Exhibit 10.18
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Agreement dated as of November 18, 1998, between US Airways
Group, Inc., a Delaware corporation, having a place of business
at Crystal Park Four, 2345 Xxxxxxxxx, XX 00000 ("Group"), US
Airways, Inc., a Delaware corporation, having a place of business
at Crystal Park Four, 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
(the "Company") and Xxxxxxx X. Xxxx, residing at X.X. Xxx 0000,
Xxxxxxxxxx, Xxxxxxxx, 00000 (the "Executive").
WITNESSETH
WHEREAS, the Company and the Executive have entered into that
certain employment agreement dated January 22, 1996 (the
"Original Agreement"), and the parties hereto desire to amend,
restate and replace the Original Agreement with this Agreement;
WHEREAS, the Executive has assumed duties of a responsible
nature to the benefit of Group and the Company and to the
satisfaction of their respective Boards of Directors (each the
"Board");
WHEREAS, the respective Boards believe it to be in the best
interests of Group and the Company to enter into this Agreement
to assure Executive's continuing services to Group and the
Company including, but not limited to, under circumstances in
which there is a possible, threatened or actual Change of Control
(as defined below);
WHEREAS, the respective Boards believe it is imperative to
diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive's
full attention and dedication to Group and the Company currently
and in the event of any threatened or pending Change of Control,
and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other
corporations; and
WHEREAS, in order to accomplish all the above objectives, the
respective Boards have authorized the Company and Group to enter
into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein contained, Group, the Company and the Executive hereby
agree as follows:
1. Certain Definitions.
(a) The "Effective Date" shall mean the date hereof.
(b) The "Change of Control Date" shall mean the first date
during the Employment Period (as defined in Section 1(c)) on
which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with
Group or the Company is terminated or the Executive ceases to be
Chairman of Group or the Company prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment or cessation of
status as Chairman (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 Chairman.
(c) The "Employment Period" shall mean the period
commencing on the Effective Date and ending on the earlier to
occur of (i) the fourth anniversary of such date or (ii) the
first day of the month next following the Executive's 65th
birthday ("Normal Retirement Date"); provided, however, that
commencing on the date one year after the Effective Date, and on
each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), the Employment Period shall be automatically
extended so as to terminate on the earlier of (x) four 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 fourth anniversary of such date or (2) the
Executive's Normal Retirement Date.
2. Change of Control. For the purpose of this Agreement,
a "Change of Control" or "Change in Control" shall mean:
(a) The acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i)
the then outstanding shares of common stock of Group (the
"Outstanding Group Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of Group entitled
to vote generally in the election of directors (the "Outstanding
Group Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (w) any
acquisition directly from Group, (x) any acquisition by Group or
any of its subsidiaries, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Group
or any of its subsidiaries or (z) any acquisition by any
corporation with respect to which, following such acquisition,
more than 85% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
beneficial owners, respectively of the Outstanding Group Common
Stock and Outstanding Group Voting Securities in substantially
the same proportions as their ownership, immediately prior to
such acquisition, of the Outstanding Group Common Stock and
Outstanding Group Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof, constitute
Group's Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Group Board of
Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by Group's shareholders, was approved by
a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents; or
(c) Approval by the shareholders of Group of a
reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Group Common Stock and Outstanding Group Voting
Securities immediately prior to such reorganization, merger or
consolidation, beneficially own, directly or indirectly, less
than 85% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding Group
Common Stock and the Outstanding Group Voting Securities, as the
case may be; or
(d) Approval by the shareholders of Group of (i) a complete
liquidation or dissolution of Group or (ii) the sale or other
disposition of all or substantially all of the assets of Group,
other than to a corporation, with respect to which following such
sale or other disposition, more than 85% of, respectively, the
then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Group Common Stock and Outstanding Group Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Group
Common Stock and Outstanding Group Voting Securities, as the case
may be; or
(e) The acquisition by an individual, entity or group of
beneficial ownership of 20% or more of the then outstanding
securities of Group, including both voting and non-voting
securities, provided, however, that such acquisition shall only
constitute a Change of Control in the event that such individual,
entity or group also obtains the power to elect by class vote,
cumulative voting or otherwise to appoint, 20% or more of the
total number of directors to the Board of Directors of Group.
3. Employment Period. Group and the Company hereby agree
to continue the Executive in their employ, and the Executive
hereby agrees to remain in the employ of Group and 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 respective Boards of Group and the
Company determine that the Executive has been performing his
duties in accordance with Section 4(a)(iii) hereof, each shall
re-elect the Executive to the position of Chairman with
substantially similar duties to those performed by the Executive
on the Effective Date, (B) the Executive's services shall be
performed at the Executive's location on the Effective Date, the
Company's headquarters, or a location where a substantial
activity for which the Executive has responsibility is located.
The President and Chief Executive Officer of Group and the
Company will report to the Executive.
(ii) During the Employment Period and on and following a
Change of Control Date, (A) the Executive's position (including
status, offices, titles and reporting relationships), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period
immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Change of
Control Date or any office or location less than thirty-five (35)
miles from such location.
(iii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
Group and the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive
to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive's
responsibilities as an employee of Group or the Company in
accordance with this Agreement. It is also expressly understood
and agreed that to the extent that such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to Group or
the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Company shall pay the Executive a base salary (x) for the first
12 months of the term hereof at a rate not less than $600,000,
and (y) during each succeeding 12 months of the term hereof at a
rate not less than his base salary in effect on the last day of
the preceding 12-month period. During the Employment Period,
base salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded in
the ordinary course of business to other key employees of the
Company and its subsidiaries. Any increase in base salary shall
not serve to limit or reduce any other obligation to the
Executive under this Agreement. Base salary shall not be reduced
after any such increase. Base salary under Section 4(b)(i) shall
hereinafter be referred to as the "Base Salary."
(ii) Annual Bonus. In addition to Base Salary, the
Executive shall be awarded, for each fiscal year during the
Employment Period, an annual bonus as shall be determined by the
Board of Group or its Human Resources Committee in accordance
with the Incentive Compensation Plan as approved by the Board of
Group or other annual bonus plan hereafter approved by the Board
of Group ("Incentive Plan"). The Executive's target bonus
opportunity under the Incentive Plan each year shall be no less
than 100% of his Base Salary (as in effect on the first day of
the year) and his maximum bonus opportunity each year shall be no
less than 200% of such Base Salary. The annual bonus under
Section 4(b)(ii) shall hereinafter be referred to as the "Annual
Bonus."
(iii) Incentive, Savings and Retirement Plans. In addition
to Base Salary and Annual Bonus payable as hereinabove provided,
the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans,
practices, policies and programs applicable on or after the
Effective Date to other key employees of the Company and its
subsidiaries (including but not limited to the employee benefit
plans listed on Exhibit A hereto), in each case providing
benefits which are the economic equivalent to those in effect on
the Effective Date or as subsequently amended.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its subsidiaries (including,
without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs) applicable on
or after the Effective Date to other key employees of the Company
and its subsidiaries, in each case providing benefits which are
the economic equivalent to those in effect on the Effective Date
or as subsequently amended.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its subsidiaries applicable at any time on or after
the Effective Date to other key employees of the Company and its
subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including but not
limited to pass privileges for non revenue transportation, in
accordance with the most favorable plans, practices, programs and
policies of the Company and its subsidiaries applicable at any
time on or after the Effective Date to other key employees of the
Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an appropriate office
or offices of a size and with furnishings and other appointments,
and to secretarial and other assistance, as provided to other key
employees of the Company and its subsidiaries.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and 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 the Company
determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of "Disability" set forth
below), it may give to the Executive written notice of its
intention to terminate the Executive's employment hereunder. In
such event, the Executive's employment with Group and the Company
shall terminate effective on the 90th day after receipt by the
Executive of such notice given at any time after a period of six
consecutive months of Disability and while such Disability is
continuing (the "Disability Effective Date"), provided that,
within the 90 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" means disability
which, at least six months after its commencement, is determined
to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). During such six
month period and until the Disability Effective Date, Executive
shall be entitled to all compensation provided for under Section
4 hereof.
(c) Cause. During the Employment Period, the Company may
terminate the Executive's employment with Group and the Company
for "Cause." For purposes of this Agreement, "Cause" means (i) an
act or acts of personal dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the
Executive at the expense of Group or the Company, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied in
a reasonable period of time after receipt of written notice from
the Company or (iii) the conviction of the Executive of a felony.
(d) Good Reason. During the Employment Period, the
Executive's employment hereunder may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good
Reason" means:
(i) the assignment to the Executive of any duties
inconsistent in any respect with Executive's position
(including status, offices, titles and reporting
relationships), authority, duties or responsibilities as
contemplated by Section 4(a)(i) or (ii) of this
Agreement, or any other action by the Company which
results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) the failure by Group to elect the Executive to
the position of Chairman or any other action by Group
which results in the diminution of the Executive's
position, authority, duties, or responsibilities,
excluding an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by
Group promptly after receipt of notice thereof given by
Executive;
(iii) (x) any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by Group or the Company promptly after receipt of notice
thereof given by the Executive or (y) after the Change
of Control Date, any failure of the Company to pay Base
Salary or Annual Bonus in accordance with Sections
4(b)(i) and (ii), respectively, or any failure by the
Company to maintain or provide the plans, programs,
policies and practices, or benefits described in
Sections 4(b)(iii) - (viii) on the most favorable basis
such plans programs, policies and practices were
maintained and benefits provided during the 90 day
period immediately preceding the Change of Control Date,
or if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter
with respect to other key employees of the Company and
its subsidiaries;
(iv) Group's or the Company's requiring the
Executive to be based at any office or location other
than that described in Sections 4(a)(i)(B) or
4(a)(ii)(B) hereof, except for travel reasonably
required in the performance of the Executive's
responsibilities;
(v) any purported termination by Group or the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement; or
(vi) any failure by Group or the Company to comply
with and satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(d), any good faith determination
of "Good Reason" made by the Executive on or after the Change of
Control Date shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the
first anniversary of the Change of Control Date shall be deemed
to be a termination for Good Reason for all purposes of this
Agreement.
(e) Notice of Termination. Any termination of the
Executive's employment hereunder by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to such other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other that the
date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the
giving of such notice). The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights
hereunder.
(f) Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that
(i) if the Executive's employment hereunder is terminated by the
Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's
employment hereunder is terminated by reason of death or
Disability, the Date of Termination shall be the date of death
of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of Group and the Company upon Termination.
(a) Death. If the Executive's employment hereunder is
terminated by reason of the Executive's death, this Agreement
shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by the
Executive as of the Date of Termination, including, for this
purpose (i) the Executive's full Base Salary through the Date
of Termination at the rate in effect on the Date of
Termination, disregarding any reduction in Base Salary in
violation of this Agreement (the "Highest Base Salary"), (ii)
the product of the Annual Bonus paid to the Executive for the
last full fiscal year and a fraction, the numerator of which is
the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365 and (iii)
any compensation previously deferred by the Executive (together
with any accrued interest thereon) and not yet paid by the
Company and any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (i), (ii) and (iii)
are hereinafter referred to as "Accrued Obligations"). 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 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 employment other than for Good Reason, this Agreement
shall terminate without further obligations to the Executive,
other than those obligations accrued or earned and vested (if
applicable) by the Executive through the Date of Termination,
including for this purpose, all Accrued Obligations and any
obligations provided for in an agreement, if any, between the
Company and the Executive pursuant to Section 5(a). All such
Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause, Disability or
Death.
(1) If, during the Employment Period and prior to a
Change of Control, the Company shall terminate the Executive's
employment hereunder other than for Cause, Disability or death
or if the Executive shall terminate his employment hereunder for
Good Reason:
(i) Group or the Company shall pay to the Executive in a
lump sum in cash within 5 days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Highest Base Salary
through the Date of Termination; and
B. Base Salary at the rate of the Highest Base
Salary for the period from the Date of Termination until
the end of the Employment Period; and
C. in the case of compensation previously deferred
by the Executive, all amounts previously deferred
(together with any accrued interest thereon) and not yet
paid by the Company, and any accrued vacation pay not yet
paid by the Company; and
(ii) 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 Section 4(b)(iv) and (vi) of this
Agreement if the Executive's employment had not been
terminated, including health insurance and life
insurance, in accordance with the most favorable plans,
practices, programs or policies of the Company and its
subsidiaries in effect on or after the Effective Date, or
if more favorable to the Executive, as in effect at any
time thereafter with respect to other key employees of
the Company and its subsidiaries and their families.
(2) If, during the Employment Period and on and after a
Change of Control Date, the Company shall terminate the
Executive's employment hereunder other than for Cause,
Disability, or death or if the Executive shall terminate his
employment hereunder for Good Reason:
(i) Group or the Company shall pay to the Executive in a
lump sum in cash within five (5) days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the Executive's
Highest Base Salary through the Date of Termination; and
B. the product of (x) the Annual Bonus paid to the
Executive for the last full fiscal year ending during the
Employment Period or, if higher, the Annual Bonus paid to
the Executive during the last full fiscal year ending
during the Employment Period or, if higher, a constructive
annual bonus in an amount equal to the maximum Annual Bonus
in effect on the Effective Date (the highest amount
determined under this clause (x) shall hereinafter be
called the "Recent Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination and the
denominator of which is 365; and
C. the product of (x) three and (y) the sum of (i)
the Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred by
the Executive, all amounts previously deferred (together
with any accrued interest thereon) and not yet paid by the
Company, and any accrued vacation pay not yet paid by the
Company; and
E. the Executive shall be entitled to receive a lump-
sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the
Retirement Plan and any supplemental and/or excess
retirement plan the Executive would receive if he remained
employed by the Company at the compensation level provided
for in Sections 4(b)(i) and (ii) of this Agreement for the
remainder of the Employment Period and (b) the actuarial
equivalent of this benefit, if any, under the Retirement
Plan and any supplemental and/or excess retirement plan.
(ii) The Company shall, for the remainder of the
Employment Period or such longer period as any plan,
program, practice or policy may provide, continue benefits
to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies
described in Sections 4(b)(iii)(with respect to any
retirement plans), (iv) and (vi) of this Agreement if the
Executive's employment had not been terminated, including
health insurance and life insurance, in accordance with the
most favorable plans, practices, programs or policies of
the Company and its subsidiaries in effect on or after the
Effective Date or, if more favorable to the Executive, as
in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries and their
families and (except as provided in paragraph (e) below)
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.
(e) Post-Retirement Travel and Health Benefits.
Notwithstanding any other provision of this Agreement, in the
event the Executive's employment hereunder is terminated for any
reason (including death, Disability, with or without Cause by the
Company, and with or without Good Reason by the Executive), the
Company shall provide the Executive with the following benefits
after the Termination Date:
(i) Travel Benefits. For the lifetime of the Executive,
the Company shall continue to provide transportation
benefits under Section 4(b)(vi) as a retired executive
officer or director (whichever is better), which shall
include first class positive space on-line travel for
Executive and his eligible dependents, including spouse, in
accordance with the most favorable terms of the policy in
effect.
(ii) Health Benefits. For the lifetime of the Executive,
the Company shall continue to provide health insurance
benefits on the same basis such benefits are provided to
retired executives of the Company, including coverage for
his eligible dependents, including spouse, in accordance
with the most favorable terms of the health benefit plan in
effect; provided, however, that if the Executive becomes
eligible for health benefits through a subsequent employer,
the provision of such benefits hereunder shall be secondary
to the coverage of such subsequent employer.
(iii) Other Benefits. For the lifetime of the Executive,
any other fringe benefits provided to the Executive as
Chairman to the extent such benefits are provided to any
other retired officers of Group or the Company.
7. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plans,
programs, policies or practices, provided by Group, the Company
or any of their respective subsidiaries and for which the
Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
stock option, restricted stock or other agreements with Group,
the Company or any of their respective subsidiaries. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program
of Group, the Company or any of their respective subsidiaries at
or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy practice or program.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which Group or the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions
of this Agreement. Group or the Company agrees to pay, to the
full extent permitted by law, all legal fees and expenses, as
incurred by Group, the Company, the Executive and others, which
the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by Group, the Company or
others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to Section 9 of this
Agreement), plus in each case interest at the applicable Federal
rate provided for in Section 7872(f)(2) of the Internal Revenue
Code of 1986, as amended (the "Code").
9. Certain Additional Payments by Group and the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by Group, the Company, any individual,
entity or group whose actions result in a Change of Control, or
their respective subsidiaries or affiliates to or for the benefit
of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional
payments required under this Section 9, including, but not
limited to, any amounts in respect of (i) options to acquire
shares of Group common stock, (ii) restricted shares of Group
common stock, (iii) the letter agreement entered into as of
January 22, 1996, as amended by letter agreement dated November
18, 1998, between the Executive and the Company with respect to
supplemental retirement benefits, and (iv) the letter agreement
entered into as of January 22, 1996 between the Executive and the
Company with respect to certain employment matters) (a
"Payment"), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") from Group or the
Company in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment, shall be made by the firm of
independent public accountants selected by the Company to audit
its financial statements (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and
the Executive within 5 business days of the Date of Termination,
or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-
Up Payment, as determined pursuant to this Section 9, shall be
paid to the Executive upon the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive
with a written opinion that failure to report the Excise Tax on
the Executive's applicable federal income tax return would not
result in the imposition of a negligence or a similar penalty.
Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-up Payments which will not have been made by
Group or the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder.
In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Group or the Company to or
for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by Group or the Company of the Gross-
Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim
prior to the expiration of the thirty-day period following the
date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim,
(iv) permit the Company to participate in any
proceedings relating to such claim; provided, however, that
Group and the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties)
incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax, including interest
and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, Group or
the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by Group or the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount
advanced by Group or the Company pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled
to any refund with respect to such claim, and the Company does
not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty days
after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of Group and the Company
all secret or confidential information, knowledge or data
relating to Group and the Company or any of their respective
subsidiaries, and their respective businesses, which shall have
been obtained by the Executive's employment by Group and the
Company or any of their subsidiaries and which shall not be or
become public knowledge (other than by acts by Executive or his
representatives in violation of this Agreement). After
termination of the Executive's employment with Group and the
Company, the Executive shall not, without the prior written
consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than Group and
the Company and those designated by either of them. In no event
shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon Group and the Company and their respective
successors and assigns.
(c) Each of Group and the Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its
business and/or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
Group or the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Group"
and "Company" shall mean each as hereinbefore defined and any
successor to their business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: If to the Company:
Xxxxxxx X. Xxxx US Airways, Inc.
X.X. Xxx 0000 0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to Group:
US Airways Group, Inc.
0000 Xxxxxxx Xxxxx
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
addressees.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Group and the Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
(f) Words or terms used in this Agreement which connote the
masculine gender are deemed to apply equally to female
executives.
(g) This Agreement supersedes the Original Agreement
between the Company and the Executive and, together with the
letter agreement dated January 22, 1996 as amended by letter
agreement dated November 18, 1998 between the Executive and the
Company with respect to supplemental retirement benefits and the
letter agreement dated January 22, 1996 between the Executive and
the Company relating to certain employment matters, contain the
entire understanding of Group (collectively referred to as the
"Letter Agreements"), the Company and the Executive with respect
to the subject matter hereof.
(h) Group hereby guarantees the payment and performance by
the Company of each and every obligation of the Company under
this Agreement and the Letter Agreements.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its respective Board of
Directors, Group and the Company have caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
-------------------
Xxxxxxx X. Xxxx
Chairman
US AIRWAYS, INC.
/s/ Xxxxxxxx X. Xxxxx
---------------------
Xxxxxxxx X. Xxxxx
Vice President, Deputy General
Counsel and Secretary
US AIRWAYS GROUP, INC.
/s/ Xxxxxxxx X. Xxxxx
---------------------
Xxxxxxxx X. Xxxxx
Secretary
EXHIBIT A
US Airways, Inc. Employee Savings Plan
US Airways, Inc. Employee Pension Plan
US Airways, Inc. Supplemental Executive Defined Contribution
Plan
1996 Stock Incentive Plan of US Airways Group, Inc.
Incentive Compensation Plan of US Airways Group, Inc.
Long Term Incentive Plan of US Airways Group, Inc.
Individual Supplemental Retirement Agreements in effect with
certain officers of US Airways, Inc.
Restricted Stock Agreements with certain officers
4
