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Exhibit 10.86
Employment Agreement
This Employment Agreement (the "Agreement") is entered into by
and between Dart Group Corporation (the "Company") and Xxxxxxx X. Xxxxx
("Executive") as of the 12th day of February, 1998.
I. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth, for a
three year term running from February 12, 1998, to and including February 12,
2001. This Agreement is subject to renewal only as set forth in Section VI
below. The term of this Agreement, including extensions thereof, is referred
to as the "Term."
II. DUTIES.
A. Executive shall serve during the course of his employment
as Chairman and Chief Executive Officer of the Company and each of its
subsidiaries, and shall have such other duties and responsibilities as the
Board of the Company shall determine from time to time.
B. Executive agrees to devote substantially all of his
professional time, energy and ability as is reasonably necessary to accomplish
the business of the Company. Nothing herein shall prevent Executive, upon
approval of the Board of Directors of the Company, from serving as a director
or trustee of other corporations or businesses which are not in competition
with the business of the Company. Nothing herein shall prevent Executive from
investing in real estate for his own account or from becoming a passive partner
or a passive stockholder in any corporation, partnership or other venture not
in direct competition with the business of the Company.
C. For the term of this Agreement, Executive shall report
directly to the Board of Directors of the Company. Executive shall be given
such authority as is appropriate to carry out the duties described above and
all executives of the Company and its subsidiaries shall report directly to
Executive or his designee. Executive shall also serve as Chairman of the Board
of Directors.
III. COMPENSATION AND BENEFITS.
A. Salary. The Company will pay to Executive a base salary
at the rate of $550,000 per year. Such salary shall be earned weekly and shall
be payable in periodic
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installments in accordance with the Company's customary practices for executive
officers. Amounts payable shall be reduced by standard withholding and other
authorized deductions. The Company will review Executive's salary at least
annually. The Company may in its discretion increase Executive's salary but it
may not reduce it during the Term.
B. Additional Compensation. To incentivize Executive to
maximize stockholder value in a timely manner, Executive shall be entitled to
additional compensation comprised of three components: (1) stock options, (2)
restricted stock and (3) cash payments, in each case as provided below. For
the purposes of this Agreement, a "Total Sale" of the Company is deemed to have
occurred either when (x) substantially all of the common stock of the Company
is converted into cash, securities or other property (including pursuant to a
transaction using recapitalization accounting) or (y) substantially all of the
Company's businesses (i.e. the businesses generating 90% or more of the
revenues of the Company) have been sold or otherwise divested. The closing
date of the transaction that gives rise to a Total Sale shall be deemed the
date of the Total Sale. For purposes of this Agreement, a "Change of Control"
occurs when any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")) is or becomes the
beneficial owner, directly or indirectly, of more than 35% of the total voting
power of the voting stock of the Company.
X. Xxxxx of Option; Exercise Price. Subject to the terms
and conditions set forth herein, the Company hereby grants to Executive options
to purchase 30,000 shares at a price per share of $108.00 (as from time to time
adjusted hereunder, the "Exercise Price"), which shall vest as provided below
and expire five years from the date of this Agreement. These options shall be
nonqualified stock options. The Exercise Price and the number of shares
purchasable upon exercise of an option shall be subject to adjustment, and
Executive will be entitled to certain notifications, in each case as provided
in Exhibit A.
1. Exercisability of Option. With respect to
vested options, upon payment of the Exercise Price at the time in effect
hereunder, the Company shall cause to be issued and shall deliver to Executive
a certificate for the shares issuable upon such exercise. Such certificate
shall be deemed to have been issued as of the date of the surrender of the
option as to such number of shares and payment of the Exercise Price.
Fractional share interests shall be disregarded, but may be accumulated. No
fewer than 50 shares may be purchased at any one time, unless the number
purchased is the total number at the time remaining for purchase under the
options. The options shall be exercisable by the delivery to the Company of a
written notice substantially in the form of Exhibit B hereto stating the number
of shares to be purchased pursuant to the options and accompanied by payment in
full in accordance with this Agreement, in an amount equal to the Exercise
Price per Share multiplied by the number of shares to be purchased.
2. Permitted Consideration. The purchase price of
any shares purchased on exercise of a vested option shall be paid in full at
the time of each purchase
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in one or a combination of the following methods: (i) in cash or by electronic
funds transfer; (ii) by check payable to the order of the Company; or (iii) by
the delivery of shares owned by Executive or vested stock options held by
Executive. Any shares or stock options used to satisfy the Exercise Price of
an option shall be valued at their fair market value on the date of exercise
(as mutually determined by the Board of Directors and Executive) and shall have
been owned by Executive or have been vested for at least six months prior to
the exercise.
3. Vesting. When each business unit is sold or
otherwise divested, a percentage of Executive's stock options shall vest and
become exercisable. Stock options shall become exercisable upon vesting. The
percentages of Executive's stock options that shall vest at the sale or
divestiture of each business unit are as follows:
% of Stock Options Vesting
Business Divested (Number of Dart Shares)
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Trak Auto 30% vest (9,000 shares)
Crown Books 15% vest (4,500 shares)
Total Beverage 10% vest (3,000 shares)
Shoppers 45% vest (13,500 shares)
Regardless of the sale or divestiture of the Company's business units, all of
the unvested options shall vest 4 1/2 years from the date of this Agreement if
executive is employed by the Company (or its successor) at such time. In case
of a Change of Control or a Total Sale of the Company, all options shall vest
immediately. The exercise price of the options shall be the Exercise Price.
4. Payment of Taxes. The Company shall pay all
documentary stamp taxes, if any, attributable to this Agreement or the issuance
of any of the shares or other securities upon the exercise of the options.
5. Reservation of shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares or its authorized and issued
shares held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue shares upon exercise of the options, the full number of
shares deliverable upon exercise of the options. Before taking any action which
would cause an adjustment pursuant to Exhibit A reducing the Exercise Price
below the then par value (if any) of the shares issuable upon exercise of the
options, the Company will take any corporate action which may, in the opinion
of its counsel (which may be counsel employed by the Company), be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares at the Exercise Price as so adjusted.
6. Representations of the Company; Obtaining
Approvals and Stock Exchange Listings; Registration Rights. The Company
covenants and represents that all shares which may be issued upon the exercise
of the options will, upon issuance, be fully
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paid and nonassessable and free from all taxes (other than withholding taxes on
income and wages), liens, charges and security interests with respect to the
issue thereof. The Company will in good faith, and as expeditiously as
possible, take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities, and will make any and all filings under Federal and State
securities laws, necessary in connection with the issuance of the options, the
exercise of the options, and the issuance, sale, transfer and delivery of
shares upon exercise of the options by Executive, provided that the foregoing
provisions of this sentence shall not be deemed to require registration of the
options or the shares issuable on exercise of the options under the Securities
Act of 1933, as amended, or similar state securities laws.
D. Restricted Stock. Executive shall also receive promptly
upon execution hereof 6,000 shares of common stock of the Company. Such shares
received by Executive shall vest as described below. When each business unit
is sold or divested, a percentage of Executive's restricted stock shall vest as
follows:
% of Shares Vesting
Business Divested (Number of Dart Shares)
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Trak Auto 30% vest (1,800 shares)
Crown Books 15% vest (900 shares)
Total Beverage 10% vest (600 shares)
Shoppers 45% vest (2,700 shares)
Regardless of the sale or divestiture of the Company's business units, all of
the unvested shares shall vest 4 1/2 years from the date of this Agreement if
Executive is employed by the Company (or its successor) at such time. In case
of a Change of Control or a Total Sale of the Company, all unvested restricted
stock shall vest immediately. When Executive's taxes become due and payable as
a result of the receipt or vesting of the restricted stock, the Company agrees
to loan Executive such amounts as are necessary to make any required tax
payments, including all taxes, interest, penalties, additions to tax and costs
imposed or incurred with respect to the restricted stock. Each such loan shall
bear simple interest at the applicable federal rate, payable annually, and
shall mature on the later of a Total Sale of the Company and the fifth
anniversary of the making of such loan; provided that each such loan will be
mandatorily prepaid from the proceeds of the sale or other divestiture of the
shares to which such loan related (e.g. if the loan related to 100 shares and
50 of such shares were sold by Executive, one half of the loan would be
mandatorily prepayable from the proceeds of such sale). Each such loan may be
prepaid at any time without premium or penalty.
1. Dividends; Voting Rights. As of the date of
this Agreement, Executive shall be entitled to cash dividends declared with
respect to the shares of restricted stock issued hereunder. Any securities or
other property receivable in respect of the restricted stock by Executive as a
result of any dividend or other distribution, conversion or exchange of or with
respect to the restricted stock will be subject to the
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restrictions and risks of forfeiture set forth herein to the same extent as the
shares of restricted stock to which such securities or other property relate.
As of the date of this Agreement, the Executive shall be entitled to voting
rights with respect to the shares of restricted stock issued hereunder.
2. Certificates. Within 10 days after the date of
this Agreement, the Company shall issue a certificate or certificates for the
shares of restricted stock issued hereunder, registered in the name of
Executive, which certificate(s) shall upon redelivery thereof to the Company
pursuant to Section III.D.3 below be held by the Company until the restrictions
on such shares shall have lapsed and the shares shall thereby have become
vested or the shares represented thereby are forfeited hereunder. The
certificate(s) representing shares forfeited hereunder and any shares
accumulated thereon shall be cancelled; any other rights or property
accumulated in respect thereof also shall be forfeited and shall revert to the
Company. The certificate(s) representing restricted shares shall bear a legend
referring to this Agreement and restrictions and limitations on such shares.
3. Certificates to be Held by the Company; Power of
Attorney. Upon delivery to Executive of the certificate(s) representing shares
awarded to Executive hereunder, Executive shall redeliver such certificate(s)
to the Company, together with a stock power or stock powers, in blank, with
respect to such certificate(s), to be held by the Company pursuant to the terms
hereof. Executive, by acceptance of this Agreement, shall be deemed to appoint
the Company and each of its authorized representatives as Executive's
attorney(s)-in-fact to effect any transfer of unvested forfeited shares (or
shares otherwise reacquired by the Company hereunder) or related property or
rights to the Company as may be required hereunder, and to execute such
documents as the Company or such representatives deem necessary or advisable in
connection with any such transfer.
4. Delivery of Certificates. Promptly after the
lapse or other release of restrictions in accordance with the terms hereof, a
certificate or certificates evidencing the number of shares of Common Stock as
to which the restrictions have lapsed or been released shall be delivered to
Executive. The shares so delivered shall no longer be restricted stock or
restricted shares hereunder.
E. Cash Bonus. If (a) a Total Sale of the Company occurs on
or before December 31, 1999 and (b) the fair market value per share of the
consideration received by stockholders in connection with all transactions
resulting in the Total Sale (as determined by the Board of Directors) exceeds
the Exercise Price, Executive shall be paid a cash bonus determined as provided
below. The amount of the cash bonus shall be: (i) $700,000 if the Total Sale
occurs on or prior to December 31, 1998, (ii) $612,500 if the Total Sale occurs
after December 31, 1998 and on or prior to Xxxxx 00, 0000, (xxx) $525,000 if
the Total Sale occurs after March 31, 1999 and on or prior to June 30, 1999,
(iv) $435,000 if the Total Sale occurs after June 30, 1999 and on or prior to
September 30, 1999, and (v) $350,000 if the Total Sale occurs after September
30, 1999 and on or
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prior to December 31, 1999. If a Total Sale does not occur by December 31,
1999, or if the fair market value per share of the consideration received by
stockholders in connection with all transactions resulting in the Total Sale
(as determined by the Board of Directors) is less than the Exercise Price,
Executive shall not be entitled to a cash bonus under this Section.
F. Excise Tax on Payments Due Because of a Change of
Control. If a transaction described in Section 280G(b)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended, occurs with respect to the Company,
that results in Executive receiving payments pursuant to this Agreement because
of a Change in Control (the "Payments"), that are subject to an excise tax
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, and
any successor provision or any comparable provision of state or local income
tax law, then the Company shall pay to Executive an additional cash payment
(the "Gross-Up Payment") in an amount such that after Executive pays all taxes,
interest, penalties, additions to tax and costs imposed or incurred with
respect to the Payments and the Gross-Up Payment, Executive retains an amount
of the Gross-Up Payment equal to any excise tax imposed on him. This provision
is intended to put Executive in the same position as Executive would have been
had no excise tax been imposed upon or incurred as a result of any payment due
to a Change in Control.
G. Non-transferability. Except as provided in this Section,
the options under this Agreement are exercisable only by Executive. Prior to
vesting, the options and the restricted stock issued hereunder are
nontransferable and shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge (other
than to the Company), except by operation of law or by will or the laws of
descent and distribution. The Company shall disregard any attempt at transfer,
assignment or other alienation prohibited hereby.
H. Performance-Based Awards. Prior to the date of this
Agreement, the performance criteria conditioning the grant of the options
hereunder and the cash bonus provided for under Section III.E. (the
"Performance Awards") hereof were approved by the Compensation Committee of the
Company. The eligible class of persons for Performance Awards consists of
Executive. In no event shall grants of Performance Awards to Executive
hereunder during the initial three year term hereof relate to more than 30,000
shares or to a cash amount of more than $700,000 (it being understood that the
6,000 restricted shares do not constitute Performance Awards). Before any
Performance Award is vested or paid hereunder, the Compensation Committee must
certify that the conditions of vesting or payment were satisfied.
I. Savings and Retirement Plans. Executive shall be
entitled to participate in all savings and retirement plans, practices,
policies and programs applicable generally to other executives of the Company.
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J. Welfare Benefit Plans. Executive and his family shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company
(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 executives of the Company.
K. Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other executives of the Company.
L. Fringe Benefits. Executive shall be entitled to fringe
benefits in accordance with the plans, practices, programs and policies as in
effect generally with respect to other executives of the Company.
M. Vacation. Executive shall be entitled to paid vacation
in accordance with the plans, policies, programs and practices as in effect
generally with respect to other executives of the Company, but in no case shall
Executive accrue fewer than 20 days of paid vacation per year.
N. Legal Fees. The Company agrees to reimburse Executive
for any fees and expenses, including legal fees and expenses, incurred by
Executive in connection with (i) the negotiation, execution and delivery of
this Agreement and (ii) the enforcement of any rights of Executive under this
Agreement.
IV. TERMINATION.
A. Cause. The Company may terminate Executive's employment
for Cause. For purposes of this Agreement, "Cause" shall mean that the Board
members, other than Executive, unanimously determine that Executive has engaged
in or committed: theft, fraud or other illegal conduct; or material breach of
this Agreement, provided, however, that no event or circumstance shall
constitute Cause within the meaning of this clause unless Executive has been
given written notice in accordance with Section XIV of the events or
circumstances constituting Cause and has failed to effect a cure thereof within
30 calendar days following the giving of such notice.
B. Death or Disability. Executive's employment shall
terminate automatically upon Executive's death. If Executive suffers a
Permanent Disability (as defined below) which results in an absence from
full-time performance of his duties for a period of five consecutive months,
then the Company shall be entitled to terminate his employment. In that event,
the Company must give to Executive written notice in accordance with Section
XIV of its intention to terminate Executive's employment, and Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by
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Executive, so long as, within the 30 days after such receipt, Executive shall
not have returned to full-time performance of his duties. For purposes of this
Agreement, "Permanent Disability" shall mean a physical or mental impairment
which substantially limits a major life activity of Executive and which renders
Executive unable to perform the essential functions of his position, even with
reasonable accommodation which does not impose any undue hardship on the
Company.
C. Resignation for Good Reason. Executive may resign for
"Good Reason." For purposes of this Agreement, "Good Reason" shall mean the
resignation of Executive after the Company, without express consent of
Executive, materially breaches the Agreement; Executive notifies the Company in
writing in accordance with Section XIV of the nature of such material breach;
and the Company does not correct such material breach within 30 calendar days
after its receipt of such notice. The Company acknowledges and agrees that a
material breach for purposes of this provision shall include, but not be
limited to, any material reduction in Executive's duties or authority (whether
or not accompanied by a change in title), or any diminution in Executive's
title.
D. Obligations of the Company Upon Termination.
1. Termination for Cause or Resignation Without
Good Reason. If Executive is terminated for Cause or if Executive resigns from
the Company without Good Reason, this Agreement shall terminate without further
obligations to Executive other than for the timely payment of: (i) Executive's
annual base salary through the date of termination to the extent not
theretofore paid, any vested restricted stock, and any cash bonus to which
Executive is entitled, on or prior to the date of termination, (ii) any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (i)
and (ii) shall be hereinafter referred to as the "Accrued Obligations"), which
shall be paid to Executive within 30 days of the termination date. Any of
Executive's options that are vested on or prior to the date of termination will
not be forfeited. If Executive is terminated for Cause, such vested options may
be exercised by Executive at any time within thirty days from the date of
termination, and if Executive resigns without Good Reason, such vested options
may be exercised by Executive at any time within one year from the date of
termination. Any unvested restricted stock or stock options shall be
forfeited. If it is subsequently determined that the Company did not have
Cause for termination under this Section IV.D.1, then the Company's decision to
terminate shall be deemed to have been made under Section IV.D.3 and Executive
is entitled to the amounts payable thereunder.
2. Termination for Death or Disability. If
Executive's employment is terminated by the Company because of Executive's
death or Permanent Disability any time after May 12, 1998, this Agreement shall
terminate without further obligations to Executive other than for the timely
payment to Executive or his estate or beneficiary, as applicable, of (a) the
Accrued Obligations, (b) payment to Executive of any amounts due
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pursuant to the terms of any applicable welfare benefit plans, and (c) payment
to Executive of the cash payment in the amounts set forth in Section III.E if a
Total Sale occurs within the time periods set forth therein. Any of
Executive's options that are vested on or prior to the date of termination
shall not be forfeited and may be exercised by Executive or Executive's estate
at any time within one year from the date of termination. Any unvested
restricted stock or stock options shall be forfeited.
3. Termination By the Company for Other than Cause,
Death or Disability, and Resignation for Good Reason. If the Company
terminates Executive's employment for other than Cause, death or Permanent
Disability, or if Executive resigns for Good Reason, this Agreement shall
terminate with the following obligations to Executive: (a) the timely payment
of Accrued Obligations; and (b) payment to Executive of the cash payment to
which Executive is entitled in the amounts set forth in Section III.E. if a
Total Sale occurs within the time periods set forth therein. In addition all
unvested stock options shall vest immediately upon the date of termination and
all of Executive's unexercised stock options may be exercised by Executive at
any time within five years from the date of this Agreement. All unvested
restricted stock shall be forfeited on the date of such termination for other
than Cause, death or Permanent Disability or resignation for Good Reason.
4. Termination By the Company After a Total Sale of
the Company. After a Total Sale of the Company, if Executive has received all
of the compensation provided for under this Agreement (including vesting of all
restricted stock, vesting of all stock options and the payment contemplated by
Section III.E), the Company may at its option, within 15 days of the
consummation of the Total Sale of the Company, terminate this Agreement upon 30
days' written notice to Executive. In such event, the Company shall have no
further obligations to compensate Executive hereunder except with respect to
obligations of the Company that survive termination of this Agreement and as
required by law.
V. ARBITRATION.
Any controversy or claim arising out of or relating to this
Agreement, its enforcement or interpretation, or because of an alleged breach,
default, or misrepresentation in connection with any of its provisions, shall
be submitted to arbitration, to be held in Washington, D.C. in accordance with
the American Arbitration Association's National Rules for the Resolution of
Employment Disputes, including that the arbitrator's fees and expenses shall be
paid entirely by the Company.
VI. RENEWAL.
This Agreement shall be automatically renewed for one additional
year each year after the expiration of the stated term, unless either party
gives written notice in accordance with Section XIV of his or its desire to
modify or terminate the Agreement and
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such notice is given at least thirty (30) days prior to the expiration of this
Agreement (or any renewal). Upon renewal pursuant to this Section VI, unless
the parties agree to modify this Agreement, no stock options, restricted stock,
or cash bonus shall be awarded to Executive in addition to those amounts to
which he is entitled in the original term of this Agreement. If a notice is
sent by the Company pursuant to this Section VI, indicating that the Company
wishes to terminate Executive's relationship with the Company at the end of the
term of this Agreement (or any renewal), such notice shall be deemed a
termination of Executive without Cause and Section IV.D.3 shall apply. If a
notice is sent by Executive pursuant to this Section VI, indicating that
Executive wishes to terminate his relationship with the Company at the end of
the term of this Agreement (or any renewal), such notice shall be deemed a
resignation by Executive without Good Reason and Section IV.D.1 shall apply.
VII. SUCCESSORS.
A. This Agreement is personal to Executive and shall not,
without the prior written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any such successor
or assignee shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" and "assignee" shall
include any person, firm, corporation or other entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires the
stock of the Company or to which the Company assigns this Agreement by
operation of law or otherwise.
VIII. WAIVER.
No waiver of any breach of any term or provision of this
Agreement shall be construed to be, nor shall be, a waiver of any other breach
of this Agreement. No waiver shall be binding unless in writing and signed by
the party waiving the breach.
IX. MODIFICATION.
This Agreement may not be amended or modified other than by a
written agreement executed by Executive and the Company, with the approval of a
majority of the Board of Directors.
X. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is
held invalid, the invalidity shall not affect other provisions or applications
of the Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to
be severable.
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XI. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and
final understanding concerning Executive's employment with the Company and the
other subject matters addressed herein between the parties. It is intended by
the parties as a complete and exclusive statement of the terms of their
agreement. It supersedes and replaces all prior negotiations and all
agreements proposed or otherwise, whether written or oral, concerning the
subject matter hereof. Any representation, promise or agreement not
specifically included in this Agreement shall not be binding upon or
enforceable against either party. This is a fully integrated agreement.
XII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and
delivered within the District of Columbia, and the rights and obligations of
the parties hereunder shall be construed and enforced in accordance with, and
governed by, by the laws of the District of Columbia without regard to
principles of conflict of laws.
XIII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XIV. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
if mailed by registered or certified mail, postage prepaid, addressed to
Executive at 0000 Xxxxxxx Xxxxxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, or addressed
to the Company at 0000 00xx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000. Either party may
change the address at which notice shall be given by written notice given in
the above manner.
XV. EXECUTION.
This Agreement is being executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.
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IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXXXXX X. XXXXX
/s/ XXXXXXX X. XXXXX
--------------------
Xxxxxxx X. Xxxxx
DART GROUP CORPORATION
By: XXXXX XXXXX
-------------------
Title: Xxxxx Xxxxx
SVP Human Resources
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PROMISSORY NOTE
$341,449.50 Landover, Maryland
March 10, 1998
FOR VALUE RECEIVED, Xxxxxxx X. Xxxxx, an individual (the
"MAKER"), unconditionally promises to pay to Dart Group Corporation, a Delaware
corporation (together with any successor or assignee by operation of law or
otherwise, the "PAYEE"), on March 10, 2003 (the "MATURITY DATE") or such other
date as provided herein, in the manner and at the place hereinafter provided,
the lesser of (i) three-hundred and forty-one thousand, four hundred forty-nine
dollars and fifty cents ($341,449.50) and (ii) the unpaid principal amount of
all advances made by the Payee to the Maker for the purposes of the Maker's
payment of taxes pursuant to the terms of the Employment Agreement dated as of
February 12, 1998 (the "EMPLOYMENT AGREEMENT"), entered into by and between the
Maker and the Payee (such lesser amount to be referred to as the "UNPAID
PRINCIPAL"); provided, however, that (x) if there has not occurred a "Total
Sale" of the Payee, as such term is defined in the Employment Agreement, on or
before March 10, 2003, then the Maturity Date shall be such later date that is
30 days after the date of the Total Sale of the Payee, and (y) if the Maker
sells any of the restricted stock granted to the Maker in the Employment
Agreement (a "MAKER SALE"), then an amount of the Unpaid Principal that is
proportional to the number of shares so sold by the Maker divided by the total
number of shares granted to the Maker in the Employment Agreement (taking into
account any adjustment to the total number of shares of the Payee in a
transaction described in Section I(a) of Exhibit A of the Employment Agreement)
shall be repaid by the Maker within 30 days after the date of such Maker Sale.
All advances made under this Note shall be noted hereon;
provided, however, that the failure to make a notation shall not limit or
otherwise affect the obligations of the Maker hereunder with respect to
payments of principal or interest on this Note.
The Maker also promises to pay interest on the unpaid
principal balance of this Note at a rate per annum equal to the lesser of: (i)
the maximum amount allowable pursuant to applicable law; or (ii) 5.59%;
provided, however that interest shall be payable from and after the fifth
anniversary of the date of this Note at the annually compounding applicable
federal rate for short-term loans in effect for the relevant semi-annual period
under proposed or final regulations promulgated under
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Section 7872 of the Internal Revenue Code of 1986, as amended, but in no event
shall such rate of interest be insufficient to prevent the imputation of
interest income for United States federal income tax purposes. Interest that
is due as of the close of business on each anniversary of the date of this Note
but not yet paid shall be added to principal (such additional amount to be
referred to as "Capitalized Interest" or included within references hereinafter
to "principal") and accrue interest from such date. Interest on this Note
shall be computed on the basis of a 365-day year, based on the actual number of
days elapsed. Interest shall be payable upon any prepayment of this Note (to
the extent accrued from the later of the date of this Note or the most recent
anniversary thereof) and at the Maturity Date. At his option, the Maker may at
any time prior to the Maturity Date pay interest accrued on the unpaid
principal balance (including Capitalized Interest) of this Note. Capitalized
Interest shall be payable on the Maturity Date and subject to acceleration or
prepayment to the same extent as Unpaid Principal.
1. PAYMENTS. All payments of principal and interest in
respect of this Note shall be made in lawful money of the United States of
America. Each payment made hereunder shall be credited first to interest then
due and the remainder of such payment shall be credited to principal, and
interest shall thereupon cease to accrue upon the principal so credited. The
Maker shall have the right at any time and from time to time to prepay the
principal of this Note in whole or in part, without premium or penalty, such
prepayment hereunder being accompanied by interest on the principal amount of
the Note being prepaid to the date of prepayment. Notwithstanding any payment
or prepayment of principal hereunder by the Maker, the Maker acknowledges and
agrees that the aggregate advances made by the Payee hereunder shall in no
event exceed the sum of $341,449.50.
2. EVENTS OF DEFAULT. The failure by the Maker to pay
any principal (including Capitalized Interest) under this Note when due,
whether such due date is determined by reference to the Maturity Date or by
acceleration, within five (5) days after such due date shall constitute an
Event of Default.
Upon an Event of Default, if but only if the Payee provides
written notice to the Maker, the Payee may declare the principal amount of this
Note (including Capitalized Interest) together with accrued interest thereon to
be due and payable, and such principal amount together with such interest shall
thereupon immediately become due and payable without presentment, further
notice, protest or other requirements of any kind (all of which are hereby
expressly waived by the Maker), unless, within 10 days of the date of such
written notice, the Maker cures such Event of Default.
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3. MISCELLANEOUS.
(a) All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telefacsimile or
cable communication) and hand-delivered, mailed, or telecopied as follows: if
to the Maker, at his address specified opposite his signature below; and if to
the Payee, at 0000 00xx Xxxxxx, Xxxxxxxx, XX 00000; or in each case at such
other address as shall be designated by the recipient. All such notices and
communications shall, when hand-delivered, mailed, or telecopied (with oral
confirmation) be effective when deposited in the mails, delivered or sent by
telecopier.
(b) No failure or delay on the part of the Payee or any
other holder of this Note to exercise any right, power or privilege under this
Note and no course of dealing between the Maker and the Payee shall impair such
right, power or privilege or operate as a waiver of any default or an
acquiescence therein, nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
expressly provided in this Note are cumulative to, and not exclusive of, any
rights or remedies that the Payee would otherwise have. No notice to or demand
on the Maker in any case shall entitle the Maker to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the right
of the Payee to any other or further action in any circumstances without notice
or demand.
(c) No provision of this Note may be waived, modified or
discharged orally, but only by an agreement signed by the party against whom
enforcement is sought.
(d) Neither the death of the Maker, nor the termination
of his employment with the Payee for any or no reason, shall accelerate the
Maturity Date or the due date of any payment hereunder.
(e) If any provision in or obligation under this Note
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(f) This note and the rights and obligations of the Maker
and the Payee hereunder shall be governed by, and shall be construed and
enforced in accordance with the laws of the State of Maryland.
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IN WITNESS WHEREOF, the Maker has executed and delivered this
Note as of the day and year and at the place first above written.
/s/ XXXXXXX X. XXXXX
-------------------------------
Xxxxxxx X. Xxxxx
Notice Address:
Senator Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxxxxx, X.X.
Xxxxxxxxxx, XX 00000
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