Exhibit 10.19
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Agreement dated as of November 18, 1998, between US Airways
Group, Inc., a Delaware corporation, having a place of business
at Crystal Park Four, 2345 Xxxxxxxxx, XX 00000 ("Group"), US
Airways, Inc., a Delaware corporation, having a place of business
at Crystal Park Four, 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
(the "Company") and Xxxxxx Xxxxxxx, residing at 0000 Xxxxx Xxxx,
XxXxxx, Xxxxxxxx 00000 (the "Executive").
WITNESSETH
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WHEREAS, the Company and the Executive have entered into
that certain employment agreement dated February 19, 1996 (the
"Original Agreement"), and the parties hereto desire to amend,
restate and replace the Original Agreement with this Agreement;
WHEREAS, the Executive has assumed the duties of the
President and Chief Executive Officer of Group and of the
President and Chief Executive Officer of the Company to the
benefit of Group and the Company, and to the satisfaction of
their respective Boards of Directors (each "Board");
WHEREAS, the respective Boards believe it to be in the best
interests of Group and the Company to enter into this Agreement
to assure Executive's continuing services to Group and 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;
WHEREAS, the respective Boards believe it is imperative to
diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending
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or threatened Change of Control and to encourage the Executive's
full attention and dedication to Group and 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; and
WHEREAS, in order to accomplish all the above objectives,
the respective Boards have authorized the Company and Group 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.
(a) The "Effective Date" shall mean the date hereof.
(b) The "Change of Control Date" shall mean the first date
during the Employment Period (as defined in Section 1(c)) 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
Group or the Company is terminated or the Executive ceases to be
President and Chief Executive Officer of Group or 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
President and Chief Executive Officer.
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(c) The "Employment 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 first day of the
month next following the Executive's 65th birthday ("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 anniversary thereof shall
be hereinafter referred to as the "Renewal Date"), the Employment
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 Employment Period shall not be so extended;
and provided, further, that upon the occurrence of a Change of
Control Date, the Employment Period shall automatically be
extended so as to terminate on the earlier to occur of (1) the
third anniversary of such date or (2) the Executive's Normal
Retirement Date.
2. Change of Control. For the purpose of this Agreement, a
"Change of Control" or "Change in 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 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
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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 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 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
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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 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,
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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. Group and the Company hereby agree to
continue the Executive in its employ, and the Executive hereby
agrees to remain in their employ during the Employment Period
under the terms and conditions provided herein.
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period and prior to a Change of
Control Date, (A) if the respective Boards of Group or the
Company determine that the Executive has been performing his
duties in accordance with Section 4(a)(iii) hereof, each shall
re-elect the Executive to the position of President and Chief
Executive Officer with substantially similar duties to those
performed 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; provided, however, that in the event
of the departure of the Chairman of Group or the Company
incumbent in that position on the Effective Date the Executive's
services shall be performed at the Executive's location on the
Effective Date, unless the Executive agrees in writing to a
different location.
(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
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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
Group and 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 Group or 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 Group or
the Company.
(b) Compensation.
(i) Base Salary. During the Employment 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 $675,000, 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
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time as shall be substantially consistent with increases in 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 Salary, the
Executive shall be awarded, for each fiscal year during the
Employment Period, an annual bonus as shall be determined by the
Board of Group or its Human Resources Committee in accordance
with the Incentive Compensation Plan as approved by the Board of
Group or other annual bonus plan hereafter approved by the Board
of Group ("Incentive Plan"). The Executive's target percentage
under the Incentive Plan each year shall be no less than 100% of
his Base Salary ("Target Bonus") (as in effect on the first day
of the year) and his maximum bonus opportunity each year shall be
no less than 200% of such Base Salary ("Maximum Bonus"). 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 Bonus payable as hereinabove provided,
the Executive 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 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
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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 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 Employment Period, the
Executive shall be entitled to fringe benefits, including but not
limited to pass privileges for 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.
(vii) Office and Support Staff. During 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 Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and
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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.
5. Termination.
(a) Mutual Agreement. During, the Employment Period, the
Executive's employment hereunder may be terminated at any time by
mutual agreement on terms to be negotiated at the time of such
termination.
(b) Death or Disability. The Executive's employment
hereunder will terminate upon his 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 hereunder. In
such event, the Executive's employment with Group and 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 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) Cause. During the Employment Period, the Company may
terminate the Executive's employment with Group and the Company
for "Cause." For purposes of this
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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 Group or the Company, (ii) repeated violations by the
Executive of the Executive's obligations under Section 4(a) 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
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, offices, titles and reporting relationships), authority,
duties or responsibilities as contemplated by Section 4(a)(i) or
(ii) 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) the failure by Group or the Company to elect the
Executive to the position of President and Chief Executive
Officer of Group or any other action by Group which results in
the diminution of the Executive's position, authority, duties, or
responsibilities, excluding an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied
by Group promptly after receipt of notice thereof is given by the
Executive;
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(iii) (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 Group or the Company promptly
after receipt of notice thereof given by the Executive or (y)
after the 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, or any failure by the Company to
maintain or provide the plans, programs, policies and practices,
or benefits described in Sections 4(b)(iii) - (viii) on the 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;
(iv) Group's or the Company's requiring the Executive to be
based at any office or location other than that described in
Sections 4(a)(i)(B) or 4(a)(ii)(B) hereof, except for travel
reasonably required in the performance of the Executive's
responsibilities;
(v) any purported termination by Group or the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(vi) any failure by Group or 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 the Change of
Control Date shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by the Executive for
any reason during
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the 30-day period immediately following the first anniversary of
the Change of Control Date shall be deemed to be a termination
for Good Reason for all purposes of this Agreement.
(e) Notice of Termination. Any termination of the
Executive's employment hereunder by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to such 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.
(f) Date of Termination. "Date of Termination" means the
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 hereunder 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 hereunder 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.
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6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment hereunder is
terminated by 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") and any obligations as provided in the
letter agreement entered into as of February 19, 1996, as amended
by the letter agreement dated November 18, 1998, between the
Executive and the Company with respect to supplemental retirement
benefits (the "Retirement Letter Agreement") and the letter
agreement dated February 19, 1996 between the Executive and the
Company with respect to certain employment matters (the
"Employment Letter Agreement") (collectively the Retirement
Letter Agreement and the Employment Letter Agreement are
hereinafter called the "Letter Agreements"). All such Accrued
Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 5 days
of the Date of Termination, or in such other form as may be
provided for pursuant to such agreements. Anything in this
Agreement to the contrary notwithstanding, the Executive's family
shall be
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entitled to receive benefits at least equal to the most favorable
benefits 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 hereunder is
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
and any obligations as provided in the Letter Agreements. All
such Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 5 days of the Date of Termination, or in such
other form as may be provided for pursuant to such agreements.
Anything in this Agreement to the contrary notwithstanding, the
Executive 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.
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(c) Cause; Other than for Good Reason. If the Executive's
employment shall be 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 Executive (together with accrued
interest thereon), plus any obligations as provided in the Letter
Agreements. If the Executive terminates 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) or as provided in the Letter Agreements. All
such Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 5 days of the Date of Termination, or in such
other form as may be provided for pursuant to such agreements.
(d) Good Reason; Other Than for Cause or Disability.
(1) If, during the Employment Period and prior to a Change
of Control, the Company shall terminate the Executive's
employment hereunder other than for Cause, Disability or death or
if the Executive shall terminate his employment hereunder for
Good Reason:
(i) Group or the Company shall pay to the Executive in a
lump sum in cash within 5 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 three and 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; and
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D. the Executive shall be entitled to receive a
retirement benefit in accordance with the terms of the Retirement
Letter Agreement; and
(ii) The Company shall:
A. for a period of three years after the Date of
Termination, 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)(iv) and (vi) 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 Effective Date, or if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key employees of the Company and its
subsidiaries and their families; and
B. at the expiration of the three-year period, continue
to provide the Executive with health insurance and on-line travel
privileges in accordance with the terms of the Employment Letter
Agreement.
(2) If, during the Employment Period and on and after a
Change of Control Date, the Company shall terminate the
Executive's employment hereunder other than for Cause,
Disability, or death or if the Executive shall terminate his
employment hereunder for Good Reason:
(i) Group or the Company shall pay to the Executive in a
lump sum in cash within 5 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 last full fiscal year ending during the
Employment Period or, if higher, the Annual Bonus paid to the
Executive during the last full fiscal year ending during the
Employment Period or, if higher, a constructive annual bonus
calculated to be equal to the Maximum Bonus in effect on the
Effective Date (the highest amount determined under this clause
(x) shall hereinafter be called 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
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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; and
E. the Executive shall be entitled to receive a
retirement benefit in accordance with the terms of the Retirement
Letter Agreement.
(ii) The Company shall:
A. for a period of three years after the Date of
Termination or such longer period as any plan, program, practice
or policy may provide, 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 Sections 4(b)(iii)(with
respect to any retirement plans), (iv) and (vi) 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 Effective Date or,
if more favorable to the Executive, as in effect at any time
thereafter with respect to other key employees of the Company and
its subsidiaries 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
Employment Period and to have retired on the last day of such
period; and
B. at the expiration of the three-year period continue
to provide the Executive with health insurance and on-line travel
privileges in accordance with the terms of the Employment Letter
Agreement.
7. Non-exclusivity of Rights. Nothing in this Agreement
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 their respective 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 their respective 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 their respective subsidiaries at
or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy practice or program.
18
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which Group or 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. Group or the Company agrees to pay, to the
full extent permitted by law, all legal fees and expenses, as
incurred by Group or the Company, the Executive and others, which
the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by Group, 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 any contest by the Executive
about the amount of any payment pursuant to 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 Group, the Company, any individual,
entity or group whose actions result in a Change of Control, or
their respective subsidiaries or affiliates 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, including, but not
limited to, any amounts in respect of (i) options to acquire
shares of Group common stock, (ii) restricted shares of Group
common stock, (iii) the Retirement Letter Agreement, and (iv) the
Employment Letter
19
Agreement) (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")
from Group or the Company 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 the Company to audit
its financial statements (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and
the Executive within 5 business days of the Date of Termination,
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 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 upon 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
20
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 Group or 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 Group or 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 Group or 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 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 Executive 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
21
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 Group
and 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 Group or the Company 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 Group
or the Company pursuant to Section 9(c), a
22
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 Group and the Company all
secret or confidential information, knowledge or data relating to
Group and the Company or any of their respective subsidiaries,
and their respective businesses, which shall have been obtained
by the Executive's employment by Group and the Company or any of
their 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 Group and 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 Group and the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this
Agreement.
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.
23
(b) This Agreement shall inure to the benefit of and be
binding upon Group and the Company and their respective
successors and assigns.
(c) Each of Group and the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of its business and/or
assets to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that Group or the Company
would be required to perform it if no such succession had taken
place. As used in this Agreement, "Group" and "Company" shall
mean each as hereinbefore defined and any successor to their
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 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 If to Group
------------------- ----------------- -----------
Xxxxxx Xxxxxxx US Airways, Inc. US Airways Group, Inc.
0000 Xxxxx Xxxx 0000 Xxxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
XxXxxx, XX 00000 Arlington, Virginia Xxxxxxxxx, Xxxxxxxx
00000 22227
Attention: General Attention: General
Counsel Counsel
24
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
addressees.
(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) Group and 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 used in this Agreement which connote the
masculine gender are deemed to apply equally to female
executives.
(g) This Agreement supersedes the Original Agreement and,
together with the Letter Agreements, contains the entire
understanding of the Company and the Executive with respect to
the subject matter hereof.
(h) Group hereby guarantees the payment and performance by
the Company of each and every obligation of the Company under
this Agreement and the Letter Agreements.
25
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its respective Board of
Directors, Group and the Company have caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
EXECUTIVE
/s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
President and Chief Executive Officer
US AIRWAYS, INC.
/s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxxx X. Xxxxx
Vice President, Deputy General
Counsel and Secretary
US AIRWAYS GROUP, INC.
/s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxxx X. Xxxxx
Secretary
26
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.
Long Term Incentive Plan of US Airways Group, Inc.
Incentive Compensation Plan of US Airways Group, Inc.
Individual Supplemental Retirement Agreements in effect with
certain officers of US Airways Group, Inc.
Restricted Stock Agreements with certain senior officers of
US Airways, Inc.
27
11326/1
