Exhibit 10.3
EMPLOYMENT AGREEMENT
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Agreement dated as of November 16, 1998, between US Airways, Inc., a
Delaware corporation, having a place of business at Crystal Park Four, 0000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx, 00000 (the "Company") and Xxxxxx X.
Xxxxxx, residing at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, 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"); and
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 "Change of Control Date" shall mean the first date during the
Change of Control 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 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.
(c) 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 the Effective 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 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" 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 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 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 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 the
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Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Change of Control
Date and ending on the earlier to occur of (a) the third anniversary of
such date, or (b) the Executive's Normal Retirement Date (hereinafter the
"Employment Period").
4. Terms of Employment.
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(a) Position and Duties.
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(i) During the Employment Period, (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, 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 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 Change of Control Date, the continued
conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the
Change of Control 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 Period, the Company
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shall pay the Executive a base salary (x) for the first
12 months of such period at a rate not less than his
base salary in effect immediately preceding the Change
of Control Date, and (y) during each succeeding 12
months 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 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
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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
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Base Salary and Annual 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 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
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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) at
least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time
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.
(v) Fringe Benefits. During the Employment Period, the
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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.
Vacation. During the Employment Period, the Executive shall be
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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.
5. Termination.
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(a) Mutual Agreement. During the Employment Period, the Executive's
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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. This Agreement shall terminate automatically
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upon the Executive's death. If, during the Employment Period, 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
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
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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) 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
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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) (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 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, 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 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 Sections
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 the Change of Control Date
shall be conclusive.
(e) Notice of Termination. Any termination by the Company for Cause
or
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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.
(f) Date of Termination. "Date of Termination" means the date of
receipt
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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
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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 reason of
the
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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 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 terminated by reason
of
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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 Executive in a lump sum in cash
within 30 days of the Date of Termination. 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.
(c) Cause; Other than for Good Reason. If the Executive's employment
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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). If the 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, 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) 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.
(d) Good Reason; Other Than for Cause or Disability.
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(1) If, during the Employment 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 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 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; and
(ii) (A) for the remainder of the Employment 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 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
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 Employment Period,
the Company shall continue to provide the Executive
with health insurance and on-line travel privileges on
the same basis such benefits were provided to the
Executive on the last day of the Employment 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 shall
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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 of 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
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.
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(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 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 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 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 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
information that is legally required to be
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 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:
------------------- -----------------
Xxxxxx X. Xxxxxx US Airways, Inc.
0000 Xxxxxx Xxxxx Xxxx Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 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 used in this Agreement which connote the masculine
gender are deemed to apply equally to female executives.
(g) This Agreement supersedes any prior employment agreement between
the Company and the Executive and contains the entire understanding of the
Company and the 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.
EXECUTIVE US AIRWAYS, INC.
---------------------------- By: -------------------------------
Xxxxxx X. Xxxxxx Xxxxxxxx X. Xxxxx
Vice President, Deputy General
Counsel and Secretary
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.
1997 Stock Incentive Plan of US Airways Group, Inc.
Incentive Compensation Plan of US Airways Group, Inc.
US Airways Group, Inc. Long Term Incentive Plan
Restricted Stock Agreements with certain officers of US Airways, Inc.
Supplemental Executive Retirement Plan ("SERP") agreements with certain
officers of US Airways, Inc.
