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 27
th day of September, 2005.
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:
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 or the Board of
Directors of the Company, as applicable.
(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;
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(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 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
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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 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 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
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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.
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,
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(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.
§§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 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.
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.
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
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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.
(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 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.
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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 (10 th )
day following written notice provided by the Board to the Executive
that his employ
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