EXHIBIT 10.10
SEVERANCE AGREEMENT
Agreement dated as of April 8, 2002, 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 Xxxxxxx X. Glass,
residing at 0000 Xxxxxx Xxxx Xxxx, Xxxxx, XX 00000 (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive has assumed duties of a responsible nature to
the benefit of the Company and to the satisfaction of its Board of Directors
(the "Board");
WHEREAS, the Board believes it to be in the best interests of the
Company to enter into this Agreement to assure Executive's continuing services
to the Company including, but not limited to, under circumstances in which there
is a possible, threatened or actual severance of employment or 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 severance of employment or 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 severance of employment 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.
(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(d)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated or the Executive ceases to be an officer of the
Company prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the "Change of Control Date" shall mean
the date immediately prior to the date of such termination of employment or
cessation of status as an officer.
(c) The "Change of Control Period" shall mean 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.
(d) 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
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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.
(e) "Key Employee" shall mean a senior vice president level employee
of the Company.
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 30% 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: (v) any acquisition directly from
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Group, (w) any acquisition by Group or any of its subsidiaries, (x) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Group or any of its subsidiaries, (y) 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 (z) any acquisition by an individual, entity
or group that, pursuant to Rule 13d-1 promulgated under the Exchange Act, is
permitted to, and actually does, report its beneficial ownership of Outstanding
Group Common Stock and Outstanding Group Voting Securities on Schedule 13G (or
any successor Schedule); provided further, that if any such individual, entity
or group subsequently becomes required to or does report its ownership of
Outstanding Group Common Stock and Outstanding Group Voting Securities on
Schedule 13D (or any successor Schedule) then, for purposes of this Section
2(a), such individual, entity or group shall be deemed to have first acquired,
on the first date on which such individual, entity or group becomes required to
or does so file, beneficial ownership of all of the Outstanding Group Common
Stock and Outstanding Group Voting Securities beneficially owned by it on such
date; or
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(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) There is consummated 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 (or any parent thereof) 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
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(d) Approval by the shareholders of Group of a complete liquidation
or dissolution of Group or the consummation of 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.
3. EMPLOYMENT PERIOD.
The Company hereby agrees to continue the Executive in its employ, and the
Executive hereby agrees to remain in the employ of the Company, 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 Board determines that the Executive has been
performing his duties in accordance with Section 4(a)(iii) hereof, it shall
re-elect the Executive to the position of Senior Vice President with
substantially similar duties to the position held by the Executive on the
Effective Date, and (B) the Executive's services shall be performed at the
Executive's location on the Effective
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Date, the Company's headquarters, or a location where a substantial
activity for which the Executive has responsibility is located.
(ii) During the Employment Period and on and following a
Change of Control Date, (A) the Executive's position (including status,
offices, titles and reporting relationships), authority, duties and
responsibilities shall be at least commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Change of Control Date
and (B) the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Change of Control Date
or any office or location where a substantial activity for which the
Executive has responsibility is located.
(iii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is also expressly understood and agreed that to the
extent that such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Change of Control Period, the Company
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 on 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 Change of Control 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".
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(ii) Annual Bonus. In addition to Base Salary, the Executive shall be
awarded, for each fiscal year during the Change of Control Period, an
annual bonus as shall be determined by the Board or its Human Resources
Committee in accordance with the Incentive Compensation Plan as approved by
the Group Board of Directors or other annual bonus plan hereafter approved
by the Board ("Incentive Plan"). 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 Change of Control Period in all
incentive (including but not limited to the Long Term Incentive Plan and
all stock incentive plans), savings and retirement plans, practices,
policies and programs applicable to other Key Employees, in each case
providing benefits which are 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.
(iv) Welfare Benefit Plans. During the Change of Control Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs applicable to other Key
Employees (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs), in each case providing
benefits which are 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.
(v) Expenses. During the Change of Control 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 Change of Control Period, the
Executive shall be entitled to fringe benefits, including but not limited
to space positive and space available travel privileges in all classes of
service and cabins on all air carriers owned by the Company and any of its
affiliates (including all carriers owned by any individual, entity or group
that has entered into an agreement the consummation of which constitutes a
Change of Control, or which otherwise
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caused a Change of Control) ("Travel Privileges"), in each case providing
benefits which are 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.
(vii) Vacation. During the Change of Control Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its subsidiaries
as in effect 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.
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. This Agreement shall terminate automatically upon
the Executive's death. If the Company determines in good faith that the
Disability of the Executive has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 90th
day after receipt by the Executive of such notice given at any time after a
period of six consecutive months of Disability and while such Disability is
continuing (the "Disability Effective Date"), provided that, within the 90 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means disability which, at least six months after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's
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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, to the extent applicable.
(c) Cause. During the Employment Period, the Company may terminate the
Executive's employment for "Cause." For purposes of this Agreement, "Cause"
means (1) a reasonable good faith determination by the Company that the
Executive engaged in an act or acts of personal dishonesty intended to result in
substantial personal enrichment of the Executive at the expense of the Company,
(2) 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 (3) 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) with respect to the termination of the Executive's employment other
than during the Change of Control Period:
(1) any reduction by the Company of the Executive's rate of base
salary, as in effect on the Effective Date or as the same may be
increased from time to time;
(2) any material and substantial diminution in the Executive's
position, authority, duties or responsibilities as contemplated
by Section 4(a)(i) of this Agreement, or any other action by the
Company which results in a material and substantial diminution in
such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith
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and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(3) any demotion of the Executive to a position lower than Senior
Vice President; or
(4) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement, and
(ii) with respect to the termination of the Executive's employment during
the Change of Control Period:
(1) 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)(ii) or (iii) 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;
(2) (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) 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) - (vii) 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;
(3) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(ii)(B)
hereof, except for travel reasonably required in the performance
of the Executive's responsibilities;
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(4) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(5) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(d)(ii), 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 during the Change of Control
Period by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than 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. Any termination other than
during the Change of Control Period by the Company for Cause or by the Executive
for Good Reason shall be communicated by written notice (which written notice
shall not constitute a Notice of Termination hereunder) to the other party
hereto given in accordance with Section 12(b) of this Agreement.
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(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 is terminated
by the Company other than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such termination and
(ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
(g) Dispute Concerning Termination. If within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 5(g)), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be extended until the earlier of
(i) the date on which the Change of Control Period ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence;
and provided further, this Section 5(g) shall be applicable only for
terminations of employment occurring during the Change of Control Period.
(h) Compensation During Dispute. If a purported termination occurs during
the Change of Control Period and the Date of Termination is extended in
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accordance with Section 5(g) hereof, the Company shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with
Section 5(g) hereof. Amounts paid under this Section 5(h) are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) Death.
(i) If the Executive's employment is terminated during the Change of
Control Period 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 (1) 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"), (2) 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 (3) any
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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 (1) through (3)) are
hereinafter referred to as "Accrued Obligations" and such amounts
specified in clauses (1) and (3) are hereinafter referred to as
"Termination Obligations"). Anything in this Agreement to the
contrary notwithstanding, the Executive's family shall be
entitled to receive benefits in accordance with the most
favorable plans, programs, practices and policies of the Company
and its subsidiaries in effect 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.
(ii) If the Executive's employment is terminated by reason of the
Executive's death other than during the Change of Control Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement other than
the Termination Obligations.
(iii) All such Accrued Obligations and Termination 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
or the date of termination (as applicable).
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(b) Disability.
(i) If the Executive's employment is terminated during the Change of
Control Period 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.
Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date
to receive disability and other benefits in accordance with the
most favorable plans, programs, practices and policies of the
Company and its subsidiaries in effect 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.
(ii) If the Executive's employment is terminated by reason of the
Executive's Disability other than during the Change of Control
Period, this Agreement shall terminate without further
obligations to the Executive under this Agreement other than the
Termination Obligations.
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(iii) All such Accrued Obligations and Termination Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination or the date of termination (as
applicable).
(c) Cause; Other than for Good Reason. If during the Employment
Period the Executive's employment is terminated for Cause or the Executive
terminates his employment other than for Good Reason, this Agreement shall
terminate without further obligations to the Executive under this Agreement
other than those obligations accrued or earned and vested (if applicable) by the
Executive through the Date of Termination or the date of termination (as
applicable), including for this purpose, the Termination Obligations. All such
Termination Obligations shall be 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.
(1) If, during the Employment Period and prior to a Change of
Control, the Company shall terminate the Executive's employment other than
for Cause, Disability or death or if the Executive shall terminate his
employment for Good Reason, the Company shall pay to the Executive in a
lump sum in cash within 30 days after the date of termination the aggregate
of the following amounts:
A. to the extent not theretofore paid, the Executive's
annual rate of base salary as in effect immediately prior to
the date of termination; and
B. the product of two (2) times the sum of (x) the
Executive's annual rate of base salary as in effect
immediately prior to the date of termination, and (y) the
Executive's "target bonus" under the Incentive Plan for the
year in which the date of termination occurs; and
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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
(2) If, during the Employment Period and on and after a
Change of Control Date, 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 Change of Control Period or, if higher, the Annual
Bonus paid to the Executive during the last full fiscal
year ending during the Change of Control Period or, if
higher, a constructive annual bonus calculated at the
"target bonus" level under the Incentive Plan in effect
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
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(ii) The Company shall:
A. for a period of three years following 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 Sections 4(b)(iii)(with respect to any
retirement plans), (iv) and (vi) of this Agreement as if the
Executive's employment had not been terminated and as if the
Change of Control Period expired on the 3rd anniversary of
the Date of Termination, 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 3rd anniversary of the Date of
Termination; and
B. the Company shall provide continuation of Travel
Privileges for the life of the Executive which are at least
as favorable as the benefits provided pursuant to 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.
(e) Notwithstanding any other provisions of this Agreement to the
contrary, upon termination of the Executive's employment for any reason
following the 5th anniversary of the Executive's date of employment, the
Executive shall be entitled to the Travel Privileges described in 6(d)(2)(ii)(B)
above.
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 its
subsidiaries and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the
19
Executive may have under any stock option, restricted stock or other agreements
with Group, the Company or any of its subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any Plan,
policy, practice or program of Group, the Company or any of its subsidiaries at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program.
8. FULL SETTLEMENT.
The Company's obligation to make the payments 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 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 (a) 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 (other than Section 6(d)(1) and 6(e)) 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) and (b) 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 by the
Company or others of the validity or enforceability of, or liability under,
Section 6(d)(1) and 6(e) of this Agreement or any guarantee of performance
thereof but only, in the case of this clause (b), if the Executive prevails on
at
20
least one material issue in such contest plus, in the case of clauses (a) and
(b), interest at the applicable Federal rate provided for in Section 7872(f)(2)
(or any successor provision thereto) of the Internal Revenue Code of 1986, as
amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9, 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, and (iii) the letter agreement entered into as of April 8, 2002 between
the Executive and the Company with respect to supplemental retirement benefits,
as amended (a "Payment"), would be subject to the excise tax imposed by Section
4999 (or any successor provision thereto) 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 and employment 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.
21
(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 a firm of
independent public accountants selected by Group prior to the Change of Control
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (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 or the Executive. 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 may 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 five (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 other 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 (or any successor
provision thereto) 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
22
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 (together with
interest and penalties incurred by the Executive in connection therewith) 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 (10) 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 he 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
23
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; whereas the Executive shall be entitled to settle
or contest, as the case may be, any other issued 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 (30)
days after such
24
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 confidential and proprietary information, 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 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 disclosed. In the event
the Executive breaches any provision of this Section 10, any payments or other
benefits promised under this Agreement shall be forfeited. Such a forfeiture
shall not limit the Company from seeking any other contractual or equitable
remedies available to it which are appropriate under the circumstances. The
Executive expressly consents to the award of injunctive relief in the event a
violation of this Section 10 is alleged by the Company.
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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 shall 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.
26
(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:
------------------- -----------------
Xxxxxxx X. Glass US Airways, Inc.
0000 Xxxxxx Xxxx Xxxx 0000 Xxxxxxx Xxxxx
Xxxxx, XX 00000 Xxxxxxxxx, Xxxxxxxx 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 hereof. (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.
27
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
-------------------------------
Xxxxxxx X. Glass
US AIRWAYS, INC.
-------------------------------
Xxxxxxxx X. XxXxxxx
Vice President, Deputy General Counsel
and Secretary
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