whether
incurred before or after the Effective Date, but only to the extent that such
costs are incurred prior to the first anniversary of the Effective Date. Such
costs shall include, without limitation, closing costs associated with the sale
of the Executive's Danielson residence and closing costs associated with the
Executive's purchase and financing of a new primary residence in the St.
Augustine area. For purposes of this Section, "closing costs" shall mean loan
origination fees, appraisal fees, credit report fees, assumption fees,
settlement or closing fees, title examination fees, title insurance binder,
document preparation fees, notary fees, attorneys' fees, real estate brokers'
commissions, title insurance fees, recording fees, tax stamps, transfer taxes,
survey fees and costs of pest, radon and home inspections. FECI shall also
arrange for and pay for the move of the Executive's household goods and personal
effects (including packing and unpacking charges) from her Danielson residence
to her new primary residence in Florida. FECI shall pay for the Executive's
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reasonable temporary living costs in the St. Augustine area for up to three (3)
months (or such later time as may be requested by the Executive and approved by
the Chief Executive Officer of FECI, which approval shall not be unreasonably
withheld) until Executive is moved into her new residence in Florida. FECI will
pay the costs associated with a reasonable number of trips to St. Augustine for
the Executive and her spouse to look for a new residence. In addition, in the
event that the Executive's Danielson residence is placed on the market for sale
at a reasonable price and is not sold within ninety (90) days after being placed
on the market, at the Executive's request FECI shall provide the Executive with
an interest-free bridge loan for a term of up to twelve (12) months for an
amount up to the asking price of the Danielson residence, which loan shall be
repayable upon the earlier of five (5) days following the closing of the sale of
the Danielson residence or the first anniversary of the making of such loan. In
addition, FECI shall pay the Executive an amount determined by its accountants
equal to the Executive's federal, state and local taxes on the foregoing
reimbursement and imputed interest under the aforesaid loan (the "Tax Gross-up")
and the federal, state and local taxes on the Tax Gross-up, all to the end that
the Executive be held harmless, on an after-tax basis, from the tax impact
thereof.]
(xi) Fringe Benefits. During the Employment Period,
the Executive and/or the Executive's family and dependents shall be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of FECI as in effect generally from time to time after the
Effective Date with respect to other peer executives of FECI.
(xii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office and support staff at least
equal to the most favorable of the foregoing provided generally from time to
time after the Effective Date with respect to other peer executives of FECI.
(xiii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of FECI as in effect generally
from time to time after the Effective Date with respect to other peer executives
of FECI.
(xiv) Car Allowance. During the Employment Period,
the Executive shall be entitled to a car allowance in accordance with FECI's car
allowance policy, in lieu of expenses associated with the operation of her
automobile.
(xv) Golden Parachute Excise Tax. If FECI determines
that any amounts payable under this Agreement are subject to the excise tax
imposed under Code Section 4999 on "excess parachute payments," FECI will
compute the excise tax imposed under Code Section 4999 and shall pay that amount
to the Executive, including any federal, state, local and excise taxes imposed
on the foregoing payment under this Section 2(b)(xv). The determination will be
made before the taxes are due and payable by the Executive, to the extent
possible. The calculations under this Section will be made in a manner
consistent with the requirements of Code Sections 280G and 4999, as in effect at
the time the calculations are made.
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(xvi) Right to Change Plans. FECI shall not be
obligated to institute, maintain or refrain from changing, amending or
discontinuing any benefit plan, program, or perquisite referred to in Sections
2(b)(vii), 2(b)(viii) and 2(b)(xi), so long as such changes are similarly
applicable to other FECI executives.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If FECI determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of disability set forth below), it may give
to the Executive notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with FECI shall terminate
upon a date selected by FECI. and set forth in such notice (the "Disability
Effective Date"), provided that, prior to such date, the Executive shall not
have returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with FECI on a full-time basis for one hundred eighty (180)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
FECI or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. FECI may terminate the Executive's employment for
Cause. For purposes of this Agreement, "Cause" shall mean (i) a material breach
by the Executive of the Executive's obligations under this Agreement (other than
as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of FECI and which is not remedied in a reasonable period of time after
receipt of notice from FECI specifying such breach; (ii) the conviction of the
Executive for committing an act of fraud, embezzlement, theft or other act
constituting a felony or the guilty or nolo contendere plea of the Executive to
such a felony; (iii) insubordination or the willful engaging by Executive in
gross misconduct or the willful violation of an FECI policy which results in
material and demonstrable injury to FECI; or (iv) a material act of dishonesty
or breach of trust on the part of the Executive resulting or intending to result
directly or indirectly in material personal gain or enrichment at the expense of
FECI. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
FECI shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of FECI.
(c) Good Reason. The Executive may terminate her employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, in
the absence of the consent of the Executive, a reasonable determination by the
Executive that any of the following has occurred:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, or any other
action by FECI which results in a material diminution in such
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position, authority, duties or responsibilities, excluding for this purpose an
isolated and insubstantial action not taken in bad faith and which is remedied
by FECI promptly after receipt of notice thereof given by the Executive; or
(ii) any failure by FECI to comply with any of the
provisions of this Agreement applicable to it, other than any isolated and
insubstantial failure not occurring in bad faith and which is remedied promptly
after notice thereof from the Executive.
(d) Termination for Other Reasons. FECI may terminate the
employment of the Executive without Cause by giving notice to the Executive,
which notice shall set forth the Date of Termination. The Executive may resign
from her employment without Good Reason hereunder by giving notice to FECI at
least thirty (30) days prior to the Date of Termination.
(e) Notice of Termination. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) in the case
of a termination under Section 3(b) or 3(c), to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated (the failure by the Executive or FECI to set forth in the Notice of
Termination any fact or circumstance shall not waive any right of the Executive
or FECI hereunder or preclude the Executive or FECI from asserting such fact or
circumstance in enforcing the Executive's or FECI's rights hereunder), and (iii)
if the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice, unless otherwise
required by Section 3(f)).
(f) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated by FECI due to the Executive's
Disability, the Date of Termination shall be the Disability Effective Date, (ii)
if the Executive's employment is terminated by reason of the Executive's death,
the Date of Termination shall be the date of death of the Executive, and (iii)
in all other cases, the date of receipt of the Notice of Termination or any
permitted later date specified therein, as the case may be.
4. Obligations of FECI upon Termination.
(a) Accelerating Event. As used in this Agreement, the term
"Accelerating Event" shall mean any of the following: (i) the Executive's
employment terminates under the circumstances described in Section 3(a), (ii)
the Executive is discharged without Cause, (iii) the Executive resigns with Good
Reason, or (iv) the accrual of Change in Control Entitlements (as defined in
Section 5(b)).
(b) Good Reason; Other than for Cause, Death or Disability.
If, during the Employment Period, FECI shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:
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(i) FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days after the Date of Termination the sum of (A) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid; (B) to the extent not theretofore paid, any annual bonus
payable to the Executive for any prior completed fiscal year; (C) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) to the extent not theretofore paid; and (D) any
accrued vacation pay, expense reimbursement and any other entitlements accrued
by the Executive under Section 2(b), to the extent not theretofore paid (the sum
of the amount described in clauses (A), (B), (C) and (D) shall be hereinafter
referred to as the "Accrued Obligations"); and
(ii) FECI shall pay to the Executive in eighteen (18)
monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to the sum of one hundred fifty percent (150%) of
the Executive's Annual Base Salary plus fifty percent (50%) of the payment made
under Section 2(b)(ii), if any, with respect to the most recently completed
fiscal year of FECI; and
(iii) For eighteen (18) months following the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, FECI shall continue benefits to the Executive and/or the Executive's
family and dependents at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 2(b)(viii) if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs or policies of
FECI as in effect generally at any time thereafter with respect to other peer
executives of FECI and their families ("Welfare Benefit Continuation"). If the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate without further
obligation to the Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations (which shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within thirty (30)
days of the Date of Termination) and the timely payment or provision of the
Welfare Benefit Continuation.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates her
employment without Good Reason, this Agreement shall terminate without further
obligation to the Executive other than the obligation to pay to the Executive
the Accrued Obligations and the amount of any compensation previously deferred
by the Executive, in each case to the extent theretofore unpaid, all of which
shall be paid in cash within thirty (30) days of the Date of Termination.
(e) Disability. If the Executive's employment shall be
terminated by reason of the Executive's Disability, this Agreement shall
terminate without further obligation to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of the Welfare Benefit
Continuation. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination. The
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Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits as in effect at the Disability Effective Date with
respect to other peer executives of FECI and their families.
(f) Nondisclosure to Media. After the Date of Termination, the
Executive and FECI agree that they will not discuss the Executive's employment
and resignation or termination (including the terms of this Agreement) with any
representatives of the media, either directly or indirectly, without the consent
of the other party hereto.
5. Change in Control.
(a) Defined. For purposes of this Agreement, a "Change in
Control" of FECI shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have occurred:
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by FECI's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of FECI
as of the date hereof, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of FECI); or
FECI merges or consolidates with any other corporation, including The St. Joe
Company or any subsidiary thereof, or FECI adopts, and the stockholders approve,
if necessary, a plan of complete liquidation of FECI, or FECI sells or disposes
of substantially all of its assets.
(b) Entitlement to Benefits. The Executive shall be entitled
to certain additional benefits upon a Change in Control if:
(i) within two (2) years following a Change in
Control, FECI either (A) substantially reduces the duties or responsibilities of
the Executive from those in effect immediately prior to such occurrence or (B)
reduces the Annual Base Salary other than a reduction which is a part of an
organization-wide salary reduction plan; or
(ii) within the period which is the last ninety (90)
days of the first year after the occurrence of a Change in Control, the
Executive voluntarily resigns her employment hereunder for any reason.
The accrual of such entitlements is referred to herein as "Change in Control
Entitlement."
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(c) Accelerating Event. A Change in Control Entitlement shall
be an Accelerating Event as defined in Section 4(a).
(d) Supplemental Payment to Executive. Upon the accrual of
Change in Control Entitlement, FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days of the date of such Change in Control, an amount
equal to two (2) times the Annual Base Salary.
6. Non-Exclusivity of Executive's Rights. Except as
provided in Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by FECI and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with FECI. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with FECI
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
7. Confidential Information.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of FECI all secret or confidential information, knowledge or data
relating to FECI or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by FECI or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with FECI, the Executive shall not,
without the prior written consent of FECI or except as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than FECI and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
(b) All records, files, memoranda, reports, price lists,
customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to the business of FECI, which
Executive shall use or prepare or otherwise have in her possession in the course
of, or as a result of, her employment hereunder shall, as between the parties
hereto, remain the sole property of FECI. Executive shall use such materials
solely for the benefit of FECI and shall not divulge any such materials other
than in furtherance of FECI's interests. Executive hereby agrees that she will
return all such materials, including copies, to FECI upon demand, or upon the
cessation of her employment.
(c) Any termination of the Executive's employment hereunder or
of this Agreement shall have no effect on the continuing operation of this
Section 7.
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8. Non-Compete; Non-Solicitation.
(a) Except as is set forth below, for a period commencing on
the Effective Date hereof and ending on the first anniversary of the date the
Executive ceases to be employed by FECI (the "Non-Competition Period"), the
Executive shall not, directly or indirectly, either for herself or any other
person, own, manage, control, materially participate in, invest in, permit her
name to be used by, act as consultant or advisor to, render material services
for (alone or in association with any person, firm, corporation or other
business organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of FECI's business at the date the Executive
ceases to be employed by FECI (collectively, a "Competitor"); provided, however,
that the restrictions set forth above shall immediately terminate and shall be
of no further force or effect (i) in the event of a default by FECI of the
performance of any of the obligations hereunder, which default is not cured
within ten (10) days after notice thereof, or (ii) if the Executive's employment
has been terminated by FECI other than for Cause, or (iii) if the Executive
resigns for Good Reason provided that the Executive gives written notice to FECI
whenever during the Non-Competition Period that she desires to accept employment
with a Competitor; and that the payment specified in Section 4(b)(ii) hereof
shall be mitigated by the amount of salary and pro rata target bonus payable to
the Executive by the Competitor based on the Executive's initial terms of
employment and attributable to employment during the Non-Competition Period.
Nothing herein shall prohibit the Executive from being a passive owner of not
more than five percent (5%) of the equity securities of an enterprise engaged in
such business which is publicly traded, so long as she has no active
participation in the business of such enterprise.
(b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of FECI to leave the employ of FECI, or in any way
interfere with the relationship between FECI and an employee thereof except in
the proper exercise of the Executive's authority, or (ii) in any way interfere
with the relationship between FECI and any customer, supplier, licensee or other
business relation thereof.
(c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
(d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against FECI or any of its affiliates,
whether or not predicated upon the terms of this Agreement, shall not constitute
a defense to the enforcement of these covenants.
9. Remedies for Executive's Breach. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then FECI may thereafter terminate the payment of any post-termination
benefits hereunder, and FECI will have no further obligation to
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Executive under this Agreement. The parties acknowledge that any violation of
Section 7 or 8 can cause substantial and irreparable harm to FECI. Therefore,
FECI shall be entitled to pursue any and all legal and equitable remedies,
including but not limited to any injunctions.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement or any claim
that FECI has in any way violated the non-discrimination and/or other provisions
of Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination
in Employment Act of 1967, as amended; the Americans with Disabilities Act; the
Family and Medical Leave Act; the Employee Retirement Income Security Act of
1974, as amended; and, in general, any federal law or the law of the State of
Florida. Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to by the
Executive and FECI. The Federal and State courts located in the United States of
America are hereby given jurisdiction to render judgment upon, and to enforce,
each arbitration award, and the parties hereby expressly consent and submit to
the jurisdiction of such courts. Notwithstanding the foregoing, in the event
that a violation of the Agreement would cause irreparable injury, FECI and the
Executive agree that in addition to the other rights and remedies provided in
this Agreement (and without waiving their rights to have all other matters
arbitrated as provided above) the other party may immediately take judicial
action to obtain injunctive relief.
11. No Conflicting Obligations of Executive. Executive
represents and warrants that she is not subject to any duties or restrictions
under any prior agreement with any previous employer or other person, and that
she has no rights or obligations except as previously disclosed to FECI which
may conflict with the interests of FECI or with the performance of the
Executive's duties and obligations under this Agreement. Executive agrees to
notify FECI immediately if any such conflicts occur in the future.
12. Certain Obligations of FECI Regarding Stock Awards. At its
expense, and as soon as practicable hereafter, with respect to the shares of
common stock described in Section 2(b)(iii) and the shares of common stock
issuable upon exercise of the stock options described in Section 2(b)(iv) and
2(b)(v), FECI shall (i) seek the approval of its shareholders with regard to the
grant of such restricted stock and stock options, (ii) register such shares
under the Securities Act of 1933, as amended, on Form S-8, (iii) qualify such
shares for issuance under all applicable state securities laws and (iv) ensure
that such shares are listed for trading on the New York Stock Exchange.
Notwithstanding any other provision of this Agreement to the contrary, FECI
shall be under no obligation to issue any shares of common stock to the
Executive pursuant to this Agreement until, in accordance with the immediately
preceding sentence, such shares are so registered and qualified and either (x)
FECI is able to repurchase in the open market or private transactions, on a
legal, practical and prudent basis, a number of shares of common stock equal to
the number issuable to the Executive or (y) shares of common stock which are
listed for trading on the New York Stock Exchange are otherwise available for
issuance by FECI hereunder. With respect to the shares of common stock described
in Section 2(b)(iii), in the event that the issuance of any such shares to the
Executive shall be delayed by reason of the provisions of this Section, FECI
shall pay to the Executive in cash on
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the date of issuance of such shares in the amount or cash-equivalent thereof
that would have been paid to the Executive as dividends or other distributions
payable with respect to such shares had such issuance not been so delayed.
13. Indemnity of Executive. FECI shall indemnify and defend
the Executive against all claims relating to the performance of her duties
hereunder to the fullest extent permitted by FECI's Articles of Incorporation
and Bylaws, the relevant provisions of which shall not be amended in their
application to the Executive to be any less favorable to her than as at present,
except as required by law. During the continuance of the Executive's employment
hereunder, FECI shall maintain in effect uninterrupted standard directors and
officers liability insurance coverage insuring the Executive against such
claims, with limits of coverage of not less than $10,000,000 per occurrence and
without deductibles, which insurance shall include a standard SEC coverage
endorsement.
14. Successors.
(a) This Agreement is personal to the Executive and without
the prior consent of FECI shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon FECI and its successors and assigns.
(c) FECI will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of FECI to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FECI would be required to perform it if no such succession had taken place. As
used in this Agreement, "FECI" shall mean FECI as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
13
<PAGE> 16
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopier,
or by courier, addressed as follows:
If to the Executive to: If to FECI to:
---------------------- -------------
Heidi J. Eddins Florida East Coast Industries, Inc.
75 Sunset Drive One Malaga Street
Danielson, CT 06239 St. Augustine, FL 32084
Facsimile: Attention: Corporate Secretary
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law or in
equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.
(d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(e) FECI may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) The Executive's or FECI's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or FECI may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(g) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law, except as
provided in Section 2(b)(xvi).
14
<PAGE> 17
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, FECI has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
Company:
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------------
Chairman and Chief Executive Officer
Executive:
/s/ Heidi J. Eddins
------------------------------------------
Heidi J. Eddins
15
<PAGE> 18
RESTRICTED STOCK AGREEMENT
(Long Term Incentive)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
HEIDI J. EDDINS
February 2, 1999
<PAGE> 19
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Heidi J. Eddins (the "Employee") is made
pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, five
thousand (5,000) shares of the Company's Common Stock (the "Restricted
Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
Anniversary Unrestricted
Date Percentage
--------------- ---------------
First 20%
Second 40%
Third 60%
Fourth 80%
<PAGE> 20
Anniversary Unrestricted
Date Percentage
--------------- ---------------
Fifth 100%
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and her successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or by the Employee without Good Reason (as defined in
Section 3(c) of the Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy her tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a
2
<PAGE> 21
particular date, fair market value will be computed as of the last date
preceding such date on which a sale was reported.
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
3
<PAGE> 22
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Heidi J. Eddins Florida East Coast Industries, Inc.
75 Sunset Drive One Malaga Street
Danielson, CT 06239 St. Augustine, FL 32084
Facsimile: Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert
4
<PAGE> 23
any right the Employee or the Company may have hereunder, shall not be
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Heidi J. Eddins
- --------------------------------
HEIDI J. EDDINS
5
<PAGE> 24
BASIC STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
HEIDI J. EDDINS
February 2, 1999
<PAGE> 25
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Heidi J. Eddins (the "Employee") is made
pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
twenty-five thousand (25,000) shares of the Company's Common Stock. The
exercise price of the NSO is $27.4375 per share, being the fair market
value of the Company's Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. One-fifth of the NSO, five thousand
(5,000) shares, shall vest on and may be exercised at any time
on or after February 2, 2000. Another one-fifth of the NSO,
five thousand (5,000) shares, shall vest on and may be
exercised at any time on or after February 2, 2001. Another
one-fifth of the NSO, five thousand (5,000) shares, shall on
vest and may be exercised at any time on or after February 2,
2002. Another one-fifth of the NSO, five thousand (5,000)
shares, shall
<PAGE> 26
vest on and may be exercised at any time on or after February
2, 2003. The remaining one-fifth of the NSO, five thousand
(5,000) shares, shall vest on and may be exercised at any time
on or after February 2, 2004. In addition, all of the NSO
shall vest on and may be exercised at any time on or after an
Accelerating Event (as defined in Section 4(a) of the
Employment Agreement). The vesting of any portion of the NSO
is conditioned on the Employee's continued employment by the
Company or a parent or subsidiary of the Company as of the
relevant vesting date.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), or (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following the accrual of Change in
Control Entitlement (as defined in Section 5(b) of the
Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation, then the person to whom the Employee's rights
under the NSO shall have passed by will or by the laws of
distribution may exercise any of the NSO within two years
after the Employee's death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
2
<PAGE> 27
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock, and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy her tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock
3
<PAGE> 28
may then be listed, (ii) completion of any registration or other
qualification of such shares under any state or federal law regulation
that the Company's counsel shall determine as necessary or advisable,
and (iii) receipt by the Company of advice by counsel that all
applicable legal requirements have been complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
4
<PAGE> 29
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Heidi J. Eddins Florida East Coast Industries, Inc.
75 Sunset Drive One Malaga Street
Danielson, CT 06239 St. Augustine, FL 32084
Facsimile: Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 30
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Heidi J. Eddins
- --------------------------------
HEIDI J. EDDINS
6
<PAGE> 31
SUPPLEMENTAL STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
HEIDI J. EDDINS
February 2, 1999
<PAGE> 32
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Heidi J. Eddins (the "Employee") is made
pursuant to the provisions of Section 2(b)(vi) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
twenty-five thousand (25,000) shares of the Company's Common Stock. The
exercise price of the NSO is $27.4375 per share, being the fair market
value of the Company's Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. The NSO shall vest and become
exercisable immediately upon the earlier of (i) the first date
as of which the average closing price of a share of the
Company's Common Stock over twenty (20) consecutive trading
days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as defined in Section
4(a) of the Employment Agreement); or (iii) February 2, 2004.
<PAGE> 33
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following accrual of Change in Control
Entitlement (as defined in Section 5(b) of the Employment
Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation and at a time when any portion of the NSO is
vested and exercisable, then the person to whom the Employee's
rights under the NSO shall have passed by will or by the laws
of distribution may exercise any of the vested and exercisable
portion of the NSO within two years after the Employee's
death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
2
<PAGE> 34
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy her tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as
3
<PAGE> 35
necessary or advisable, and (iii) receipt by the Company of advice by
counsel that all applicable legal requirements have been complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail,
4
<PAGE> 36
return receipt requested, postage prepaid, or by telecopier, or by
courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
Heidi J. Eddins Florida East Coast Industries, Inc.
75 Sunset Drive One Malaga Street
Danielson, CT 06239 St. Augustine, FL 32084
Facsimile: Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 37
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Heidi J. Eddins
- --------------------------------
HEIDI J. EDDINS
6
<PAGE> 1
EXHIBIT 10.d
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
between
JOHN D. McPHERSON
and
FLORIDA EAST COAST INDUSTRIES, INC.
- --------------------------------------------------------------------------------
February 2, 1999
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Employment Period................................................... 1
2. Terms of Employment................................................. 1
(a) Position and Duties........................................ 1
(b) Compensation............................................... 2
3. Termination of Employment........................................... 6
(a) Death or Disability........................................ 6
(b) Cause...................................................... 6
(c) Good Reason................................................ 7
(d) Termination for Other Reasons.............................. 7
(e) Notice of Termination...................................... 7
(f) Date of Termination........................................ 7
4. Obligations of FECI upon Termination................................ 7
(a) Accelerating Event......................................... 7
(b) Good Reason; Other than for Cause, Death or Disability..... 8
(c) Death...................................................... 8
(d) Cause; Other Than for Good Reason.......................... 8
(e) Disability................................................. 9
(f) Nondisclosure to Media..................................... 9
5. Change in Control................................................... 9
(a) Defined.................................................... 9
(b) Entitlement to Benefits.................................... 9
(c) Accelerating Event......................................... 10
(d) Supplemental Payment to Executive.......................... 10
6. Non-Exclusivity of Executive's Rights............................... 10
7. Confidential Information............................................ 10
8. Non-Compete; Non-Solicitation....................................... 11
9. Remedies for Executive's Breach..................................... 12
10. Dispute Resolution.................................................. 12
11. No Conflicting Obligations of Executive............................. 12
12. Certain Obligations of FECI Regarding Stock Awards.................. 12
13. Indemnity of Executive.............................................. 13
14. Successors.......................................................... 13
15. Miscellaneous....................................................... 13
<PAGE> 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
February 2, 1999, between JOHN D. McPHERSON, an individual (the "Executive"),
and FLORIDA EAST COAST INDUSTRIES, INC. ("FECI"), a Florida corporation, recites
and provides as follows:
WHEREAS, the Board of Directors of FECI (the "Board") desires
that FECI retain the services of the Executive, and the Executive desires to be
employed with FECI, all on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, FECI and the Executive agree as follows:
1. Employment Period. FECI hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by FECI, in
accordance with the terms and provisions of this Agreement, for the period
commencing on receipt by Canadian National of approval of the Surface
Transportation Board to exercise control of Illinois Central (but in any event
no later than July 31, 1999) (the "Effective Date") and continuing until
terminated by either party hereto (the "Employment Period").
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall
serve as Executive Vice President - Rail Operations of FECI and as Chief
Operating Officer of Florida East Coast Railway Company, a wholly owned
subsidiary of FECI, (the "Florida East Coast") and shall have such authority and
perform such executive duties as are commensurate with such positions and as are
otherwise assigned by the Board.
(ii) The Executive's services shall be performed at
FECI's headquarters in St. Augustine, Florida and other facilities of FECI and
its subsidiaries.
(iii) During the Employment Period, and excluding any
periods of vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of FECI and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Chief Executive Officer of FECI in
each instance, which approval shall not be unreasonably withheld, (B) deliver
lectures or fulfill speaking engagements and (C) manage personal investments, so
long as such activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of FECI in accordance with this
Agreement.
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(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive a base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis, at the annual rate of not
less than Two Hundred Fifty Thousand Dollars ($250,000) per year. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually by
the Compensation Committee of the Board (the "Compensation Committee"). Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced and the term "Annual Base Salary" as used in this Agreement shall
mean the Annual Base Salary as so increased.
(ii) Signing Bonus. The Executive shall receive a
grant of restricted stock for four thousand three hundred (4,300) shares of FECI
common stock issued under the FECI 1998 Stock Incentive Plan. Such shares shall
be subject to restrictions which shall provide that the Executive shall not
transfer such shares during the restriction period and shall forfeit such shares
if during the restriction period he is discharged by FECI for Cause (as
hereinafter defined in Section 3(b)) or resigns from employment with FECI
without Good Reason (as hereinafter defined in Section 3(c)). The restriction
period shall lapse with respect to such shares in equal annual installments on
each of the first and second anniversaries of the Effective Date.
Notwithstanding the foregoing, the restriction period shall lapse immediately as
to all such shares in the event that an Accelerating Event (as hereinafter
defined in Section 4(a)) occurs. The Executive shall be entitled to receive any
dividends or other distributions payable with respect to such shares of
restricted stock beginning on the date of award of such shares. Such stock award
shall be evidenced by a written restricted stock award agreement between FECI
and the Executive, the terms of which shall be agreed to by the parties in good
faith as soon as practical.
(iii) Short-Term Incentive Bonus. In addition to
Annual Base Salary, during the Employment Period the Executive shall participate
in an annual incentive bonus plan. Such plan shall provide the Executive with
the opportunity to earn a bonus based on achievement of performance criteria.
The incentive bonus plan shall be structured such that the Executive shall
receive up to fifty percent (50%) of Annual Base Salary for attainment of
certain target performance goals (prorated for any partial year of employment),
with a maximum bonus of one hundred percent (100%) of Annual Base Salary for
extraordinary performance (prorated for any partial year of employment). The
Compensation Committee will establish the performance criteria and goals in
consultation with the Executive. The bonus payable pursuant to this Section
2(b)(iii) for any fiscal year shall be paid to the Executive no later than the
30th day following the issuance of the audited financial statements of FECI for
such year.
(iv) Long-Term Incentives: Restricted Stock. The
Executive shall receive a grant of restricted stock for ten thousand (10,000)
shares of FECI common stock issued under the FECI 1998 Stock Incentive Plan.
Such shares shall be subject to restrictions which shall provide that the
Executive shall not transfer such shares during the restriction period and shall
forfeit such shares if during the restriction period he is discharged by FECI
for Cause (as hereinafter defined in Section 3(b)) or resigns from employment
with FECI without Good Reason (as hereinafter defined in Section 3(c)). The
restriction period shall lapse with respect to
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such shares in equal annual installments on the first through fifth
anniversaries of the Effective Date. Notwithstanding the foregoing, the
restriction period shall lapse immediately as to all such shares in the event
that an Accelerating Event (as hereinafter defined in Section 4(a)) occurs. The
Executive shall be entitled to receive any dividends or other distributions
payable with respect to such shares of restricted stock beginning on the date of
award of such shares. Such stock award shall be evidenced by a written
restricted stock award agreement between FECI and the Executive, the terms of
which shall be agreed to by the parties in good faith as soon as practical.
(v) Long-Term Incentives: Basic Stock Options. The
Executive shall receive a grant of non-statutory stock options on fifty thousand
(50,000) shares of FECI common stock issued under the FECI 1998 Stock Incentive
Plan. The options shall have a term of ten (10) years (subject to earlier
expiration as hereinafter provided), shall have an exercise price equal to one
hundred percent (100%) of the fair market value, as of the close of trading on
the date of this Agreement (being $27.4375) of the shares of common stock
subject to such stock options, and shall vest and become exercisable in five (5)
equal annual installments on the first through the fifth anniversaries of the
Effective Date; provided, however, that such stock options shall vest
immediately and become exercisable in their entirety in the event that an
Accelerating Event (as hereinafter defined in Section 4(a)) occurs. To the
extent not previously exercised, all such stock options shall expire immediately
following the Date of Termination (as hereinafter defined in Section 3(f));
provided, however, that the Executive, or his heirs or legal representatives in
the event of the Executive's death, may exercise all or any part of such stock
options as were exercisable as of the close of business on the Date of
Termination for a period of two (2) years following such Date of Termination in
the event (i) an Accelerating Event (as hereinafter defined in Section 4(a))
occurs; or (ii) the Executive retires at normal retirement age under any
retirement plan of FECI. Such stock options shall include a provision for
adjustment in the option price to reflect any extraordinary distribution made
with respect to the common stock during the term of the options. In the event of
a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock options shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.
(vi) Long Term Incentives: Supplemental Stock
Options. The Executive shall receive a grant of non-statutory stock options on
fifty thousand (50,000) shares of FECI common stock issued under the FECI 1998
Stock Incentive Plan. The options shall have a term of ten (10) years (subject
to earlier expiration as hereinafter provided), shall have an exercise price
equal to one hundred percent (100%) of the fair market value, as of the close of
trading on the date of this Agreement (being $27.4375) of the shares of common
stock subject to such stock options, and shall vest and become exercisable
immediately upon the earlier of (i) the first date as of which the average
closing price of a share of FECI common stock over twenty (20) consecutive
trading days is not less than Fifty Dollars ($50.00); (ii) the occurrence of an
Accelerating Event (as hereinafter defined in Section 4(a)); or (iii) the fifth
anniversary of the Effective Date. To the extent not previously exercised, all
such stock options shall expire immediately following the Date of Termination
(as hereinafter defined in Section 3(f)); provided,
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however, that the Executive, or his heirs or legal representatives in the event
of the Executive's death, may exercise all or any part of such stock option as
was exercisable as of the close of business on the Date of Termination for a
period of two (2) years following such Date of Termination in the event (i) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(ii) the Executive retires at normal retirement age under any retirement plan of
FECI. Such stock options shall include a provision for adjustment in the option
price to reflect any extraordinary distribution made with respect to the common
stock during the term of the options. In the event of a capital adjustment
resulting from a stock dividend, stock split, reorganization, merger,
consolidation, spinoff, a combination or exchange of shares or other transaction
having a similar substantive effect, the number shares of stock subject to the
stock options and the option price shall be equitably adjusted. Such stock
option shall be evidenced by a written stock option award agreement between FECI
and the Executive, the terms of which shall be agreed to by the parties in good
faith as soon as practical.
(vii) Long-Term Incentives: Subsequent Option Grants.
During the Employment Period, the Executive shall be entitled to participate in
long-term equity incentive plans and programs applicable generally to other peer
executives of FECI and the Florida East Coast. Such participation shall commence
with respect to FECI's 1999 fiscal year. Such plans and programs shall be
structured such that the Executive shall receive option grants with targeted
annual grant value (using valuation methods consistent with those used by FECI
for financial reporting purposes) between one hundred percent (100%) and one
hundred twenty-five percent (125%) of Annual Base Salary for attainment of
certain target performance goals (prorated for any partial year of employment).
The Compensation Committee will establish the performance criteria and goals in
consultation with the Executive.
(viii) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all savings
and retirement plans, practices, policies and programs applicable generally to
other peer executive of FECI and the Florida East Coast.
(ix) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family and dependents, as the case
may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by
FECI and the Florida East Coast (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of FECI and the Florida East
Coast.
(x) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
employment-related expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of FECI and the Florida East
Coast as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and the Florida East Coast
(xi) Relocation Expense. FECI shall make the
Executive whole by reimbursing him for all reasonable costs associated with his
relocation from Chicago,
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Illinois to the St. Augustine, Florida, area, whether incurred before or after
the Effective Date. Such costs shall include, without limitation, closing costs
associated with the sale of the Executive's Chicago residence and closing costs
associated with the Executive's purchase and financing of a new primary
residence in the St. Augustine area. For purposes of this Section, "closing
costs" shall mean loan origination fees, appraisal fees, credit report fees,
assumption fees, settlement or closing fees, title examination fees, title
insurance binder, document preparation fees, notary fees, attorneys' fees, real
estate brokers' commissions, title insurance fees, recording fees, tax stamps,
transfer taxes, survey fees and costs of pest, radon and home inspections. FECI
shall also arrange for and pay for the move of the Executive's household goods
and personal effects (including packing and unpacking charges) from his Chicago
residence to his new primary residence in Florida. FECI shall pay for the
Executive's reasonable temporary living costs in the St. Augustine area for up
to three (3) months (or such later time as may be requested by the Executive and
approved by the Chief Executive Officer of FECI, which approval shall not be
unreasonably withheld) until Executive is moved into his new residence in
Florida. FECI will pay the costs associated with a reasonable number of trips to
St. Augustine for the Executive and his spouse to look for a new residence. In
addition, in the event that the Executive's Chicago residence is placed on the
market for sale at a reasonable price and is not sold within ninety (90) days
after being placed on the market, at the Executive's request FECI shall provide
the Executive with an interest-free bridge loan for a term of up to twelve (12)
months for an amount up to the asking price of the Chicago residence, which loan
shall be repayable upon the earlier of five (5) days following the closing of
the sale of the Chicago residence or the first anniversary of the making of such
loan. In addition, FECI shall pay the Executive an amount determined by its
accountants equal to the Executive's federal, state and local taxes on the
foregoing reimbursement and imputed interest under the aforesaid loan (the "Tax
Gross-up") and the federal, state and local taxes on the Tax Gross-up, all to
the end that the Executive be held harmless, on an after-tax basis, from the tax
impact thereof.
(xii) Fringe Benefits. During the Employment Period,
the Executive and/or the Executive's family and dependents shall be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of FECI and the Florida East Coast as in effect generally from time
to time after the Effective Date with respect to other peer executives of FECI
and the Florida East Coast.
(xiii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office and support
staff at least equal to the most favorable of the foregoing provided generally
from time to time after the Effective Date with respect to other peer executives
of FECI and the Florida East Coast.
(xiv) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of FECI and the Florida East
Coast as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and the Florida East Coast.
(xv) Car Allowance. During the Employment Period, the
Executive shall be entitled to a car allowance in accordance with FECI's car
allowance policy, in lieu of expenses associated with the operation of his
automobile.
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(xvi) Golden Parachute Excise Tax. If FECI determines
that any amounts payable under this Agreement are subject to the excise tax
imposed under Code Section 4999 on "excess parachute payments", FECI will
compute the excise tax imposed under Code Section 4999 and shall pay that amount
to the Executive, including any federal, state, local and excise taxes imposed
on the foregoing payment under this Section 2(b)(xvi). The determination will be
made before the taxes are due and payable by the Executive, to the extent
possible. The calculations under this Section will be made in a manner
consistent with the requirements of Code Sections 280G and 4999, as in effect at
the time the calculations are made.
(xvii) Right to Change Plans. FECI shall not be
obligated to institute, maintain or refrain from changing, amending or
discontinuing any benefit plan, program, or perquisite referred to in Sections
2(b)(viii), 2(b)(ix) and 2(b)(xii), so long as such changes are similarly
applicable to other FECI executives.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If FECI determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of disability set forth below), it may give
to the Executive notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with FECI shall terminate
upon a date selected by FECI. and set forth in such notice (the "Disability
Effective Date"), provided that, prior to such date, the Executive shall not
have returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with FECI on a full-time basis for one hundred eighty (180)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
FECI or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. FECI may terminate the Executive's employment for
Cause. For purposes of this Agreement, "Cause" shall mean (i) a material breach
by the Executive of the Executive's obligations under this Agreement (other than
as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of FECI and which is not remedied in a reasonable period of time after
receipt of notice from FECI specifying such breach; (ii) the conviction of the
Executive for committing an act of fraud, embezzlement, theft or other act
constituting a felony or the guilty or nolo contendere plea of the Executive to
such a felony; (iii) insubordination or the willful engaging by Executive in
gross misconduct or the willful violation of an FECI policy which results in
material and demonstrable injury to FECI; or (iv) a material act of dishonesty
or breach of trust on the part of the Executive resulting or intending to result
directly or indirectly in material personal gain or enrichment at the expense of
FECI. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
FECI shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of FECI.
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(c) Good Reason. The Executive may terminate his employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, in
the absence of the consent of the Executive, a reasonable determination by the
Executive that any of the following has occurred:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, or any other
action by FECI which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated
and insubstantial action not taken in bad faith and which is remedied by FECI
promptly after receipt of notice thereof given by the Executive; or
(ii) any failure by FECI to comply with any of the
provisions of this Agreement applicable to it, other than any isolated and
insubstantial failure not occurring in bad faith and which is remedied promptly
after notice thereof from the Executive.
(d) Termination for Other Reasons. FECI may terminate the
employment of the Executive without Cause by giving notice to the Executive,
which notice shall set forth the Date of Termination. The Executive may resign
from his employment without Good Reason hereunder by giving notice to FECI at
least thirty (30) days prior to the Date of Termination.
(e) Notice of Termination. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) in the case
of a termination under Section 3(b) or 3(c), to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated (the failure by the Executive or FECI to set forth in the Notice of
Termination any fact or circumstance shall not waive any right of the Executive
or FECI hereunder or preclude the Executive or FECI from asserting such fact or
circumstance in enforcing the Executive's or FECI's rights hereunder), and (iii)
if the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice, unless otherwise
required by Section 3(f)).
(f) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated by FECI due to the Executive's
Disability, the Date of Termination shall be the Disability Effective Date, (ii)
if the Executive's employment is terminated by reason of the Executive's death,
the Date of Termination shall be the date of death of the Executive, and (iii)
in all other cases, the date of receipt of the Notice of Termination or any
permitted later date specified therein, as the case may be.
4. Obligations of FECI upon Termination.
(a) Accelerating Event. As used in this Agreement, the term
"Accelerating Event" shall mean any of the following: (i) the Executive's
employment
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terminates under the circumstances described in Section 3(a), (ii) the Executive
is discharged without Cause, (iii) the Executive resigns with Good Reason, or
(iv) the accrual of Change in Control Entitlements (as defined in Section 5(b)).
(b) Good Reason; Other than for Cause, Death or Disability.
If, during the Employment Period, FECI shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:
(i) FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days after the Date of Termination the sum of (A) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid; (B) to the extent not theretofore paid, any annual bonus
payable to the Executive for any prior completed fiscal year; (C) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) to the extent not theretofore paid; and (D) any
accrued vacation pay, expense reimbursement and any other entitlements accrued
by the Executive under Section 2(b), to the extent not theretofore paid (the sum
of the amount described in clauses (A), (B), (C) and (D) shall be hereinafter
referred to as the "Accrued Obligations"); and
(ii) FECI shall pay to the Executive in eighteen (18)
monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to the sum of one hundred fifty percent (150%) of
the Executive's Annual Base Salary plus fifty percent (50%) of the payment made
under Section 2(b)(iii), if any, with respect to the most recently completed
fiscal year of FECI; and
(iii) For eighteen (18) months following the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, FECI shall continue benefits to the Executive and/or the Executive's
family and dependents at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 2(b)(ix) if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs or policies of
FECI and the Florida East Coast as in effect generally at any time thereafter
with respect to other peer executives of FECI and the Florida East Coast and
their families ("Welfare Benefit Continuation"). If the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate without further
obligation to the Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations (which shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within thirty (30)
days of the Date of Termination) and the timely payment or provision of the
Welfare Benefit Continuation.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason, this Agreement shall terminate without further
obligation to the Executive other
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than the obligation to pay to the Executive the Accrued Obligations and the
amount of any compensation previously deferred by the Executive, in each case to
the extent theretofore unpaid, all of which shall be paid in cash within thirty
(30) days of the Date of Termination.
(e) Disability. If the Executive's employment shall be
terminated by reason of the Executive's Disability, this Agreement shall
terminate without further obligation to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of the Welfare Benefit
Continuation. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination. The Executive shall
be entitled after the Disability Effective Date to receive disability and other
benefits as in effect at the Disability Effective Date with respect to other
peer executives of FECI and the Florida East Coast and their families.
(f) Nondisclosure to Media. After the Date of Termination, the
Executive and FECI agree that they will not discuss the Executive's employment
and resignation or termination (including the terms of this Agreement) with any
representatives of the media, either directly or indirectly, without the consent
of the other party hereto.
5. Change in Control.
(a) Defined. For purposes of this Agreement, a "Change in
Control" of FECI shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have occurred:
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by FECI's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of FECI
as of the date hereof, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of FECI); or
FECI merges or consolidates with any other corporation, including The St. Joe
Company or any subsidiary thereof, or FECI adopts, and the stockholders approve,
if necessary, a plan of complete liquidation of FECI, or FECI sells or disposes
of substantially all of its assets.
(b) Entitlement to Benefits. The Executive shall be entitled
to certain additional benefits upon a Change in Control if:
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(i) within two (2) years following a Change in
Control, FECI either (A) substantially reduces the duties or responsibilities of
the Executive from those in effect immediately prior to such occurrence or (B)
reduces the Annual Base Salary other than a reduction which is a part of an
organization-wide salary reduction plan; or
(ii) within the period which is the last ninety (90)
days of the first year after the occurrence of a Change in Control, the
Executive voluntarily resigns his employment hereunder for any reason.
The accrual of such entitlements is referred to herein as "Change in Control
Entitlement."
(c) Accelerating Event. A Change in Control Entitlement shall
be an Accelerating Event as defined in Section 4(a).
(d) Supplemental Payment to Executive. Upon the accrual of
Change in Control Entitlement, FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days of the date of such Change in Control, an amount
equal to two (2) times the Annual Base Salary.
6. Non-Exclusivity of Executive's Rights. Except as provided
in Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by FECI or the Florida East Coast and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with FECI the
Florida East Coast. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with FECI or the Florida East Coast at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
7. Confidential Information.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of FECI all secret or confidential information, knowledge or data
relating to FECI or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by FECI or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with FECI, the Executive shall not,
without the prior written consent of FECI or except as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than FECI and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
(b) All records, files, memoranda, reports, price lists,
customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to
10
<PAGE> 13
the business of FECI, which Executive shall use or prepare or otherwise have in
his possession in the course of, or as a result of, his employment hereunder
shall, as between the parties hereto, remain the sole property of FECI.
Executive shall use such materials solely for the benefit of FECI and shall not
divulge any such materials other than in furtherance of FECI's interests.
Executive hereby agrees that he will return all such materials, including
copies, to FECI upon demand, or upon the cessation of his employment.
(c) Any termination of the Executive's employment hereunder or
of this Agreement shall have no effect on the continuing operation of this
Section 7.
8. Non-Compete; Non-Solicitation.
(a) Except as is set forth below, for a period commencing on
the Effective Date hereof and ending on the first anniversary of the date the
Executive ceases to be employed by FECI (the "Non-Competition Period"), the
Executive shall not, directly or indirectly, either for himself or any other
person, own, manage, control, materially participate in, invest in, permit his
name to be used by, act as consultant or advisor to, render material services
for (alone or in association with any person, firm, corporation or other
business organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of the Florida East Coast's business at the
date the Executive ceases to be employed by FECI (collectively, a "Competitor");
provided, however, that the restrictions set forth above shall immediately
terminate and shall be of no further force or effect (i) in the event of a
default by FECI of the performance of any of the obligations hereunder, which
default is not cured within ten (10) days after notice thereof, or (ii) if the
Executive's employment has been terminated by FECI other than for Cause, or
(iii) if the Executive resigns for Good Reason provided that the Executive gives
written notice to FECI whenever during the Non-Competition Period that he
desires to accept employment with a Competitor; and that the payment specified
in Section 4(b)(ii) hereof shall be mitigated by the amount of salary and pro
rata target bonus payable to the Executive by the Competitor based on the
Executive's initial terms of employment and attributable to employment during
the Non-Competition Period. Nothing herein shall prohibit the Executive from
being a passive owner of not more than five percent (5%) of the equity
securities of an enterprise engaged in such business which is publicly traded,
so long as he has no active participation in the business of such enterprise.
(b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of FECI or the Florida East Coast to leave the employ of
FECI or the Florida East Coast, or in any way interfere with the relationship
between FECI and/or the Florida East Coast and an employee thereof except in the
proper exercise of the Executive's authority, or (ii) in any way interfere with
the relationship between FECI and/or the Florida East Coast and any customer,
supplier, licensee or other business relation thereof.
(c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
11
<PAGE> 14
(d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against FECI or any of its affiliates,
whether or not predicated upon the terms of this Agreement, shall not constitute
a defense to the enforcement of these covenants.
9. Remedies for Executive's Breach. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then FECI may thereafter terminate the payment of any post-termination
benefits hereunder, and FECI will have no further obligation to Executive under
this Agreement. The parties acknowledge that any violation of Section 7 or 8 can
cause substantial and irreparable harm to FECI. Therefore, FECI shall be
entitled to pursue any and all legal and equitable remedies, including but not
limited to any injunctions.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement or any claim
that FECI has in any way violated the non-discrimination and/or other provisions
of Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination
in Employment Act of 1967, as amended; the Americans with Disabilities Act; the
Family and Medical Leave Act; the Employee Retirement Income Security Act of
1974, as amended; and, in general, any federal law or the law of the State of
Florida. Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to by the
Executive and FECI. The Federal and State courts located in the United States of
America are hereby given jurisdiction to render judgment upon, and to enforce,
each arbitration award, and the parties hereby expressly consent and submit to
the jurisdiction of such courts. Notwithstanding the foregoing, in the event
that a violation of the Agreement would cause irreparable injury, FECI and the
Executive agree that in addition to the other rights and remedies provided in
this Agreement (and without waiving their rights to have all other matters
arbitrated as provided above) the other party may immediately take judicial
action to obtain injunctive relief.
11. No Conflicting Obligations of Executive. Executive
represents and warrants that he is not subject to any duties or restrictions
under any prior agreement with any previous employer or other person, and that
he has no rights or obligations except as previously disclosed to FECI which may
conflict with the interests of FECI or with the performance of the Executive's
duties and obligations under this Agreement. Executive agrees to notify FECI
immediately if any such conflicts occur in the future.
12. Certain Obligations of FECI Regarding Stock Awards. At its
expense, and as soon as practicable hereafter, with respect to the shares of
common stock described in Section 2(b)(ii) and 2(b)(iv) and the shares of common
stock issuable upon exercise of the stock options described in Section 2(b)(v)
and 2(b)(vi), FECI shall (i) seek the approval of its shareholders with regard
to the grant of such restricted stock and stock options, (ii) register such
shares under the Securities Act of 1933, as amended, on Form S-8, (iii) qualify
such shares
12
<PAGE> 15
for issuance under all applicable state securities laws and (iv) ensure that
such shares are listed for trading on the New York Stock Exchange.
Notwithstanding any other provision of this Agreement to the contrary, FECI
shall be under no obligation to issue any shares of common stock to the
Executive pursuant to this Agreement until, in accordance with the immediately
preceding sentence, such shares are so registered and qualified and either (x)
FECI is able to repurchase in the open market or private transactions, on a
legal, practical and prudent basis, a number of shares of common stock equal to
the number issuable to the Executive or (y) shares of common stock which are
listed for trading on the New York Stock Exchange are otherwise available for
issuance by FECI hereunder. With respect to the shares of common stock described
in Section 2(b)(ii) and Section 2(b)(iv), in the event that the issuance of any
such shares to the Executive shall be delayed by reason of the provisions of
this Section, FECI shall pay to the Executive in cash on the date of issuance of
such shares in the amount or cash-equivalent thereof that would have been paid
to the Executive as dividends or other distributions payable with respect to
such shares had such issuance not been so delayed.
13. Indemnity of Executive. FECI shall indemnify and defend
the Executive against all claims relating to the performance of his duties
hereunder to the fullest extent permitted by FECI's Articles of Incorporation
and Bylaws, the relevant provisions of which shall not be amended in their
application to the Executive to be any less favorable to him than as at present,
except as required by law. During the continuance of the Executive's employment
hereunder, FECI shall maintain in effect uninterrupted standard directors and
officers liability insurance coverage insuring the Executive against such
claims, with limits of coverage of not less than $10,000,000 per occurrence and
without deductibles, which insurance shall include a standard SEC coverage
endorsement.
14. Successors.
(a) This Agreement is personal to the Executive and without
the prior consent of FECI shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon FECI and its successors and assigns.
(c) FECI will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of FECI to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FECI would be required to perform it if no such succession had taken place. As
used in this Agreement, "FECI" shall mean FECI as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The
13
<PAGE> 16
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopier,
or by courier, addressed as follows:
If to the Executive to: If to FECI to:
---------------------- -------------
John D. McPherson. Florida East Coast Industries, Inc.
137 Circle Ridge Drive One Malaga Street
Hinsdale, IL 60521 St. Augustine, FL 32084
Facsimile: 630/323-9855 Attention: Corporate Secretary
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law or in
equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.
(d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(e) FECI may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) The Executive's or FECI's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or FECI may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(g) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law, except as
provided in Section 2(b)(xvii).
14
<PAGE> 17
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, FECI has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
Company:
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
------------------------------------------
Chairman and Chief Executive Officer
Executive:
/s/ John D. McPherson
---------------------------------------------
John D. McPherson
15
<PAGE> 18
BASIC STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
JOHN D. McPHERSON
February 2, 1999
<PAGE> 19
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and John D. McPherson (the "Employee") is made
pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
50,000 shares of the Company's Common Stock. The exercise price of the
NSO is $27.4375 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. One-fifth of the NSO, 10,000 shares,
shall vest on and may be exercised at any time on or after
February 2, 2000. Another one-fifth of the NSO, 10,000 shares,
shall vest on and may be exercised at any time on or after
February 2, 2001. Another one-fifth of the NSO, 10,000 shares,
shall on vest and may be exercised at any time on or after
February 2, 2002. Another one-fifth of the NSO, 10,000 shares,
shall vest on and may be exercised at any time on or after
February 2, 2003. The remaining one-fifth of the NSO, 10,000
shares, shall vest on and may be exercised at any time on or
after February 2, 2004. In addition, all of the NSO shall vest
on and may be exercised at any time on or after
<PAGE> 20
an Accelerating Event (as defined in Section 4(a) of the
Employment Agreement). The vesting of any portion of the NSO
is conditioned on the Employee's continued employment by the
Company or a parent or subsidiary of the Company as of the
relevant vesting date.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), or (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following the accrual of Change in
Control Entitlement (as defined in Section 5(b) of the
Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation, then the person to whom the Employee's rights
under the NSO shall have passed by will or by the laws of
distribution may exercise any of the NSO within two years
after the Employee's death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
2
<PAGE> 21
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock, and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares
3
<PAGE> 22
under any state or federal law regulation that the Company's counsel
shall determine as necessary or advisable, and (iii) receipt by the
Company of advice by counsel that all applicable legal requirements
have been complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail,
4
<PAGE> 23
return receipt requested, postage prepaid, or by telecopier, or by
courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
John D. McPherson Florida East Coast Industries, Inc.
137 Circle Ridge Drive One Malaga Street
Hinsdale, IL 60521 St. Augustine, FL 32084
Facsimile: 630/323-9855 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 24
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
---------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ John D. McPherson
- --------------------------------
JOHN D. McPHERSON
6
<PAGE> 25
RESTRICTED STOCK AGREEMENT
(Long Term Incentive)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
JOHN D. McPHERSON
February 2, 1999
<PAGE> 26
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and John D. McPherson (the "Employee") is made
pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, ten
thousand (10,000) shares of the Company's Common Stock (the "Restricted
Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
Anniversary Unrestricted
Date Percentage
--------------- ---------------
First 20%
Second 40%
Third 60%
<PAGE> 27
Anniversary Unrestricted
Date Percentage
--------------- ---------------
Fourth 80%
Fifth 100%
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or by the Employee without Good Reason (as defined in
Section 3(c) of the Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a
2
<PAGE> 28
particular date, fair market value will be computed as of the last date
preceding such date on which a sale was reported.
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
3
<PAGE> 29
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
John D. McPherson Florida East Coast Industries, Inc.
137 Circle Ridge Drive One Malaga Street
Hinsdale, IL 60521 St. Augustine, FL 32084
Facsimile: 630/323-9855 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
4
<PAGE> 30
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Employee or the
Company may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
---------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ John D. McPherson
- --------------------------------
JOHN D. McPHERSON
5
<PAGE> 31
RESTRICTED STOCK AGREEMENT
(Signing Bonus)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
JOHN D. McPHERSON
February 2, 1999
<PAGE> 32
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and John D. McPherson (the "Employee") is made
pursuant to the provisions of Section 2(b)(ii) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, four
thousand three hundred (4,300) shares of the Company's Common Stock
(the "Restricted Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
Anniversary Unrestricted
Date Percentage
--------------- ---------------
First 50%
Second 50%
<PAGE> 33
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or by the Employee without Good Reason (as defined in
Section 3(c) of the Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a particular date, fair market value will be
computed as of the last date preceding such date on which a sale was
reported.
2
<PAGE> 34
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
3
<PAGE> 35
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
John D. McPherson Florida East Coast Industries, Inc.
137 Circle Ridge Drive One Malaga Street
Hinsdale, IL 60521 St. Augustine, FL 32084
Facsimile: 630/323-9855 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert
4
<PAGE> 36
any right the Employee or the Company may have hereunder, shall not be
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
---------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ John D. McPherson
- --------------------------------
JOHN D. McPHERSON
5
<PAGE> 37
SUPPLEMENTAL STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
JOHN D. McPHERSON
February 2, 1999
<PAGE> 38
THIS AGREEMENT, dated February 2, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and John D. McPherson (the "Employee") is made
pursuant to the provisions of Section 2(b)(vi) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
50,000 shares of the Company's Common Stock. The exercise price of the
NSO is $27.4375 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Shareholder Approval. The NSO is granted subject to
shareholder approval of the First Amendment to the Plan dated October
1, 1998, which approval shall be sought by the Company at the next
meeting of shareholders following grant of this NSO.
3. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. The NSO shall vest and become
exercisable immediately upon the earlier of (i) the first date
as of which the average closing price of a share of the
Company's Common Stock over twenty (20) consecutive trading
days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as defined in Section
4(a) of the Employment Agreement); or (iii) February 2, 2004.
<PAGE> 39
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) February 2,
2009, (ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any retirement plan
of the Company), (iii) the effective date that the Employee
terminates employment for any other reason (but in no event
earlier than two years following accrual of Change in Control
Entitlement (as defined in Section 5(b) of the Employment
Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation and at a time when any portion of the NSO is
vested and exercisable, then the person to whom the Employee's
rights under the NSO shall have passed by will or by the laws
of distribution may exercise any of the vested and exercisable
portion of the NSO within two years after the Employee's
death.
4. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
5. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
2
<PAGE> 40
6. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
7. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of written notice stating the
number of shares elected to be purchased, and by payment to the Company
as described in paragraph 4.
8. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
9. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as
3
<PAGE> 41
necessary or advisable, and (iii) receipt by the Company of advice by
counsel that all applicable legal requirements have been complied with.
10. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding arbitration
before a panel of one or more arbitrators under the administration of
the American Arbitration Association, and in a location mutually agreed
to by the Employee and the Company. The Federal and State courts
located in the United States of America are hereby given jurisdiction
to render judgment upon, and to enforce, each arbitration award, and
the parties hereby expressly consent and submit to the jurisdiction of
such courts.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail,
4
<PAGE> 42
return receipt requested, postage prepaid, or by telecopier, or by
courier, addressed as follows:
If to the Employee to: If to the Company to:
--------------------- --------------------
John D. McPherson Florida East Coast Industries, Inc.
137 Circle Ridge Drive One Malaga Street
Hinsdale, IL 60521 St. Augustine, FL 32084
Facsimile: 630/323-9855 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 43
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anestis
---------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ John D. McPherson
- --------------------------------
JOHN D. McPHERSON
6
<PAGE> 1
EXHIBIT 10.e
Agreement for Professional Services
THIS AGREEMENT shall be effective commencing the 1st day of January,
1999, between Florida East Coast Industries, Inc., located at One Malaga Street,
St. Augustine, FL 32084 (hereinafter referred to as "FECI"), and Carl F.
Zellers, Jr., located at 355 Marsh Point Circle, St. Augustine, FL 32084
(hereinafter referred to as "Consultant").
- -- General type of services to be performed: Management Consulting
- -- FECI's Responsible Individual: Robert W. Anestis
- -- Telephone Number: (904) 826-2202
WITNESSETH:
WHEREAS FECI desires to commission the services of a consultant to
perform the hereinafter described services, and Consultant desires to be so
commissioned.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein contained, the parties agree as follows:
1. SCOPE OF SERVICES:
a. Description: A description of the nature and scope of services to be
performed by Consultant under this Agreement (the "Services") shall be as set
forth in Exhibit "A" attached hereto and incorporated by this reference.
b. Time for Completion: Consultant shall commence the Services upon
execution of this Agreement and shall complete the same in accordance with the
schedule ("Schedule") as set forth in Exhibit "B" attached hereto and
incorporated herein by this reference.
c. Additional Services: FECI may, from time to time, authorize
Consultant in writing to perform additional services, in which event Consultant
shall perform these services ("Additional Services") in connection with the
Services. Any such Additional Services shall be set forth in a Change Order to
this Agreement which shall be executed by both parties and which shall be
governed by the terms and conditions of this Agreement.
2. COMPENSATION:
a. FECI shall compensate Consultant, in accordance with the applicable
provisions of Exhibit "A", a Fixed Price amount of $137,500.00 per year for
services and reimbursable expenses for the satisfactory performance of the
Services.
<PAGE> 2
b. Consultant shall invoice FECI monthly at $11,458.33 per month, and
FECI shall pay such invoice within thirty (30) days after receipt of invoice.
Invoice shall refer to this Agreement by the Agreement Number indicated at the
top left-hand corner of the first page of this Agreement. Authorized
reimbursable expenses shall be indicated and shall be invoiced at the same time
as monthly payment under consulting agreement at their actual cost together with
the original receipts or other documentation to substantiate expenditures.
Invoiced expenses shall be paid within 30 days unless FECI contests any portion
thereof within 15 days. All invoices should be addressed to:
Florida East Coast Industries, Inc.
Vice President & Secretary
P. O. Box 1048
St. Augustine, FL 32085
c. Additional Services shall be compensated for in an amount which the
parties mutually agree to in advance, such amount being added to the Fixed Price
Amount and invoiced and paid in accordance with the terms hereof; provided
however, that Consultant shall not be entitled to compensation for Additional
Services unless Consultant has obtained prior written authorization in the form
of a Change Order from FECI to perform the same.
3. CONFIDENTIALITY OF MATERIAL.
Consultant may, during the course of providing its services hereunder or in
relation to this Agreement have access to and acquire knowledge regarding
materials, data, systems and other information of or with respect to FECI and
any subsidiaries and affiliated companies thereof, which may not be accessible
or known to the general public. Any knowledge acquired by Consultant from such
materials, data, systems, or information or otherwise through its engagement
hereunder shall not be used, published or divulged by Consultant, to any other
person, firm or corporation, in any advertising or promotion regarding
Consultant or its services, or in any other manner or connection whatsoever
without first having obtained written permission of FECI which permission FECI
may withhold in its sole discretion. Consultant specifically agrees that the
foregoing confidentiality obligation applies to any information acquired by or
disclosed to Consultant in any document provided to Consultant by FECI,
including, but not limited to a Request for Proposal, Request for Estimate,
Request for Quotation and Invitation to Bid.
FECI may request at any time and not later than the termination of this
Agreement that Consultant promptly deliver to FECI any or all material provided
to Consultant during the term of this Agreement. Additionally, FECI may request
that all documents, memoranda, notes and any other material prepared by
Consultant in executing of this Agreement be destroyed, and that this
destruction be certified in writing to FECI by Consultant or another authorized
person. The provisions of this Article shall survive the expiration or earlier
termination of this Agreement.
2
<PAGE> 3
4. CONFLICT OF INTEREST.
Consultant during the term of this Agreement with FECI will not accept
employment or engage in any representation or consultation that does or may
directly or indirectly conflict with or be adverse to any interest of the FECI,
including without limitation any employment by or representation of a government
entity or agency that regulates the FECI or in which any FECI land is located.
5. PROMOTION & DESIGN RIGHTS.
a. Consultant shall acquire no right under this Agreement to use, and
shall not use, the name of FECI or any of its affiliated or subsidiary
companies;
(i) in any of its advertising, publicity, or promotion; nor
(ii) in any in-house publication; nor
(iii) to express or imply any endorsement by FECI of its
services nor in any other manner whatsoever (whether or not
similar to the uses herein above specifically prohibited).
The provisions of this Article shall survive the expiration or earlier
termination of this Agreement.
b. Title to all plans, drawings, specifications, ideas, concepts,
designs, sketches, models, programs, software, reports, and other tangible
deliverables produced by Consultant pursuant to this Agreement shall be and
remain the sole and exclusive property of FECI.
c. The Consultant shall submit all such deliverables to FECI upon
completion thereof unless it is necessary for Consultant, in FECI's sole
discretion, to retain possession for a longer period of time. Upon early
termination of Consultant's services hereunder, as provided in paragraph 10,
Consultant shall deliver to FECI all such deliverables whether complete or not.
FECI shall have and retain all rights to use any and all deliverables.
Consultant may retain copies for its permanent records, provided such documents
are not used by the Consultant for any purpose without FECI's prior express
written consent.
d. FECI shall retain all rights, title and interest, in and to all
deliverables developed pursuant to this Agreement. To the extent the Services
performed under this Agreement produce or include copyrightable materials or
designs, such deliverables are work made for hire for FECI as the author,
creator, or inventor thereof upon creation, and FECI shall have all rights
therein pertaining, including, without limitation, rights of reproduction. This
provision shall be construed as and constitute a complete assignment to FECI of
any and all rights Consultant may have (if any) in this regard. The Consultant
acknowledges that FECI is the motivating force and factor, and for purposes of
copyright or patent, has the right to such copyrightable or patentable
deliverables produced by Consultant under this Agreement.
3
<PAGE> 4
6. INSURANCE WARRANTY & INDEMNIFICATION.
Consultant hereby represents that it has the professional experience and skill
to perform the Services required to be performed hereunder; that it shall comply
with all applicable federal, state and local laws, that it shall perform said
services in accordance with generally accepted professional standards and in an
expeditious and economical manner consistent with the best interests of FECI.
Consultant shall, throughout the performance of its services pursuant to this
Agreement, maintain automobile liability coverage protecting it and FECI from
claims for personal injury and property damage, respectively (including bodily
injury and death), which may arise from or in connection with the performance of
Consultant's services hereunder. Any such insurance shall provide that coverage
thereunder may not be reduced or canceled unless thirty (30) days prior written
notice thereof is furnished to FECI by Consultant.
7. ASSIGNMENT & AGENCY.
a. This Agreement is for the personal services of Consultant and may
not be assigned by Consultant, nor shall it be assignable by operation of law
without the prior written consent of FECI, which consent FECI may withhold in
its sole discretion.
b. It is the express intention of the parties that Consultant is an
independent contractor and not an employee, agent, joint venturer or partner of
FECI. Nothing in this agreement shall be interpreted or construed as creating or
establishing the relationship of employer and employee between FECI and
Consultant or any employee or agent of Consultant. Both parties acknowledge that
Consultant is not an employee for state or federal tax purposes. Subject to
Paragraph 4 of this Agreement, Consultant shall retain the right to perform
services for others during the term of this Agreement. Since Consultant is not
FECI's employee, Consultant is responsible for paying all required state and
federal taxes. In particular:
-- FECI shall not withhold FICA (Social Security) from
Consultant's payments;
-- FECI will not make state or federal unemployment insurance
contributions on Consultant's behalf;
-- FECI will not withhold state or federal income tax from
payment to Consultant;
-- FECI will not make disability insurance contributions on
behalf of Consultant;
-- FECI will not obtain workers' compensation insurance on behalf
of Consultant.
c. Consultant shall complete, execute and deliver to FECI a Request for
Taxpayer Identification and Certification Form (W-8) prior to, or concurrent
with, the execution of this Agreement by Consultant.
4
<PAGE> 5
8. DETERMINATION OF DISPUTES.
Any disputes, differences, claims or counterclaims between FECI and Consultant
shall be submitted to the appropriate Florida State Court in the County of St.
Johns, State of Florida, having jurisdiction over the subject matter. In any
such dispute Consultant agrees to out-of-state service in accordance with the
applicable rules of Civil Procedure and state law. This Agreement shall be
governed by, and be construed in accordance with, the laws of the State of
Florida without regard to principles of conflicts of law.
9. TERMINATION.
Anything herein to the contrary notwithstanding, FECI and Consultant may
mutually agree to terminate this Agreement. In the event of termination, FECI's
sole obligation and liability to Consultant, if any, shall be to pay Consultant
the portion of the fee earned by it, plus any earned amount for Additional
Services, based on the percentage of services completed through the date of
termination, plus any authorized reimbursable expenses incurred.
10. ENTIRE AGREEMENT.
This Agreement supersedes any and all agreements, either oral or written,
between the parties hereto with respect to the rendering of services by
Consultant for FECI and contains all the covenants and agreements between the
parties with respect to the rendering of such services. Each party to this
agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
Agreement, statement, or promise not contained in this Agreement shall be valid
or binding. Any modification of this Agreement will be effective only if it is
in writing signed by both parties.
11. PARTIAL INVENTORY.
If any provision in this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remaining provisions will
nevertheless continue in full force without being impaired or invalidated in any
way.
12. CAPTIONS.
The captions contained in this Agreement are inserted for convenience of
reference only and shall not be construed in any manner for the purpose of
interpreting the provisions thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
CONSULTANT: NAME
Authorized Signature:
---------------------------
Print Name: Carl F. Zellers, Jr.
---------------------------
Print Title: Consultant
---------------------------
Federal I.D./S.S.#: ###-##-####
---------------------------
Date: November 12, 1998
---------------------------
FLORIDA EAST COAST INDUSTRIES, INC.
Authorized Signature:
---------------------------
Name: T. N. Smith
---------------------------
Title: Vice President & Secretary
---------------------------
Date: November 12, 1998
---------------------------
6
<PAGE> 7
EXHIBIT A
SCOPE OF SERVICES AND DELIVERABLES
CONSULTANT: Carl F. Zellers, Jr.
--------------------------------------------------
Consultant shall provide to FECI the following services:
Advice and counsel on various corporate matters on request of Chairman
and Chief Executive Officer of FECI.
Consultant shall be compensated a Fixed Price amount of $137,500.00 per year for
its services to be provided herein which amount is payable as provided in
paragraph 2 of this Agreement even if his services are not requested.
In addition, Consultant will be provided access to FECI telephone system,
including WATS line via extension at his home address and shall be paid
reimbursable expenses, based on the following guidelines
All reasonable, direct, non-salary, reimburseable expenses, including
materials, shall be billed to FECI at actual cost with no markup
allowed. Reimbursables shall include, but not be limited to, the
following:
Mileage shall be reimbursed at a not to exceed rate of $0.31 per mile
(NOT intended for daily commuting).
All air travel, regardless of domestic or international destination,
shall be reimbursed at unrestricted coach class fare.
Travel time will not be billable, unless otherwise agreed to by the
parties.
Rental cars of midsize should be obtained from the lowest cost
provider.
Lodging on business trips will be reimbursed by FECI at reasonable
rates according to availability.
Third party consultants shall not be engaged without the prior written
approval of FECI.
Professional fees for third party consultants engaged directly by Consultant
shall be approved in advance by FECI. Invoices from these third parties must be
passed through to FECI without additional mark-up. Alternatively, and with
advance approval of FECI, professional fees by third parties may be directly
invoiced to FECI.
7
<PAGE> 8
EXHIBIT B
PERFORMANCE SCHEDULE
CONSULTANT: Carl F. Zellers, Jr.
------------------------------------
Consultant shall follow the schedule set forth below for the scope of work
described in Exhibit "A".
Services to be completed on December 31, 2001.
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 65,928
<SECURITIES> 43,146
<RECEIVABLES> 29,193
<ALLOWANCES> 0
<INVENTORY> 9,623
<CURRENT-ASSETS> 158,302
<PP&E> 973,541
<DEPRECIATION> (273,785)
<TOTAL-ASSETS> 896,293
<CURRENT-LIABILITIES> 47,942
<BONDS> 0
0
0
<COMMON> 62,343
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 896,293
<SALES> 110,542
<TOTAL-REVENUES> 112,321
<CGS> 0
<TOTAL-COSTS> 85,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,795
<INCOME-TAX> 10,039
<INCOME-CONTINUING> 16,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,756
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
