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Delaware | US Airways Group, Inc. 54-1194634 | ||
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(State of Incorporation | US Airways, Inc. 53-0218143 | ||
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of both registrants) | (I.R.S. Employer Identification Nos.) |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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| W. Douglas Parker, the Chairman and Chief Executive Officer of America West Holdings, who serves as Chairman and Chief Executive Officer of US Airways Group; | ||
| Bruce R. Lakefield, the former President and Chief Executive Officer of US Airways Group and US Airways, who serves as Vice Chairman of US Airways Group; | ||
| Herbert M. Baum, Richard C. Kraemer, Denise M. OLeary, Richard P. Schifter and J. Steven Whisler, who were nominated by America West Holdings; and | ||
| Cheryl G. Krongard, Hans Mirka and George M. Philip, who were nominated by US Airways Group. |
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| A severance payment equal to 200% of the sum of Mr. Parkers current base salary plus the greater of (i) the average of Mr. Parkers bonus with respect to the three calendar years immediately prior to the termination and (ii) the target bonus for the year of termination. | ||
| Accelerated vesting of all stock and other awards held by Mr. Parker pursuant to the America West Holdings incentive compensation plans, which awards shall remain exercisable for a period of 36 months or such longer period as provided by the terms of any specific award. | ||
| In respect of the performance-based award plan, a payment equal to 200% of the greater of (i) 125% of Mr. Parkers current base salary and (ii) the amount that would have been paid to Mr. Parker if the total stockholder return for the performance cycle ending on December 31 of the year in which termination occurs had been measured as of the termination date. | ||
| Continued benefits for Mr. Parker and his dependents under all medical plans and programs maintained by America West Holdings for a period of 24 months from the date of termination. | ||
| Continued term life insurance for a period of 24 months from the date of termination. | ||
| Lifetime positive space travel privileges for Mr. Parker and his wife and dependents. | ||
| A tax gross-up payment to offset the taxes that could be imposed if any severance payments are considered to be excess parachute payments subject to excise tax under Section 4999 of the Internal Revenue Code. |
| Individuals currently constituting the America West Holdings board of directors, or whose election to the board of directors is approved by at least two thirds of the incumbent directors, cease to constitute at least a majority of the America West Holdings board of directors. | ||
| An individual, entity or group acquires 25% or more of the combined voting power of America West Holdings or America West Airlines or more than 50% of the America West Holdings Class A common stock. | ||
| Any merger, consolidation or reorganization of the America West Holdings or America West Airlines is consummated, unless the America West Holdings stockholders continue to hold at least 75% of the voting power of the surviving entity. | ||
| America West Holdings or America West Airlines disposes of all or substantially all of its assets. |
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| Accelerated vesting of all outstanding stock options held by the executive. | ||
| Lifetime positive travel space privileges for the executive and his or her dependents. |
| A payment equal to 200% of the executives current base salary. | ||
| A payment equal to 200% of the executives then current target bonus under America West Holdings annual bonus program. | ||
| In respect of the performance-based award plan, a payment equal to 200% of the greater of (i) the covered executives target award under the performance-based award plan and (ii) the amount that would have been paid to the covered executive if the total stockholder return for the performance cycle ending on December 31 of the year in which termination occurs had been measured as of the termination date. | ||
| Continued benefits for the executive and his or her dependents under all medical plans and programs for a period of 24 months. | ||
| Extended exercisability of all vested stock options until the earlier of (i) the expiration of the stock options in accordance with their terms or (ii) 18 months following the executives termination of employment. |
Exhibit No. | Description | |
10.1
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US Airways Group, Inc. 2005 Equity Incentive Plan. | |
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10.2
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Letter Agreement between US Airways Group, Inc. and Bruce R. Lakefield dated as of September 27, 2005. | |
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10.3
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Employment Agreement between US Airways Group, Inc. and Alan W. Crellin dated as of September 27, 2005. | |
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10.4
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Employment Agreement between US Airways Group, Inc. and Jerrold A. Glass dated as of September 27, 2005. | |
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10.5
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Employment Agreement between US Airways Group, Inc. and Elizabeth K. Lanier dated as of September 27, 2005. |
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Exhibit No. | Description | |
10.6
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Stock Unit Award Agreement between US Airways Group, Inc. and W. Douglas Parker as of September 27, 2005. | |
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10.7
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Form of Stock Unit Award Agreement. | |
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10.8
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Form of Stock Appreciation Right Award Agreement. |
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US Airways Group, Inc. (REGISTRANT)
Date: October 3, 2005
By:
/s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
US Airways, Inc. (REGISTRANT)
Date: October 3, 2005
By:
/s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Table of Contents
20
Exhibit No.
Description
US Airways Group, Inc. 2005 Equity Incentive Plan.
Letter Agreement between US Airways Group, Inc. and Bruce R.
Lakefield dated as of September 27, 2005.
Employment Agreement between US Airways Group, Inc. and Alan
W. Crellin dated as of September 27, 2005.
Employment Agreement between US Airways Group, Inc. and
Jerrold A. Glass dated as of September 27, 2005.
Employment Agreement between US Airways Group, Inc. and
Elizabeth K. Lanier dated as of September 27, 2005.
Stock Unit Award Agreement between US Airways Group, Inc. and
W. Douglas Parker as of September 27, 2005.
Form of Stock Unit Award Agreement.
Form of Stock Appreciation Right Award Agreement.
EXHIBIT 10.1
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
APPROVAL DATE: SEPTEMBER 27, 2005
TERMINATION DATE: SEPTEMBER 26, 2015
1. GENERAL.
(a) ELIGIBLE AWARD RECIPIENTS. The persons eligible to receive discretionary Stock Awards and Performance Cash Awards are Employees, Directors and Consultants. The persons eligible to receive non-discretionary Stock Awards under the Non-Discretionary Grant Program are Eligible Directors.
(b) AVAILABLE AWARDS. The Plan provides for the grant of the following
Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) Stock Bonus Awards, (iv) Stock Appreciation Rights, (v) Stock Unit Awards,
and (vi) Other Stock Awards. The Plan also provides for the grant of Performance
Cash Awards.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Awards as set forth in Section 1(a), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide a means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock Awards.
2. DEFINITIONS.
As used in the Plan, the following definitions shall apply to the capitalized terms indicated below:
(a) "AFFILIATE" means (i) any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, and (ii) any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. The Board, in its sole discretion, shall have the authority to determine (i) the time or times at which the foregoing ownership tests are applied, and (ii) whether "Affiliate" includes entities other than corporations within the foregoing definition.
(b) "ANNUAL AWARD" means a Stock Award granted to each Eligible Director pursuant to Section 8(c)(ii).
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(c) "ANNUAL MEETING" means the first meeting of the Company's stockholders held each calendar year at which Directors of the Company are selected.
(d) "AWARD" means a Stock Award or a Performance Cash Award.
(e) "BOARD" means the Board of Directors of the Company.
(f) "CAPITALIZATION ADJUSTMENT" has the meaning ascribed to that term in
Section 12(a).
(g) "CAUSE" means, as determined by the Company, in its sole discretion:
(i) the Participant's engaging in fraud, misappropriation of property of the Company or an Affiliate, or gross misconduct damaging to such property or the business of the Company or an Affiliate; or
(ii) the Participant's conviction of a felony or a violation of any material policy of the Company or an Affiliate.
The determination that a termination of the Participant's Continuous Service is either for Cause or without Cause shall be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated by reason of dismissal without Cause for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
Notwithstanding the foregoing or any other provision of this Plan, the definition of Cause (or any analogous term) in an individual Stock Award Agreement or other written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Cause (or any analogous term) is set forth in such Stock Award Agreement or other written agreement, the foregoing definition shall apply.
(h) "CHANGE IN CONTROL" means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person from the Company in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (B) solely because the level of Ownership held by any Exchange Act Person (the "SUBJECT PERSON") exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a
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result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur;
(iv) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
(v) individuals who, on the date this Plan is adopted by the Board, are members of the Board (the "INCUMBENT BOARD") cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board.
The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.
Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual Stock Award Agreement or other written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control (or any analogous term) is set forth in such Stock Award or other written agreement, the foregoing definition shall apply.
(i) "CODE" means the Internal Revenue Code of 1986, as amended.
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(j) "COMMITTEE" means a committee of one (1) or more members of the Board to whom authority has been delegated by the Board in accordance with Section 3(d).
(k) "COMMON STOCK" means the common stock of the Company.
(l) "COMPANY" means US Airways Group, Inc., a Delaware corporation.
(m) "CONSULTANT" means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the Board of Directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a "Consultant" for purposes of the Plan.
(n) "CONTINUOUS SERVICE" means that the Participant's service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's service with the Company or an Affiliate, shall not terminate a Participant's Continuous Service. For example, a change in status from an employee of the Company to a consultant to an Affiliate or to a Director shall not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence.
(o) "CORPORATE TRANSACTION" means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;
(iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(p) "COVERED EMPLOYEE" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be
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reported to stockholders under the Exchange Act, as determined for purposes of
Section 162(m) of the Code.
(q) "DIRECTOR" means a member of the Board.
(r) "DISABILITY" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.
(s) "ELIGIBLE DIRECTOR" means a Director who is not an Employee and is eligible to participate in the Non-Discretionary Grant Program.
(t) "EMPLOYEE" means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an "Employee" for purposes of the Plan.
(u) "ENTITY" means a corporation, partnership or other entity.
(v) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(w) "EXCHANGE ACT PERSON" means any natural person, Entity or "group"
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
"Exchange Act Person" shall not include (i) the Company or any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of
the Plan as set forth in Section 15, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities.
(x) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the Common Stock on the date of determination, then the Fair Market Value shall be the closing selling price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists.
(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith.
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(y) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(z) "INITIAL AWARD" means an Option granted to an Eligible Director pursuant to Section 8(c)(i).
(aa) "NON-DISCRETIONARY GRANT PROGRAM" means the non-discretionary grant program in effect under Section 8 of the Plan.
(bb) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("REGULATION S-K")), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(cc) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option.
(dd) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(ee) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
(ff) "OPTION AGREEMENT" means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.
(gg) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
(hh) "OTHER STOCK AWARD" means an award whose value is based in whole or in part on the Common Stock and that is granted pursuant to Section 7(d).
(ii) "OTHER STOCK AWARD AGREEMENT" means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.
(jj) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" who receives compensation for prior services (other than benefits under a
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tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an "affiliated corporation," and does not receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.
(kk) "OWN," "OWNED," "OWNER," "OWNERSHIP" A person or Entity shall be deemed to "Own," to have "Owned," to be the "Owner" of, or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(ll) "PARTICIPANT" means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
(mm) "PERFORMANCE CASH AWARD" means an award of cash granted pursuant to
Section 11(h)(ii).
(nn) "PERFORMANCE CRITERIA" means the one or more criteria that the Board
shall select for purposes of establishing the Performance Goals for a
Performance Period. The Performance Criteria that shall be used to establish
such Performance Goals may be based on any one of, or combination of, the
following: (i) earnings before interest, taxes, depreciation, rent and
amortization expenses ("EBITDAR"); (ii) earnings before interest, taxes,
depreciation and amortization ("EBITDA"); (iii) earnings before interest and
taxes ("EBIT"); (iv) EBITDAR, EBITDA, EBIT or earnings before taxes and unusual
or nonrecurring items as measured either against the annual budget or as a ratio
to revenue or return on total capital; (v) net earnings; (vi) earnings per
share; (vii) net income (before or after taxes); (viii) profit margin; (ix)
operating margin; (x) operating income; (xi) net operating income; (xii) net
operating income after taxes; (xiii) growth; (xiv) net worth; (xv) cash flow;
(xvi) cash flow per share; (xvii) total stockholder return; (xviii) return on
capital; (xix) stock price performance; (xx) revenues; (xxi) revenues per
available seat mile; (xxii) costs; (xxiii) costs per available seat mile; (xxiv)
working capital; (xxv) capital expenditures; (xxvi) improvements in capital
structure; (xxvii) economic value added; (xxviii) industry indices; (xxix)
regulatory ratings; (xxx) customer satisfaction using the Air Travel Consumer
Report issued by the United States Department of Transportation; (xxxi) expenses
and expense ratio management; (xxxii) debt reduction; (xxxiii) profitability of
an identifiable business unit or product; (xxxiv) levels of expense, cost or
liability by category, operating unit or any other delineation; (xxxv)
implementation or completion of projects or processes; and (xxxvi) combination
of airline operating certificates within a specified period. Partial achievement
of the specified criteria may result in the payment or vesting corresponding to
the degree of achievement as specified in the Stock Award Agreement or the
written terms of a Performance Cash Award. The Board shall, in its sole
discretion, define the manner of calculating the Performance Criteria it selects
to use for a Performance Period.
(oo) "PERFORMANCE GOALS" means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be set on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or a relevant index. The Board is authorized
7.
to make adjustments in the method of calculating the attainment of Performance
Goals for a Performance Period as follows: (i) to exclude restructuring and/or
other nonrecurring charges; (ii) to exclude exchange rate effects, as
applicable, for non-U.S. dollar denominated net sales and operating earnings;
(iii) to exclude the effects of changes to generally accepted accounting
standards required by the Financial Accounting Standards Board; (iv) to exclude
the effects of any statutory adjustments to corporate tax rates; (v) to exclude
the effects of any "extraordinary items" as determined under generally accepted
accounting principles; (vi) to exclude any other unusual, non-recurring gain or
loss or other extraordinary item; (vii) to respond to, or in anticipation of,
any unusual or extraordinary corporate item, transaction, event or development;
(viii) to respond to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; (ix) to exclude the
dilutive effects of acquisitions or joint ventures; (x) to assume that any
business divested by the Company achieved performance objectives at targeted
levels during the balance of a Performance Period following such divestiture;
(xi) to exclude the effect of any change in the outstanding shares of common
stock of the Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to
common shareholders other than regular cash dividends; (xii) to reflect a
corporate transaction, such as a merger, consolidation, separation (including a
spinoff or other distribution of stock or property by a corporation), or
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code); and (xiii) to reflect any partial or
complete corporate liquidation. The Board also retains the discretion to reduce
or eliminate the compensation or economic benefit due upon attainment of
Performance Goals.
(pp) "PERFORMANCE PERIOD" means the one or more periods of time, which may be of varying and overlapping durations, as the Board may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to and the payment of a Performance Stock Award or a Performance Cash Award.
(qq) "PERFORMANCE STOCK AWARD" means a Stock Award granted pursuant to
Section 11(h)(i).
(rr) "PLAN" means this US Airways Group, Inc. 2005 Equity Incentive Plan.
(ss) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
(tt) "RETIREMENT" means:
(i) for purposes of any Stock Award granted under the Plan, except for any Stock Award granted pursuant to the Non-Discretionary Grant Program under Section 8, retirement from the Company and all Affiliates (a) at or after the age of fifty-five (55) and prior to age sixty-five (65) with the consent of the Board or Committee, or (b) at or after the age of sixty-five (65) without the consent of the Board or Committee; and
(ii) for purposes of any Stock Award granted under the Plan pursuant to the Non-Discretionary Grant Program under Section 8, retirement from the Board (a) at or after the
8.
age of fifty-five (55) and prior to age sixty-five (65) with the consent of the Board, or (b) at or after the age of sixty-five (65) without the consent of the Board.
Notwithstanding the foregoing or any other provision of this Plan, the definition of Retirement (or any analogous term) in an individual Stock Award Agreement or other written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Retirement (or any analogous term) is set forth in such Stock Award Agreement or other written agreement, the foregoing definition shall apply.
(uu) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(vv) "STOCK APPRECIATION RIGHT" means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 7(c).
(ww) "STOCK APPRECIATION RIGHT AGREEMENT" means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan.
(xx) "STOCK AWARD" means any right granted under the Plan, including an Option, a Stock Bonus Award, a Stock Appreciation Right, a Stock Unit Award, an Other Stock Award, or a Performance Stock Award.
(yy) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.
(zz) "STOCK BONUS AWARD" means an award of shares of Common Stock which is granted pursuant to Sections 7(a) and 8(c)(iii)(2).
(aaa) "STOCK BONUS AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Bonus Award evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan.
(bbb) "STOCK UNIT AWARD" means a right to receive shares of Common Stock which is granted pursuant to Sections 7(b) and 8(c)(iii)(2).
(ccc) "STOCK UNIT AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Unit Award evidencing the terms and conditions of a Stock Unit Award grant. Each Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan.
(ddd) "SUBSIDIARY" means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by
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reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).
(eee) "TEN PERCENT STOCKHOLDER" means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a Committee, as provided in Section 3(d). However, the Board may not delegate administration of the Non-Discretionary Grant Program.
(b) POWERS OF BOARD. Except with respect to the Non-Discretionary Grant Program, the Board or the Committee, to the extent delegated to the Committee pursuant to Section 3(d), shall have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine from time to time (1) which of the persons eligible under the Plan shall be granted Awards; (2) when and how each Award shall be granted; (3) what type or combination of types of Awards shall be granted; (4) the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to an Award; and (5) the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.
(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.
(iii) To amend the Plan or an Award as provided in Section 13.
(iv) To terminate or suspend the Plan as provided in Section 14.
(v) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan.
(vi) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by individuals who are foreign nationals or employed outside the United States.
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(c) ADMINISTRATION OF NON-DISCRETIONARY GRANT PROGRAM. The Board shall have the power, subject to and within the limitations of, the express provisions of the Non-Discretionary Grant Program:
(i) To determine the provisions of each Stock Award to the extent not specified in the Non-Discretionary Grant Program.
(ii) To construe and interpret the Non-Discretionary Grant Program and the Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Non-Discretionary Grant Program or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Non-Discretionary Grant Program fully effective.
(iii) To amend the Non-Discretionary Grant Program, including the number of shares subject to Initial and Annual Awards or a Stock Award thereunder, as provided in Section 13.
(iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Non-Discretionary Grant Program.
(d) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate some or all of the administration of the Plan (except the Non-Discretionary Grant Program) to a Committee or Committees. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(ii) SECTION 162(m) AND RULE 16b-3 COMPLIANCE. In the sole discretion of the Board, the Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or the Committee, in its sole discretion, may (1) delegate to a committee of one or more members of the Board who need not be Outside Directors the authority to grant Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award, or (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, and/or (2) delegate to a committee of one or more members of the Board who need not be Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.
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(e) DELEGATION TO AN OFFICER. The Board may delegate to one or more Officers of the Company the authority to do one or both of the following: (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Awards and the terms thereof; and (ii) determine the number of shares of Common Stock to be subject to Stock Awards granted to such Officers and Employees of the Company; provided, however, that the Board resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding anything to the contrary in this Section 3(e), the Board may not delegate to an Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section 2(x)(ii) above.
(f) EFFECT OF BOARD'S DECISION. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.
(g) CANCELLATION AND RE-GRANT OF STOCK AWARDS. Neither the Board nor any Committee shall have the authority to effect any of the following, unless the stockholders of the Company have approved such an action within the preceding twelve (12) months: (i) reduction of the exercise price of any outstanding Stock Awards under the Plan; (ii) cancellation of any outstanding Stock Awards under the Plan and the grant in substitution therefor of (A) new Stock Awards under the Plan or another equity plan of the Company covering the same or a different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board, in its sole discretion); or (iii) any other action that is treated as a repricing under generally accepted accounting principles.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 12(a) relating to
Capitalization Adjustments, the number of shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed, in the aggregate, 10,969,191
shares of Common Stock. Subject to Section 4(b), the number of shares available
for issuance under the Plan shall be reduced by: (i) one (1) share for each
share of stock issued pursuant to (A) an Option granted under Section 6 or 8, or
(B) a Stock Appreciation Right granted under Section 7(c); and (ii) three (3)
shares for each share of Common Stock issued pursuant to a Stock Bonus Award,
Stock Unit Award or Other Stock Award granted under Section 7. Shares may be
issued in connection with a merger or acquisition as permitted by NYSE Listed
Company Manual Section 303A(8) or, if applicable, NASD Rule 4350(i)(1)(A)(iii)
and such issuance shall not reduce the number of shares available for issuance
under the Plan.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any (i) Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, (ii) shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited to or repurchased by the Company pursuant to the Company's reacquisition or repurchase rights under the Plan, including any forfeiture or repurchase caused by the failure to meet a contingency or condition required for the vesting of such shares, or (iii) Stock Award is settled in cash, then the shares of Common Stock not issued under such Stock Award, or forfeited to or repurchased by the Company, shall revert to and again become available for issuance under the Plan. If any
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shares subject to a Stock Award are not delivered to a Participant because the Stock Award is exercised through a reduction of shares subject to the Stock Award (i.e., "net exercised") or an appreciation distribution in respect of a Stock Appreciation Right is paid in shares of Common Stock, the number of shares subject to the Stock Award that are not delivered to the Participant shall remain available for subsequent issuance under the Plan. If any shares subject to a Stock Award are not delivered to a Participant because such shares are withheld in satisfaction of the withholding of taxes incurred in connection with the exercise of an Option or Stock Appreciation Right or the issuance of shares under a Stock Bonus Award, Stock Unit Award or Other Stock Award, the number of shares that are not delivered to the Participant shall remain available for subsequent issuance under the Plan. If the exercise price of any Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by actual delivery or attestation), then the number of shares so tendered shall remain available for subsequent issuance under the Plan. Any shares subject to outstanding stock awards granted under the America West 2002 Incentive Equity Plan or the US Airways Group, Inc. 2004 Omnibus Stock Incentive Plan that expire or terminate for any reason prior to exercise or settlement shall be added to the share reserve of this Plan and become available for issuance pursuant to Stock Awards granted hereunder.
To the extent there is issued a share of Common Stock pursuant to a Stock
Award that counted as three (3) shares against the number of shares available
for issuance under the Plan pursuant to Section 4(a) and such share of Common
Stock again becomes available for issuance under the Plan pursuant to this
Section 4(b), then the number of shares of Common Stock available for issuance
under the Plan shall increase by three (3) shares.
(i) INCENTIVE STOCK OPTION LIMIT. Notwithstanding anything to the contrary in this Section 4(b), subject to the provisions of Section 12(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be 10,969,191 shares of Common Stock.
(c) SOURCE OF SHARES. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC AWARDS. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Non-discretionary Stock Awards granted under the Non-Discretionary Grant Program in Section 8 may be granted only to Eligible Directors. Performance Cash Awards may be granted to Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.
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(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, no Employee shall be eligible to be granted during any calendar year Options or Stock Appreciation Rights covering more than one million (1,000,000) shares of Common Stock.
(d) CONSULTANTS. A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act ("FORM S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other rule governing the use of Form S-8.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical; provided, however, that each Option Agreement shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten (10) years from the date of grant, or such shorter period specified in the Option Agreement; provided, however, that an Incentive Stock Option granted to a Ten Percent Stockholder shall be subject to the provisions of Section 5(b).
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than one hundred percent (100%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner consistent with the provisions of
Section 424(a) of the Code.
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(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The methods of payment permitted by this Section 6(d) are:
(i) by cash or check;
(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv) by a "net exercise" arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, the Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided, however, that shares of Common Stock will no longer be outstanding under an Option and will not be exercisable thereafter to the extent that (i) the number of shares is reduced to pay the exercise price pursuant to the "net exercise," (ii) shares are delivered to the Participant as a result of such exercise, and (iii) shares are withheld to satisfy tax withholding obligations; or
(v) in any other form of legal consideration that may be acceptable to the Board.
(e) TRANSFERABILITY OF OPTIONS. The Board may, in its sole discretion, impose such limitations on the transferability of Options as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options shall apply:
(i) RESTRICTIONS ON TRANSFER. An Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
(ii) DOMESTIC RELATIONS ORDERS. Notwithstanding the foregoing, an Option may be transferred pursuant to a domestic relations order; provided, however, that if an Option is an Incentive Stock Option, such Option shall be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii) BENEFICIARY DESIGNATION. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form provided by or
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otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. In the absence of such a designation, the executor or administrator of the Optionholder's estate shall be entitled to exercise the Option.
(f) VESTING OF OPTIONS GENERALLY. The total number of shares of Common Stock subject to an Option may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(f) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.
(g) TERMINATION OF CONTINUOUS SERVICE. In the event that an Optionholder's Continuous Service terminates (other than for Cause or upon the Optionholder's death, Disability or Retirement), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.
(h) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may
provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death,
Disability or Retirement, or upon a Change in Control, if applicable) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of a period of three
(3) months after the termination of the Optionholder's Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements, or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.
(i) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date three (3) years following such termination of Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.
(j) DEATH OF OPTIONHOLDER. In the event that (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's
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Continuous Service for a reason other than death, the Option may be exercised
(to the extent that the Optionholder was entitled to exercise such Option as of
the date of death) by the Optionholder's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionholder's death, but only within the period
ending on the earlier of (i) the date three (3) years following the date of
death (or such longer or shorter period specified in the Option Agreement), or
(ii) the expiration of the term of such Option as set forth in the Option
Agreement. If, after the Optionholder's death, the Option is not exercised
within the time specified herein or in the Option Agreement (as applicable), the
Option shall terminate.
(k) RETIREMENT OF OPTIONHOLDER. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's Retirement, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date three (3) years following such termination of Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.
(l) TERMINATION FOR CAUSE. In the event that an Optionholder's Continuous Service is terminated for Cause, the Option shall terminate upon the termination date of such Optionholder's Continuous Service, and the Optionholder shall be prohibited from exercising his or her Option from and after the time of such termination of Continuous Service.
(m) EARLY EXERCISE. The Option may include a provision whereby the Optionholder may elect at any time before the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The Company shall not be required to exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each Stock Bonus Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. To the extent consistent with the Company's Bylaws, at the Board's election, shares of Common Stock may be (i) held in book entry form subject to the Company's instructions until any restrictions relating to the Stock Bonus Award lapse; or (ii) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and conditions of separate Stock Bonus Award Agreements need not be identical; provided, however, that each Stock Bonus Award Agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
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(i) CONSIDERATION. A Stock Bonus Award may be awarded in consideration for (i) past or future services rendered to the Company or an Affiliate, or (ii) any other form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) VESTING. Shares of Common Stock awarded under a Stock Bonus Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.
(iii) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's Continuous Service terminates, the Company may receive, pursuant to a forfeiture condition, any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination of Continuous Service under the terms of the Stock Bonus Award Agreement.
(iv) TRANSFERABILITY. Rights to acquire shares of Common Stock under the Stock Bonus Award Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Stock Bonus Award Agreement, as the Board shall determine in its sole discretion, so long as Common Stock awarded under the Stock Bonus Award Agreement remains subject to the terms of the Stock Bonus Award Agreement.
(b) STOCK UNIT AWARDS. Each Stock Unit Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of separate Stock Unit Award Agreements need not be identical; provided, however, that each Stock Unit Award Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) CONSIDERATION. At the time of grant of a Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law.
(ii) VESTING. At the time of the grant of a Stock Unit Award, the Board may impose such restrictions or conditions on the vesting of the Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii) PAYMENT. A Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Stock Unit Award Agreement.
(iv) ADDITIONAL RESTRICTIONS. At the time of the grant of a Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Stock Unit Award to a time following the vesting of such Stock Unit Award.
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(v) DIVIDEND EQUIVALENTS. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Stock Unit Award, as determined by the Board and contained in the Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Stock Unit Award Agreement to which they relate.
(vi) TERMINATION OF CONTINUOUS SERVICE. Except as otherwise provided in the applicable Stock Unit Award Agreement, such portion of the Stock Unit Award that has not vested will be forfeited upon the Participant's termination of Continuous Service.
(c) STOCK APPRECIATION RIGHTS. Each Stock Appreciation Right Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with other Stock Awards. The terms and conditions of separate Stock Appreciation Right Agreements need not be identical; provided, however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) TERM. No Stock Appreciation Right shall be exercisable after the expiration of ten (10) years from the date of grant, or such shorter period specified in the Stock Appreciation Right Agreement.
(ii) STRIKE PRICE. Each Stock Appreciation Right will be denominated in shares of Common Stock equivalents. The strike price of each Stock Appreciation Right granted as a stand-alone or tandem Stock Award shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock equivalents subject to the Stock Appreciation Right on the date of grant.
(iii) CALCULATION OF APPRECIATION. The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (i) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (ii) the strike price that will be determined by the Board at the time of grant of the Stock Appreciation Right.
(iv) VESTING. At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems appropriate.
(v) EXERCISE. To exercise any outstanding Stock Appreciation Right, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.
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(vi) PAYMENT. The appreciation distribution in respect of a Stock Appreciation Right may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and set forth in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.
(vii) TERMINATION OF CONTINUOUS SERVICE. In the event that a Participant's Continuous Service terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant's Continuous Service (or such longer or shorter period specified in the Stock Appreciation Right Agreement), or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after termination, the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall terminate.
(d) OTHER STOCK AWARDS. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock may be granted either alone or in addition to Stock Awards provided for under Section 6 and the preceding provisions of this Section 7. Subject to the provisions of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.
8. NON-DISCRETIONARY GRANTS TO ELIGIBLE DIRECTORS.
(a) GENERAL. The Non-Discretionary Grant Program in this Section 8 allows Eligible Directors to receive Stock Awards automatically at designated intervals over their period of Continuous Service on the Board.
(b) ELIGIBILITY. The Stock Awards shall automatically be granted to all Eligible Directors who meet the specified criteria.
(c) NON-DISCRETIONARY GRANTS.
(i) INITIAL AWARD. Without any further action of the Board, each person who on or after January 1, 2006 is elected or appointed for the first time to be an Eligible Director automatically shall, upon the date of his or her initial election or appointment as an Eligible Director, be granted an Initial Award as described in Section 8(c)(iii) below.
(ii) ANNUAL AWARDS. Without any further action of the Board, on the date of each Annual Meeting, commencing with the first Annual Meeting after January 1, 2006, each person who is then an Eligible Director automatically shall be granted an Annual Award as described in Section 8(c)(iii) below; provided, however, that if the person has not been serving as an Eligible Director for the entire period since the preceding Annual Meeting, then the number of shares subject to such Annual Award shall be reduced pro rata for each full month prior to the date of grant during which such person did not serve as an Eligible Director.
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(iii) FORM OF INITIAL AND ANNUAL AWARDS. On or before December 31 of
any calendar year, the Board shall determine if all Initial or Annual Awards to
be granted in the subsequent calendar year shall be in the form of Options
described in Section 8(d) or Stock Bonus or Stock Unit Awards described in
Section 8(e). If the Board does not make such a determination on or before
December 31 of a calendar year, all Initial and Annual Awards to be granted in
the subsequent calendar year shall be in the form of Options described in
Section 8(d).
(1) OPTION. If the Initial or Annual Award is in the form of an Option, the Initial or Annual Award shall be a Nonstatutory Stock Option to purchase four thousand one hundred twenty-five (4,125) shares of Common Stock on the terms and conditions set forth in Section 8(d).
(2) STOCK BONUS AWARD OR STOCK UNIT AWARD. If the
Initial or Annual Award is in the form of a Stock Bonus Award or Stock Unit
Award, the Initial or Annual Award shall not be more favorable to an Eligible
Director than that number of unvested shares of Common Stock, rounded down to
the next whole number of shares, determined as the quotient obtained by dividing
(i) the "fair value" of the Option specified in Section 8(c)(iii)(1) determined
under generally accepted accounting principles and using the option pricing
model employed by the Company for purposes of estimating the value of
compensatory stock options for financial reporting purposes as reported in the
Annual Report filed on Form 10-K or Form 10-KSB (or any successor forms) with
the Securities and Exchange Commission in the calendar year preceding the date
of grant, by (ii) the Fair Market Value per share of the Common Stock on the
date of grant.
(d) NON-DISCRETIONARY OPTION GRANT PROVISIONS.
(i) OPTION TYPE. Each Option granted hereunder shall be a Nonstatutory Stock Option.
(ii) VESTING. Each Option granted hereunder shall be fully vested on the date the Option is granted.
(iii) TERM. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.
(iv) EXERCISE PRICE. The exercise price of each Option shall be one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.
(v) TERMINATION OF CONTINUOUS SERVICE. The provisions of Sections
6(g), 6(h), 6(i), 6(j) and 6(k) shall apply to each Option granted hereunder;
provided, however, that in the event that an Optionholder's Continuous Service
terminates upon a Change in Control, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option
as of the date of termination of Continuous Service) within such period of time
ending on the earlier of (i) the date three (3) years following the termination
of the Optionholder's Continuous Service (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination of Continuous
Service, the Optionholder does not exercise his or her Option
21.
within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.
(vi) REMAINING TERMS. The remaining terms and conditions of each Option shall be as set forth in an Option Agreement in the form adopted from time to time by the Board; provided, however, that the terms of such Option Agreement shall be consistent with the provisions of the Plan.
(e) NON-DISCRETIONARY STOCK BONUS AWARD OR STOCK UNIT AWARD PROVISIONS.
(i) CONSIDERATION. Payment for the Stock Bonus Award or Stock Unit Award shall be for past or future services rendered to the Company or an Affiliate. In the event that additional consideration is required to be paid so that the shares of Common Stock subject to the Stock Bonus Award or Stock Unit Award shall be deemed fully paid and nonassessable, the Board shall determine the amount and character of such additional consideration.
(ii) REMAINING TERMS. The remaining terms and conditions of each grant of Stock Bonus Awards and Stock Unit Awards shall be as set forth in a Stock Bonus Award Agreement or Stock Unit Award Agreement in a form adopted from time to time by the Board; provided, however, that the terms of such Stock Bonus Award Agreement or Stock Unit Award Agreement shall be consistent with the provisions of the Plan.
9. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. No Stock Award under the Plan shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Board, in its sole discretion, has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject.
10. USE OF PROCEEDS FROM SALES OF COMMON STOCK.
Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.
11. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.
22.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan, any Stock
Award Agreement or other instrument executed thereunder or in connection with
any Award granted pursuant to the Plan shall confer upon any Participant any
right to continue to serve the Company or an Affiliate in the capacity in effect
at the time the Stock Award was granted or shall affect the right of the Company
or an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant's agreement with the Company or an Affiliate, or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means (in addition to the Company's right to withhold from any compensation paid to the Participant by the Company)
23.
or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; or (iii) by such other method as may be set forth in the Stock Award Agreement.
(g) ELECTRONIC DELIVERY. Any reference herein to a "written" agreement or document shall include any agreement or document delivered electronically or posted on the Company's intranet.
(h) PERFORMANCE AWARDS.
(i) PERFORMANCE STOCK AWARDS. A Performance Stock Award is a Stock Award that may be granted, may vest, or may be exercised based upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not, require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee, in its sole discretion. The maximum benefit to be received by any Participant in any calendar year attributable to Stock Awards described in this Section 11(h)(i) shall not exceed the value of one million (1,000,000) shares of Common Stock.
(ii) PERFORMANCE CASH AWARDS. A Performance Cash Award is a cash award that may be granted upon the attainment during a Performance Period of certain Performance Goals. A Performance Cash Award may, but need not, require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee, in its sole discretion. The maximum benefit to be received by any Participant in any calendar year attributable to cash awards described in this Section 11(h)(ii) shall not exceed five million dollars ($5,000,000).
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in, or other events
occur with respect to, the Common Stock subject to the Plan or subject to any
Stock Award after the effective date of the Plan set forth in Section 15 without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company (each a
"CAPITALIZATION ADJUSTMENT")), the Board shall appropriately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 4(a); (ii) the class(es) and maximum number of securities that may be
issued pursuant to the exercise of Incentive Stock Options pursuant to Section
4(b); (iii) the class(es) and maximum number of securities that may be awarded
to any person pursuant to Sections 5(c) and 11(h); (iv) the class(es) and number
of securities subject to each Stock Award under the Non-Discretionary Grant
Program under Section 8; and (v) the class(es) and number of securities and
price per share of stock subject to outstanding Stock Awards. The Board shall
make such
24.
adjustments, and its determination shall be final, binding and conclusive. (Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a transaction "without receipt of consideration" by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company's repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.
(c) CORPORATE TRANSACTION. The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of the Stock Award:
(i) STOCK AWARDS MAY BE ASSUMED. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (including, but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor's parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation may choose to assume or continue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation or substitution shall be set by the Board in accordance with the provisions of Section 3(b).
(ii) STOCK AWARDS HELD BY CURRENT PARTICIPANTS. In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the "CURRENT PARTICIPANTS"), the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company
25.
with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction).
(iii) STOCK AWARDS HELD BY OTHERS. In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated and such Stock Awards (other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction.
(iv) PAYMENT FOR STOCK AWARDS IN LIEU OF EXERCISE. Notwithstanding the foregoing, in the event a Stock Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may not exercise such Stock Award but will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (i) the value of the property the holder of the Stock Award would have received upon the exercise of the Stock Award, over (ii) any exercise price payable by such holder in connection with such exercise.
(d) CHANGE IN CONTROL. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur.
13. AMENDMENT OF THE PLAN AND AWARDS.
(a) AMENDMENT OF PLAN. Subject to the limitations, if any, of applicable law, the Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy applicable law.
(b) STOCKHOLDER APPROVAL. The Board, in its sole discretion, may submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the
26.
Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the affected Participant, and (ii) such
Participant consents in writing.
(e) AMENDMENT OF AWARDS. The Board, at any time and from time to time, may amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement or the written terms of a Performance Cash Award, subject to any specified limits in the Plan that are not subject to Board discretion; provided, however, that the rights under any Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the effective date specified in Section 15. No Awards may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective September 17, 2005.
16. CHOICE OF LAW.
The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state's conflict of laws rules.
27.
EXHIBIT 10.2
September 27, 2005
US Airways Group, Inc.
US Airways, Inc.
Crystal Park Four
2345 Crystal Drive
Arlington, VA 22227
RE: WAIVER OF CERTAIN RIGHTS AND CLAIMS UNDER EMPLOYMENT AGREEMENT
To Whom It May Concern:
This letter is to confirm in writing my understanding with you regarding the various rights and claims that I have agreed to waive under the terms of my Employment Agreement with you, which originally became effective as of April 19, 2004 (the "Employment Agreement").
Pursuant to that certain Memorandum of Law of Debtors and Debtors-in-Possession (A) In Support of Confirmation of Joint Plan of Reorganization of US Airways, Inc. and its Affiliated Debtors and Debtors-in-Possession, and (B) In Response to Objections Thereto, filed in the U.S. Bankruptcy Court on September 15, 2005, in Footnote 16, we indicated that the severance payment that I would be eligible to receive would be $1,700,000. In order to comply with that number, I have agreed to waive the following:
(a) any and all rights or claims to payment under the Long-Term Incentive Plan (the "LTIP") described in Section 4.4 of the Employment Agreement that may now or in the future become due and payable, including but not limited to any payments that may become payable under the LTIP due to a Change in Control (as defined in the Employment Agreement); and
(b) any and all rights or claims to any payment of any amounts under
Section 6.5(b)(3) of the Employment Agreement that may now or in the future
become due and payable.
It is my understanding that all other provisions of the Employment Agreement shall remain in full force and effect.
September 27, 2005
I would appreciate your having appropriate representatives execute the bottom of this letter to confirm that my recitation of the waiver is accurate and consistent with your understanding.
Very truly yours, Bruce R. Lakefield Confirmed: Confirmed: US Airways Group, Inc. US Airways, Inc. ________________________________ _______________________________ By: ___________________________ By: __________________________ |
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is hereby entered into by and between US AIRWAYS, INC., a Delaware corporation having its principal place of business at Crystal Park Four, 2345 Crystal Drive, Arlington, Virginia 22227 (the "Company") and ALAN W. CRELLIN (the "Executive"), as of the 27th day of September, 2005.
W I T N E S S E T H
WHEREAS, the Executive has the responsibilities and duties of the position of Executive Vice President-Operations for the Company; and
WHEREAS, the Board and the Human Resources Committee of the Board believe it to be in the best interests of the Company to enter into this Agreement to properly document the terms and conditions of the Executive's employment with the Company including, but not limited to, the duties and obligations of the parties under circumstances in which there is a Change of Control of the Company;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and the Executive hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Accrued Obligations shall mean any amounts of Reduced Base Salary plus any accrued and unused vacation pay that has been earned but not yet paid by the Company, determined as of the Executive's Date of Termination.
1.2 Agreement shall mean this Employment Agreement between the Company and the Executive.
1.3 Affiliate shall mean any parent, brother-sister or subsidiary corporation of the Company, any joint venture in which the Company owns at least a 50 percent interest, and any partnership, limited liability partnership or limited liability corporation in which the Company or any of its wholly-owned Affiliates owns at least a 50 percent interest.
1.4 Base Salary shall mean the basic rate of pay and does not include any additional compensation in the form of benefits or perquisites and does not include any reductions to the basic rate of pay.
CRELLIN EMPLOYMENT AGREEMENT Page 1
1.5 Board shall mean the Board of Directors of Group or the Board of Directors of the Company, as applicable.
1.6 Cause shall mean:
(a) willful and continued failure to substantially perform his duties with the Company within fifteen (15) days after a written demand for substantial performance is delivered to the Employee which identifies the manner in which the Company believes that the Employee has not substantially performed his duties;
(b) unlawful or willful misconduct which is economically injurious to, or injurious to the reputation or good will of, the Company or to any entity in control of, controlled by or under common control with the Company (and its successors);
(c) indictment for or conviction of, or a plea of guilty or nolo contendere, to a felony charge;
(d) habitual drug or alcohol abuse that impairs the Employee's ability to perform the essential duties of his position; or
(e) embezzlement, fraud or any other illegal act against the Company or any illegal act committed in connection with the Executive's performance of his duties.
1.7 Change of Control shall mean the occurrence of any of the following events on or after the Effective Date of this Agreement:
(a) Acquisition of Substantial Percentage. 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 ("the 1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company's parent, US Airways Group, Inc. ("Group")(the "Outstanding Group Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Group entitled to vote generally in the election of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control:
(1) any acquisition directly from Group;
(2) any acquisition by Group or any of its subsidiaries;
(3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Group or any of its subsidiaries;
(4) 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
CRELLIN EMPLOYMENT AGREEMENT Page 2
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
(5) any acquisition by an individual, entity or group that, pursuant to Rule 13d-1 promulgated under the 1934 Act, is permitted to, and actually does, report its beneficial ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13G (or any successor Schedule); provided further, that if any such individual, entity or group subsequently becomes required to or does report its ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and Outstanding Group Voting Securities beneficially owned by it on such date; or
(b) Change of Majority of Board Members. Individuals who, as of the Effective Date of this Agreement, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; 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 1934 Act) or other actual or threatened solicitation of proxies or consents; or
(c) Reorganization, Merger or Consolidation. There is consummated a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such reorganization, merger or consolidation, beneficially own, directly or indirectly, less than 85% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Group Common Stock and the Outstanding Group Voting Securities, as the case may be; or
(d) Disposition of Assets. Approval by the shareholders of Group of a complete liquidation or dissolution of Group or the consummation of the sale or other
CRELLIN EMPLOYMENT AGREEMENT Page 3
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.
1.8 Change of Control Date shall mean the first date on which a Change of Control occurs.
1.9 Change of Control Period shall mean the period beginning on the Change of Control Date and ending on the day two (2) years thereafter.
1.10 Company shall mean US Airways, Inc., a Delaware corporation, and its Affiliates, including its successors and assigns.
1.11 Date of Termination means final date of the Executive's employment.
1.12 Disability shall mean a mental or physical impairment or injury of the Executive which is determined to result in his total and permanent inability to perform the essential functions of his position without reasonable accommodation, as determined by the Board of Directors based on professional medical and/or psychological opinions, or the Executive's eligibility to receive disability benefits under the terms and conditions of the Company's long-term disability policy, based on an "own occupation" definition under the policy
1.13 Effective Date shall mean the date of the emergence of Group and the Company from the protection of the U.S. Bankruptcy Court, as defined by Paragraph 1.63 of the Joint Plan of Reorganization of US Airways Group, Inc. and its Affiliated Debtors, dated August 9, 2005, as amended and confirmed by that certain Findings of Fact, Conclusions of Law and Order Confirming the Joint Plan of Reorganization, dated September 16, 2005.
1.14 Good Reason shall mean:
(a) the assignment to the Executive of any duties materially inconsistent with the Executive's position, authority, duties or responsibilities as contemplated by this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities; provided, that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the assignment or other Company action would meet the provisions of this paragraph, and the Company has had at least fifteen (15) days following delivery of the written notice to correct the assignment or action and has not done so;
(b) the failure by the Company to reelect the Executive to a position with materially similar or greater duties than the position held by the Executive on the Effective Date;
CRELLIN EMPLOYMENT AGREEMENT Page 4
provided, that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the Company action would meet the provisions of this paragraph, and the Company has had at least fifteen (15) days following delivery of the written notice to correct the action and has not done so;
(c) any material failure by the Company to comply with the material provisions of this Agreement; provided that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the Company has failed to meet the material provisions of this Agreement, and the Company has had at least fifteen (15) days following delivery of the written notice to correct any such failure and has not done so;
(d) after a Change of Control Date, any failure of the Company (i)
to pay Reduced Base Salary, (ii) to maintain the Executive's Annual Bonus and
Long-Term Incentive Plan target percentages at the same level as immediately
prior to the Change of Control, (iii) to maintain and contribute to the EDCP (as
defined in Section 4.6 hereof) pursuant to the plan document and this Agreement,
(iv) to provide travel privileges to the Executive and his family as in effect
prior to the Change of Control Date or at least equivalent to travel privileges
provided to other Key Employees, (v) to provide the Executive with the same
amount of vacation or paid time off as he had prior to the Change of Control,
and (vi) to provide the Executive and the Executive's family with any other
employee benefit plans, programs, policies and practices at a level comparable
to that provided to other active Key Employees of the Company;
(e) the Company's requiring the Executive to be based at any office or location further than a fifty (50) mile radius from the Washington, D.C. metropolitan area, except for travel reasonably required in the performance of the Executive's responsibilities;
(f) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or
(g) any failure by the Company to comply with and satisfy the successor provisions of Section 11.3 of this Agreement.
1.15 Group shall mean U.S. Airways Group, Inc., the parent of the Company.
1.16 Key Employee shall mean any Executive Vice President of the Company or, in the event of a Change of Control, any officer of a similar level of responsibility.
1.17 Notice of Termination shall mean a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the Date of Termination (which date shall be not more than fifteen (15) days after the giving of such notice).
1.18 Proprietary Information shall mean information that meets the definition of "trade secret" under the laws of the State of Delaware, as well as any scientific or technical information, design, process, procedure, formula or improvement that is secret and of value, information that
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Group and/or the Company takes reasonable efforts to protect from disclosure and from which Group and/or the Company derives actual or potential economic value due to its confidential nature, including, but not limited to, technical or nontechnical data, formulas, compilations, programs, devices, methods, techniques, drawings, processes, financial data, lists of actual or potential customers, price lists, business plans, customer and vendor records, training and operations materials and memoranda, personnel records, financial information relating to the business of Group and the Company, accounts, customers, vendors, employees and affairs of Group and the Company, and any information marked "confidential" by Group and/or the Company.
1.19 Reduced Base Salary shall mean the Executive's Base Salary as reduced pursuant to Company agreements with unions, Company executive compensation guidelines or agreements between the Executive and the Company.
1.20 Term shall mean the period during which this Agreement is effective. The Term of this Agreement is described in Article III hereof.
ARTICLE II
DUTIES AND RESPONSIBILITY
2.1 Duties and Authority. The Executive is engaged and agrees to perform services for and on behalf of the Company as its Executive Vice President-Operations and shall report directly to the Chief Executive Officer. The Executive shall have such duties and responsibilities as may be assigned to him by the Company's bylaws or by the Chief Executive Officer. The Executive agrees to perform such duties diligently and efficiently and in accordance with the reasonable directions of the Chief Executive Officer. The Executive shall conduct himself at all times in a business-like and professional manner as appropriate for his position and shall represent the Company in all respects in compliance with good business and ethical practices. In addition, the Executive shall be subject to and abide by the policies and procedures of the Company applicable to personnel of the Company, as may be adopted from time to time.
2.2 Best Efforts. During his employment with the Company, excluding any periods of vacation and sick leave to which the Executive is entitled, subject to the provisions of Section 2.3 below, the Executive shall devote his full attention, energies and best efforts to rendering services on behalf of the Company (or its Affiliates) and shall not engage in any outside employment without the express written consent of the Board.
2.3 Outside Activities. During his employment, 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) invest or trade in stocks, bonds, commodities or other forms of investment, including real property if the Executive does not "participate" (within the meaning of Treas. Reg. Sections 1.469-5(f) and 1.469-5T(f)) in such 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. The Executive may also participate in any interest or activity
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which is approved in writing by the Board. At least once each year during this Agreement, and at any time upon the Board's request, the Executive shall provide a full disclosure to the Corporate Governance Committee of the Board of his participation in any corporate, civic and charitable activities (including service on corporate or charitable boards of directors or trustees). Prior to pursuing or accepting any board membership, teaching position or any other activity which will require a significant portion of the Executive's time (other than those in which he is engaged on the Effective Date), the Executive agrees to discuss such activity with the Human Resources Committee of the Board.
2.4 No Violation of Other Agreement. By execution of this Agreement, the Executive hereby warrants and represents to the Company that his acceptance of this employment arrangement and his performance of the duties and responsibilities described hereunder will not cause him to violate the terms and conditions of any obligation or agreement to which he is a party and will not expose the Company to any liability in connection with any such obligation or agreement.
ARTICLE III
AT WILL EMPLOYMENT
3.1 At Will Employment. Prior to a Change of Control, this Agreement shall not have a specified Term. The employment relationship between the Executive and the Company is one of "at-will employment," which provides that either party to the Agreement may terminate the Agreement at any time for any reason. The parties hereto agree that in the event either desires to terminate the Agreement, the terminating party shall provide the other party written notice of the termination.
3.2 Automatic Term Provisions Upon Change of Control. As of a Change of Control Date, this Agreement automatically shall become effective for a two (2) year Term from that date and shall terminate on the close of business on the date two (2) years following the Change of Control Date, unless earlier terminated by the parties pursuant to the provisions hereof.
ARTICLE IV
COMPENSATION AND BENEFITS
4.1 Base Salary. The Company agrees that the Executive's annual Base Salary is $425,000, which does not include any benefits or perquisites or reductions. Notwithstanding the foregoing, the Company and the Executive have agreed to reductions to the Base Salary, which will result in the Executive receiving an annual Reduced Base Salary of $317,475. Base Salary and Reduced Base Salary shall be reviewed at least annually by the Human Resources Committee of the Board and may be increased from time to time based upon performance.
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4.2 Emergence Cash Bonus. Upon the earlier of (a) the date of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, or (b) December 31, 2005, if the Executive remains employed on such earlier date, the Company may, at its discretion, provide the Executive a cash bonus in an amount to be determined by the Human Resources Committee.
4.3 Equity Incentives.
(a) Restricted Stock Award. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive shares of Restricted Stock under the terms of the Company's 2004 Omnibus Stock Incentive Plan (the "Omnibus Plan") or any successor plan, in an amount to be determined by the Human Resources Committee. This grant of Restricted Stock shall be made effective as of the date of emergence and shall vest and become transferable as follows: 50% of the Restricted Stock shall become vested and nonforfeitable as of the date of grant, and 25% of the Restricted Stock shall become vested and nonforfeitable on each of the next two anniversaries of such date of emergence.
(b) Stock Option Grant. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive a nonqualified stock option for shares of the Company's common stock, under the terms of the Company's 2004 Omnibus Stock Incentive Plan or any successor plan, in an amount to be determined by the Human Resources Committee. This stock option shall be granted effective as of the date of emergence, shall have a per share exercise price equal to the per share fair market value of the common stock on the date of grant, and shall become exercisable as follows: 50% of the nonqualified stock option shall become exercisable as of the date of grant, and 25% of the nonqualified stock option shall become exercisable on each of the next two anniversaries of such date of emergence.
(c) Future Grants and Awards. The Executive shall remain eligible to receive future grants and awards of restricted stock, options or any other equity-based grants or awards as may be made under the terms of the Omnibus Plan or any successor plan, as may be determined from time to time by the Human Resources Committee. Following a Change of Control, the Executive shall receive equity-based grants and awards at a level comparable and with vesting and exercisability comparable to any regular and normal course grants and awards made to other Key Employees of the Company.
4.4 Annual Bonus. The Executive shall be eligible to participate in the Company's annual cash bonus program under the Company's Incentive Compensation Plan, as determined by the Human Resources Committee of the Board or any other annual bonus plan hereafter approved by the Board ("Incentive Plan"). The annual bonus under this Section 4.4 shall hereinafter be referred to as the "Annual Bonus."
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4.5 Long-Term Incentive Plan. The Executive shall be eligible to participate in the long-term incentive program under the Company's Long-Term Incentive Plan, as determined by the Human Resources Committee of the Board or any other long-term incentive plan hereafter approved by the Board ("LTIP").
4.6 Retirement Plans. The Executive shall be eligible to participate in the US Airways Group, Inc. Funded Executive Defined Contribution Plan and the US Airways Group, Inc. Unfunded Executive Defined Contribution Plan (the "EDCPs"). While participating in the EDCPs, the Executive shall not be eligible to receive allocations of any employer contributions under any tax-qualified retirement plan or to participate in any other nonqualified retirement or deferred compensation plan sponsored by the Company or Group. EDCP payments reduced after October 11, 2004 shall be restored in monthly installments over a two-year period beginning on October 12, 2006 (the "Restoration Payments"), as long as the Executive remains employed by the Company. Notwithstanding the foregoing, in the event that the Executive terminates employment at any time before commencement of the Restoration Payments or during the period that Restoration Payments are being made due to (i) death, (ii) Disability, (iii) termination by the Company without Cause, or (iv) termination by the Executive due to Good Reason, then the Executive shall be immediately eligible to receive a lump sum payment equivalent to the present value of the Restoration Payments. If the Executive terminates employment due to termination by the Company for Cause or due to the Executive's voluntary termination, then no Restoration Payments shall be made to the Executive's account (and/or directly to the Executive), and if Restoration Payments have already commenced, such payments shall cease as of the Date of Termination.
4.7 Welfare and Fringe Benefit Plans. During his employment with the Company, the Executive shall be eligible to participate in the Company's welfare and fringe benefit plans pursuant to the Company's plans and policies as in effect for active Key Employees from time to time. The Company reserves the right to amend or terminate any of its welfare and fringe benefit plans and policies (including but not limited to coverages and premium structures) at any time.
4.8 Business Expenses. During his employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the expense reimbursement policies and procedures of the Company applicable to other active Key Employees.
4.9 Withholding, FICA, FUTA, Etc. Any amount to be paid to the Executive under the provisions of this Agreement which represents taxable income shall be subject to, and reduced by, any applicable federal, state or local taxes imposed by law, included, but not limited to, taxes imposed under Subtitle C of the Code.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. The Executive's employment and this Agreement shall be terminated as follows:
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(a) Death: Immediately upon the date of death of the Executive;
(b) Disability: On the tenth (10th) day following written notice provided by the Board to the Executive that his employment is being terminated due to the Executive's Disability;
(c) Termination by Company for Cause: Immediately upon the date of written notice provided by the Board to the Executive that his employment is being terminated for "Cause";
(d) Termination by Company Without Cause: Immediately upon the date specified in a written notice provided by the Board to the Executive that his employment is being terminated without Cause; or
(e) Termination by Executive for Good Reason: Immediately upon the date specified in a written notice provided by the Executive to the Board that his employment is being terminated for Good Reason (following any applicable notice and period for cure as required by the definition of Good Reason); provided, that if the Executive is terminating for Good Reason due to relocation as described in Section 1.14(e), the Executive shall provide the Company no less than thirty (30) days' advance written notice, unless the Company affirmatively waives such 30-days' advance notice requirement; or
(f) Voluntary Resignation by Executive: Upon the date specified in a written notice provided by the Executive to the Board that he is voluntarily resigning and terminating his employment, which specified date shall be at least fifteen (15) business days following the date of delivery of the notice, unless the parties mutually agree to an earlier or later termination date.
5.2 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 Sections 5.1(e) and 12.2 of this Agreement. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the terms of this Agreement.
ARTICLE VI
OBLIGATIONS OF THE COMPANY UPON TERMINATION
6.1 Termination Due to 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 estate, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, and (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's death occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the
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numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365. The Accrued Obligations shall be paid to the Executive's estate in a lump sum in cash within 30 days following the Date of Termination, and the amount of any Annual Bonus payable to the Executive's estate shall be payable at the same time that Annual Bonuses are paid to other executives.
6.2 Termination Due to Disability. If the Executive's employment is terminated due to the Executive's Disability, this Agreement shall terminate as of the Date of Termination without further obligations to the Executive, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's Disability occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365, and (iv) disability and other benefits (to the extent permitted by law or by the applicable insurance policies) provided by the Company to disabled employees and/or their families, as the same may change from time to time for Key Employees. The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination and the amount of any Annual Bonus payable to the Executive shall be payable at the same time that Annual Bonuses are paid to other Key Employees.
6.3 Termination by the Company for Cause. If the Executive's employment is terminated by the Company for Cause, this Agreement shall terminate without further obligations to the Executive other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.4 Voluntary Resignation by the Executive. If the Executive terminates his employment by voluntary resignation (but not for Good Reason), this Agreement shall terminate without further obligations to the Executive, other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.5 Termination by the Company Without Cause or Termination by Executive for Good Reason.
(a) After the Effective Date, if the Company shall terminate the Executive's employment without Cause, or if the Executive shall terminate his employment for Good Reason, this Agreement shall terminate and the Company shall pay and/or provide to the Executive the sum of the following:
(1) Accrued Obligations that the Executive had accrued or earned as of the Date of Termination;
(2) 200% of the sum of:
(A) the Executive's Reduced Base Salary, plus
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(B) the Executive's target Annual Bonus (based on Reduced Base Salary) if the Incentive Plan is then in effect for the year in which the Date of Termination occurs, or if the Incentive Plan (as described in Section 4.4 hereof), or any similar annual bonus plan is not then in effect and its suspension or termination constituted a Good Reason basis for the Executive's termination of employment, then the Executive's target Annual Bonus under the Incentive Plan immediately prior to its suspension or termination;
provided however, that if the Executive terminates his employment for Good Reason as specified in Section 1.14(e) (relating to the Company's requiring the Executive to be based at any office or location further than a fifty (50) mile radius from the Washington, D.C. metropolitan area), the 200% of Reduced Base Salary and target Annual Bonus shall be reduced to 100% of such Reduced Base Salary and target Annual Bonus.
(3) Health Insurance. Payment of a lump sum cash amount equivalent to the cost of COBRA continuation premiums under the Company's medical, dental, vision and prescription drug coverages (as applicable) for the Executive and his covered dependents for eighteen (18) months following the Date of Termination, regardless of whether the Executive and/or his covered dependents actually elect COBRA continuation coverage; and
(4) Life Insurance. Continuation of existing life insurance coverage for the Executive for eighteen (18) months following the Date of Termination on the same premium and coverage basis as in effect on the Date of Termination; provided that in the event the Company is not permitted to continue the coverage on the same premium and/or coverage basis by the applicable carrier or reinsurers, the Company shall pay the Executive a lump sum cash amount equivalent to the amount of premiums the Company would have paid for the coverage if the Executive had remained an active employee and the coverage remained in effect on the same premium and coverage basis for the 18-month period; and
(5) Travel Privileges. Immediate vesting and continuation for the Executive's lifetime of on-line, first class, positive space travel privileges for business and pleasure for the Executive and his eligible family members, pursuant to the terms and conditions of the Company's travel policy for active Key Employees; provided that the Company shall not provide any gross-up payments to the Executive or his eligible family members for taxes payable on such travel.
(6) Compliance with Code Section 409A. Any payments under this subsection that are subject to the provisions of Code Section 409A shall be made in accordance with those provisions, including the delay of at least six (6) months for any severance payments if applicable.
(b) Protected Benefits. Notwithstanding any other provision of this Agreement, if the Executive's termination of employment for any reason follows the fifth
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anniversary of the Executive's date of employment with the Company, the Executive shall be entitled to:
(1) Continuation of travel privileges on the same basis as such benefits were provided to the Executive on the date prior to the termination of employment, or if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter, with such travel privileges to continue for the life of the Executive;
(2) Continuation of health insurance benefits in the Company's health insurance program (as the same may change from time to time) until the Executive reaches age 65 provided that the Executive continues to pay monthly premiums at the same time and at the same premium rate applicable to active employees; and provided further, however, that if the Executive should become 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;
(3) a lump sum cash payment in the amount of $70,180, representing the present value of post-age 65 lifetime medical benefits in lieu of those benefits, and
(4) a lump sum cash payment equal to the difference between the value of the accrued and unused vacation that was paid to the Executive at the end of the year 2000 and the value that such accrued and unused vacation would have been if calculated at his current rate of Base Salary as of the Date of Termination.
ARTICLE VII
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-Up Payment. 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), including, but not limited to, any amounts in respect of (i) options to acquire shares of common stock and (ii) restricted shares of common stock) (a "Payment"), would be subject to the excise tax imposed by Section 4999 (or any successor provision thereto) of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income and employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon Payments.
7.2 Determinations by Independent Accountants. Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether a Gross-Up
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Payment is required and the amount of such Gross-Up Payment, shall be made by a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within five (5) business days of the Date of Termination, or such earlier time as is requested by the Company or the Executive. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7.2, 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 other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 7.3 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment (together with interest and penalties incurred by the Executive in connection therewith) that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
7.3 IRS Claims. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company relating to such claim,
(b) 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,
(c) cooperate with the Company in good faith in order effectively to contest such claim,
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(d) 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 7.3, 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 sue 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 sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder; whereas the Executive shall be entitled to settle or contest, as the case may be, any other issued raised by the Internal Revenue Service or any other taxing authority.
7.4 Refunds. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 7.3, 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 7.3) 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 7.3, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such 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. Notwithstanding any other provision of this Section 7.4, the Company shall not make any advance or forgive any amount if such action would be deemed to be a prohibited loan by the Company in violation of any provision of the Sarbanes-Oxley Act of 2002 or any other law or regulation.
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ARTICLE VIII
NONEXCLUSIVITY OF RIGHTS
8.1 Notwithstanding any other provision of this Agreement, the Executive (and/or as applicable, his spouse and/or dependents or his estate) shall be entitled to any benefits or provisions provided by the specific terms and conditions of any equity-based compensation plans, insurance policies, or employee benefit plans or programs of the Company in which he participated as of the Date of his Termination. 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 Affiliates at or subsequent to the Date of Termination shall be payable in accordance with the terms and conditions of such plan, policy, practice or program.
ARTICLE IX
RESTRICTIVE COVENANTS
9.1 Use and Return of Documents and Property. Executive acknowledges that in the course of his employment with the Company, he will have the opportunity to inspect and use certain property, both tangible and intangible, of Group, the Company and its Affiliates. All such property shall remain the exclusive property of Group, the Company and its Affiliates, and Executive has and shall have no right or interest in such property. Executive shall use Company property only during employment and only in the performance of his job and to further the Company's interests, and he will not remove Company property from the Company's premises except to the extent necessary to perform his duties and to the extent approved by the Company, either expressly or generally under its policies. Promptly upon the Executive's Date of Termination, Executive shall return to the Company all of the Company's property of any kind, including but not limited to, business plans, financial records, computer hardware, computer software, documents, data, books, memoranda, notes, sketches, audio-visual materials, correspondence, lists, pricing information, customer and/or vendor lists or information, and all other tangible property.
9.2 New Developments. Any discovery, invention, process or improvement made or discovered by the Executive during his employment with the Company in connection with or in any way affecting or relating to the business of Group, the Company or any of its Affiliates (as then carried on or under active consideration) shall forthwith be disclosed to the Company and shall belong to and be the absolute property of the Company. The preceding sentence does not apply to any invention for which no equipment, supplies, facility, trade secret information of the Company was used and which was developed entirely on the Executive's own time, unless the invention relates directly to the business of Group, the Company or its Affiliates or to its or their actual or demonstrably anticipated research or development, or the invention results from any work performed by the Executive for the Company.
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9.3 Nonsolicitation of Customers. Executive agrees that during his employment with the Company, he will not, directly or indirectly, without the Company's prior written consent, contact any customer of the Company or any of its Affiliates for business purposes unrelated to furthering the business of the Company or its Affiliates. Executive further agrees that for a period of one (1) year following his Date of Termination, he will not directly or indirectly, (i) contact, solicit or divert, or attempt to contact, solicit, divert or take away, any customer of the Company or its Affiliates for purposes of, or with respect to, providing a customer to a competing business; or (ii) take any affirmative action with a customer of the Company or its Affiliates for purposes of providing a customer to a business competing with the Company or its Affiliates. The prohibitions of the preceding sentence shall apply only to customers of the Company with whom the Executive had Material Contact on the Company's behalf during the twelve (12) months immediately preceding the Date of Termination. For purposes of this Agreement, the Executive had "Material Contact" with a customer if (a) he had business dealings with the customer on the Company's behalf; (b) he was responsible for supervising or coordinating the dealings between the Company and the customer; or (c) he obtained Proprietary Information about the customer as a result of his association with the Company.
9.4 Nonsolicitation of Employees. The Executive agrees that during his employment with the Company and for one (1) year after his Date of Termination, the Executive will not, directly or indirectly, solicit or attempt to recruit or hire any employees of the Company or its Affiliates who were employed by the Company or its Affiliates at any time during the last year of the Executive's employment with the Company and who are actively employed by the Company or its Affiliates at the time of the solicitation or attempted solicitation, to provide services similar to those performed by the employee for the Company on behalf of, or for the purpose of engaging in employment with, a competitor of the Company.
9.5 Nondisclosure of Trade Secrets and Proprietary Information. Except to the extent reasonably necessary for Executive to perform his duties for the Company, the Executive shall not, directly or indirectly, furnish or disclose to any person, or use in any way, any trade secrets of the Company or its Affiliates, for so long as such trade secrets remain "trade secrets" under applicable state law. Except to the extent reasonably necessary for Executive to perform his duties for the Company, Executive shall not, during his employment with the Company or following the Executive's Date of Termination, directly or indirectly, furnish or disclose to any person, or use in any way, for personal benefit or the benefit of others, any Proprietary Information of the Company or its Affiliates.
9.6 No Disparagement. The Executive agrees that he shall not make any untrue or disparaging statement or criticism, written or oral, nor take any action which is adverse to the interests of the Company or that would cause the Company or its current and former officers, directors, or employees embarrassment or humiliation or otherwise cause or contribute to such persons being held in disrepute by the public or the Company's customers or employees. From and after the Date of Termination, the Executive shall refrain from discussing the terms and conditions of the termination of his employment with any employee or customer of the Company or with any reporter, media contacts or any form of public media, unless such communication is previously approved by the General Counsel of the Company.
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9.7 Reasonableness. Executive has carefully considered the nature and extent of the restrictions upon his and the rights and remedies conferred on the Company under this Agreement, and Executive hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and remedies conferred upon the Company, are necessary to protect the goodwill and other value of the business of the Company;
(b) the restrictions places upon Executive hereunder are fair and reasonable in time and territory, will not prevent him from earning a livelihood, and place no greater restraint upon the Executive than is reasonably necessary to secure the business and goodwill of the Company;
(c) the Company is relying upon the restrictions and covenants contained herein in continuing to make available to Executive information concerning the business of the Company;
(d) Executive's employment hereunder places him in a position of confidence and trust with the Company and its employees, customers and suppliers; and
(e) the provisions of this section shall be interpreted so as to protect the Proprietary Information, and to secure for the Company the exclusive benefits of the work performed on behalf of the Company by the Executive under this Agreement, and not to unreasonably limit his ability to engage in employment and consulting activities in noncompetitive areas which do not endanger the Company's legitimate interests expressed in this Agreement.
9.8 Remedy for Breach. Executive acknowledges and agrees that his breach of any of the covenants contained in this Article of this Agreement will cause irreparable injury to the Company and that remedies at law available to the Company for any actual or threatened breach by the Executive of such covenants will be inadequate and that the Company shall be entitled to specific performance of the covenants in this Article or injunctive relief against activities in violation of this Article by temporary or permanent injunction or other appropriate judicial remedy, writ or order, without the necessity or proving actual damages. This provision with respect to injunctive relief shall not diminish the right of the Company to claim and recover monetary damages against the Executive for any breach of this Agreement, in addition to injunctive relief. In the event of any breach by the Executive, the Company shall be entitled to immediately cease any and all payments and benefits being provided to the Executive and/or his family and to seek repayment from the Executive of any severance payments previously paid to him under this Agreement. The Executive acknowledges and agrees that the covenants contained in this Article shall be construed as agreements independent of any other provision of this or any other contract between the parties hereto, and that the existence of any claim or cause of action by the Executive against the Company, whether predicated upon this or any other contract, shall not constitute a defense to the enforcement by the Company of said covenants.
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ARTICLE X
GENERAL RELEASE
10.1 No payment of any kind or provision of any benefit provided under this Agreement shall be made by the Company to the Executive following his Date of Termination prior to and unless the Executive executes a general release of all claims that he, his family, heirs and assigns and any related persons or entities may have against the Company. The release language shall be substantially in the form attached as Exhibit "A" to this Agreement. It is understood and agreed that the Executive's execution of the general release of claims shall not include a release of (i) the right to payment of or provision of coverage under any vested, nonforfeitable benefits to which the Executive (or a beneficiary of the Executive) may be entitled under the terms and provisions of any employee benefit plan, program, practice or policy of the Company as of the Date of Termination; (ii) any rights to indemnification under the articles or by-laws of the Company, (iii) rights under any policy of directors and officers liability insurance that covers or has covered the Executive; and (iv) any right or claim as a stockholder of the Company.
ARTICLE XI
SUCCESSORS
11.1 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 estate.
11.2 This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
11.3 The Company shall require any successor and assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) 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.
ARTICLE XII
MISCELLANEOUS
12.1 Governing Law. 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
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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.
12.2 Notices. 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: Alan W. Crellin US Airways, Inc. US Airways Group, Inc. At Most Recent Address on File in 2345 Crystal Drive Company Records Arlington, Virginia 22227 Attention: Executive Vice President, General Counsel and Secretary America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281 Attention: Senior Vice President, 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.
12.3 Invalidity of Any Provision. It is the intention of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws of each state and jurisdiction in which such enforcement is sought, but that the unenforceability (or the modification to conform with such laws) of any provision hereof shall not render unenforceable or impair the remainder of this Agreement which shall be deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions. The parties further agree to alter the balance of this Agreement in order to render the same valid and enforceable. The terms of the restrictive covenant provisions of this Agreement shall be deemed modified to the extent necessary to be enforceable and, specifically, without limiting the foregoing, if the term of the applicable restrictive covenant is too long to be enforceable, it shall be modified to encompass the longest term which is enforceable and, if the scope of the geographic area of the applicable restrictive covenant is too great to be enforceable, it shall be modified to encompass the greatest area that is enforceable.
12.4 Waiver of Breach. The waiver of a breach of any provision of this Agreement by a party hereto shall not operate or be construed as a waiver of any subsequent breach by the other party hereto.
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12.5 Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. All understanding and agreements (whether written or oral, including an oral offer of employment or written offer letter) heretofore made between the parties hereto with respect to the subject matter of this Agreement are superseded by this Agreement and this Agreement alone fully and completely expresses all agreements between the parties related to the subject matter. This Agreement may not be changed orally but only by an amendment in writing signed by both parties. Upon execution of this Agreement, the Executive hereby waives any rights and claims he may have under any prior understandings and/or agreements related to his employment (other than those preserved by Section 10.1 hereof), including but not limited to any rejection damage claims provided under 11 U.S.C. Section 365.
12.6 Survival of Provisions. The provisions of Article IX - Restrictive Covenants shall survive termination of this Agreement.
12.7 Captions. The captions appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of any provisions of this Agreement or in any way affect this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
EXECUTIVE:
US AIRWAYS, INC.
By:______________________________________
Title: ___________________________________
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EXHIBIT "A"
GENERAL RELEASE
FOR AND IN CONSIDERATION of the payments and benefits provided to ALAN W. CRELLIN (the "Executive") by US AIRWAYS, INC., a Delaware corporation (the "Company") under the terms and conditions of that certain Employment Agreement dated the 27th day of September, 2005, upon the Executive's Date of Termination, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Executive does hereby, for and on behalf of himself, his heirs, assigns and all related entities and persons ("Executive's Releasing Parties"), fully and finally release, acquit and forever discharge the Company, its officers, directors, employees and all related entities and persons, all employee benefit plans of the Company and all employee benefit plans of their related entities, and such plans' related entities and persons (collectively, "Company Released Parties"), of and from any and all claims, counterclaims, actions, causes of action, demands, rights, damages, costs, expenses or compensation which the Executive's Releasing Parties now have, or may have, or may hereafter claim to have had as of the Date of Termination, whether developed or undeveloped, anticipated or unanticipated, based on any acts, omissions, transactions or occurrences whatsoever occurring prior to and/or up until the Date of Termination, and specifically, but not by way of limitation, from those claims which are, or arise by reason of, or are in any way connected with, or which are or may be based in whole or in part on the employment relationship which existed between the Executive and the Company and the termination of that employment relationship, including, without limitation, (i) those claims arising under any foreign, federal, state, county or municipal fair employment practices act and/or any law, ordinance or regulation promulgated by any foreign, federal, state, county, municipality or other state subdivision; (ii) those claims for breach of duty and/or implied covenant of good faith and fair dealing; (iii) those claims for interference with and/or breach of contract (express or implied, in fact or in law, oral or written); (iv) those claims for retaliatory or wrongful discharge of any kind; (v) those claims for intentional or negligent infliction of emotional distress or mental anguish; (vi) those claims for outrageous conduct; (vii) those claims for interference with business relationships, contractual relationships or employment relationships of any kind; (viii) those claims for breach of duty, fraud, fraudulent inducement to contract, breach of right of privacy, libel, slander, or tortious conduct of any kind; (ix) those claims arising under Title VII of the Civil Rights Act of 1964 and/or the Civil Rights Act of 1991 and/or 42 U.S.C. Section 1981; (x) those claims arising under any state or federal handicap or disability discrimination law or act, including but not limited to the Rehabilitation Act of 1973 and the Americans with Disabilities Act; (xi) those claims arising from any damages suffered at any time by reason of the effects or continued effects of any alleged or actual discriminatory or wrongful acts; (xii) those claims arising under or in reliance upon any statute, regulation, rule or ordinance (local, state or federal); (xiii) those claims arising under Employment Retirement Income Security Act of 1974, as amended, and/or the Family and Medical Leave Act; (xiv) those claims arising under the workers' compensation laws of any state or other jurisdiction; and (xv) any and all other claims arising under law or in equity in the United States of America or in any foreign jurisdiction.
The Executive hereby acknowledges that he is knowingly and voluntarily waiving and releasing any rights he may have under ADEA and that the consideration given under the Employment Agreement for this General Release is in addition to anything of value to which he was already entitled. He further acknowledges that he has been advised by this writing, as required by the ADEA, that: (A) the waiver and release do not apply to any rights or claims that may arise on or after the date he executes this Release; (B) he has the right to consult with an attorney prior to executing this Release; (C) he has
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twenty-one (21) days to consider this Release (although he may choose to voluntarily execute this Release earlier); (D) he has seven (7) days following his execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after he executes this Release.
Agreed to, acknowledged and executed by the Executive this ___________ day of ____________________, 20______.
*****
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is hereby entered into by and between US AIRWAYS, INC., a Delaware corporation having its principal place of business at Crystal Park Four, 2345 Crystal Drive, Arlington, Virginia 22227 (the "Company") and JERROLD A. GLASS (the "Executive"), as of the 27th day of September, 2005.
W I T N E S S E T H
WHEREAS, the Executive has the responsibilities and duties of the position of Executive Vice President and Chief Human Resources Officer for the Company; and
WHEREAS, the Board and the Human Resources Committee of the Board believe it to be in the best interests of the Company to enter into this Agreement to properly document the terms and conditions of the Executive's employment with the Company including, but not limited to, the duties and obligations of the parties under circumstances in which there is a Change of Control of the Company;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and the Executive hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Accrued Obligations shall mean any amounts of Reduced Base Salary plus any accrued and unused vacation pay that has been earned but not yet paid by the Company, determined as of the Executive's Date of Termination.
1.2 Agreement shall mean this Employment Agreement between the Company and the Executive.
1.3 Affiliate shall mean any parent, brother-sister or subsidiary corporation of the Company, any joint venture in which the Company owns at least a 50 percent interest, and any partnership, limited liability partnership or limited liability corporation in which the Company or any of its wholly-owned Affiliates owns at least a 50 percent interest.
1.4 Base Salary shall mean the basic rate of pay and does not include any additional compensation in the form of benefits or perquisites and does not include any reductions to the basic rate of pay.
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1.5 Board shall mean the Board of Directors of Group and the Board of Directors of the Company, as applicable.
1.6 Cause shall mean:
(a) willful and continued failure to substantially perform his duties with the Company within fifteen (15) days after a written demand for substantial performance is delivered to the Employee which identifies the manner in which the Company believes that the Employee has not substantially performed his duties;
(b) unlawful or willful misconduct which is economically injurious to, or injurious to the reputation or good will of, Group or the Company or to any entity in control of, controlled by or under common control with Group or the Company (and its successors);
(c) indictment for or conviction of, or a plea of guilty or nolo contendere, to a felony charge;
(d) habitual drug or alcohol abuse that impairs the Employee's ability to perform the essential duties of his position; or
(e) embezzlement, fraud or any other illegal act against the Company or any illegal act committed in connection with the Executive's performance of his duties.
1.7 Change of Control shall mean the occurrence of any of the following events on or after the Effective Date of this Agreement:
(a) Acquisition of Substantial Percentage. 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 ("the 1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company's parent, US Airways Group, Inc. ("Group")(the "Outstanding Group Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Group entitled to vote generally in the election of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control:
(1) any acquisition directly from Group;
(2) any acquisition by Group or any of its subsidiaries;
(3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Group or any of its subsidiaries;
(4) 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
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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
(5) any acquisition by an individual, entity or group that, pursuant to Rule 13d-1 promulgated under the 1934 Act, is permitted to, and actually does, report its beneficial ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13G (or any successor Schedule); provided further, that if any such individual, entity or group subsequently becomes required to or does report its ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and Outstanding Group Voting Securities beneficially owned by it on such date; or
(b) Change of Majority of Board Members. Individuals who, as of the Effective Date of this Agreement, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; 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 1934 Act) or other actual or threatened solicitation of proxies or consents; or
(c) Reorganization, Merger or Consolidation. There is consummated a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such reorganization, merger or consolidation, beneficially own, directly or indirectly, less than 85% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Group Common Stock and the Outstanding Group Voting Securities, as the case may be; or
(d) Disposition of Assets. Approval by the shareholders of Group of a complete liquidation or dissolution of Group or the consummation of the sale or other
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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.
1.8 Change of Control Date shall mean the first date on which a Change of Control occurs.
1.9 Change of Control Period shall mean the period beginning on the Change of Control Date and ending on the day two (2) years thereafter.
1.10 Company shall mean US Airways, Inc., a Delaware corporation, and its Affiliates, including its successors and assigns.
1.11 Date of Termination means final date of the Executive's employment.
1.12 Disability shall mean a mental or physical impairment or injury of the Executive which is determined to result in his total and permanent inability to perform the essential functions of his position without reasonable accommodation, as determined by the Board of Directors based on professional medical and/or psychological opinions, or the Executive's eligibility to receive disability benefits under the terms and conditions of the Company's long-term disability policy, based on an "own occupation" definition under the policy.
1.13 Effective Date shall mean the date of the emergence of Group and the Company from the protection of the U.S. Bankruptcy Court, as defined by Paragraph 1.63 of the Joint Plan of Reorganization of US Airways Group, Inc. and its Affiliated Debtors, dated August 9, 2005, as amended and confirmed by that certain Findings of Fact, Conclusions of Law and Order Confirming the Joint Plan of Reorganization, dated September 16, 2005.
1.14 Good Reason shall mean:
(a) the assignment to the Executive of any duties materially inconsistent with the Executive's position, authority, duties or responsibilities as contemplated by this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities; provided, that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the assignment or other Company action would meet the provisions of this paragraph, and the Company has had at least fifteen (15) days following delivery of the written notice to correct the assignment or action and has not done so;
(b) the failure by Group or the Company to reelect the Executive to a position with materially similar or greater duties than the position held by the Executive on the Effective
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Date; provided, that the Executive has delivered a written notice to Group and/or the Company which identifies the manner in which the Executive believes that the Company action would meet the provisions of this paragraph, and the Company has had at least fifteen (15) days following delivery of the written notice to correct the action and has not done so;
(c) any material failure by the Company to comply with the material provisions of this Agreement; provided that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the Company has failed to meet the material provisions of this Agreement, and the Company has had at least fifteen (15) days following delivery of the written notice to correct any such failure and has not done so;
(d) after a Change of Control Date, any failure of the Company (i)
to pay Reduced Base Salary, (ii) to maintain the Executive's Annual Bonus and
Long-Term Incentive Plan target percentages at the same level as immediately
prior to the Change of Control, (iii) to maintain and contribute to the EDCP (as
defined in Section 4.6 hereof) pursuant to the plan document and this Agreement,
(iv) to provide travel privileges to the Executive and his family as in effect
prior to the Change of Control Date or at least equivalent to travel privileges
provided to other Key Employees, (v) to provide the Executive with the same
amount of vacation or paid time off as he had prior to the Change of Control,
and (vi) to provide the Executive and the Executive's family with any other
employee benefit plans, programs, policies and practices at a level comparable
to that provided to other active Key Employees of the Company;
(e) the Company's requiring the Executive to be based at any office or location further than a fifty (50) mile radius from the Washington, D.C. metropolitan area, except for travel reasonably required in the performance of the Executive's responsibilities;
(f) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or
(g) any failure by the Company to comply with and satisfy the successor provisions of Section 11.3 of this Agreement.
1.15 Group shall mean U.S. Airways Group, Inc., the parent of the Company.
1.16 Key Employee shall mean any Executive Vice President of the Company or, in the event of a Change of Control, any officer of a similar level of responsibility.
1.17 Notice of Termination shall mean a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the Date of Termination (which date shall be not more than fifteen (15) days after the giving of such notice).
1.18 Proprietary Information shall mean information that meets the definition of "trade secret" under the laws of the State of Delaware, as well as any scientific or technical information, design, process, procedure, formula or improvement that is secret and of value, information that
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Group and/or the Company takes reasonable efforts to protect from disclosure and from which Group and/or the Company derives actual or potential economic value due to its confidential nature, including, but not limited to, technical or nontechnical data, formulas, compilations, programs, devices, methods, techniques, drawings, processes, financial data, lists of actual or potential customers, price lists, business plans, customer and vendor records, training and operations materials and memoranda, personnel records, financial information relating to the business of Group and the Company, accounts, customers, vendors, employees and affairs of Group and the Company, and any information marked "confidential" by Group and/or the Company.
1.19 Reduced Base Salary shall mean the Executive's Base Salary as reduced pursuant to Company agreements with unions, Company executive compensation guidelines or agreements between the Executive and the Company.
1.20 Term shall mean the period during which this Agreement is effective. The Term of this Agreement is described in Article III hereof.
ARTICLE II
DUTIES AND RESPONSIBILITY
2.1 Duties and Authority. The Executive is engaged and agrees to perform services for and on behalf of Group and the Company as its Executive Vice President and Chief Human Resources Officer and shall report directly to the Chief Executive Officer. The Executive shall have such duties and responsibilities as may be assigned to him by the Company's bylaws or by the Chief Executive Officer. The Executive agrees to perform such duties diligently and efficiently and in accordance with the reasonable directions of the Chief Executive Officer. The Executive shall conduct himself at all times in a business-like and professional manner as appropriate for his position and shall represent the Company in all respects in compliance with good business and ethical practices. In addition, the Executive shall be subject to and abide by the policies and procedures of the Company applicable to personnel of the Company, as may be adopted from time to time.
2.2 Best Efforts. During his employment with Group and the Company, excluding any periods of vacation and sick leave to which the Executive is entitled, subject to the provisions of Section 2.3 below, the Executive shall devote his full attention, energies and best efforts to rendering services on behalf of the Company (or its Affiliates) and shall not engage in any outside employment without the express written consent of the Board.
2.3 Outside Activities. During his employment, 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) invest or trade in stocks, bonds, commodities or other forms of investment, including real property if the Executive does not "participate" (within the meaning of Treas. Reg. Sections 1.469-5(f) and 1.469-5T(f)) in such investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of Group and the Company in
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accordance with this Agreement. The Executive may also participate in any interest or activity which is approved in writing by the Board. At least once each year during this Agreement, and at any time upon the Board's request, the Executive shall provide a full disclosure to the Corporate Governance Committee of the Board of his participation in any corporate, civic and charitable activities (including service on corporate or charitable boards of directors or trustees). Prior to pursuing or accepting any board membership, teaching position or any other activity which will require a significant portion of the Executive's time (other than those in which he is engaged on the Effective Date), the Executive agrees to discuss such activity with the Human Resources Committee of the Board.
2.4 No Violation of Other Agreement. By execution of this Agreement, the Executive hereby warrants and represents to Group and the Company that his acceptance of this employment arrangement and his performance of the duties and responsibilities described hereunder will not cause him to violate the terms and conditions of any obligation or agreement to which he is a party and will not expose Group or the Company to any liability in connection with any such obligation or agreement.
ARTICLE III
AT WILL EMPLOYMENT
3.1 At Will Employment. Prior to a Change of Control, this Agreement shall not have a specified Term. The employment relationship between the Executive and the Company is one of "at-will employment," which provides that either party to the Agreement may terminate the Agreement at any time for any reason. The parties hereto agree that in the event either desires to terminate the Agreement, the terminating party shall provide the other party written notice of the termination.
3.2 Automatic Term Provisions Upon Change of Control. As of a Change of Control Date, this Agreement automatically shall become effective for a two (2) year Term from that date and shall terminate on the close of business on the date two (2) years following the Change of Control Date, unless earlier terminated by the parties pursuant to the provisions hereof.
ARTICLE IV
COMPENSATION AND BENEFITS
4.1 Base Salary. The Company agrees that the Executive's annual Base Salary is $425,000, which does not include any benefits or perquisites or reductions. Notwithstanding the foregoing, the Company and the Executive have agreed to reductions to the Base Salary, which will result in the Executive receiving an annual Reduced Base Salary of $317,475. Base Salary and Reduced Base Salary shall be reviewed at least annually by the Human Resources Committee of the Board and may be increased from time to time based upon performance.
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4.2 Emergence Cash Bonus. Upon the earlier of (a) the date of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, or (b) December 31, 2005, if the Executive remains employed on such earlier date, the Company may, at its discretion, provide the Executive a cash bonus in an amount to be determined by the Human Resources Committee.
4.3 Equity Incentives.
(a) Restricted Stock Award. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive shares of Restricted Stock under the terms of the Company's 2004 Omnibus Stock Incentive Plan (the "Omnibus Plan") or any successor plan, in an amount to be determined by the Human Resources Committee. This grant of Restricted Stock shall be made effective as of the date of emergence and shall vest and become transferable as follows: 50% of the Restricted Stock shall become vested and nonforfeitable as of the date of grant, and 25% of the Restricted Stock shall become vested and nonforfeitable on each of the next two anniversaries of such date of emergence.
(b) Stock Option Grant. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive a nonqualified stock option for shares of the Company's common stock, under the terms of the Company's 2004 Omnibus Stock Incentive Plan or any successor plan, in an amount to be determined by the Human Resources Committee. This stock option shall be granted effective as of the date of emergence, shall have a per share exercise price equal to the per share fair market value of the common stock on the date of grant, and shall become exercisable as follows: 50% of the nonqualified stock option shall become exercisable as of the date of grant, and 25% of the nonqualified stock option shall become exercisable on each of the next two anniversaries of such date of emergence.
(c) Future Grants and Awards. The Executive shall remain eligible to receive future grants and awards of restricted stock, options or any other equity-based grants or awards as may be made under the terms of the Omnibus Plan or any successor plan, as may be determined from time to time by the Human Resources Committee. Following a Change of Control, the Executive shall receive equity-based grants and awards at a level comparable and with vesting and exercisability comparable to any regular and normal course grants and awards made to other Key Employees of the Company.
4.4 Annual Bonus. The Executive shall be eligible to participate in the Company's annual cash bonus program under the Company's Incentive Compensation Plan, as determined by the Human Resources Committee of the Board or any other annual bonus plan hereafter approved by the Board ("Incentive Plan"). The annual bonus under this Section 4.4 shall hereinafter be referred to as the "Annual Bonus."
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4.5 Long-Term Incentive Plan. The Executive shall be eligible to participate in the long-term incentive program under the Company's Long-Term Incentive Plan, as determined by the Human Resources Committee of the Board or any other long-term incentive plan hereafter approved by the Board ("LTIP").
4.6 Retirement Plans. The Executive shall be eligible to participate in the US Airways Group, Inc. Funded Executive Defined Contribution Plan and the US Airways Group, Inc. Unfunded Executive Defined Contribution Plan (the "EDCPs"). While participating in the EDCPs, the Executive shall not be eligible to receive allocations of any employer contributions under any tax-qualified retirement plan or to participate in any other nonqualified retirement or deferred compensation plan sponsored by the Company or Group. EDCP payments reduced after October 11, 2004 shall be restored in monthly installments over a two-year period beginning on October 12, 2006 (the "Restoration Payments"), as long as the Executive remains employed by the Company. Notwithstanding the foregoing, in the event that the Executive terminates employment at any time before commencement of the Restoration Payments or during the period that Restoration Payments are being made due to (i) death, (ii) Disability, (iii) termination by the Company without Cause, or (iv) termination by the Executive due to Good Reason, then the Executive shall be immediately eligible to receive a lump sum payment equivalent to the present value of the Restoration Payments. If the Executive terminates employment due to termination by the Company for Cause or due to the Executive's voluntary termination, then no Restoration Payments shall be made to the Executive's account (and/or directly to the Executive), and if Restoration Payments have already commenced, such payments shall cease as of the Date of Termination.
4.7 Welfare and Fringe Benefit Plans. During his employment with the Company, the Executive shall be eligible to participate in the Company's welfare and fringe benefit plans pursuant to the Company's plans and policies as in effect for active Key Employees from time to time. The Company reserves the right to amend or terminate any of its welfare and fringe benefit plans and policies (including but not limited to coverages and premium structures) at any time.
4.8 Business Expenses. During his employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the expense reimbursement policies and procedures of the Company applicable to other active Key Employees.
4.9 Withholding, FICA, FUTA, Etc. Any amount to be paid to the Executive under the provisions of this Agreement which represents taxable income shall be subject to, and reduced by, any applicable federal, state or local taxes imposed by law, included, but not limited to, taxes imposed under Subtitle C of the Code.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. The Executive's employment and this Agreement shall be terminated as follows:
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(a) Death: Immediately upon the date of death of the Executive;
(b) Disability: On the tenth (10th) day following written notice provided by the Board to the Executive that his employment is being terminated due to the Executive's Disability;
(c) Termination by Company for Cause: Immediately upon the date of written notice provided by the Board to the Executive that his employment is being terminated for "Cause";
(d) Termination by Company Without Cause: Immediately upon the date specified in a written notice provided by the Board to the Executive that his employment is being terminated without Cause; or
(e) Termination by Executive for Good Reason: Immediately upon the date specified in a written notice provided by the Executive to the Board that his employment is being terminated for Good Reason (following any applicable notice and period for cure as required by the definition of Good Reason); provided, that if the Executive is terminating for Good Reason due to relocation as described in Section 1.14(e), the Executive shall provide the Company no less than thirty (30) days' advance written notice, unless the Company affirmatively waives such 30-days' advance notice requirement; or
(f) Voluntary Resignation by Executive: Upon the date specified in a written notice provided by the Executive to the Board that he is voluntarily resigning and terminating his employment, which specified date shall be at least fifteen (15) business days following the date of delivery of the notice, unless the parties mutually agree to an earlier or later termination date.
5.2 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 Sections 5.1(e) and 12.2 of this Agreement. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the terms of this Agreement.
ARTICLE VI
OBLIGATIONS OF THE COMPANY UPON TERMINATION
6.1 Termination Due to 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 estate, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, and (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's death occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the
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numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365. The Accrued Obligations shall be paid to the Executive's estate in a lump sum in cash within 30 days following the Date of Termination, and the amount of any Annual Bonus payable to the Executive's estate shall be payable at the same time that Annual Bonuses are paid to other executives.
6.2 Termination Due to Disability. If the Executive's employment is terminated due to the Executive's Disability, this Agreement shall terminate as of the Date of Termination without further obligations to the Executive, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's Disability occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365, and (iv) disability and other benefits (to the extent permitted by law or by the applicable insurance policies) provided by the Company to disabled employees and/or their families, as the same may change from time to time for Key Employees. The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination and the amount of any Annual Bonus payable to the Executive shall be payable at the same time that Annual Bonuses are paid to other Key Employees.
6.3 Termination by the Company for Cause. If the Executive's employment is terminated by the Company for Cause, this Agreement shall terminate without further obligations to the Executive other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.4 Voluntary Resignation by the Executive. If the Executive terminates his employment by voluntary resignation (but not for Good Reason), this Agreement shall terminate without further obligations to the Executive, other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.5 Termination by the Company Without Cause or Termination by Executive for Good Reason.
(a) After the Effective Date, if the Company shall terminate the Executive's employment without Cause, or if the Executive shall terminate his employment for Good Reason, this Agreement shall terminate and the Company shall pay and/or provide to the Executive the sum of the following:
(1) Accrued Obligations that the Executive had accrued or earned as of the Date of Termination;
(2) 200% of the sum of:
(A) the Executive's Reduced Base Salary, plus
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(B) the Executive's target Annual Bonus (based on
Reduced Base Salary) if the Incentive Plan is then in
effect for the year in which the Date of Termination
occurs, or if the Incentive Plan (as described in
Section 4.4 hereof), or any similar annual bonus plan is
not then in effect and its suspension or termination
constituted a Good Reason basis for the Executive's
termination of employment, then the Executive's target
Annual Bonus under the Incentive Plan immediately prior
to its suspension or termination;
provided however, that if the Executive terminates his
employment for Good Reason as specified in Section
1.14(e) (relating to the Company's requiring the
Executive to be based at any office or location further
than a fifty (50) mile radius from the Washington, D.C.
metropolitan area), the 200% of Reduced Base Salary and
target Annual Bonus shall be reduced to 100% of such
Reduced Base Salary and target Annual Bonus.
(3) Health Insurance. Payment of a lump sum cash amount equivalent to the cost of COBRA continuation premiums under the Company's medical, dental, vision and prescription drug coverages (as applicable) for the Executive and his covered dependents for eighteen (18) months following the Date of Termination, regardless of whether the Executive and/or his covered dependents actually elect COBRA continuation coverage; and
(4) Life Insurance. Continuation of existing life insurance coverage for the Executive for eighteen (18) months following the Date of Termination on the same premium and coverage basis as in effect on the Date of Termination; provided that in the event the Company is not permitted to continue the coverage on the same premium and/or coverage basis by the applicable carrier or reinsurers, the Company shall pay the Executive a lump sum cash amount equivalent to the amount of premiums the Company would have paid for the coverage if the Executive had remained an active employee and the coverage remained in effect on the same premium and coverage basis for the 18-month period; and
(5) Travel Privileges. Immediate vesting and continuation for the Executive's lifetime of on-line, first class, positive space travel privileges for business and pleasure for the Executive and his eligible family members, pursuant to the terms and conditions of the Company's travel policy for active Key Employees; provided that the Company shall not provide any gross-up payments to the Executive or his eligible family members for taxes payable on such travel.
(6) Compliance with Code Section 409A. Any payments under this subsection that are subject to the provisions of Code Section 409A shall be made in accordance with those provisions, including the delay of at least six (6) months for any severance payments if applicable.
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ARTICLE VII
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-Up Payment. 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), including, but not limited to, any amounts in respect of (i) options to acquire shares of common stock and (ii) restricted shares of common stock) (a "Payment"), would be subject to the excise tax imposed by Section 4999 (or any successor provision thereto) of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income and employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon Payments.
7.2 Determinations by Independent Accountants. Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within five (5) business days of the Date of Termination, or such earlier time as is requested by the Company or the Executive. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7.2, 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 other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 7.3 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment (together with interest and penalties incurred by the Executive in connection therewith) that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
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7.3 IRS Claims. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company relating to such claim,
(b) 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,
(c) cooperate with the Company in good faith in order effectively to contest such claim,
(d) 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 7.3, 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 sue 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 sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder; whereas the Executive shall be entitled to settle or contest, as the case may be, any other issued raised by the Internal Revenue Service or any other taxing authority.
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7.4 Refunds. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 7.3, 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 7.3) 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 7.3, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such 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. Notwithstanding any other provision of this Section 7.4, the Company shall not make any advance or forgive any amount if such action would be deemed to be a prohibited loan by the Company in violation of any provision of the Sarbanes-Oxley Act of 2002 or any other law or regulation.
ARTICLE VIII
NONEXCLUSIVITY OF RIGHTS
8.1 Notwithstanding any other provision of this Agreement, the Executive (and/or as applicable, his spouse and/or dependents or his estate) shall be entitled to any benefits or provisions provided by the specific terms and conditions of any equity-based compensation plans, insurance policies, or employee benefit plans or programs of the Company in which he participated as of the Date of his Termination. 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 Affiliates at or subsequent to the Date of Termination shall be payable in accordance with the terms and conditions of such plan, policy, practice or program.
ARTICLE IX
RESTRICTIVE COVENANTS
9.1 Use and Return of Documents and Property. Executive acknowledges that in the course of his employment with Group and the Company, he will have the opportunity to inspect and use certain property, both tangible and intangible, of Group, the Company and its Affiliates. All such property shall remain the exclusive property of Group, the Company and its Affiliates, and Executive has and shall have no right or interest in such property. Executive shall use Company property only during employment and only in the performance of his job and to further the Company's interests, and he will not remove Company property from the Company's premises except to the extent necessary to perform his duties and to the extent approved by the Company, either expressly or generally under its policies. Promptly upon the Executive's Date of Termination, Executive shall return to the Company all of the Company's property of any kind, including but not limited to, business plans, financial records, computer hardware, computer software, documents, data, books, memoranda, notes, sketches, audio-visual materials,
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correspondence, lists, pricing information, customer and/or vendor lists or information, and all other tangible property.
9.2 New Developments. Any discovery, invention, process or improvement made or discovered by the Executive during his employment with Group and the Company in connection with or in any way affecting or relating to the business of Group, the Company or any of its Affiliates (as then carried on or under active consideration) shall forthwith be disclosed to the Company and shall belong to and be the absolute property of the Company. The preceding sentence does not apply to any invention for which no equipment, supplies, facility, trade secret information of the Company was used and which was developed entirely on the Executive's own time, unless the invention relates directly to the business of Group, the Company or its Affiliates or to its or their actual or demonstrably anticipated research or development, or the invention results from any work performed by the Executive for the Company.
9.3 Nonsolicitation of Customers. Executive agrees that during his employment with Group and the Company, he will not, directly or indirectly, without the Company's prior written consent, contact any customer of Group, the Company or any of its Affiliates for business purposes unrelated to furthering the business of Group, the Company or its Affiliates. Executive further agrees that for a period of one (1) year following his Date of Termination, he will not directly or indirectly, (i) contact, solicit or divert, or attempt to contact, solicit, divert or take away, any customer of the Company or its Affiliates for purposes of, or with respect to, providing a customer to a competing business; or (ii) take any affirmative action with a customer of the Company or its Affiliates for purposes of providing a customer to a business competing with the Company or its Affiliates. The prohibitions of the preceding sentence shall apply only to customers of the Company with whom the Executive had Material Contact on the Company's behalf during the twelve (12) months immediately preceding the Date of Termination. For purposes of this Agreement, the Executive had "Material Contact" with a customer if (a) he had business dealings with the customer on the Company's behalf; (b) he was responsible for supervising or coordinating the dealings between the Company and the customer; or (c) he obtained Proprietary Information about the customer as a result of his association with the Company.
9.4 Nonsolicitation of Employees. The Executive agrees that during his employment with Group and the Company and for one (1) year after his Date of Termination, the Executive will not, directly or indirectly, solicit or attempt to recruit or hire any employees of Group, the Company or its Affiliates who were employed by Group, the Company or its Affiliates at any time during the last year of the Executive's employment with the Company and who are actively employed by Group, the Company or its Affiliates at the time of the solicitation or attempted solicitation, to provide services similar to those performed by the employee for the Company on behalf of, or for the purpose of engaging in employment with, a competitor of the Company.
9.5 Nondisclosure of Trade Secrets and Proprietary Information. Except to the extent reasonably necessary for Executive to perform his duties for Group and the Company, the Executive shall not, directly or indirectly, furnish or disclose to any person, or use in any way, any trade secrets of Group, the Company or its Affiliates, for so long as such trade secrets remain "trade secrets" under applicable state law. Except to the extent reasonably necessary for Executive to perform his duties for the Company, Executive shall not, during his employment
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with the Company or following the Executive's Date of Termination, directly or indirectly, furnish or disclose to any person, or use in any way, for personal benefit or the benefit of others, any Proprietary Information of the Company or its Affiliates.
9.6 No Disparagement. The Executive agrees that he shall not make any untrue or disparaging statement or criticism, written or oral, nor take any action which is adverse to the interests of the Company or that would cause the Company or its current and former officers, directors, or employees embarrassment or humiliation or otherwise cause or contribute to such persons being held in disrepute by the public or the Company's customers or employees. From and after the Date of Termination, the Executive shall refrain from discussing the terms and conditions of the termination of his employment with any employee or customer of the Company or with any reporter, media contacts or any form of public media, unless such communication is previously approved by the General Counsel of the Company.
9.7 Reasonableness. Executive has carefully considered the nature and extent of the restrictions upon his and the rights and remedies conferred on the Company under this Agreement, and Executive hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and remedies conferred upon the Company, are necessary to protect the goodwill and other value of the business of the Company;
(b) the restrictions places upon Executive hereunder are fair and reasonable in time and territory, will not prevent him from earning a livelihood, and place no greater restraint upon the Executive than is reasonably necessary to secure the business and goodwill of the Company;
(c) the Company is relying upon the restrictions and covenants contained herein in continuing to make available to Executive information concerning the business of the Company;
(d) Executive's employment hereunder places him in a position of confidence and trust with the Company and its employees, customers and suppliers; and
(e) the provisions of this section shall be interpreted so as to protect the Proprietary Information, and to secure for the Company the exclusive benefits of the work performed on behalf of the Company by the Executive under this Agreement, and not to unreasonably limit his ability to engage in employment and consulting activities in noncompetitive areas which do not endanger the Company's legitimate interests expressed in this Agreement.
9.8 Remedy for Breach. Executive acknowledges and agrees that his breach of any of the covenants contained in this Article of this Agreement will cause irreparable injury to the Company and that remedies at law available to the Company for any actual or threatened breach by the Executive of such covenants will be inadequate and that the Company shall be entitled to specific performance of the covenants in this Article or injunctive relief against activities in violation of this Article by temporary or permanent injunction or other appropriate judicial remedy, writ or order, without the necessity or proving actual damages. This provision with respect to injunctive relief shall not diminish the right of the Company to claim and recover monetary damages against the Executive for any breach of this Agreement, in addition to injunctive relief. In the event of any breach by the Executive, the Company shall be entitled to
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immediately cease any and all payments and benefits being provided to the Executive and/or his family and to seek repayment from the Executive of any severance payments previously paid to him under this Agreement. The Executive acknowledges and agrees that the covenants contained in this Article shall be construed as agreements independent of any other provision of this or any other contract between the parties hereto, and that the existence of any claim or cause of action by the Executive against the Company, whether predicated upon this or any other contract, shall not constitute a defense to the enforcement by the Company of said covenants.
ARTICLE X
GENERAL RELEASE
10.1 No payment of any kind or provision of any benefit provided under this Agreement shall be made by Group or the Company to the Executive following his Date of Termination prior to and unless the Executive executes a general release of all claims that he, his family, heirs and assigns and any related persons or entities may have against Group or the Company. The release language shall be substantially in the form attached as Exhibit "A" to this Agreement. It is understood and agreed that the Executive's execution of the general release of claims shall not include a release of (i) the right to payment of or provision of coverage under any vested, nonforfeitable benefits to which the Executive (or a beneficiary of the Executive) may be entitled under the terms and provisions of any employee benefit plan, program, practice or policy of the Company as of the Date of Termination; (ii) any rights to indemnification under the articles or by-laws of Group and/or the Company, (iii) rights under any policy of directors and officers liability insurance that covers or has covered the Executive; and (iv) any right or claim as a stockholder of the Company.
ARTICLE XI
SUCCESSORS
11.1 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 estate.
11.2 This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
11.3 The Company shall require any successor and assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) 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.
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ARTICLE XII
MISCELLANEOUS
12.1 Governing Law. 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.
12.2 Notices. 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: Jerrold A. Glass US Airways, Inc. US Airways Group, Inc. At Most Recent Address on File in 2345 Crystal Drive Company Records Arlington, Virginia 22227 Attention: Executive Vice President, General Counsel and Secretary America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281 Attention: Senior Vice President, 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.
12.3 Invalidity of Any Provision. It is the intention of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws of each state and jurisdiction in which such enforcement is sought, but that the unenforceability (or the modification to conform with such laws) of any provision hereof shall not render unenforceable or impair the remainder of this Agreement which shall be deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions. The parties further agree to alter the balance of this Agreement in order to render the same valid and enforceable. The terms of the restrictive covenant provisions of this Agreement shall be deemed modified to the extent necessary to be enforceable and, specifically, without limiting the foregoing, if the term of the applicable restrictive covenant is too long to be enforceable, it shall be modified to encompass the longest term which is enforceable and, if the scope of the geographic area of the
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applicable restrictive covenant is too great to be enforceable, it shall be modified to encompass the greatest area that is enforceable.
12.4 Waiver of Breach. The waiver of a breach of any provision of this Agreement by a party hereto shall not operate or be construed as a waiver of any subsequent breach by the other party hereto.
12.5 Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. All understanding and agreements (whether written or oral, including an oral offer of employment or written offer letter) heretofore made between the parties hereto with respect to the subject matter of this Agreement are superseded by this Agreement and this Agreement alone fully and completely expresses all agreements between the parties related to the subject matter. This Agreement may not be changed orally but only by an amendment in writing signed by both parties. Upon execution of this Agreement, the Executive hereby waives any rights and claims he may have under any prior understandings and/or agreements related to his employment (other than those preserved by Section 10.1 hereof), including but not limited to any rejection damage claims provided under 11 U.S.C. Section 365.
12.6 Survival of Provisions. The provisions of Article IX - Restrictive Covenants shall survive termination of this Agreement.
12.7 Captions. The captions appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of any provisions of this Agreement or in any way affect this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
EXECUTIVE:
US AIRWAYS, INC.
By:________________________________________
Title: ___________________________________
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EXHIBIT "A"
GENERAL RELEASE
FOR AND IN CONSIDERATION of the payments and benefits provided to JERROLD
A. GLASS (the "Executive") by US AIRWAYS, INC., a Delaware corporation (the
"Company") under the terms and conditions of that certain Employment Agreement
dated the 27th day of September, 2005, upon the Executive's Date of Termination,
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Executive does hereby, for and on behalf of himself, his
heirs, assigns and all related entities and persons ("Executive's Releasing
Parties"), fully and finally release, acquit and forever discharge the Company,
their officers, directors, employees and all related entities and persons, all
employee benefit plans of the Company and all employee benefit plans of their
related entities, and such plans' related entities and persons (collectively,
"Company Released Parties"), of and from any and all claims, counterclaims,
actions, causes of action, demands, rights, damages, costs, expenses or
compensation which the Executive's Releasing Parties now have, or may have, or
may hereafter claim to have had as of the Date of Termination, whether developed
or undeveloped, anticipated or unanticipated, based on any acts, omissions,
transactions or occurrences whatsoever occurring prior to and/or up until the
Date of Termination, and specifically, but not by way of limitation, from those
claims which are, or arise by reason of, or are in any way connected with, or
which are or may be based in whole or in part on the employment relationship
which existed between the Executive and the Company and the termination of that
employment relationship, including, without limitation, (i) those claims arising
under any foreign, federal, state, county or municipal fair employment practices
act and/or any law, ordinance or regulation promulgated by any foreign, federal,
state, county, municipality or other state subdivision; (ii) those claims for
breach of duty and/or implied covenant of good faith and fair dealing; (iii)
those claims for interference with and/or breach of contract (express or
implied, in fact or in law, oral or written); (iv) those claims for retaliatory
or wrongful discharge of any kind; (v) those claims for intentional or negligent
infliction of emotional distress or mental anguish; (vi) those claims for
outrageous conduct; (vii) those claims for interference with business
relationships, contractual relationships or employment relationships of any
kind; (viii) those claims for breach of duty, fraud, fraudulent inducement to
contract, breach of right of privacy, libel, slander, or tortious conduct of any
kind; (ix) those claims arising under Title VII of the Civil Rights Act of 1964
and/or the Civil Rights Act of 1991 and/or 42 U.S.C. Section 1981; (x) those
claims arising under any state or federal handicap or disability discrimination
law or act, including but not limited to the Rehabilitation Act of 1973 and the
Americans with Disabilities Act; (xi) those claims arising from any damages
suffered at any time by reason of the effects or continued effects of any
alleged or actual discriminatory or wrongful acts; (xii) those claims arising
under or in reliance upon any statute, regulation, rule or ordinance (local,
state or federal); (xiii) those claims arising under Employment Retirement
Income Security Act of 1974, as amended, and/or the Family and Medical Leave
Act; (xiv) those claims arising under the workers' compensation laws of any
state or other jurisdiction; and (xv) any and all other claims arising under law
or in equity in the United States of America or in any foreign jurisdiction.
The Executive hereby acknowledges that he is knowingly and voluntarily waiving and releasing any rights he may have under ADEA and that the consideration given under the Employment Agreement for this General Release is in addition to anything of value to which he was already entitled. He further acknowledges that he has been advised by this writing, as required by the ADEA, that: (A) the waiver and release do not apply to any rights or claims that may arise on or after the date he executes this Release; (B) he has the right to consult with an attorney prior to executing this Release; (C) he has
GLASS EMPLOYMENT AGREEMENT Page 21
twenty-one (21) days to consider this Release (although he may choose to voluntarily execute this Release earlier); (D) he has seven (7) days following his execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after he executes this Release.
Agreed to, acknowledged and executed by the Executive this ___________ day of ____________________,20______.
*****
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is hereby entered into by and between US AIRWAYS, GROUP, INC., a Delaware holding company ("Group "), US AIRWAYS, INC., a Delaware corporation having its principal place of business at Crystal Park Four, 2345 Crystal Drive, Arlington, Virginia 22227 (the "Company") and ELIZABETH K. LANIER (the "Executive"), as of the 27th day of September, 2005.
W I T N E S S E T H
WHEREAS, the Executive has the responsibilities and duties of the position of Executive Vice President-Corporate Affairs, General Counsel and Secretary for both Group and the Company; and
WHEREAS, the Board and the Human Resources Committee of the Board believe it to be in the best interests of Group and the Company to enter into this Agreement to properly document the terms and conditions of the Executive's employment with the Company including, but not limited to, the duties and obligations of the parties under circumstances in which there is a Change of Control of the Company;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and the Executive hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Accrued Obligations shall mean any amounts of Reduced Base Salary plus any accrued and unused vacation pay that has been earned but not yet paid by the Company, determined as of the Executive's Date of Termination.
1.2 Agreement shall mean this Employment Agreement between the Company and the Executive.
1.3 Affiliate shall mean any parent, brother-sister or subsidiary corporation of the Company, any joint venture in which the Company owns at least a 50 percent interest, and any partnership, limited liability partnership or limited liability corporation in which the Company or any of its wholly-owned Affiliates owns at least a 50 percent interest.
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1.4 Base Salary shall mean the basic rate of pay and does not include any additional compensation in the form of benefits or perquisites and does not include any reductions to the basic rate of pay.
1.5 Board shall mean the Board of Directors of Group and the Board of Directors of the Company, as applicable.
1.6 Cause shall mean:
(a) willful and continued failure to substantially perform her duties with the Company within fifteen (15) days after a written demand for substantial performance is delivered to the Employee which identifies the manner in which the Company believes that the Employee has not substantially performed her duties;
(b) unlawful or willful misconduct which is economically injurious to, or injurious to the reputation or good will of, Group or the Company or to any entity in control of, controlled by or under common control with Group or the Company (and its successors);
(c) indictment for or conviction of, or a plea of guilty or nolo contendere, to a felony charge;
(d) habitual drug or alcohol abuse that impairs the Employee's ability to perform the essential duties of her position; or
(e) embezzlement, fraud or any other illegal act against the Company or any illegal act committed in connection with the Executive's performance of her duties.
1.7 Change of Control shall mean the occurrence of any of the following events on or after the Effective Date of this Agreement:
(a)Acquisition of Substantial Percentage. 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 ("the 1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company's parent, US Airways Group, Inc. ("Group")(the "Outstanding Group Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Group entitled to vote generally in the election of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control:
(1) any acquisition directly from Group;
(2) any acquisition by Group or any of its subsidiaries;
(3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Group or any of its subsidiaries;
LANIER EMPLOYMENT AGREEMENT Page 2
(4) 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
(5) any acquisition by an individual, entity or group that, pursuant to Rule 13d-1 promulgated under the 1934 Act, is permitted to, and actually does, report its beneficial ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13G (or any successor Schedule); provided further, that if any such individual, entity or group subsequently becomes required to or does report its ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and Outstanding Group Voting Securities beneficially owned by it on such date; or
(b) Change of Majority of Board Members. Individuals who, as of the Effective Date of this Agreement, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; 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 1934 Act) or other actual or threatened solicitation of proxies or consents; or
(c) Reorganization, Merger or Consolidation. There is consummated a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such reorganization, merger or consolidation, beneficially own, directly or indirectly, less than 85% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the
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Outstanding Group Common Stock and the Outstanding Group Voting Securities, as the case may be; or
(d) Disposition of Assets. Approval by the shareholders of Group of a complete liquidation or dissolution of Group or the consummation of the sale or other disposition of all or substantially all of the assets of Group, other than to a corporation with respect to which, following such sale or other disposition, more than 85% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Group Common Stock and Outstanding Group Voting Securities, as the case may be.
1.8 Change of Control Date shall mean the first date on which a Change of Control occurs.
1.9 Change of Control Period shall mean the period beginning on the Change of Control Date and ending on the day two (2) years thereafter.
1.10 Company shall mean US Airways, Inc., a Delaware corporation, and its Affiliates, including its successors and assigns.
1.11 Date of Termination means final date of the Executive's employment.
1.12 Disability shall mean a mental or physical impairment or injury of the Executive which is determined to result in her total and permanent inability to perform the essential functions of her position without reasonable accommodation, as determined by the Board of Directors based on professional medical and/or psychological opinions, or the Executive's eligibility to receive disability benefits under the terms and conditions of the Company's long-term disability policy, based on an "own occupation" definition under the policy
1.13 Effective Date shall mean the date of the emergence of Group and the Company from the protection of the U.S. Bankruptcy Court, as defined by Paragraph 1.63 of the Joint Plan of Reorganization of US Airways Group, Inc. and its Affiliated Debtors, dated August 9, 2005, as amended and confirmed by that certain Findings of Fact, Conclusions of Law and Order Confirming the Joint Plan of Reorganization, dated September 16, 2005.
1.14 Good Reason shall mean:
(a) the assignment to the Executive of any duties materially inconsistent with the Executive's position, authority, duties or responsibilities as contemplated by this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities; provided, that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the assignment or other Company action would meet the provisions of this paragraph, and the Company has had at
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least fifteen (15) days following delivery of the written notice to correct the assignment or action and has not done so;
(b) the failure by Group or the Company to reelect the Executive to a position with materially similar or greater duties than the position held by the Executive on the Effective Date; provided, that the Executive has delivered a written notice to Group and/or the Company which identifies the manner in which the Executive believes that the Company action would meet the provisions of this paragraph, and the Company has had at least fifteen (15) days following delivery of the written notice to correct the action and has not done so;
(c) any material failure by the Company to comply with the material provisions of this Agreement; provided that the Executive has delivered a written notice to the Company which identifies the manner in which the Executive believes that the Company has failed to meet the material provisions of this Agreement, and the Company has had at least fifteen (15) days following delivery of the written notice to correct any such failure and has not done so;
(d) after a Change of Control Date, any failure of the Company (i)
to pay Reduced Base Salary, (ii) to maintain the Executive's Annual Bonus and
Long-Term Incentive Plan target percentages at the same level as immediately
prior to the Change of Control, (iii) to maintain and contribute to the EDCP (as
defined in Section 4.6 hereof) pursuant to the plan document and this Agreement,
(iv) to provide travel privileges to the Executive and her family as in effect
prior to the Change of Control Date or at least equivalent to travel privileges
provided to other Key Employees, (v) to provide the Executive with the same
amount of vacation or paid time off as she had prior to the Change of Control,
and (vi) to provide the Executive and the Executive's family with any other
employee benefit plans, programs, policies and practices at a level comparable
to that provided to other active Key Employees of the Company;
(e) the Company's requiring the Executive to be based at any office or location further than a fifty (50) mile radius from the Washington, D.C. metropolitan area, except for travel reasonably required in the performance of the Executive's responsibilities;
(f) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or
(g) any failure by the Company to comply with and satisfy the successor provisions of Section 11.3 of this Agreement.
1.15 Group shall mean U.S. Airways Group, Inc., the parent of the Company.
1.16 Key Employee shall mean any Executive Vice President of the Company or, in the event of a Change of Control, any officer of a similar level of responsibility.
1.17 Notice of Termination shall mean 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
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than the date of receipt of such notice, specifies the Date of Termination (which date shall be not more than fifteen (15) days after the giving of such notice).
1.18 Proprietary Information shall mean information that meets the definition of "trade secret" under the laws of the State of Delaware, as well as any scientific or technical information, design, process, procedure, formula or improvement that is secret and of value, information that Group and/or the Company takes reasonable efforts to protect from disclosure and from which Group and/or the Company derives actual or potential economic value due to its confidential nature, including, but not limited to, technical or nontechnical data, formulas, compilations, programs, devices, methods, techniques, drawings, processes, financial data, lists of actual or potential customers, price lists, business plans, customer and vendor records, training and operations materials and memoranda, personnel records, financial information relating to the business of Group and the Company, accounts, customers, vendors, employees and affairs of Group and the Company, and any information marked "confidential" by Group and/or the Company.
1.19 Reduced Base Salary shall mean the Executive's Base Salary as reduced pursuant to Company agreements with unions, Company executive compensation guidelines or agreements between the Executive and the Company.
1.20 Term shall mean the period during which this Agreement is effective. The Term of this Agreement is described in Article III hereof.
ARTICLE II
DUTIES AND RESPONSIBILITY
2.1 Duties and Authority. The Executive is engaged and agrees to perform services for and on behalf of Group and the Company as its Executive Vice President-Corporate Affairs, General Counsel and Secretary and shall report directly to the Chief Executive Officer. The Executive shall have such duties and responsibilities as may be assigned to her by the Company's bylaws or by the Chief Executive Officer. The Executive agrees to perform such duties diligently and efficiently and in accordance with the reasonable directions of the Chief Executive Officer. The Executive shall conduct herself at all times in a business-like and professional manner as appropriate for her position and shall represent the Company in all respects in compliance with good business and ethical practices. In addition, the Executive shall be subject to and abide by the policies and procedures of the Company applicable to personnel of the Company, as may be adopted from time to time.
2.2 Best Efforts. During her employment with Group and the Company, excluding any periods of vacation and sick leave to which the Executive is entitled, subject to the provisions of Section 2.3 below, the Executive shall devote her full attention, energies and best efforts to rendering services on behalf of the Company (or its Affiliates) and shall not engage in any outside employment without the express written consent of the Board.
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2.3 Outside Activities. During her employment, 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) invest or trade in stocks, bonds, commodities or other forms of investment, including real property if the Executive does not "participate" (within the meaning of Treas. Reg. Sections 1.469-5(f) and 1.469-5T(f)) in such investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of Group and the Company in accordance with this Agreement. The Executive may also participate in any interest or activity which is approved in writing by the Board. At least once each year during this Agreement, and at any time upon the Board's request, the Executive shall provide a full disclosure to the Corporate Governance Committee of the Board of her participation in any corporate, civic and charitable activities (including service on corporate or charitable boards of directors or trustees). Prior to pursuing or accepting any board membership, teaching position or any other activity which will require a significant portion of the Executive's time (other than those in which she is engaged on the Effective Date), the Executive agrees to discuss such activity with the Human Resources Committee of the Board.
2.4 No Violation of Other Agreement. By execution of this Agreement, the Executive hereby warrants and represents to Group and the Company that her acceptance of this employment arrangement and her performance of the duties and responsibilities described hereunder will not cause her to violate the terms and conditions of any obligation or agreement to which she is a party and will not expose Group or the Company to any liability in connection with any such obligation or agreement.
ARTICLE III
AT WILL EMPLOYMENT
3.1 At Will Employment. Prior to a Change of Control, this Agreement shall not have a specified Term. The employment relationship between the Executive and the Company is one of "at-will employment," which provides that either party to the Agreement may terminate the Agreement at any time for any reason. The parties hereto agree that in the event either desires to terminate the Agreement, the terminating party shall provide the other party written notice of the termination.
3.2 Automatic Term Provisions Upon Change of Control. As of a Change of Control Date, this Agreement automatically shall become effective for a two (2) year Term from that date and shall terminate on the close of business on the date two (2) years following the Change of Control Date, unless earlier terminated by the parties pursuant to the provisions hereof.
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ARTICLE IV
COMPENSATION AND BENEFITS
4.1 Base Salary. The Company agrees that the Executive's annual Base Salary is $425,000, which does not include any benefits or perquisites or reductions. Notwithstanding the foregoing, the Company and the Executive have agreed to reductions to the Base Salary, which will result in the Executive receiving an annual Reduced Base Salary of $317,475. Base Salary and Reduced Base Salary shall be reviewed at least annually by the Human Resources Committee of the Board and may be increased from time to time based upon performance.
4.2 Emergence Cash Bonus. Upon the earlier of (a) the date of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, or (b) December 31, 2005, if the Executive remains employed on such earlier date, the Company may, at its discretion, provide the Executive a cash bonus in an amount to be determined by the Human Resources Committee.
4.3 Equity Incentives.
(a) Restricted Stock Award. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive shares of Restricted Stock under the terms of the Company's 2004 Omnibus Stock Incentive Plan (the "Omnibus Plan") or any successor plan, in an amount to be determined by the Human Resources Committee. This grant of Restricted Stock shall be made effective as of the date of emergence and shall vest and become transferable as follows: 50% of the Restricted Stock shall become vested and nonforfeitable as of the date of grant, and 25% of the Restricted Stock shall become vested and nonforfeitable on each of the next two anniversaries of such date of emergence.
(b) Stock Option Grant. If the Executive remains employed by the Company at the time of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, the Company may, in its discretion, grant to the Executive a nonqualified stock option for shares of the Company's common stock, under the terms of the Company's 2004 Omnibus Stock Incentive Plan or any successor plan, in an amount to be determined by the Human Resources Committee. This stock option shall be granted effective as of the date of emergence, shall have a per share exercise price equal to the per share fair market value of the common stock on the date of grant, and shall become exercisable as follows: 50% of the nonqualified stock option shall become exercisable as of the date of grant, and 25% of the nonqualified stock option shall become exercisable on each of the next two anniversaries of such date of emergence.
(c) Future Grants and Awards. The Executive shall remain eligible to receive future grants and awards of restricted stock, options or any other equity-based grants or awards as may be made under the terms of the Omnibus Plan or any successor plan, as may be determined from time to time by the Human Resources Committee. Following a Change of Control, the Executive shall receive equity-based grants and awards at a level comparable and with vesting and exercisability comparable to any regular and normal course grants and awards made to other Key Employees of the Company.
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4.4 Annual Bonus. The Executive shall be eligible to participate in the Company's annual cash bonus program under the Company's Incentive Compensation Plan, as determined by the Human Resources Committee of the Board or any other annual bonus plan hereafter approved by the Board ("Incentive Plan"). The annual bonus under this Section 4.4 shall hereinafter be referred to as the "Annual Bonus."
4.5 Long-Term Incentive Plan. The Executive shall be eligible to participate in the long-term incentive program under the Company's Long-Term Incentive Plan, as determined by the Human Resources Committee of the Board or any other long-term incentive plan hereafter approved by the Board ("LTIP").
4.6 Retirement Plans. The Executive shall be eligible to participate in the US Airways Group, Inc. Funded Executive Defined Contribution Plan and the US Airways Group, Inc. Unfunded Executive Defined Contribution Plan (the "EDCPs"). While participating in the EDCPs, the Executive shall not be eligible to receive allocations of any employer contributions under any tax-qualified retirement plan or to participate in any other nonqualified retirement or deferred compensation plan sponsored by the Company or Group. EDCP payments reduced after October 11, 2004 shall be restored in monthly installments over a two-year period beginning on October 12, 2006 (the "Restoration Payments"), as long as the Executive remains employed by the Company. Notwithstanding the foregoing, in the event that the Executive terminates employment at any time before commencement of the Restoration Payments or during the period that Restoration Payments are being made due to (i) death, (ii) Disability, (iii) termination by the Company without Cause, or (iv) termination by the Executive due to Good Reason, then the Executive shall be immediately eligible to receive a lump sum payment equivalent to the present value of the Restoration Payments. If the Executive terminates employment due to termination by the Company for Cause or due to the Executive's voluntary termination, then no Restoration Payments shall be made to the Executive's account (and/or directly to the Executive), and if Restoration Payments have already commenced, such payments shall cease as of the Date of Termination.
4.7 Welfare and Fringe Benefit Plans. During her employment with the Company, the Executive shall be eligible to participate in the Company's welfare and fringe benefit plans pursuant to the Company's plans and policies as in effect for active Key Employees from time to time. The Company reserves the right to amend or terminate any of its welfare and fringe benefit plans and policies (including but not limited to coverages and premium structures) at any time.
4.8 Business Expenses. During her employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the expense reimbursement policies and procedures of the Company applicable to other active Key Employees.
4.9 Withholding, FICA, FUTA, Etc. Any amount to be paid to the Executive under the provisions of this Agreement which represents taxable income shall be subject to, and reduced by, any applicable federal, state or local taxes imposed by law, included, but not limited to, taxes imposed under Subtitle C of the Code.
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ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. The Executive's employment and this Agreement shall be terminated as follows:
(a) Death: Immediately upon the date of death of the Executive;
(b) Disability: On the tenth (10th) day following written notice provided by the Board to the Executive that her employment is being terminated due to the Executive's Disability;
(c) Termination by Company for Cause: Immediately upon the date of written notice provided by the Board to the Executive that her employment is being terminated for "Cause";
(d) Termination by Company Without Cause: Immediately upon the date specified in a written notice provided by the Board to the Executive that her employment is being terminated without Cause; or
(e) Termination by Executive for Good Reason: Immediately upon the date specified in a written notice provided by the Executive to the Board that her employment is being terminated for Good Reason (following any applicable notice and period for cure as required by the definition of Good Reason); provided, that if the Executive is terminating for Good Reason due to relocation as described in Section 1.14(e), the Executive shall provide the Company no less than thirty (30) days' advance written notice, unless the Company affirmatively waives such 30-days' advance notice requirement; or
(f) Voluntary Resignation by Executive: Upon the date specified in a written notice provided by the Executive to the Board that she is voluntarily resigning and terminating her employment, which specified date shall be at least fifteen (15) business days following the date of delivery of the notice, unless the parties mutually agree to an earlier or later termination date.
5.2 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 Sections 5.1(e) and 12.2 of this Agreement. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the terms of this Agreement.
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ARTICLE VI
OBLIGATIONS OF THE COMPANY UPON TERMINATION
6.1 Termination Due to 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 estate, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, and (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's death occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365. The Accrued Obligations shall be paid to the Executive's estate in a lump sum in cash within 30 days following the Date of Termination, and the amount of any Annual Bonus payable to the Executive's estate shall be payable at the same time that Annual Bonuses are paid to other executives.
6.2 Termination Due to Disability. If the Executive's employment is terminated due to the Executive's Disability, this Agreement shall terminate as of the Date of Termination without further obligations to the Executive, other than (i) Accrued Obligations that the Executive has accrued or earned as of the Date of Termination, (ii) any earned but unpaid Annual Bonus from the year prior to the Date of Termination, (iii) in the event Annual Bonuses are actually paid to executives for the year in which the Executive's Disability occurs, a prorated bonus equal to the product of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365, and (iv) disability and other benefits (to the extent permitted by law or by the applicable insurance policies) provided by the Company to disabled employees and/or their families, as the same may change from time to time for Key Employees. The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination and the amount of any Annual Bonus payable to the Executive shall be payable at the same time that Annual Bonuses are paid to other Key Employees.
6.3 Termination by the Company for Cause. If the Executive's employment is terminated by the Company for Cause, this Agreement shall terminate without further obligations to the Executive other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.4 Voluntary Resignation by the Executive. If the Executive terminates her employment by voluntary resignation (but not for Good Reason), this Agreement shall terminate without further obligations to the Executive, other than Accrued Obligations that the Executive has accrued or earned as of the Date of Termination. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days following the Date of Termination.
6.5 Termination by the Company Without Cause or Termination by Executive for Good Reason.
(a) After the Effective Date, if the Company shall terminate the Executive's employment without Cause, or if the Executive shall terminate her employment for Good
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Reason, this Agreement shall terminate and the Company shall pay and/or provide to the Executive the sum of the following:
(1) Accrued Obligations that the Executive had accrued or earned as of the Date of Termination;
(2) 200% of the sum of:
(A) the Executive's Reduced Base Salary, plus
(B) the Executive's target Annual Bonus (based on
Reduced Base Salary) if the Incentive Plan is then in
effect for the year in which the Date of Termination
occurs, or if the Incentive Plan (as described in
Section 4.4 hereof), or any similar annual bonus plan is
not then in effect and its suspension or termination
constituted a Good Reason basis for the Executive's
termination of employment, then the Executive's target
Annual Bonus under the Incentive Plan immediately prior
to its suspension or termination;
provided however, that if the Executive terminates her
employment for Good Reason as specified in Section
1.14(e) (relating to the Company's requiring the
Executive to be based at any office or location further
than a fifty (50) mile radius from the Washington, D.C.
metropolitan area), the 200% of Reduced Base Salary and
target Annual Bonus shall be reduced to 100% of such
Reduced Base Salary and target Annual Bonus.
(3) Health Insurance. Payment of a lump sum cash amount equivalent to the cost of COBRA continuation premiums under the Company's medical, dental, vision and prescription drug coverages (as applicable) for the Executive and her covered dependents for eighteen (18) months following the Date of Termination, regardless of whether the Executive and/or her covered dependents actually elect COBRA continuation coverage; and
(4) Life Insurance. Continuation of existing life insurance coverage for the Executive for eighteen (18) months following the Date of Termination on the same premium and coverage basis as in effect on the Date of Termination; provided that in the event the Company is not permitted to continue the coverage on the same premium and/or coverage basis by the applicable carrier or reinsurers, the Company shall pay the Executive a lump sum cash amount equivalent to the amount of premiums the Company would have paid for the coverage if the Executive had remained an active employee and the coverage remained in effect on the same premium and coverage basis for the 18-month period; and
(5) Travel Privileges. Immediate vesting and continuation for the Executive's lifetime of on-line, first class, positive space travel privileges for business and pleasure for the Executive and her eligible family members, pursuant to the terms and conditions of the Company's travel policy for active Key Employees; provided that the Company shall not provide any gross-up payments to the Executive or her eligible family members for taxes payable on such travel.
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(6) Compliance with Code Section 409A. Any payments under this subsection that are subject to the provisions of Code Section 409A shall be made in accordance with those provisions, including the delay of at least six (6) months for any severance payments if applicable.
ARTICLE VII
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-Up Payment. 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), including, but not limited to, any amounts in respect of (i) options to acquire shares of common stock and (ii) restricted shares of common stock) (a "Payment"), would be subject to the excise tax imposed by Section 4999 (or any successor provision thereto) of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income and employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon Payments.
7.2 Determinations by Independent Accountants. Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within five (5) business days of the Date of Termination, or such earlier time as is requested by the Company or the Executive. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7.2, 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 other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-up Payments which will not have been made by the Company
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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 7.3 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment (together with interest and penalties incurred by the Executive in connection therewith) that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
7.3 IRS Claims. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which she 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:
(a) give the Company any information reasonably requested by the Company relating to such claim,
(b) 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,
(c) cooperate with the Company in good faith in order effectively to contest such claim,
(d) 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 7.3, 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 sue 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 sue 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
LANIER EMPLOYMENT AGREEMENT Page 14
provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder; whereas the Executive shall be entitled to settle or contest, as the case may be, any other issued raised by the Internal Revenue Service or any other taxing authority.
7.4 Refunds. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 7.3, 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 7.3) 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 7.3, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such 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. Notwithstanding any other provision of this Section 7.4, the Company shall not make any advance or forgive any amount if such action would be deemed to be a prohibited loan by the Company in violation of any provision of the Sarbanes-Oxley Act of 2002 or any other law or regulation.
ARTICLE VIII
NONEXCLUSIVITY OF RIGHTS
8.1 Notwithstanding any other provision of this Agreement, the Executive (and/or as applicable, her spouse and/or dependents or her estate) shall be entitled to any benefits or provisions provided by the specific terms and conditions of any equity-based compensation plans, insurance policies, or employee benefit plans or programs of the Company in which she participated as of the Date of her Termination. 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 Affiliates at or subsequent to the Date of Termination shall be payable in accordance with the terms and conditions of such plan, policy, practice or program.
ARTICLE IX
RESTRICTIVE COVENANTS
9.1 Use and Return of Documents and Property. Executive acknowledges that in the course of her employment with Group and the Company, she will have the opportunity to inspect and use certain property, both tangible and intangible, of Group, the Company and its Affiliates. All such property shall remain the exclusive property of Group, the Company and its Affiliates, and Executive has and shall have no right or interest in such property. Executive shall
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use Company property only during employment and only in the performance of her job and to further the Company's interests, and she will not remove Company property from the Company's premises except to the extent necessary to perform her duties and to the extent approved by the Company, either expressly or generally under its policies. Promptly upon the Executive's Date of Termination, Executive shall return to the Company all of the Company's property of any kind, including but not limited to, business plans, financial records, computer hardware, computer software, documents, data, books, memoranda, notes, sketches, audio-visual materials, correspondence, lists, pricing information, customer and/or vendor lists or information, and all other tangible property.
9.2 New Developments. Any discovery, invention, process or improvement made or discovered by the Executive during her employment with Group and the Company in connection with or in any way affecting or relating to the business of Group, the Company or any of its Affiliates (as then carried on or under active consideration) shall forthwith be disclosed to the Company and shall belong to and be the absolute property of the Company. The preceding sentence does not apply to any invention for which no equipment, supplies, facility, trade secret information of the Company was used and which was developed entirely on the Executive's own time, unless the invention relates directly to the business of Group, the Company or its Affiliates or to its or their actual or demonstrably anticipated research or development, or the invention results from any work performed by the Executive for the Company.
9.3 Nonsolicitation of Customers. Executive agrees that during her employment with Group and the Company, she will not, directly or indirectly, without the Company's prior written consent, contact any customer of Group, the Company or any of its Affiliates for business purposes unrelated to furthering the business of Group, the Company or its Affiliates. Executive further agrees that for a period of one (1) year following her Date of Termination, she will not directly or indirectly, (i) contact, solicit or divert, or attempt to contact, solicit, divert or take away, any customer of the Company or its Affiliates for purposes of, or with respect to, providing a customer to a competing business; or (ii) take any affirmative action with a customer of the Company or its Affiliates for purposes of providing a customer to a business competing with the Company or its Affiliates. The prohibitions of the preceding sentence shall apply only to customers of the Company with whom the Executive had Material Contact on the Company's behalf during the twelve (12) months immediately preceding the Date of Termination. For purposes of this Agreement, the Executive had "Material Contact" with a customer if (a) she had business dealings with the customer on the Company's behalf; (b) she was responsible for supervising or coordinating the dealings between the Company and the customer; or (c) she obtained Proprietary Information about the customer as a result of her association with the Company.
9.4 Nonsolicitation of Employees. The Executive agrees that during her employment with Group and the Company and for one (1) year after her Date of Termination, the Executive will not, directly or indirectly, solicit or attempt to recruit or hire any employees of Group, the Company or its Affiliates who were employed by Group, the Company or its Affiliates at any time during the last year of the Executive's employment with the Company and who are actively employed by Group, the Company or its Affiliates at the time of the solicitation or attempted solicitation, to provide services similar to those performed by the employee for the Company on behalf of, or for the purpose of engaging in employment with, a competitor of the Company.
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9.5 Nondisclosure of Trade Secrets and Proprietary Information. Except to the extent reasonably necessary for Executive to perform her duties for Group and the Company, the Executive shall not, directly or indirectly, furnish or disclose to any person, or use in any way, any trade secrets of Group, the Company or its Affiliates, for so long as such trade secrets remain "trade secrets" under applicable state law. Except to the extent reasonably necessary for Executive to perform her duties for the Company, Executive shall not, during her employment with the Company or following the Executive's Date of Termination, directly or indirectly, furnish or disclose to any person, or use in any way, for personal benefit or the benefit of others, any Proprietary Information of the Company or its Affiliates.
9.6 No Disparagement. The Executive agrees that she shall not make any untrue or disparaging statement or criticism, written or oral, nor take any action which is adverse to the interests of the Company or that would cause the Company or its current and former officers, directors, or employees embarrassment or humiliation or otherwise cause or contribute to such persons being held in disrepute by the public or the Company's customers or employees. From and after the Date of Termination, the Executive shall refrain from discussing the terms and conditions of the termination of her employment with any employee or customer of the Company or with any reporter, media contacts or any form of public media, unless such communication is previously approved by the General Counsel of the Company.
9.7 Reasonableness. Executive has carefully considered the nature and extent of the restrictions upon her and the rights and remedies conferred on the Company under this Agreement, and Executive hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and remedies conferred upon the Company, are necessary to protect the goodwill and other value of the business of the Company;
(b) the restrictions places upon Executive hereunder are fair and reasonable in time and territory, will not prevent her from earning a livelihood, and place no greater restraint upon the Executive than is reasonably necessary to secure the business and goodwill of the Company;
(c) the Company is relying upon the restrictions and covenants contained herein in continuing to make available to Executive information concerning the business of the Company;
(d) Executive's employment hereunder places her in a position of confidence and trust with the Company and its employees, customers and suppliers; and
(e) the provisions of this section shall be interpreted so as to protect the Proprietary Information, and to secure for the Company the exclusive benefits of the work performed on behalf of the Company by the Executive under this Agreement, and not to unreasonably limit her ability to engage in employment and consulting activities in noncompetitive areas which do not endanger the Company's legitimate interests expressed in this Agreement.
9.8 Remedy for Breach. Executive acknowledges and agrees that her breach of any of the covenants contained in this Article of this Agreement will cause irreparable injury to the Company and that remedies at law available to the Company for any actual or threatened breach by the Executive of such covenants will be inadequate and that the Company shall be entitled to
LANIER EMPLOYMENT AGREEMENT Page 17
specific performance of the covenants in this Article or injunctive relief against activities in violation of this Article by temporary or permanent injunction or other appropriate judicial remedy, writ or order, without the necessity or proving actual damages. This provision with respect to injunctive relief shall not diminish the right of the Company to claim and recover monetary damages against the Executive for any breach of this Agreement, in addition to injunctive relief. In the event of any breach by the Executive, the Company shall be entitled to immediately cease any and all payments and benefits being provided to the Executive and/or her family and to seek repayment from the Executive of any severance payments previously paid to her under this Agreement. The Executive acknowledges and agrees that the covenants contained in this Article shall be construed as agreements independent of any other provision of this or any other contract between the parties hereto, and that the existence of any claim or cause of action by the Executive against the Company, whether predicated upon this or any other contract, shall not constitute a defense to the enforcement by the Company of said covenants.
ARTICLE X
GENERAL RELEASE
10.1 No payment of any kind or provision of any benefit provided under this Agreement shall be made by Group or the Company to the Executive following her Date of Termination prior to and unless the Executive executes a general release of all claims that she, her family, heirs and assigns and any related persons or entities may have against Group or the Company. The release language shall be substantially in the form attached as Exhibit "A" to this Agreement. It is understood and agreed that the Executive's execution of the general release of claims shall not include a release of (i) the right to payment of or provision of coverage under any vested, nonforfeitable benefits to which the Executive (or a beneficiary of the Executive) may be entitled under the terms and provisions of any employee benefit plan, program, practice or policy of the Company as of the Date of Termination; (ii) any rights to indemnification under the articles or by-laws of Group and/or the Company, (iii) rights under any policy of directors and officers liability insurance that covers or has covered the Executive; and (iv) any right or claim as a stockholder of the Company.
ARTICLE XI
SUCCESSORS
11.1 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 estate.
11.2 This Agreement shall inure to the benefit of and be binding upon Group and the Company and its successors and assigns.
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11.3 Group and the Company shall require any successor and assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Group and the Company would be required to perform it if no such succession had taken place.
ARTICLE XII
MISCELLANEOUS
12.1 Governing Law. 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.
12.2 Notices. 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: Elizabeth K. Lanier US Airways, Inc. US Airways Group, Inc. At Most Recent Address on File in 2345 Crystal Drive Company Records Arlington, Virginia 22227 Attention: Executive Vice President, General Counsel and Secretary America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281 Attention: Senior Vice President, 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.
12.3 Invalidity of Any Provision. It is the intention of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws of each state and jurisdiction in which such enforcement is sought, but that the unenforceability (or the modification to conform with such laws) of any provision hereof shall not render unenforceable or impair the remainder of this Agreement which shall be deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions. The parties further agree
LANIER EMPLOYMENT AGREEMENT Page 19
to alter the balance of this Agreement in order to render the same valid and enforceable. The terms of the restrictive covenant provisions of this Agreement shall be deemed modified to the extent necessary to be enforceable and, specifically, without limiting the foregoing, if the term of the applicable restrictive covenant is too long to be enforceable, it shall be modified to encompass the longest term which is enforceable and, if the scope of the geographic area of the applicable restrictive covenant is too great to be enforceable, it shall be modified to encompass the greatest area that is enforceable.
12.4 Waiver of Breach. The waiver of a breach of any provision of this Agreement by a party hereto shall not operate or be construed as a waiver of any subsequent breach by the other party hereto.
12.5 Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. All understanding and agreements (whether written or oral, including an oral offer of employment or written offer letter) heretofore made between the parties hereto with respect to the subject matter of this Agreement are superseded by this Agreement and this Agreement alone fully and completely expresses all agreements between the parties related to the subject matter. This Agreement may not be changed orally but only by an amendment in writing signed by both parties. Upon execution of this Agreement, the Executive hereby waives any rights and claims she may have under any prior understandings and/or agreements related to her employment (other than those preserved by Section 10.1 hereof), including but not limited to any rejection damage claims provided under 11 U.S.C. Section 365.
12.6 Survival of Provisions. The provisions of Article IX - Restrictive Covenants shall survive termination of this Agreement.
12.7 Captions. The captions appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of any provisions of this Agreement or in any way affect this Agreement.
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 GROUP, INC.
By:________________________________________
Title: ____________________________________
US AIRWAYS, INC.
By:________________________________________
Title: ____________________________________
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EXHIBIT "A"
GENERAL RELEASE
FOR AND IN CONSIDERATION of the payments and benefits provided to
ELIZABETH K. LANIER (the "Executive") by US AIRWAYS, GROUP, INC., a Delaware
holding company ("Group "), and/or US AIRWAYS, INC., a Delaware corporation (the
"Company") under the terms and conditions of that certain Employment Agreement
dated the 27th day of September, 2005, upon the Executive's Date of Termination,
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Executive does hereby, for and on behalf of herself, her
heirs, assigns and all related entities and persons ("Executive's Releasing
Parties"), fully and finally release, acquit and forever discharge Group, the
Company, their officers, directors, employees and all related entities and
persons, all employee benefit plans of Group and the Company and all employee
benefit plans of their related entities, and such plans' related entities and
persons (collectively, "Company Released Parties"), of and from any and all
claims, counterclaims, actions, causes of action, demands, rights, damages,
costs, expenses or compensation which the Executive's Releasing Parties now
have, or may have, or may hereafter claim to have had as of the Date of
Termination, whether developed or undeveloped, anticipated or unanticipated,
based on any acts, omissions, transactions or occurrences whatsoever occurring
prior to and/or up until the Date of Termination, and specifically, but not by
way of limitation, from those claims which are, or arise by reason of, or are in
any way connected with, or which are or may be based in whole or in part on the
employment relationship which existed between the Executive and Group and/or the
Company and the termination of that employment relationship, including, without
limitation, (i) those claims arising under any foreign, federal, state, county
or municipal fair employment practices act and/or any law, ordinance or
regulation promulgated by any foreign, federal, state, county, municipality or
other state subdivision; (ii) those claims for breach of duty and/or implied
covenant of good faith and fair dealing; (iii) those claims for interference
with and/or breach of contract (express or implied, in fact or in law, oral or
written); (iv) those claims for retaliatory or wrongful discharge of any kind;
(v) those claims for intentional or negligent infliction of emotional distress
or mental anguish; (vi) those claims for outrageous conduct; (vii) those claims
for interference with business relationships, contractual relationships or
employment relationships of any kind; (viii) those claims for breach of duty,
fraud, fraudulent inducement to contract, breach of right of privacy, libel,
slander, or tortious conduct of any kind; (ix) those claims arising under Title
VII of the Civil Rights Act of 1964 and/or the Civil Rights Act of 1991 and/or
42 U.S.C. Section 1981; (x) those claims arising under any state or federal
handicap or disability discrimination law or act, including but not limited to
the Rehabilitation Act of 1973 and the Americans with Disabilities Act; (xi)
those claims arising from any damages suffered at any time by reason of the
effects or continued effects of any alleged or actual discriminatory or wrongful
acts; (xii) those claims arising under or in reliance upon any statute,
regulation, rule or ordinance (local, state or federal); (xiii) those claims
arising under Employment Retirement Income Security Act of 1974, as amended,
and/or the Family and Medical Leave Act; (xiv) those claims arising under the
workers' compensation laws of any state or other jurisdiction; and (xv) any and
all other claims arising under law or in equity in the United States of America
or in any foreign jurisdiction.
The Executive hereby acknowledges that she is knowingly and voluntarily waiving and releasing any rights she may have under ADEA and that the consideration given under the Employment Agreement for this General Release is in addition to anything of value to which she was already entitled. She further acknowledges that she has been advised by this writing, as required by the ADEA, that: (A) the waiver and release do not apply to any rights or claims that may arise on or after the date she executes this
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Release; (B) she has the right to consult with an attorney prior to executing this Release; (C) she has twenty-one (21) days to consider this Release (although she may choose to voluntarily execute this Release earlier); (D) she has seven (7) days following her execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after she executes this Release.
Agreed to, acknowledged and executed by the Executive this ___________ day of ____________________, 20_________.
*****
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Exhibit 10.6
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK UNIT AWARD GRANT NOTICE
US Airways Group, Inc. (the "COMPANY"), pursuant to its 2005 Equity Incentive Plan (the "PLAN"), hereby grants to Participant a Stock Unit Award covering the number of stock units (the "STOCK UNITS") set forth below (the "AWARD"). This Award shall be evidenced by a Stock Unit Award Agreement (the "AWARD AGREEMENT"). This Award is subject to all of the terms and conditions as set forth herein and in the Award Agreement and the Plan, all of which are attached hereto and incorporated herein in their entirety.
Participant: W. Douglas Parker Date of Grant: September 27, 2005 Number of Stock Units: 41,250 Payment for Stock Units: Participant's services to the Company |
VESTING SCHEDULE: Subject to acceleration as described in Section 2 of the Award Agreement, and provided that the Participant's Continuous Service has not terminated prior to the applicable vesting date, the Stock Units shall vest as follows:
- 50% of the Stock Units shall vest on September 27, 2007; and
- 25% of the Stock Units shall vest on each of September 27, 2008 and 2009.
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Award Agreement and the Plan. Participant further acknowledges that this Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the award of the Stock Units and the Common Stock subject to the Stock Units and supersede all prior oral and written agreements on that subject with the exception of (i) awards previously granted and delivered to Participant under the Plan, and (ii) the following agreements only:
OTHER AGREEMENTS: None US AIRWAYS GROUP, INC. PARTICIPANT By: --------------------------------- ---------------------------------------- Signature Signature Title: Date: ------------------------------ ---------------------------------- Date: ------------------------------- |
ATTACHMENTS: Stock Unit Award Agreement and US Airways Group, Inc. 2005 Equity Incentive Plan |
ATTACHMENT I
AWARD AGREEMENT
ATTACHMENT II
US AIRWAYS GROUP, INC. 2005 EQUITY INCENTIVE PLAN
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK UNIT AWARD AGREEMENT
Pursuant to the Stock Unit Award Grant Notice ("GRANT NOTICE") and this Stock Unit Award Agreement ("AWARD AGREEMENT"), US Airways Group, Inc. (the "COMPANY") has awarded you a Stock Unit Award under its 2005 Equity Incentive Plan (the "PLAN") for the number of stock units ("STOCK UNITS") as indicated in the Grant Notice (collectively, the "AWARD"). Except where indicated otherwise, defined terms not explicitly defined in this Award Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your Award are as follows:
1. NUMBER OF STOCK UNITS AND SHARES OF COMMON STOCK. The number of Stock Units subject to your Award is set forth in the Grant Notice. Each Stock Unit shall represent the right to receive one (1) share of Common Stock. The number of Stock Units subject to your Award and the number of shares of Common Stock deliverable with respect to such Stock Units may be adjusted from time to time for capitalization adjustments as described in Section 12(a) of the Plan.
2. VESTING. The Stock Units shall vest, if at all, as provided in the vesting schedule set forth in your Grant Notice, provided, however, that:
(A) vesting shall cease upon the termination of your Continuous Service; and
(B) vesting of all Stock Units shall be fully accelerated in the event that (i) your Continuous Service is terminated by the Company without Cause (as defined in the Plan) or by reason of your death or Disability (as defined in the Plan), (ii) you terminate your Continuous Service for Good Reason (as defined in your Executive Change in Control and Severance Benefits Agreement), or (iii) your Continuous Service is terminated involuntarily with or without Cause (as defined in the Plan) within twenty-four (24) months following a Change in Control (as defined in the Plan) of the Company that occurs subsequent to September 27, 2005.
3. DIVIDENDS. You will be entitled to receive payments equal to any cash dividends and other distributions paid with respect to a corresponding number of shares subject to your Award, provided that if any such dividends or distributions are paid in shares, the Fair Market Value of such shares will be converted into additional shares covered by the Award, and further provided that such additional shares will be subject to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as apply to the other Stock Units and Common Stock subject to your Award.
4. PAYMENT. This Award was granted in consideration of your services to the Company. Subject to Section 10 below, you will not be required to make any payment to the Company (other than your past and future services with the Company) with respect to your receipt of the Award, vesting of the Stock Units, or the delivery of the shares of Common Stock subject to the Stock Units.
5. DELIVERY OF SHARES.
(A) Subject to Sections 5(b) and 10 below, your vested Units shall be converted into shares of Common Stock, and the Company will deliver to you a number of shares of the Company's Common Stock equal to the number of vested shares subject to your Award, on the applicable vesting date. The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
(B) In the event that the Company determines that you are subject to its policy regarding trading of the Company's stock by its officers and directors and any shares of Common Stock subject to your Award are scheduled to be delivered on a day (the "ORIGINAL DISTRIBUTION DATE") that does not occur during a "window period" applicable to you, as determined by the Company in accordance with such policy, then such shares shall not be delivered on such Original Distribution Date and shall instead be delivered on the first day of the next "window period" applicable to you pursuant to such policy.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you will not be issued any shares of Common Stock under your Award unless either (a) such shares are then registered under the Securities Act or (b) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award also must comply with other applicable laws and regulations governing the Award, and you will not receive any shares of Common Stock under your Award if the Company determines that such receipt would not be in material compliance with such laws and regulations.
7. TRANSFER RESTRICTIONS. Prior to the time that the shares of Common Stock subject to your Award have been delivered to you, you may not transfer, pledge, sell or otherwise dispose of such shares. For example, you may not use shares of Common Stock that may be issued in respect of your Stock Units as security for a loan, nor may you transfer, pledge, sell or otherwise dispose of such shares. This restriction on transfer will lapse upon delivery to you of shares of Common Stock in respect of your vested Stock Units. Your Award is not transferable, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of shares of Common Stock in respect of vested Stock Units pursuant to this Agreement.
8. AWARD NOT A SERVICE CONTRACT. Your Award is not an employment or service contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation on your part to continue in the service of the Company or any Affiliate, or on the part of the Company or any Affiliate to continue such service. In addition, nothing in your Award shall obligate the Company or any Affiliate, their respective stockholders, boards of directors or employees to continue any relationship that you might have as an Employee or Consultant of the Company or any Affiliate.
9. UNSECURED OBLIGATION. Your Award is unfunded, and even as a holder of vested Stock Units, you shall be considered an unsecured creditor of the Company with respect
to the Company's obligation, if any, to distribute shares of Common Stock pursuant to this Agreement. You shall not have voting or any other rights as a stockholder of the Company with respect to the Common Stock acquired pursuant to this Agreement until such Common Stock is issued to you. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.
10. WITHHOLDING OBLIGATIONS.
(A) At the time you receive a distribution of shares of Common Stock pursuant to your Award, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with such distribution.
(B) Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you pursuant to your Award a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of distribution, not in excess of the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid variable award accounting).
(C) Unless the tax withholding obligations of the Company and/or any Affiliate thereof are satisfied, the Company shall have no obligation to deliver to you any shares of Common Stock pursuant to your Award.
11. NOTICES. Any notices provided for in your Award or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.
12. MISCELLANEOUS.
(A) The rights and obligations of the Company with respect to your Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns.
(B) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.
(C) You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(D) This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(E) All obligations of the Company under the Plan and this Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
13. HEADINGS. The headings of the Sections in this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
14. SEVERABILITY. If all or any part of this Agreement or the Plan is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.
15. GOVERNING PLAN DOCUMENT. Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan shall control.
* * * * *
This Stock Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the Stock Unit Grant Notice to which it is attached.
Exhibit 10.7
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK UNIT AWARD GRANT NOTICE
US Airways Group, Inc. (the "COMPANY"), pursuant to its 2005 Equity Incentive Plan (the "PLAN"), hereby grants to Participant a Stock Unit Award covering the number of stock units (the "STOCK UNITS") set forth below (the "AWARD"). This Award shall be evidenced by a Stock Unit Award Agreement (the "AWARD AGREEMENT"). This Award is subject to all of the terms and conditions as set forth herein and in the Award Agreement and the Plan, all of which are attached hereto and incorporated herein in their entirety.
Participant: _______________________________
Date of Grant: _____________________________
Number of Stock Units: _____________________
Payment for Stock Units: Participant's services to the Company
VESTING SCHEDULE: Subject to acceleration as described in Section 2 of the Award Agreement, and provided that the Participant's Continuous Service has not terminated prior to the applicable vesting date and the performance condition specified in Section 5(c) of the Award Agreement has been satisfied, the Stock Units shall vest as follows:
- 50% of the Stock Units shall vest on each of September 27, 2008 and 2009.
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Award Agreement and the Plan. Participant further acknowledges that this Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the award of the Stock Units and the Common Stock subject to the Stock Units and supersede all prior oral and written agreements on that subject with the exception of (i) awards previously granted and delivered to Participant under the Plan, and (ii) the following agreements only:
OTHER AGREEMENTS: None US AIRWAYS GROUP, INC. PARTICIPANT By: --------------------------------- ---------------------------------------- Signature Signature Title: Date: ------------------------------ ---------------------------------- Date: ------------------------------- |
ATTACHMENTS: Stock Unit Award Agreement and US Airways Group, Inc. 2005 Equity Incentive Plan
ATTACHMENT I
AWARD AGREEMENT
ATTACHMENT II
US AIRWAYS GROUP, INC. 2005 EQUITY INCENTIVE PLAN
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK UNIT AWARD AGREEMENT
Pursuant to the Stock Unit Award Grant Notice ("GRANT NOTICE") and this Stock Unit Award Agreement ("AWARD AGREEMENT"), US Airways Group, Inc. (the "COMPANY") has awarded you a Stock Unit Award under its 2005 Equity Incentive Plan (the "PLAN") for the number of stock units ("STOCK UNITS") as indicated in the Grant Notice (collectively, the "AWARD"). Except where indicated otherwise, defined terms not explicitly defined in this Award Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your Award are as follows:
1. NUMBER OF STOCK UNITS AND SHARES OF COMMON STOCK. The number of Stock Units subject to your Award is set forth in the Grant Notice. Each Stock Unit shall represent the right to receive one (1) share of Common Stock. The number of Stock Units subject to your Award and the number of shares of Common Stock deliverable with respect to such Stock Units may be adjusted from time to time for capitalization adjustments as described in Section 12(a) of the Plan.
2. VESTING. The Stock Units shall vest, if at all, as provided in the vesting schedule set forth in your Grant Notice, provided, however, that:
(A) vesting shall cease upon the termination of your Continuous Service; and
(B) vesting of all Stock Units shall be fully accelerated in the event that (i) your Continuous Service is terminated by the Company without Cause (as defined in the Plan) or by reason of your death or Disability (as defined in the Plan), (ii) you terminate your Continuous Service for Good Reason (as defined in your Executive Change in Control and Severance Benefits Agreement), or (iii) your Continuous Service is terminated involuntarily with or without Cause (as defined in the Plan) within twenty-four (24) months following a Change in Control (as defined in the Plan) of the Company that occurs subsequent to September 27, 2005.
3. DIVIDENDS. You will be entitled to receive payments equal to any cash dividends and other distributions paid with respect to a corresponding number of shares subject to your Award, provided that if any such dividends or distributions are paid in shares, the Fair Market Value of such shares will be converted into additional shares covered by the Award, and further provided that such additional shares will be subject to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as apply to the other Stock Units and Common Stock subject to your Award.
4. PAYMENT. This Award was granted in consideration of your services to the Company. Subject to Section 10 below, you will not be required to make any payment to the Company (other than your past and future services with the Company) with respect to your receipt of the Award, vesting of the Stock Units, or the delivery of the shares of Common Stock subject to the Stock Units.
5. DELIVERY OF SHARES.
(A) Subject to Sections 5(b), 5(c) and 10 below, your vested Units shall be converted into shares of Common Stock, and the Company will deliver to you a number of shares of the Company's Common Stock equal to the number of vested shares subject to your Award, on the applicable vesting date. The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
(B) In the event that the Company determines that you are subject to its policy regarding trading of the Company's stock by its officers and directors and any shares of Common Stock subject to your Award are scheduled to be delivered on a day (the "ORIGINAL DISTRIBUTION DATE") that does not occur during a "window period" applicable to you, as determined by the Company in accordance with such policy, then such shares shall not be delivered on such Original Distribution Date and shall instead be delivered on the first day of the next "window period" applicable to you pursuant to such policy; and
(C) Notwithstanding anything in this Award Agreement or Plan to the
contrary, no shares of Common Stock subject to the Stock Units shall be
delivered to you unless (i) the operating certificates of US Airways, Inc. and
America West Airlines, Inc. have been combined before September 27, 2008, and
(ii) you remain in Continuous Service until the end of such three (3) year
period.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you will not be issued any shares of Common Stock under your Award unless either (a) such shares are then registered under the Securities Act or (b) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award also must comply with other applicable laws and regulations governing the Award, and you will not receive any shares of Common Stock under your Award if the Company determines that such receipt would not be in material compliance with such laws and regulations.
7. TRANSFER RESTRICTIONS. Prior to the time that the shares of Common Stock subject to your Award have been delivered to you, you may not transfer, pledge, sell or otherwise dispose of such shares. For example, you may not use shares of Common Stock that may be issued in respect of your Stock Units as security for a loan, nor may you transfer, pledge, sell or otherwise dispose of such shares. This restriction on transfer will lapse upon delivery to you of shares of Common Stock in respect of your vested Stock Units. Your Award is not transferable, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of shares of Common Stock in respect of vested Stock Units pursuant to this Agreement.
8. AWARD NOT A SERVICE CONTRACT. Your Award is not an employment or service contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation on your part to continue in the service of the Company or any Affiliate, or on the part of the Company or any Affiliate to continue such service. In addition, nothing in your
Award shall obligate the Company or any Affiliate, their respective stockholders, boards of directors or employees to continue any relationship that you might have as an Employee or Consultant of the Company or any Affiliate.
9. UNSECURED OBLIGATION. Your Award is unfunded, and even as a holder of vested Stock Units, you shall be considered an unsecured creditor of the Company with respect to the Company's obligation, if any, to distribute shares of Common Stock pursuant to this Agreement. You shall not have voting or any other rights as a stockholder of the Company with respect to the Common Stock acquired pursuant to this Agreement until such Common Stock is issued to you. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.
10. WITHHOLDING OBLIGATIONS.
(A) At the time you receive a distribution of shares of Common Stock pursuant to your Award, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with such distribution.
(B) Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you pursuant to your Award a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of distribution, not in excess of the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid variable award accounting).
(C) Unless the tax withholding obligations of the Company and/or any Affiliate thereof are satisfied, the Company shall have no obligation to deliver to you any shares of Common Stock pursuant to your Award.
11. NOTICES. Any notices provided for in your Award or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.
12. MISCELLANEOUS.
(A) The rights and obligations of the Company with respect to your Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns.
(B) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.
(C) You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(D) This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(E) All obligations of the Company under the Plan and this Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
13. HEADINGS. The headings of the Sections in this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
14. SEVERABILITY. If all or any part of this Agreement or the Plan is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.
15. GOVERNING PLAN DOCUMENT. Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan shall control.
* * * * *
This Stock Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the Stock Unit Grant Notice to which it is attached.
Exhibit 10.8
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT AWARD GRANT NOTICE
US Airways Group, Inc. (the "COMPANY"), pursuant to its 2005 Equity Incentive Plan (the "PLAN"), hereby grants to Participant a Stock Appreciation Right Award covering the number of stock appreciation rights (the "STOCK APPRECIATION RIGHTS") set forth below (the "AWARD"). This Award shall be evidenced by a Stock Appreciation Right Award Agreement (the "AWARD AGREEMENT"). This Award is subject to all of the terms and conditions as set forth herein and in the Award Agreement and the Plan, each of which is attached hereto and incorporated herein in its entirety.
Participant: _________________________________________ Date of Grant: _________________________________________ Number of Stock Appreciation Rights: _________________________________________ Fair Market Value Per Share on Date of Grant: _________________________________________ Expiration Date: _________________________________________ |
VESTING SCHEDULE: Subject to acceleration as described in Section 3 of the Award Agreement, and provided that the Participant's Continuous Service has not terminated prior to the applicable vesting date, the Stock Appreciation Rights shall vest as follows:
- 50% of the Stock Appreciation Rights shall vest on September 27, 2007; and
- 25% of the Stock Appreciation Rights shall vest on each of September 27, 2008 and 2009.
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Award Agreement and the Plan. Participant further acknowledges that this Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the award of the Stock Appreciation Rights and supersede all prior oral and written agreements on that subject with the exception of (i) awards previously granted and delivered to Participant under the Plan, and (ii) the following agreements only:
OTHER AGREEMENTS: _________________________________________
US AIRWAYS GROUP, INC. PARTICIPANT By: --------------------------------- ---------------------------------------- Signature Signature Title: Date: ------------------------------ ---------------------------------- Date: ------------------------------- |
ATTACHMENTS: Stock Appreciation Right Award Agreement and US Airways Group, Inc. 2005 Equity Incentive Plan
ATTACHMENT I
AWARD AGREEMENT
ATTACHMENT II
US AIRWAYS GROUP, INC. 2005 EQUITY INCENTIVE PLAN
US AIRWAYS GROUP, INC.
2005 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT AWARD AGREEMENT
Pursuant to the Stock Appreciation Right Award Grant Notice ("GRANT NOTICE") and this Stock Appreciation Right Award Agreement ("AWARD AGREEMENT"), US Airways Group, Inc. (the "COMPANY") has awarded you a Stock Appreciation Right Award under its 2005 Equity Incentive Plan (the "PLAN") for the number of stock appreciation rights ("STOCK APPRECIATION RIGHTS") as indicated in the Grant Notice (collectively, the "AWARD"). Except where indicated otherwise, defined terms not explicitly defined in this Award Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your Award are as follows:
1. NUMBER OF STOCK APPRECIATION RIGHTS. The number of Stock Appreciation
Rights subject to your Award is set forth in the Grant Notice. Such number may
be adjusted from time to time for capitalization adjustments as described in
Section 12(a) of the Plan.
2. CALCULATION OF APPRECIATION. The amount payable upon exercise of each vested Stock Appreciation Right shall be equal to the excess of (A) the Fair Market Value per share of Common Stock on the date of exercise, over (B) the Fair Market Value per share of Common Stock on the date of grant of the Stock Appreciation Right (as indicated in the Grant Notice).
3. VESTING. The Stock Appreciation Rights shall vest, if at all, as provided in the vesting schedule set forth in your Grant Notice, provided, however, that:
(A) vesting shall cease upon the termination of your Continuous Service; and
(B) vesting of all Stock Appreciation Rights shall be fully
accelerated in the event that (i) your Continuous Service is terminated by the
Company without Cause (as defined in the Plan) or by reason of your death or
Disability (as defined in the Plan), (ii) you terminate your Continuous Service
for Good Reason (as defined in your Executive Change in Control and Severance
Benefits Agreement), or (iii) your Continuous Service is terminated
involuntarily with or without Cause (as defined in the Plan) within twenty-four
(24) months following a Change in Control (as defined in the Plan) of the
Company that occurs subsequent to September 27, 2005.
4. EXERCISE. You may exercise the vested portion of your Award during its term by delivering a Notice of Exercise (in a form designated by the Company) to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require. The exercise date will be the business day on which your signed Notice of Exercise is received by the Company. If the Notice of Exercise is received after normal business hours for a given day, then the exercise date will be considered to be the following business day.
5. TERM. You may not exercise your Award before the commencement or after the expiration of its term. The term of your Award commences on the Date of Grant and expires upon the earliest of the following:
(A) immediately upon the termination of your Continuous Service for Cause (as defined in the Plan);
(B) three (3) months after the termination of your Continuous Service for any reason (other than for Cause or your death, Disability or Retirement), provided that if during any part of such three (3) month period you may not exercise your Award solely because of the condition set forth in Section 7 relating to "Securities Law Compliance," your Award shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service;
(C) three (3) years after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;
(D) three (3) years after the termination of your Continuous Service due to your Disability;
(E) three (3) years after the termination of your Continuous Service due to your Retirement;
(F) the Expiration Date indicated in your Grant Notice; or
(G) the day before the tenth (10th) anniversary of the Date of Grant.
6. PAYMENT. Subject to Section 10, the amount payable upon exercise of the Award shall be settled in shares of Common Stock based on the Fair Market Value of such shares at the time of exercise.
7. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you may not exercise your Award unless either (a) the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or (b) the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your Award also must comply with other applicable laws and regulations governing the Award, and you may not exercise your Award if the Company determines that such exercise would not be in material compliance with such laws and regulations.
8. TRANSFER RESTRICTIONS. Your Award is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your Award.
9. AWARD NOT A SERVICE CONTRACT. Your Award is not an employment or service contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation on your part to continue in the service of the Company or any Affiliate, or on the part of the Company or any Affiliate to continue such service. In addition, nothing in your Award shall obligate the Company or any Affiliate, their respective stockholders, boards of
directors or employees to continue any relationship that you might have as an Employee or Consultant of the Company or any Affiliate.
10. WITHHOLDING OBLIGATIONS.
(A) At the time you exercise your Award, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your Award.
(B) Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your Award a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid variable award accounting).
(C) You may not exercise your Award unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your Award when desired even though your Award is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock unless such obligations are satisfied.
11. NOTICES. Any notices provided for in your Award or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.
12. MISCELLANEOUS.
(A) The rights and obligations of the Company with respect to your Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns.
(B) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.
(C) You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(D) This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(E) All obligations of the Company under the Plan and this Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
13. HEADINGS. The headings of the Sections in this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
14. SEVERABILITY. If all or any part of this Agreement or the Plan is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.
15. GOVERNING PLAN DOCUMENT. Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan shall control.
* * * * *
This Stock Appreciation Right Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the Stock Appreciation Right Award Grant Notice to which it is attached.