Exhibit 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
AMENDMENT NO. 1
This Amendment No. 1 (this
“ Amendment ”) to the Employment Agreement,
dated September 29, 2006 (the “ Employment
Agreement ”), among UAL Corporation, a Delaware
corporation (“ UAL ”), United Air
Lines, Inc., a Delaware corporation (“ UA
”, UAL and UA sometimes collectively referred to herein as
“ United ”), and Peter D. McDonald (the “
Executive ”) is made as of this 15th day of May,
2008.
WHEREAS the Executive recently
assumed a new role with United as its Executive Vice President and
Chief Administrative Officer and will no longer serve as
United’s Executive Vice President and Chief Operating
Officer;
WHEREAS United desires to continue
the employment of the Executive in such new role and to continue to
benefit from the Executive’s services, and the Executive
desires to continue such employment, on the terms and conditions
hereinafter set forth;
WHEREAS United and the Executive
also wish to amend the Employment Agreement in order to address the
requirements of Section 409A of the Code;
WHEREAS, pursuant to
Section 10(e) of the Employment Agreement, the Employment
Agreement may be modified or amended by a writing signed by United
and the Executive; and
WHEREAS, pursuant to
Section 10(n) of the Employment Agreement, United may
make necessary amendments to the Employment Agreement for the
limited purpose of, and solely to the extent necessary to avoid
imposition of penalties and additional taxes upon the Executive
under Section 409A of the Code;
NOW THEREFORE, for good and valuable
consideration, which is hereby acknowledged and agreed by the
undersigned, each of UAL, UA and the Executive (each a
“party”) agrees as follows (capitalized terms not
otherwise defined herein shall have the meaning assigned thereto in
the Employment Agreement):
1.
Amendment to Section 1(a).
Section 1(a) of the Employment Agreement shall be amended
and restated in its entirety to read as follows:
“Subject to all of the terms
and conditions of this Agreement, United agrees to continue to
employ the Executive as its Executive Vice President and Chief
Administrative Officer for the Employment Period (as defined in
Section 2) and the Executive agrees to remain employed by
United during such period.”
2.
Amendment to Section 1(b). The first sentence of
Section 1(b) of the Employment Agreement shall be amended
and restated in its entirety to read as follows:
“On and after the date of the
amendment to the Employment Agreement, dated as of May 15,
2008 (the “ Amendment ”), as Executive Vice
President and Chief Administrative Officer of United, the Executive
shall be responsible for the following areas: customer
experience; human resources; labor relations; employee experience;
safety and security; industry, environmental, corporate and
governmental affairs; and information systems; provided that
(i) the Executive will perform such other duties as he is
reasonably directed to perform by the Chief Executive Officer of
United consistent with the Executive’s positions as Executive
Vice President and Chief Administrative Officer of United, and
(ii) following the date of the Amendment, the Chief Executive
Officer of United may determine that the Executive shall cease to
be responsible for one or more of the foregoing areas, so long as
the Executive’s level of overall responsibility with respect
to the Company shall remain commensurate with the Executive’s
level of responsibility as in effect on the date of the
Amendment.”
3.
Amendment to Section 3(b). The last sentence of
Section 3(b) of the Employment Agreement shall be amended
and restated in its entirety to read as follows:
“The annual bonus under this
Section 3(b) will hereinafter be referred to as the
“Annual Bonus” and will be paid at such time and in
such manner as set forth in the applicable annual incentive
compensation plan documents.”
4.
Amendment to Section 3(e)(A).
Section 3(e)(A) of the Employment Agreement shall be
amended by inserting the following text immediately following the
first sentence thereof:
“In consideration for the
Executive’s agreeing to remain employed by the Company
notwithstanding the change in his title from Chief Operating
Officer to Chief Administrative Officer, as soon as practicable
following the date of the Amendment (but in no event later than 30
days thereafter), United will cause an additional amount equal to
$820,000 to be deposited in the Executive’s name under the
Secular Trust. Following the date of the Amendment, for
purposes of this Agreement, the term “Retention
Payment” shall mean the original amount of the Retention
Payment plus such additional amount.”
5.
Amendment to Section 3(e)(B).
Section 3(e)(B) of the Employment Agreement shall be
amended and restated in its entirety to read as follows:
“Subject to the terms and
conditions of this Section 3(e)(B) and except as
otherwise provided herein or in Section 3(e)(C) or (D),
the Executive’s rights with respect to 100% of the assets
then held by the Secular Trust shall become vested on
February 1, 2009 (the “ Vesting Date ”),
provided that, except as set forth in the immediately following
sentence, in order for the Executive’s rights with respect to
the Secular Trust to become vested, the Executive must remain
actively employed by United until the Vesting Date. If, prior
to the Vesting Date, the Executive’s employment under this
Agreement is terminated involuntarily for any reason other than
Cause (as defined in Section 4(c)), including as a result of
the Executive’s death or Disability (as defined in
Section 4(b)), or if the Executive resigns for Good Reason (as
defined in Section 4(d), as modified by the Amendment),
subject to Section 5(k), the Executive’s rights with
respect to all assets then
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held by the Secular Trust shall
become immediately vested as of the date that the Release described
in Section 5(k) becomes effective and irrevocable (the
“ Release Effective Date ”). For the
avoidance of doubt, if, prior to the Vesting Date, the
Executive’s employment under this Agreement is terminated
involuntarily for Cause or if the Executive resigns without Good
Reason, the Executive’s rights with respect to all unvested
assets then held by the Secular Trust shall immediately terminate
as of the Termination Date and the Executive shall be entitled to
no further payments or benefits with respect to the unvested
portion of the Retention Payment. In the event that the
Executive’s rights with respect to the assets of the Secular
Trust become vested pursuant to this Section 3(e)(B), the
Executive will be entitled to distribution of such assets not later
than 30 days following the date the Executive’s rights
thereto become vested.”
6.
Amendment to Section 3(e)(E). The first and
second sentences of Section 3(e)(E) of the Employment
Agreement shall be amended and restated in their entirety to read
as follows:
“In addition to the foregoing,
United will pay to the Executive an additional amount (such amount,
an “ Additional Payment ”) such that, after
payment by, or on behalf of, the Executive of all income and
employment taxes with respect to any vested portion of the
Retention Payment, including any income and employment taxes
imposed upon the Additional Payment, the Executive retains an
amount with respect to such vested portion of the Retention Payment
equal to the aggregate amount of such taxes imposed on such vested
portion of the Retention Payment; provided , however
, that United shall only be obligated to provide the Executive with
Additional Payments with respect to that portion of the Retention
Payment that does not exceed $3,420,000 in the aggregate. Any
Additional Payment will be paid as soon as practicable following
the Executive’s delivery to United of documentation
sufficient to demonstrate the Executive’s entitlement to such
Additional Payment, but in no event later than the end of the year
following the year in which Executive pays (or the Trustee remits)
the related tax.
7.
Addition of New Section 3(e)(F). The following
text shall be inserted as new Section 3(e)(F) of the
Employment Agreement:
“In consideration for the
Executive’s agreeing to remain employed by the Company
notwithstanding the change in his title from Chief Operating
Officer to Chief Administrative Officer, as soon as practicable
following the date of the Amendment (and in no event later than 30
days thereafter), the Company shall pay to the Executive a lump-sum
cash payment in an amount equal to $1,359,750, and following the
date of the Amendment, the Executive shall have no further rights
with respect to former Sections 5(d)(B) and (C) of this
Employment Agreement and shall not be entitled to any severance
payments from the Company under any other severance plan, program,
policy, agreement or arrangement, except as specifically provided
in Sections 3(e)(B) and 5(e)(ii) of this
Agreement.”
8.
Amendment to 3(f). Section 3(f) of the
Employment Agreement shall be amended by inserting the following
text at the end thereof:
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“To the extent payments under
any perquisite program or policy are subject to Section 409A
of the Code, the reimbursement of expenses or in-kind benefits
provided thereunder during a year will not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year. In no event shall such an expense be
reimbursed after the last day of the year following the year in
which the expense was incurred. The right to such
reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.”
9.
Amendment to Section 3(g).
Section 3(g) of the Employment Agreement shall be amended
by inserting the following text at the end thereof:
“The reimbursement of expenses
during a year will not affect the expenses eligible for
reimbursement in any other year. In no event shall such an
expense be reimbursed after the last day of the year following the
year in which the expense was incurred. The right to such
reimbursement is not subject to liquidation or exchange for another
benefit.”
10.
Amendment to Section 4(d).
Section 4(d) of the Employment Agreement shall be amended
by inserting the following text at the end thereof:
“Notwithstanding the
foregoing, the Executive must give notice to United within 120 days
of the occurrence of the event giving rise, or events which in the
aggregate give rise (or within 120 days after the date he learns or
reasonably should have learned of such event or events, if later),
to the Good Reason event to terminate his employment for Good
Reason based on such event(s). During the notice period
(which shall not be less than 30 days), United shall have the
opportunity to substantially correct the condition that caused the
Good Reason, in which case