Exhibit 10.4
EMPLOYMENT AGREEMENT
Agreement dated as of January 25, 1999, 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 Xxxxxxxx X. Xxxxx, residing at 0000 Xxxxxxxxx
Xxxx, Xxxxxxxx, 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.
(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.
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2. Change of Control. For the purpose of this Agreement, a
"Change of Control" or "Change in Control" shall mean:
(a) The acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of 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
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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
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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 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.
(a) Position and Duties.
(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.
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(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.
(i) Base Salary. During the Employment 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
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 shall be awarded, for each fiscal year during the
Employment Period, an annual bonus as shall be determined by the
Board or its Human Resources Committee in accordance with the
Incentive Compensation Plan of Group approved by the Group Board
of Directors ("Incentive Plan") or otherwise. The annual bonus
under Section 4(b)(ii) shall hereinafter be referred to as the
"Annual Bonus."
(iii) Incentive, Savings and Retirement Plans. In addition
to Base Salary and Annual Bonus payable as hereinabove provided,
the Employee shall be
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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 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
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.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company
and its subsidiaries as in effect on or after the Effective Date
with respect to other key employees of the Company and its
subsidiaries.
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, 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
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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 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 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
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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 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
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provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other that the date of receipt
of such notice, specifies the termination date (which date shall
be not more than fifteen (15) days after the giving of such
notice). The failure by the Executive to set forth in the Notice
of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(f) Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that (i)
if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (ii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective
Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate
without further obligations to the Executive's legal
representatives under this Agreement, other than those obligations
accrued or earned and vested (if applicable) by the Executive as
of the Date of Termination, including, for this purpose (i) the
Executive's full Base Salary through the Date of Termination at
the rate in effect on the Date of Termination, disregarding any
reduction in Base Salary in violation of this Agreement (the
"Highest Base Salary"), (ii) the product of the Annual Bonus paid
to the Executive for the last full fiscal year and a fraction, the
numerator of which is the number of days in the current fiscal
year through the Date of
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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 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
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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 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.
(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
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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
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(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 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 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,
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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.
(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
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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
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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.
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(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
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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,
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postage prepaid, addressed as follows:
If to the Executive: If to the Company:
------------------- -----------------
Xxxxxxxx X. Xxxxx US Airways, Inc.
0000 Xxxxxxxxx Xxxx Crystal Park Four
Xxxxxxxx, 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.
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IN WITNESS WHEREOF, the Executive has hereunto set her 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:
--------------------------- ---------------------------
Xxxxxxxx X. Xxxxx Xxxxxxxx X. XxXxxxx
Secretary and
Assistant General Counsel
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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.
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