5
SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the
"Agreement") is made and entered into as of this 22nd day of
July, 1998 (the "Effective Date"), by and between ATLANTIC COAST
AIRLINES HOLDINGS, INC., a Delaware corporation ("ACAH"),
ATLANTIC COAST AIRLINES, a California corporation ("ACA") (ACAH
and ACA are herein collectively referred to as the "Company") and
XXXXX X. XXXXX ("Xxxxx").
WITNESSETH THAT:
WHEREAS, Xxxxx is currently employed by the Company as Chief
Executive Officer and President, and in connection with such
employment entered into a Severance Agreement (dated October 16,
1991), as amended (April 28, 1994, April 27, 1995 and October 16,
1996), with the Company; and
WHEREAS, the Company wishes to assure itself of the
continued services of Xxxxx; and
WHEREAS, the Board of Directors of the Company has
determined that the best interests of the Company would be served
by entering into this amended and restated Agreement with Xxxxx;
NOW, THEREFORE, the parties, for and in consideration of the
mutual and reciprocal covenants and agreements hereinafter
contained, and intending to be legally bound hereby, do contract
and agree as follows:
1. Employment: Company hereby employs Xxxxx and Xxxxx
hereby accepts employment by Company and agrees to perform his
duties and responsibilities hereunder upon all of the terms and
conditions as are hereinafter set forth.
2. Duties: Xxxxx shall serve the Company in the
capacities of Chief Executive Officer and President. Xxxxx shall
be responsible for supervising and directing all operations of
the Company. All other officers of the Company shall report to
Xxxxx except the Chairman of the Board of Directors (to the
extent such person is deemed to be an officer).. Xxxxx shall
otherwise be responsible for carrying out all duties assigned to
the President by the Company's Board of Directors and under
ACAH's and ACA's Bylaws. The Company shall use its good faith
efforts to ensure that Xxxxx continues to serve as a member of
the Company's Board of Directors.
3. Terms of Employment: Xxxxx'x term of employment under
this Restated Agreement shall commence on the Effective Date and
shall terminate on the last day of the calendar month which is
thirty-six (36) calendar months after the Effective Date, unless
further extended as hereinafter set forth. Commencing on each
successive anniversary of the Effective Date, the Agreement shall
automatically be extended for an additional twelve (12) months
without further action by either party unless one party provides
the other sixty (60) days' written notice that such party does
not wish to extend the term of this Agreement.
4. Extent of Service: Xxxxx shall devote such time and
attention as is required to perform his obligations under this
Agreement and will at all times faithfully and industriously,
consistent with his ability, experience and talent, perform his
duties hereunder.
5. Compensation: During the term of this Agreement,
Company agrees to pay to Xxxxx, and Xxxxx agrees to accept from
Company, in full payment for services rendered by Xxxxx and work
to be performed by him under the terms of this Agreement, the
following:
A. An annual base salary of Two-Hundred Ninety Five
Thousand Dollars ($295,000) shall be paid to Xxxxx. Commencing
October 1, 1998 and each October 1 thereafter, the amount of
Xxxxx'x base salary shall be increased as determined by the
Compensation Committee of the Board of Directors of the Company;
provided, however, that in no event shall Xxxxx'x annual base
salary be less than the previous year's annual base salary.
Xxxxx'x base salary for each year shall be payable to him in
accordance with the reasonable payroll practices of the Company
as from time to time in effect for executive employees (but in no
event less often than monthly).
X. Xxxxx shall participate in the Company's
Management Incentive Program, or any successor bonus plan or
program for management employees. In addition, if the Company
maintains an additional executive/management bonus plan, then
Xxxxx'x bonus arrangement shall be at least consistent with the
provisions of such bonus plan.
X. Xxxxx shall be eligible for an additional annual
bonus under an executive performance bonus plan currently known
as Senior Management Incentive Plan for so long as the Board of
Directors determines to maintain such plan. Under such plan,
each calendar year, Xxxxx shall be entitled to receive a bonus
equal to specified percentage of base salary upon the attainment
of certain pre-established goals. The maximum bonus under this
plan assuming all goals are met will not be less than 100% of
base salary. Such goals and percentage of salary shall be
determined by the Compensation Committee of the Board of
Directors of the Company prior to the commencement of each plan
year. The bonus amount each year shall be paid in a single cash
lump sum paid at the time period provided under such plan, at the
same time as paid to other eligible employees, and generally no
later than 90 days after the end of the plan period.
X. Xxxxx will be entitled to deferred compensation
("Deferred Compensation") as described in this section. The
Company will make Deferred Compensation contributions at the rate
of fifty percent (50%) of Xxxxx'x annual base salary beginning
with the annual lump sum contribution made as of June 30, 1998.
Such contributions will be applied toward funding such deferred
compensation program as the Company and Xxxxx may agree to from
time to time, consistent with the funding and vesting provisions
of this Agreement.
The method of funding of Deferred Compensation, and the timing of
contributions, shall be agreed between the Company and Xxxxx from
time to time. As of the date hereof, the Deferred Compensation
program is provided under a split dollar life insurance
arrangement with Minnesota Mutual Life Insurance Company (which
may be changed to an arrangement with Phoenix Home Life Mutual -
(the "Split Dollar Agreement"). The Company may implement a
substitute Deferred Compensation plan not tied to a Split Dollar
Agreement so long as (1) the amount contributed by the Company on
Xxxxx'x behalf equals the amount set forth herein, and (2) the
vesting schedule, credit for Years of Service, and terms of
distribution are all at least as favorable to Xxxxx as set forth
herein. The Company shall continue to abide by the terms of the
Split Dollar Agreement with Xxxxx previously executed the 29th
day of December, 1995, which shall provide for a split dollar
plan for a policy of insurance upon the life of Xxxxx in a face
amount to be mutually agreed upon between Xxxxx and the Company.
For so long as the Split Dollar Agreement shall serve as the
deferred compensation program under this Agreement, the following
terms shall apply:
(i) Xxxxx shall be the owner of the policy under the
Split Dollar Agreement and will have the right to designate his
beneficiary with respect to proceeds of the policy payable upon
his death; provided, however, that notwithstanding the
foregoing, the Company shall have a collateral assignment of the
policy as security for the repayment of the amounts contributed
by the Company toward the payment of premiums for the policy.
(ii) The Company shall, except as provided in paragraph
5D(iii) below, each year as required under the Split Dollar
Agreement and the related policy, pay, on or before the due
date(s) under the terms of the policy, the entire amount of the
annual premium due on the policy acquired pursuant to the terms
of the Split Dollar Agreement. The annual premium due on the
policy will be the amount of the Company's contribution to
deferred compensation calculated as described above.
(iii) The "Deferred Compensation Ending Date" shall
mean the date of termination of Xxxxx'x employment if Xxxxx'x
employment with the Company is terminated at any time under
circumstances that do not entitle him to Severance Compensation
pursuant to Section 10 of this Agreement, or shall mean the last
day of the Severance Period (as defined in Section 10) if Xxxxx
is entitled to Severance Compensation. During a Severance
Period, Deferred Compensation shall continue pursuant to the
terms of 10.E.(iii) hereof. Upon the Deferred Compensation Ending
Date, the following shall occur:
(a) The applicable vested percentage of Xxxxx'x
interest in Deferred Compensation shall be calculated
as provided herein. Xxxxx will be entitled to receive
the deferred compensation benefit provided under such
deferred compensation program only to the extent he is
vested in the Company's contributions. Vesting will be
based upon "Years of Service", with Xxxxx to be
credited with one Year of Service for completion of
each twelve (12) consecutive month period of employment
with the Company beginning January 1, 1996 and ending
on the Deferred Compensation Ending Date. (That is,
Xxxxx will be credited with Years of Service for any
applicable Severance Period, as further provided in
Section 10.E.(iv) hereof.) Xxxxx will become vested in
the deferred compensation based on the following
schedule:
Years of ServicePercentage Vested
1-4 0%
5 25%
6 35%
7 50%
8 65%
9 80%
10 100%
In the event of a Change in Control (as defined in
Paragraph 8.C. of this Agreement) of the Company, Xxxxx
shall become immediately 100% vested in his Deferred
Compensation amount notwithstanding the above vesting
schedule.
(b) The Split Dollar Agreement shall continue in
full force and effect and survive separate and apart
from this Agreement; provided, however, that the
Company shall, at its election, have no further
obligation to pay any premium on the policy under the
Split Dollar Agreement which has a due date after the
Deferred Compensation Ending Date and such obligation
shall be transferred to Xxxxx.
(c) The Company shall pay to Xxxxx whatever
"Deferred Compensation" amount is equal to the
applicable vested percentage of the total policy
premiums paid by the Company pursuant to the Split
Dollar Agreement. The Company shall make this payment
within thirty (30) days following the Deferred
Compensation Ending Date by releasing its interest in
the policy, or a portion thereof, on Xxxxx'x life
acquired pursuant to the terms of the Split Dollar
Agreement, or any or all of the paid up additions
standing to the credit of such policy, if any, such
that such released interest equals the Deferred
Compensation amount paid to Xxxxx pursuant to this
Paragraph 5D. The Company agrees that the amount of
any such release of interest by the Company shall
reduce the amount of "Liabilities" (as such term is
defined in the Agreement of Assignment of Life
Insurance Death Benefit As Collateral entered into
between Xxxxx and the Company in connection with the
Split Dollar Agreement) owed to the Company in
connection with the Split Dollar Agreement and related
Collateral Assignment Agreement. Accordingly, the
Company also agrees to reduce to such extent its
collateral assignment of the policy pursuant to the
Split Dollar Agreement and related Collateral
Assignment Agreement.
E. The Company may pay Xxxxx discretionary compensation,
bonuses and benefits in addition to those provided for herein in
such amounts and at such times as the Compensation Committee of
the Board of Directors of the Company shall determine.
6. Benefits:
A. The Company shall pay for or provide Xxxxx such
vacation time and benefits, including but not limited to,
coverage under Company's major medical, accident, health, dental,
disability and life insurance plans, as are made available to
other executive employees of Company generally (and, to the
extent provided by such policies, to Xxxxx'x dependents).
B. The Company agrees to promptly reimburse Xxxxx
for any otherwise unreimbursed premiums and/or uncovered medical
expenses up to $10,000 per calendar year under a written medical
reimbursement plan maintained for Xxxxx and other key executive
employees. If such payments are taxable to Xxxxx, the Company
shall pay Xxxxx a gross-up equal to the estimated income, FICA
and Medicare taxes due with respect to such reimbursement, with
federal and state income taxes being estimated at the highest
marginal rates.
X. Xxxxx shall be eligible to participate in any
profit sharing plan, employee stock ownership plan or other
qualified retirement plan adopted by Company to the same extent
as other executive employees of Company. Xxxxx shall also be
eligible to participate in any stock option, stock appreciation
rights or stock purchase plans or programs or nonqualified
deferred compensation arrangements of Company, which
participation shall be at levels at least equal in value to such
benefits provided by Company to other key executive employees of
Company.
7. Reimbursement of Expenses: The Company agrees to
promptly reimburse Xxxxx, within fifteen (15) days after
presentation of receipts and other appropriate documentation, for
all reasonable, ordinary and necessary travel costs and other
necessary expenses incurred by Xxxxx in performing his duties
pursuant to this Agreement.
8. Stock Options:
A. Company agrees to continue in force a stock option
plan or one which is substantially similar to the existing plan
("Stock Option Plan"), which has been approved by the
shareholders of the Company and, on the first business day in
each January commencing in January, 1999, and (subject to the
provisions of Paragraph 10.A.(vii)) continuing so long as Xxxxx
is employed by the Company to xxxxx Xxxxx options under the Stock
Option Plan to purchase not less than 100,000 shares of the
common stock of ACAH at the price per share at the closing of the
trading market on the last business date prior to such grant.
The Company also agrees to approve the issuance of such
additional shares as are necessary to enable Xxxxx to exercise
such options. The Company will not be required to reserve shares
from existing plans to cover future obligations under this
paragraph, but will use reasonable efforts to obtain shareholder
approval as necessary from time to time to make a sufficient
number of additional shares available on a timely basis, and will
provide Xxxxx with equivalent alternative compensation should
approval not be obtained. The terms of the grant of such options
granted after January 1, 1998 shall provide that (a) Xxxxx'x
right to exercise such options shall vest and become exercisable
over the five-year period beginning on the date of each grant at
the rate of one-fifth per year (i.e., one-fifth shall vest and
become exercisable on the first anniversary of the grant) so long
as Xxxxx is employed by the Company, (b) such options shall be
exercisable for ten (10) years after the date of the grant so
long as Xxxxx is employed by the Company and (c) Xxxxx shall have
the right to exercise such vested options within ninety (90) days
following any termination of Xxxxx'x employment except that in
the case of termination of employment for which Xxxxx is entitled
to "Severance Compensation" as provided herein, in which case the
terms of Paragraph 10.E.(iii) shall apply.
B. In addition to the foregoing, if the Company in
the exercise of its discretion, shall xxxxx Xxxxx any additional
stock options, such options shall contain terms and conditions
which are at least as favorable to Xxxxx as those set forth in
this Paragraph 8. All outstanding options previously issued to
Xxxxx prior to the Effective Date of this Amended and Restated
Severance Agreement shall also be subject to the foregoing terms,
except that options granted on or before December 31, 1997 shall
vest over three years at the rate of one-third per year and
except that no such terms shall be applicable to options intended
to qualify as Incentive Stock Options if and to the extent such
terms would be deemed to result in a "material modification" of
such options (for example, Xxxxx will not be entitled to more
than 90 days to exercise such options following any termination
of employment other than on account of death or disability, in
which case he will be entitled to one year to exercise such
options).
C. For purposes of this Agreement, a "Change in Control"
shall be deemed to occur on the earliest of (a) an acquisition
(other than directly from Company) of any securities of Company
entitled to vote for the election of Directors (the "Voting
Securities") by any "person or group" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934) other than an employee benefit plan of Company, immediately
after which such person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 under the Exchange Act) of more than thirty
percent (30%) of the combined voting power of Company's then
outstanding Voting Securities; (b) announcement by any "person
or group" (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934) of its acceptance for
payment of securities tendered pursuant to a tender offer or
exchange offer initiated by such person owning or representing
securities constituting more than twenty percent (20%) of the
combined voting power of Company's then outstanding Voting
Securities; (c) the approval by the Company's stockholders of
(1) a merger, consolidation or reorganization involving Company
or a transfer of substantially all of the assets of Company
(other than to an entity or entities owned by Company), unless
the company resulting from such merger, consolidation or
reorganization or the company to which such assets are
transferred (the "Surviving Corporation") shall adopt or assume
this Agreement and the stockholders of Company immediately before
such merger, consolidation or reorganization own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least eighty percent (80%) of the combined
voting power of the Surviving Corporation in substantially the
same proportion as their ownership immediately before such
merger, consolidation or reorganization, or (2) a complete
liquidation or dissolution of Company; or (d) persons who on the
date of this Agreement are directors of Company, together with
people nominated by a majority of them or by persons who were
nominated by them, cease for any reason to constitute a majority
of Company's Board of Directors.
9. Deductions: Deductions shall be made from Xxxxx'x
compensation for social security, Medicare, federal, state and
local withholding taxes, and any other such taxes as may from
time to time be required by any governmental authority.
10. Termination: Xxxxx'x employment with the Company shall
be terminated only in accordance with the following provisions:
A. Disability.
(i) In the event Xxxxx shall become mentally or
physically disabled so as to have been unable to perform his
duties hereunder for twelve (12) consecutive months, subject to
Xxxxx'x right to return to work as provided below, Company shall
have the right to terminate Xxxxx'x employment with Company upon
the expiration of such twelve (12) month period; provided,
however, that upon any such termination Company shall be
obligated to provide Xxxxx with Severance Compensation as
provided in Paragraph 10.E. herein. Such twelve-month period
shall be deemed to have commenced on the date when Xxxxx is first
unable to perform his duties on a substantially full-time basis
because of mental or physical disability and shall end on the
date on which Xxxxx shall return to the substantial full-time
performance of his duties. If at the expiration of such twelve
(12) month period, the Company shall desire to terminate Xxxxx
on the basis of disability, it shall give written notice to him.
Xxxxx'x employment shall thereafter be terminated if he does not
return to substantial full-time performance of his duties within
ten (10) calendar days after such notice is given.
(ii) Nothing contained herein shall be construed
to affect Xxxxx'x rights under any disability insurance or
similar policy, whether maintained by the Company, Xxxxx or
another party. The Company may utilize a disability policy to
fund, in whole or in part, the compensation that would be due to
Xxxxx during the term of or in the event of a disability, in
which case the proceeds of the policy would not be in addition to
any compensation otherwise payable to Xxxxx.
(iii) For purposes of this Agreement, Xxxxx
shall be deemed to be disabled when he shall have been absent
from his duties because of sickness, illness, injury or other
physical or mental infirmity on a substantially full-time basis.
In the event of a dispute as to whether Xxxxx is disabled, the
issue of the determination of disability shall be submitted to a
Board of Arbiters for a binding decision under the procedures set
forth in Paragraph 10.A.(v) below.
(iv)At the end of any disability (other than a
disability that results in the termination of Xxxxx'x employment
with the Company), Xxxxx shall return to work and this Agreement
shall continue as though such disability had not occurred.
(v) If there is a dispute as to whether Xxxxx is
subject to any disability, the issue shall be submitted to a
Board of Arbiters (whose decision shall be binding on the Company
and Xxxxx) consisting of three persons: one physician who
specializes in the physical or mental disability in dispute
(hereinafter referred to as a "Specialist") shall be appointed on
behalf of Company by the Board of Directors of Company (with
Xxxxx having no vote on this question); a second Specialist shall
be appointed by Xxxxx and a third Specialist shall be appointed
by the two Specialists so appointed. The decision of a majority
of such Specialists shall be binding upon the parties hereto. If
a majority of the Specialists determines that Xxxxx is not
subject to any disability for purposes of this Agreement, shall
return to work under the provisions hereof. Such Specialists may
physically examine Xxxxx, who hereby consents to such examination
and to make available any pertinent medical records. The cost of
such Specialists shall be paid by Company.
(vi) If it is determined that Xxxxx can return to
work hereunder on a part-time basis, the parties agree to use
good faith efforts to negotiate the terms of Xxxxx'x return to
work.
(vii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated, Xxxxx
shall continue to receive his base salary and any applicable
bonus, and shall continue to receive all benefits as an employee
and as provided herein generally. Any options previously granted
shall continue to vest, but no new options shall be issued to
Xxxxx.
(viii) During any period in which Xxxxx is
disabled but his employment shall not have been terminated, Xxxxx
shall continue to be credited with Years of Service for purposes
of vesting of Deferred Compensation as set forth in Paragraph
5.D.
B. Death.
(i) Xxxxx'x employment with Company shall
terminate immediately upon Xxxxx'x death; provided, however, that
Company shall be obligated to provide the Severance Compensation
as specified in Paragraph 10.E. herein to Xxxxx'x estate, heirs
or beneficiaries.
(ii) Nothing contained herein shall be construed
to affect Xxxxx'x rights under any life insurance or similar
policy, whether maintained by Company, Xxxxx or another party.
The Company may utilize a life insurance policy to fund, in whole
or in part, the Severance Compensation that would be payable in
the event of Xxxxx'x death, in which case the proceeds of any
such policy other than the Split Dollar Agreement would not be in
addition to any Severance Compensation otherwise payable under
this Paragraph 10.B.
C. Termination by Xxxxx.
(i) Without Good Reason. Xxxxx may, without
"Good Reason" (as hereinafter defined), terminate his employment
by giving to Company sixty (60) days' written notice by Certified
Mail, Return Receipt Requested, at the office of Company, and
such termination shall be effective on the sixtieth (60th) day
following the date of such notice (the "Termination Date"). In
such event, Xxxxx (i) shall continue to render his services up to
the Termination Date if so requested by Company and (ii) shall be
paid his regular base salary and shall receive all benefits up to
the Termination Date. Xxxxx will be entitled to payment of any
bonus due but not yet paid for prior bonus periods, and for a pro-
rata bonus amount for the bonus period in which the termination
occurs pursuant to this Paragraph 10.C.(i) but will not be
entitled to Severance Compensation or to any other compensation,
bonus or fringe benefits accrued after the Termination Date. The
bonus payable to Xxxxx will be paid at the same time it would
have been paid had Xxxxx'x employment not been terminated, will
be based on the achievement of targets for the entire bonus
period without regard to interim results as of the termination
date, and will be paid pro-rata based on the number of full
months Xxxxx was employed within the bonus period divided by the
total number of months in the bonus period.
(ii) With Good Reason. Xxxxx may terminate his
employment with Company immediately for Good Reason. In the
event Xxxxx'x employment with Company is terminated by Xxxxx for
Good Reason, Company shall be obligated to provide Xxxxx with
Xxxxxxxxx Compensation as provided in Paragraph 10.E. herein".
Good Reason" shall mean any of the following (without Xxxxx'x
express prior written consent):
(a) The assignment to Xxxxx by Company of
duties inconsistent with Xxxxx'x positions, duties,
responsibility and status with Company, or any removal of Xxxxx
from or any failure to re-elect Xxxxx to his positions, including
his position as a member of the Company's Board of Directors
(except in connection with the termination of his employment for
disability, death or for cause as provided herein), unless cured
within fifteen (15) days of Xxxxx giving written notice thereof
to the Company.
(b) Any material adverse change in any
benefit plan or arrangement in which Xxxxx is participating and
which is not applicable generally to other key executive
employees of Company who participate in such plan or
arrangement), unless cured within fifteen (15) days of Xxxxx
giving written notice thereof to the Company.
(c) Xxxxx'x relocation outside of the
Washington D.C./ Northern Virginia region without his consent,
except for required travel by Xxxxx on Company business;
provided, however, that if the Board of Directors of Company
determines to relocate Company's principal executive offices,
Company shall pay all of Xxxxx'x reasonable moving and other
relocation expenses, the Board of Directors shall make such
adjustments in Xxxxx'x salary as it reasonably deem necessary to
reflect the increased costs of living in the new location, and
Xxxxx shall be obligated to perform his services generally at
such new location and such relocation shall not constitute "Good
Reason" hereunder.
(d) Any material breach by Company of any
provisions of this Agreement which is not cured by Company within
fifteen (15) days of Xxxxx giving written notice thereof to the
Company.
(e) Except in the case of disability or
death, any purported termination of Xxxxx'x employment by the
Company which is not effected pursuant to sixty (60) days' prior
written notice of termination.
(f) Any termination by Xxxxx of his
employment with the Company which is effected as a result of, in
connection with or within twelve (12) months following a "Change
in Control" as defined and determined under Paragraph 8.C. of
this Agreement.
D. Termination by Company.
(i) Without Cause. Company may, without cause,
terminate Xxxxx'x employment under this Agreement at any time by
giving Xxxxx sixty (60) days' written notice thereof, and such
termination shall be effective on the sixtieth (60th) day
following the date such notice is given (said 60th day, the
"Termination Date"). Company shall be obligated to provide Xxxxx
with Xxxxxxxxx Compensation as provided in Paragraph 10.E.
herein. At the option of Company, Xxxxx'x employment shall be
immediately terminated upon the Company giving such notice, in
which case Xxxxx shall continue to receive his full base salary
and related fringe benefits through the Termination Date.
Notwithstanding any provision of this Agreement to the contrary,
any termination of Xxxxx'x employment by the Company, for any
reason or no reason, within one year following a "Change in
Control", as defined and determined under Paragraph 8.C. of this
Agreement, shall automatically be deemed to be a termination
without cause.
(ii) For Cause. Company may terminate Xxxxx'x
employment under this Agreement immediately for "cause." In such
event, Xxxxx will be entitled to payment of a pro-rata bonus
amount to the date of termination of employment, but will not be
entitled to Severance Compensation or to any other compensation,
bonus or fringe benefits accrued after the date of termination of
employment. The bonus amount payable to Xxxxx will be calculated
in the same fashion as in the case of termination by Xxxxx
without good reason, as set forth in paragraph 10.C.(i) above.
Cause shall be defined as any of the following: (i) willful
unauthorized misconduct in the material performance of Xxxxx'x
duties hereunder, (ii) commission of an act of theft, fraud or
dishonesty by Xxxxx, which act is materially harmful to Company,
(iii) material breach of any provision of this Agreement if such
breach has not been cured by Xxxxx (or if Xxxxx has not
compensated the Company for such breach by payment of an amount
deemed reasonable by the Company if the breach cannot be cured)
within fifteen (15) days after the Company gives Xxxxx written
notice of such breach. Any termination under this Paragraph
10.D.(ii) shall take effect immediately upon the Company giving
Xxxxx written notice thereof.
X. Xxxxxxxxx Compensation. "Severance Compensation"
is defined as all of the compensation and benefits described in
this Paragraph 10.E. It will be provided to Xxxxx upon the
occurrence of any of the events described elsewhere in this
Agreement as providing for Xxxxx'x receipt of Severance
Compensation, but not in any other circumstances except to the
extent that individual components of Severance Compensation may
be separately provided pursuant to the terms of this Agreement.
"Termination Date" is defined as the last day of Xxxxx'x
employment with the Company. "Severance Period" is defined as
the period beginning on the day following the Termination Date
and ending on the day which is three years following the
Termination Date. The compensation and benefits to be provided
as Severance Compensation are as follows:
(i) Severance Pay. Throughout the Severance
Period, Xxxxx will receive severance pay at the rate of 100% of
his annual base salary in effect at the time of his termination,
to be paid on the Company's regular payroll payment dates at the
same time and in the same fashion as the Company's regular
payroll payments.
(ii) Bonus. The Company shall pay to Xxxxx a one-
time bonus equal to three times the highest annual bonus received
by Xxxxx during any one of the five years immediately preceding
the year in which the Termination Date occurs. This bonus will
be paid within thirty days following the Termination Date. It
shall be considered to be full compensation for all amounts due
to Xxxxx for bonus plans in which he was participating as of the
Termination Date, and he shall not be entitled to any further
payments under any of said plans during the Severance Period or
thereafter. Notwithstanding the above, any bonus due to Xxxxx
for years (or other applicable bonus period) completed prior to
the Termination Date but not yet paid shall be paid in addition
to the bonus described herein.
(iii) Stock Options. All options to purchase
shares of ACAH stock that have been granted to Xxxxx shall become
100% vested as of the Termination Date. All options that would
have been granted to Xxxxx in the future pursuant to paragraph
8.A. hereof shall not be granted if the date on which they would
have been granted occurs after the Termination Date, even though
said date may occur during the Severance Period. Xxxxx (or, in
the case of death, his estate or his beneficiaries) shall have
the right to exercise such vested options until the earlier of
the original expiration date of said option, or a date determined
as follows: (a) for options not intended to qualify as Incentive
Stock Options, Xxxxx shall have the right to exercise vested
options any time prior to the end of the Severance Period;
(b) for options intended to qualify as Incentive Stock Options
where termination is caused by reasons other than his death or
disability, Xxxxx shall have the right to exercise within 90 days
following termination of his employment; (c) for options intended
to qualify as Incentive Stock Options where termination is caused
by his death or disability, Xxxxx (or his estate or his
beneficiaries) shall have the right to exercise within one year
following termination of his employment.
(iv) Deferred Compensation. The Deferred
Compensation program will continue throughout the Severance
Period, including Xxxxx'x accumulation of Years of Service for
vesting purposes, and including the Company's continuation of
contributions. The Split Dollar Agreement shall continue in full
force and effect through the Severance Period and shall survive
separate and apart from this Agreement, and the Company's
obligation to pay all premiums pursuant to this Agreement shall
continue in accordance with the terms of the Split Dollar
Agreement for the Severance Period. At the end of the Severance
Period, Xxxxx shall receive his vested interest and any
obligation to pay premiums shall be transferred to Xxxxx.
Alternatively, the Company may elect to pay such amounts to Xxxxx
as would be payable during the Severance Period by the Company
under the Deferred Compensation program in a single lump sum
payment within fifteen (15) days after the Termination Date.
(v) Insurance Programs. Coverage under the
Company's major medical, accident, health, dental, disability and
life insurance plans as from time to time provided to other
executive employees of the Company (and, to the extent provided
by such policies, to Xxxxx'x dependents) shall continue to be
paid for by the Company during the Severance Period, or, in the
event of Xxxxx'x termination following a Change of Control of the
Company as defined in paragraph 8.C., for the longer of the
Severance Period or the remainder of Xxxxx'x life. Provided,
however, if such coverage cannot be continued during the
Severance Period or until Xxxxx'x death, as the case may be,
under the terms of such policies or plans, the Company shall
reimburse Xxxxx for the cost of comparable coverage under
individually obtained policies or for COBRA coverage, or shall
make other arrangements to assure that Xxxxx has comparable
coverage.
(vi) Vacation. Vacation shall not continue to
accrue after the Termination Date under any circumstances.
(vii) Executive Medical Reimbursement Plan.
Throughout the Severance Period, the Company will continue to
promptly reimburse Xxxxx for any otherwise unreimbursed premiums
and/or uncovered medical expenses up to $10,000 per calendar year
under a written medical reimbursement plan maintained for the
Company's key executive employees, including the tax gross-up, if
applicable.
(viii) Travel Benefits. Xxxxx and his wife
shall be provided with free travel on the Company's planes or on
the planes of any successor in interest to the Company on a
positive space basis. These travel benefits will be provided
throughout the Severance Period, or, in the event of a Change of
Control of the Company as defined in paragraph 8.C., for the
longer of the Severance Period or the remainder of Xxxxx'x life.
Xxxxx shall not be entitled to travel benefits on any other
airline.
(ix) Deductions for Taxes. Any compensation due
to Xxxxx hereunder will be subject to deductions for social
security, federal and state withholding taxes, and any other such
taxes as may from time to time be required by governmental
authority.
(x) Notwithstanding any provision to the contrary
in this Agreement, if any part of the payments provided for under
or pursuant to this Agreement (the "Agreement Payments"),
together with all payments in the nature of compensation to or
for the benefit of Xxxxx under any other arrangement, would if
paid constitute a "parachute payment" under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), then the
amount payable to Xxxxx under or pursuant to this Agreement in
such circumstances shall be subject to the following sentence of
this Paragraph 10.E(x). If (i) the value of the Agreement
Payments plus the value of all other payments to or for the
benefit of Xxxxx that constitute "parachute payments," minus the
amount of any excise taxes payable under Code Section 4999 with
respect to such payments and the amount of any similar or
comparable taxes payable only in connection with a change in
control, is greater than (ii) the greatest value of payments in
the nature of compensation contingent upon a change in control
that could be paid at such time to or for the benefit of Xxxxx
and not constitute a "parachute payment" (the "Alternative
Payment"), then the Agreement Payments shall be payable to Xxxxx;
otherwise, only the Alternative Payment shall be payable to
Xxxxx.
11. Assignment: This Agreement, as it relates to the
employment of Xxxxx, is a personal contract and the rights and
interests of Xxxxx hereunder may not be sold, transferred,
assigned, pledged or hypothecated. However, this Agreement shall
inure to the benefit of and be binding upon Company and its
successors and assigns including, without limitation, any
corporation or other entity into which Company is merged or which
acquires all or substantially all of the outstanding common stock
or assets of Company. At any time prior to a Change in Control,
Company may provide, without the prior written consent of Xxxxx,
that Xxxxx shall be employed pursuant to this Agreement by any of
its affiliates instead of or in addition to Company, and in such
case all references herein to the "Company" shall be deemed to
include any such entity, provided that (i) such action shall not
relieve Company of its obligation to make or cause an affiliate
to make or provide for any payment to or on behalf of Xxxxx
pursuant to this Agreement, and (ii) Xxxxx'x duties and
responsibilities shall not be significantly diminished as a
result thereof. The Board of Directors may assign any or all of
its responsibilities hereunder to any committee of the Board, in
which case references to the Board of Directors shall be deemed
to refer to such committee.
12. Invalid Provisions: The invalidity of any one or more
of the paragraphs or provisions of this Agreement shall not
affect the reasonable enforceability of the remaining paragraphs
or provisions of this Agreement, all of which are inserted herein
conditionally upon being valid in law; and in the event one or
more of the paragraphs or provisions contained herein shall be
invalid, this instrument shall be construed as if such invalid
paragraphs or provisions had not been inserted or, alternatively,
said paragraphs or provisions shall be reasonably limited to the
extent that the applicable court interpreting the provisions of
this Agreement considered to be reasonable.
13. Specific Performance: The parties hereby agree that
any violation by Xxxxx of the covenants and agreements contained
herein shall cause irreparable damage to Company, and Company
may, as a matter of course, enjoin and restrain said violation by
Xxxxx by process issued out of a court of competent jurisdiction,
in addition to any other remedies that said court may see fit to
award.
14. Binding Effect: All the terms of this Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and
assigns.
15. Attorneys' Fees: Company shall pay all legal fees
incurred by Xxxxx in connection with the preparation of this
Agreement promptly after submission of a xxxx therefor. In the
event an action is taken by either party to enforce this
Agreement or resolve a dispute in connection herewith, the
prevailing party shall be entitled to recover the costs incurred
with the prosecution and defense of such action, including
reasonable attorney's fees.
16. Waiver of Breach or Violation Not Deemed Continuing:
The waiver by either party of any provision of this Agreement
shall not operate as, or be construed to be, a waiver of any
subsequent breach hereof.
17. Entire Agreement; Law Governing: This Agreement
supersedes in its entirety any and all other agreements
(specifically including any earlier versions of this Severance
Agreement), either oral or in writing, between the parties hereto
with respect to the subject matter hereof, by and between Company
and Xxxxx, and contains all the covenants and agreements among
the parties with respect to such subject matter. This Agreement
shall be construed in accordance with the laws of the
Commonwealth of Virginia. Xxxxx hereby acknowledges that he was
represented by counsel of his choosing in the drafting and
negotiation of this Agreement and that he reviewed this Agreement
with and was advised as to each of the terms thereof by such
counsel. In interpreting this Agreement, a court shall not treat
either party as the draftsman of the Agreement.
18. Paragraph Headings: The Paragraph headings contained
in this Agreement are for convenience only and shall in no manner
be construed as a part of this Agreement.
19. Release by Xxxxx. In the event of a termination of
employment by Xxxxx that results in the payment of Severance
Compensation to him pursuant to the terms of this Agreement, in
consideration for such Severance Compensation, Xxxxx hereby
agrees to execute a full and complete release to the Company
releasing any and all claims that he may have against the Company
including any claims relating to his termination of employment.
20. Notices. All notices permitted or required to be given
pursuant to this Agreement shall be in writing and shall be
deemed to have been sufficiently given, subject to the further
provisions of this Section 20, for all purposes when presented
personally to such party (which in the case of notice to the
Company, shall be presented to the person holding the office or
offices identified below) or sent by facsimile transmission, any
national overnight delivery service, or certified or registered
mail, to such party at its address set forth below:
If to Xxxxx, to the most recent address indicated for
Xxxxx'x residence in the personnel records of Company, unless
Xxxxx gives written notice that such notices are to be delivered
to another address.
If to ACA or the Company:
Atlantic Coast Airlines Holdings, Inc.
Atlantic Coast Airlines
000X Xxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel or Corporate Secretary
Fax No. (000) 000-0000
Such notice shall be deemed to be given and received when
delivered if delivered personally, upon electronic or other
confirmation of receipt if delivered by facsimile transmission,
the next business day after the date sent if sent by a national
overnight delivery service, or five (5) business days after the
date mailed if mailed in the continental United States by
certified or registered mail. Any notice of any change in such
address shall also be given in the manner set forth above.
Whenever the giving of notice is required, the giving of such
notice may be waived in writing by the party entitled to receive
such notice.
A copy of any notice given to Xxxxx shall be sent to:
Xxxxxx X. Xxxxxx
Xxxx Xxxxxxx Xxx & Xxxxxx
0000 X Xxxxxx, XX
Xxxxx 000, Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Fax No. (000) 000-0000
IN WITNESS WHEREOF, the Company has hereunto caused this
Agreement to be executed by a duly authorized officer and Xxxxx
has hereunto set his hand as of the day and year first above
written.
WITNESS:
________________________________
_____________________________
Xxxxx X. Xxxxx
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx Xxxxx,
Secretary Chairman of the Board
ATTEST: ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ BY:
____________________________
Xxxxxxx X. Xxxxxxx, C. Xxxxxx
Xxxxx,
Secretary Chairman of the Board
