EXHIBIT 10.24
SEVERANCE AGREEMENT
Agreement dated as of February 1, 1998, between US Airways, Inc., a
Delaware corporation, having a place of business at Crystal Park Four, 0000
Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000 (the "Company") and N. Xxxxx Xxxxx
residing at 00000 Xxxxxx Xxxx Xxxx, Xxxxxx, Xxxxxxxx, 00000 (the
"Executive").
WITNESSETH
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WHEREAS, the Executive has assumed duties of a responsible nature to
the benefit of the Company and to the satisfaction of its Board of
Directors (the "Board");
WHEREAS, the Board believes it to be in the best interests of the
Company to enter into this Agreement to assure Executive's continuing
services to the Company including, but not limited to, under circumstances
in which there is a possible, threatened or actual Change of Control (as
defined below) of the Company; and
WHEREAS, the Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company currently and in the event of any threatened or pending Change
of Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation
and benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to
accomplish all the above objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree as follows:
1. Certain Definitions.
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(a) The "Effective Date" shall mean the date hereof.
(b) The "Employment Period" shall mean the period commencing on the
Effective Date and ending on the earlier to occur of (i) the Executive's
severance of employment for any reason, or (ii) the first day of the month
next following the Executive's 65th birthday ("Normal Retirement Date").
(c) The "Change of Control Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(d)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated or the Executive
ceases to be an officer of the Company prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment or cessation of status as an
officer (i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control, then for
all purposes of this Agreement the "Change of Control Date" shall mean the
date immediately prior to the date of such termination of employment or
cessation of status as an officer.
(d) The "Change of Control Period" shall mean the period commencing on
the Effective Date and ending on the earlier to occur of (i) the third
anniversary of such date or (ii) the Executive's Normal Retirement Date;
provided, however, that commencing on the date one year after the Effective
Date, and on each annual anniversary of such date (such date and each
annual
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anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), the Change of Control Period shall be automatically extended so as
to terminate on the earlier of (x) three years from such Renewal Date or
(y) the Executive's Normal Retirement Date, unless at least 30 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a
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Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company's
parent, US Airways Group, Inc. ("Group") (the "Outstanding Group Common
Stock") or (ii) the combined voting power of the then outstanding voting
securities of Group entitled to vote generally in the election of directors
(the "Outstanding Group Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (w) any
acquisition directly from Group, (x) any acquisition by Group or any of its
subsidiaries, (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Group or any of its subsidiaries or (z)
any acquisition by any corporation with respect to which, following such
acquisition, more than 85% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were beneficial owners,
respectively of the Outstanding Group Common Stock and
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Outstanding Group Voting Securities in substantially the same proportions
as their ownership, immediately prior to such acquisition, of the
Outstanding Group Common Stock and Outstanding Group Voting Securities, as
the case may be; or
(b) Individuals who, as of the date hereof, constitute Group's Board of
Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Group Board of Directors; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by Group's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of Group of a reorganization, merger
or consolidation, in each case, with respect to which all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Group Common Stock and Outstanding Group
Voting Securities immediately prior to such reorganization, merger or
consolidation, beneficially own, directly or indirectly, less than 85% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation of the Outstanding Group
Common Stock and the Outstanding Group Voting Securities, as the case may
be; or
(d) Approval by the shareholders of Group of (i) a complete liquidation
or dissolution of
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Group or (ii) the sale or other disposition of all or substantially all of
the assets of Group, other than to a corporation, with respect to which
following such sale or other disposition, more than 85% of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Group Common Stock and Outstanding Group Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Group Common Stock and
Outstanding Group Voting Securities, as the case may be; or
(e) The acquisition by an individual, entity or group of beneficial
ownership of 20% or more of the then outstanding securities of Group,
including both voting and non-voting securities, provided, however, that
such acquisition shall only constitute a change of control in the event
that such individual, entity or group also obtains the power to elect by
class vote, cumulative voting or otherwise to appoint 20% or more of the
total number of directors to the Board of Directors of Group.
3. Employment Period. The Company hereby agrees to continue
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the Executive in its employ, and the Executive hereby agrees to remain in
the employ of the Company, during the Employment Period, subject to the
terms and conditions provided herein.
4. Terms of Employment
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(a) Position and Duties.
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(i) During the Employment Period and
prior to a Change of Control Date, (A) if the Board
determines that the Executive has been performing
his duties in accordance with Section 4(a)(iii)
hereof, it shall re-elect the Executive to a
responsible executive position with substantially
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similar level of duties to the position held by the
Executive on the Effective Date, (B) the
Executive's services shall be performed at the
Executive's location on the Effective Date, the
Company's headquarters, or a location where a
substantial activity for which the Executive has
responsibility is located.
(ii) During the Employment Period and
on and following a Change of Control Date, (A) the
Executive's position (including status, offices,
titles and reporting relationships), authority,
duties and responsibilities shall be at least
commensurate in all material respects with the most
significant of those held, exercised and assigned
at any time during the 90-day period immediately
preceding the Change of Control Date and (B) the
Executive's services shall be performed at the
location where the Executive was employed
immediately preceding the Change of Control Date or
any office or location less than thirty-five (35)
miles from such location.
(iii) During the Employment Period, and
excluding any periods of vacation and sick 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 the Company and, to the extent necessary
to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the
Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions
and (C) manage personal investments, so long as
such activities do not significantly interfere with
the performance of the Executive's responsibilities
as an employee of the Company in accordance with
this Agreement. It is also expressly understood
and agreed that to the extent that such activities
have been conducted by the Executive prior to the
Effective Date, the continued conduct of such
activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
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(i) Base Salary. During the Employment
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Period, the Company shall pay the Executive a base
salary x) for the first 12 months of the term
hereof at a rate not less than his base salary in
effect on the Effective Date of this Agreement, and
(y) during each succeeding 12 months of the term
hereof at a rate not less than his base salary in
effect on the last day of the preceding 12-month
period. During the Employment Period, base salary
shall be reviewed at least annually and shall be
increased at any time and from time to time as
shall be substantially consistent with increases in
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base salary awarded in the ordinary course of
business to other key employees of the Company and
its subsidiaries. Any increase in base salary
shall not serve to limit or reduce any other
obligation to the Executive under this Agreement.
Base salary shall not be reduced after any such
increase. Base salary under Section 4(b)(i) shall
hereinafter be referred to as the "Base Salary".
(ii) Annual Bonus. In addition to Base
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Salary, the Executive shall be awarded, for each
fiscal year during the Employment Period, an annual
bonus as shall be determined by the Board or its
Human Resources Committee in accordance with the
Incentive Compensation Plan of Group approved by
the Group Board of Directors ("Incentive Plan") or
otherwise. The annual bonus under Section 4(b)(ii)
shall hereinafter be referred to as the "Annual
Bonus".
(iii) Incentive, Savings and Retirement
---------------------------------
Plans. In addition to Base Salary and Annual
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Bonus payable as hereinabove provided, the
Employee shall be entitled to participate during
the Employment Period in all incentive, savings
and retirement plans, practices, policies and
programs applicable on or after the Effective Date
to other key employees of the Company and its
subsidiaries (including but not limited to the
employee benefit plans listed on Exhibit A
hereto), in each case providing benefits which are
the economic equivalent to those in effect on the
Effective Date or as subsequently amended.
(iv) Welfare Benefit Plans. During the
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Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive
all benefits under welfare benefit plans,
practices, policies and programs provided by the
Company and its subsidiaries (including, without
limitation, medical, prescription, dental,
disability, salary continuance, employee life,
group life, accidental death and travel accident
insurance plans and programs) applicable on or
after the Effective Date to other key employees of
the Company and its subsidiaries, in each case
providing benefits which are the economic
equivalent to those in effect on the Effective
Date or as subsequently amended.
(v) Expenses. During the Employment
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Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the
most favorable policies, practices and procedures
of the Company and its subsidiaries applicable at
any time on or after the Effective Date to other
key employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the
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Employment Period, the Executive shall be entitled
to fringe benefits, including but not limited to
pass privileges for
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non-revenue
transportation in accordance with the most
favorable plans, practices, programs and policies of the
Company and its subsidiaries applicable at any time on or after the
Effective Date to other key employees of the Company and its
subsidiaries, as those benefits may be amended from time to
time.
(vii) Office and Support Staff. During
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the Employment Period, the Executive shall be
entitled to an appropriate office or offices of a
size and with furnishings and other appointments,
and to secretarial and other assistance, as
provided to other key employees of the Company and
its subsidiaries.
(viii) Vacation. During the Employment
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Period, the Executive shall be entitled to paid
vacation in accordance with the most favorable
plans, policies, programs and practices of the
Company and its subsidiaries as in effect on or
after the Effective Date with respect to other key
employees of the Company and its subsidiaries, as
such policies, programs and practices may be
amended from time to time.
5. Termination.
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(a) Mutual Agreement. The Executive's employment hereunder
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may be terminated at any time by mutual agreement on terms to be negotiated
at the time of such termination.
(b) Death or Disability. This Agreement shall terminate
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automatically upon the Executive's death. If the Company 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 written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 90th day after receipt by the Executive of
such notice given at any time after a period of six consecutive months of
Disability and while such Disability is continuing (the "Disability
Effective Date"), provided that, within the 90 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" means
disability which, at least six months after its commencement, is determined
to be total and permanent by a physician
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selected by the Company or its insurers and acceptable to the Executive or
the Executive's legal representative (such agreement as to acceptability
not to be withheld unreasonably). During such six month period and until
the Disability Effective Date, Executive shall be entitled to all
compensation provided for under Section 4 hereof.
(c) Other Termination. During the Employment Period and
-----------------
prior to a Change of Control, the Company may terminate the Executive's
employment for any reason. During the Change of Control Period, the
Company may terminate the Executive's employment for "Cause." For purposes
of this Agreement, "Cause" means (i) an act or acts of personal dishonesty
taken by the Executive and intended to result in substantial personal
enrichment of the Executive at the expense of the Company, (ii) repeated
violations by the Executive of the Executive's obligations under Section
4(a)(ii) of this Agreement which are demonstrably willful and deliberate on
the Executive's part and which are not remedied in a reasonable period of
time after receipt of written notice from the Company or (iii) the
conviction of the Executive of a felony.
(d) Good Reason. During the Employment Period, the
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Executive's employment hereunder may be terminated by the
Executive for Good Reason. For purposes of this
Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
duties inconsistent in any respect with Executive's position
(including status, titles and reporting relationships),
authority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) (x) any failure by the Company to comply
with any of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive, or (y) after a Change of Control Date, any failure
of the Company to pay Base Salary or Annual Bonus in
accordance with Sections 4(b)(i) and (ii), respectively, and
any failure by the Company to maintain or provide the plans,
programs, policies and practices, and benefits described in
Sections 4(b)(iii) - (viii) on the
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most favorable basis such plans programs, policies and
practices were maintained and benefits provided during the
90-day period immediately preceding the Change of Control
Date, or if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter with
respect to other key employees of the Company and its
subsidiaries;;
(iii) the Company's requiring the
Executive to be based at any office or location other
than that described in Section 4(a)(i)(B) or 4(a)(ii)(B)
hereof, except for travel reasonably required in the
performance of the Executive's responsibilities;
(iv) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement; or
(v) any failure by the Company to comply
with and satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(d), any good faith determination of
"Good Reason" made by the Executive on or after a Change of Control Date
shall be conclusive.
(e) Notice of Termination. Any termination by the Company
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during the Employment Period and prior to a Change of Control shall be
effected by the normal policies and practices of the Company. Any
termination by the Company during the Change of Control Period or by the
Executive for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) 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 that 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). The failure by
the Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights hereunder.
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(f) Date of Termination. "Date of Termination" means the
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date of receipt of the Notice of Termination or any later date specified
therein, as the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's employment is
terminated by reason of 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.
6. Obligations of the Company upon Termination.
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(a) Death. If the Executive's employment is terminated by
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reason of the Executive's death, this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than those obligations accrued or earned and vested (if
applicable) by the Executive as of the Date of Termination, including, for
this purpose (i) the Executive's full Base Salary through the Date of
Termination at the rate in effect on the Date of Termination, disregarding
any reduction in Base Salary in violation of this Agreement (the "Highest
Base Salary"), (ii) the product of the Annual Bonus paid to the Executive
for the last full fiscal year and 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 and (iii) any compensation previously
deferred by the Executive (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay not yet paid by
the Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding,
the Executive's family shall be entitled to receive benefits at least equal
to the most favorable benefits
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provided by the Company and any of its subsidiaries to surviving families
of employees of the Company and such subsidiaries under such plans,
programs, practices and policies relating to family death benefits, if any,
in accordance with the most favorable plans, programs, practices and
policies of the Company and its subsidiaries in effect on or after the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other key employees of the Company and its subsidiaries and
their families.
(b) Disability. If the Executive's employment is
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terminated by reason of the Executive's Disability, this Agreement shall
terminate without further obligations to the Executive, other than those
obligations accrued or earned and vested (if applicable) by the Executive
as of the Date of Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to the Employee in
a lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Employee shall be
entitled after the Disability Effective Date to receive disability and
other benefits at least equal to the most favorable of those provided by
the Company and its subsidiaries to disabled employees and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company and its subsidiaries
in effect on or after the Effective Date or, if more favorable to the
Executive and /or the Executive's family, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries and their families.
(c) Cause. If the Executive's employment shall be
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terminated for Cause, this Agreement shall terminate without further
obligations to the Executive (other than the obligation to pay to the
Executive the Highest Base Salary through the Date of Termination plus the
amount of any accrued vacation pay not yet paid by the Company and any
compensation previously deferred by the
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Executive (together with accrued interest thereon).
(d) Resignation; Other than for Good Reason. If the
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Executive terminates his employment other than for Good Reason, this
Agreement shall terminate without further obligations to the Executive,
other than those obligations accrued or earned and vested (if applicable)
by the Executive through the Date of Termination, including for this
purpose, all Accrued Obligations and any obligations provided for in an
agreement, if any, between the Company and the Executive pursuant to
Section 5(a). All such Accrued Obligations shall be paid to paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(e) Good Reason; Other than for Cause, Disability or Death.
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(1) If, during the Employment Period and prior to a
Change of Control, the Company shall terminate the
Executive's employment other than for Cause, Disability or
death or if the Executive shall terminate his employment for
Good Reason, the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination, the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Highest Base Salary through the Date
of Termination; and
B. an amount equal to one times the Executive's
Highest Base Salary; and
C. in the case of compensation previously
deferred by the Executive, all amounts previously
deferred (together with any accrued interest
thereon) and not yet paid by the Company and any
accrued vacation pay not yet paid by the Company.
(2) If, during the Change of Control Period, the
Company shall terminate the Executive's employment other
than for Cause, Disability or death or if the Executive
shall terminate his employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Highest Base Salary through the Date
of Termination; and
B. the product of (x) the Annual Bonus paid to
the Executive for the
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last full fiscal year ending during the Change
of Control Period or, if higher, the Annual
Bonus paid to the Executive during the last full
fiscal year ending during the Change of Control
Period or, if higher, a constructive annual
bonus calculated to be equal to the bonus that
would have been payable to the Executive from
the Company for the last full fiscal year ending
prior to the Date of Termination (regardless of
whether the Executive was employed in an officer
position for all or any part of such fiscal
year) as if Group had achieved the "target level
of performance" under the Incentive Plan set at
the level for the fiscal year immediately
preceding the Change of Control Date and
assuming the Executive's "target percentage"
under the Incentive Plan equals such target
percentage assigned to the Executive immediately
preceding the Change of Control Date (the
highest Annual Bonus determined under this
clause (x) shall hereinafter be referred to as
the "Recent 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;
and
C. the product of (x) three and (y) the sum of
(i) the Highest Base Salary and (ii) the Recent
Bonus; and
D. in the case of compensation previously
deferred by the Executive, all amounts
previously deferred (together with any accrued
interest thereon) and not yet paid by the
Company and any accrued vacation pay not yet
paid by the Company.
(ii) the Company shall provide to the Executive
after the Date of Termination the aggregate of
the following:
A. for the remainder of the Change of Control
Period or such longer period as any plan,
program, practice or policy may provide, the
Company shall continue benefits to the Executive
and/or the Executive's family at least equal to
those which would have been provided to them in
accordance with the plans, programs, practices
and policies described in Section 4(b)(iii)
(with respect to any retirement plans), (iv) and
(v) of this Agreement if the Executive's
employment had not been terminated, including
health insurance and life insurance, in
accordance with the most favorable plans,
practices, programs or policies of the Company
and its subsidiaries in effect on or after the
Change of Control Date or, if more favorable to
the Executive, as in effect at any time
thereafter with respect to other key employees
and their families and for purposes of
eligibility for retiree benefits pursuant to
such plans, practices, programs and policies,
the Executive shall be considered to have
remained employed until the end of the Change of
Control Period and to have retired on the last
day of such period; and
B. at the expiration of the Change of Control
Period, the Company shall continue to provide the Executive
with health insurance and on-line travel
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privileges on the same basis such benefits were
provided to the Executive on the last day of the
Change of Control Period, with such benefits to
continue for the life of the Executive; provided,
however, that if the Executive becomes eligible
for health insurance through a subsequent
employer, the Company's provision of such benefits
shall be secondary to the benefit coverage of the
subsequent employer.
7. Non-exclusivity of Rights. Nothing in this Agreement
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shall prevent or limit the Executive's continuing or future participation
in any benefit, bonus, incentive or other plans, programs, policies or
practices, provided by Group, the Company or any of its subsidiaries and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any stock
option, restricted stock or other agreements with Group, the Company or any
of its subsidiaries. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of Group, the Company or any of its subsidiaries at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy practice or program.
8. Full Settlement. The Company's obligation to make the payments
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provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defence or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement. The Company agrees to pay, to the full extent permitted by law,
all legal fees and expenses, as incurred by the Company, the Executive and
others, which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of
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any contest by the Executive about the amount of any payment pursuant of
Section 9 of this Agreement), plus in each case interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Internal Revenue
Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, shall be made
by the firm of independent public accountants selected by Group to audit
its financial statements (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the
16
individual, entity or group effecting the Change of Control, the Executive
shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid to the
Executive within 5 days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's applicable
federal income tax return would not result in the imposition of a
negligence or a similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the
thirty-day period following the date on which it gives such notice to
17
the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such
claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim,
(iv) permit the Company to participate in any
proceedings relating to such claim; provided, however,
that the Company shall bear and pay directly all costs
and expenses (including additional interest and
penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment
of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and
xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with
respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to
such advance; and further provided that any extension
of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be
due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company
18
pursuant to Section 9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), a determination is
made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in
------------------------
a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to Group, the Company
or any of their subsidiaries, and their respective businesses, which shall
have been obtained by the Executive's employment by the Company or any of
its subsidiaries and which shall not be or become public knowledge (other
than by acts by Executive or his representatives in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. Notwithstanding
the foregoing, the Executive or his representatives may disclose any such
information if such information is compelled by legal process, provided
that if Executive is so compelled, he shall provide the Company with prompt
notice so that it may seek a protective order or other remedy. In any
event, Executive shall furnish only that portion of the confidential
19
information that is legally required to be disclosed. In the event the
Executive breaches any provision of this Section 10, any payments or other
benefits promised under this Agreement shall be forfeited. Such a
forfeiture shall not limit the Company from seeking any other contractual
or equitable remedies available to it which are appropriate under the
circumstances. The Executive expressly consents to the award of injunctive
relief in the event a violation of this Section 10 is alleged by the
Company.
11. Successors
----------.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company 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
the Company and its successors and assigns.
(c) The Company 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 the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company 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.
12. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this
20
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,
addressed as follows:
If to the Executive: If to the Company:
------------------- -----------------
N. Xxxxx Xxxxx US Airways, Inc.
00000 Xxxxxx Xxxx Xxxx Xxxxxxx Xxxx Xxxx
Xxxxxx, XX 00000 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
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) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company 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.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or
any other provision thereof.
(f) Words or terms in this Agreement which connote the masculine
gender are deemed to apply equally to female executives.
(g) This Agreement supersedes any prior employment or severance
agreement between the Company and the Executive, and contains the entire
understanding of the Company and the
21
Executive with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
US AIRWAYS, INC.
/s/ Xxxxxxxx X. Xxxxx
---------------------
Xxxxxxxx X. Xxxxx
Vice President, Deputy General
Counsel and Secretary
EXECUTIVE
/s/ N. Xxxxx Xxxxx
-----------------------
N. Xxxxx Xxxxx
22
EXHIBIT A
---------
US Airways, Inc. Employee Savings Plan
US Airways, Inc. Employee Pension Plan
US Airways, Inc. Supplemental Executive Defined Contribution Plan
1996 Stock Incentive Plan of US Airways Group, Inc.
Incentive Compensation Plan of US Airways Group, Inc.
Individual Supplemental Retirement Agreements in effect with certain
officers
Restricted Stock Agreements with certain senior officers
23
