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Exhibit 10.37
SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") is
entered into effective as of January 1, 2000, by and among AMERICA WEST HOLDINGS
CORPORATION, a Delaware corporation ("Holdings"), AMERICA WEST AIRLINES, INC., a
Delaware corporation and a wholly-owned subsidiary of Holdings ("AWA"), THE
LEISURE COMPANY, a Delaware corporation and a wholly-owned subsidiary of
Holdings ("Leisure," and, together with AWA and Holdings, "Employers" and
individually, an "Employer"), and WILLIAM A. FRANKE ("Franke").
RECITALS
A. The Employers and Franke have executed that certain Employment
Agreement dated as of February 17, 1998 (the "Original Agreement").
B. The Employers and Franke have executed that certain Amendment to
Employment Agreement dated as of January 15, 1999 (the "First Amendment")
amending certain provisions of the Original Agreement (the Original Agreement,
as amended by the First Amendment, hereinafter referred to as the "Amended
Agreement").
C. In consideration of the premises, and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties, the
Employers and Franke desire to further amend the Amended Agreement as specified
herein.
AGREEMENT
The Employers and Franke, intending to be legally bound, agree as follows:
1. AMENDMENT.
(a) AMENDMENT OF SECTION 1.1.
(i) Section 1.1 of the Amended Agreement is hereby amended to add a
definition of "Retirement," such definition to read in its entirety as follows:
"'Retirement'" shall mean Franke's termination of employment on or
after the Expiration Date, or such earlier date as may be approved
by the Board, for any reason other than Misconduct."
(ii) Section 1.1 of the Amended Agreement is hereby amended to
revise the definition of "Expiration Date" to read it its entirety as follows:
"'Expiration Date'" shall mean December 31, 2002."
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(b) AMENDMENT OF SECTION 3.1. Section 3.1 of the Amended Agreement is
hereby amended by replacing "$200,000" in paragraph (a) with "$600,000" and by
replacing paragraph (b) to read in its entirety as follows:
"(b) The Base Salary shall be reviewed at least annually by
the Board at such time or times as the salaries of other senior
executives of the Employers as a group are reviewed commencing in
February 2001, and may be increased by the Board at any time or from
time to time as the Board may deem appropriate."
(c) AMENDMENT OF SECTION 3.2. Section 3.2 of the Amended Agreement is
hereby amended by adding a new Section 3.2(g) and redesignating existing Section
3.2(g) and the following sections accordingly, such new Section 3.2(g) to read
in its entirety as follows:
"(g) Notwithstanding the foregoing provisions of this Section
3.2, in the event Franke's employment is terminated by reason of
Retirement, the 1996 Stock Option may be exercised at any time
within the 36-month period beginning on the date of such Retirement,
but not thereafter (and in no event after October 28, 2006)."
(d) AMENDMENT OF SECTION 3.3. Section 3.3 of the Amended Agreement is
hereby amended by adding a new Section 3.3(g) and redesignating existing Section
3.3(g) and the following sections accordingly, such new Section 3.3(g) to read
in its entirety as follows:
"(g) Notwithstanding the foregoing provisions of this Section
3.3, in the event Franke's employment is terminated by reason of
Retirement, the 1998 Stock Option may be exercised, to the extent
then vested, at any time within the 36-month period beginning on the
date of such Retirement, but not thereafter (and in no event after
February 17, 2008). To the extent that the 1998 Stock Option is not
vested on the date of such Retirement, the portion thereof that is
not vested on the date of such Retirement shall automatically lapse
and be cancelled unexercised as of such date."
(e) AMENDMENT OF SECTION 3.4. Section 3.4 of the Amended Agreement is
hereby amended by adding a new Section 3.4(g) and redesignating existing Section
3.4(g) and the following sections accordingly, such new Section 3.4(g) to read
in its entirety as follows:
"(g) Notwithstanding the foregoing provisions of this Section
3.4, in the event Franke's employment is terminated by reason of
Retirement, the 1999 Stock Option may be exercised, to the extent
then vested, at any time within the 36-month period beginning on the
date of such Retirement, but not thereafter (and in no event after
January 15, 2009). To the extent that the 1999 Stock Option is not
vested on the date of such Retirement, the portion
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thereof that is not vested on the date of such Retirement shall
automatically lapse and be cancelled unexercised as of such date."
(f) AMENDMENT OF SECTION 3.9. The final sentence of Section 3.9 of the
Amended Agreement is hereby deleted, and a new sentence is added at the end of
Section 3.9 to read in its entirety as follows:
"In addition, (x) Franke shall be considered for additional
annual option grants under the Incentive Plan and other long-term
incentive benefits at such time or times, commencing in December
2000, as the senior executives of the Employers as a group are
considered for such option grants and benefits, and (y) Franke shall
be eligible to earn an annual bonus under the terms of any annual
bonus program made available to other senior executives of the
Employers, such bonus to be based on a target of not less than 60%
of Base Salary and a maximum of not less than 120% of Base Salary,
or such higher percentages as the Board may establish from time to
time, and to be calculated using reasonable performance criteria
established by the Board from time to time based 75% on the
financial performance of Holdings and 25% on individual performance
by Franke, or such other relative weighting as Franke and the Board
may agree from time to time."
(g) NEW SECTION 3.12. A new Section 3.12 is added to the Amended Agreement
to read in its entirety as follows:
"Effective as of January 5, 2000, Franke has been granted an
option to purchase 110,000 Shares for $20.0625 per Share pursuant to
the Incentive Plan (the "2000 Stock Option"). The following
provisions of this Section 3.12 constitute the agreement required
with respect to the 2000 Stock Option under Paragraph 4(i) of the
Incentive Plan:
(a) The 2000 Stock Option shall be exercisable as to one-third
of the Shares covered thereby on January 5, 2001, as to an
additional one-third of the Shares covered thereby on January 5,
2002 and as to the remaining one-third of the Shares covered thereby
on December 31, 2002, so that the 2000 Stock Option will be
exercisable in full on December 31, 2002.
(b) Upon the exercise of the 2000 Stock Option, the Person
exercising the 2000 Stock Option shall pay to Holdings an amount
equal to the exercise price, such amount to be paid (i) in cash,
(ii) by delivering to Holdings issued and outstanding Shares which
have an aggregate Market Value per Share at the date of exercise
equal to the exercise price, (iii) by directing Holdings to sell a
sufficient number of Shares to be acquired on exercise of the
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2000 Stock Option through a broker approved by Holdings, in which
event the proceeds of such sale shall be applied by Holdings to the
payment of the exercise price and any applicable withholding taxes,
with any surplus then remaining to be paid to the Person exercising
the 2000 Stock Option or its designee or (iv) by any combination of
the foregoing.
(c) Upon the occurrence of a Change in Control, or in the
event Franke's employment is terminated by Franke pursuant to
Section 4.1 for Good Reason or by Holdings pursuant to Section 4.2
for a reason other than Misconduct or Disability, the 2000 Stock
Option shall become automatically vested in full and may be
exercised at any time thereafter; provided, however, in no event
shall the 2000 Stock Option be exercisable after January 5, 2010.
(d) In the event Franke's employment is terminated by Franke
pursuant to Section 4.1 other than for Good Reason or on account of
Disability or by Holdings pursuant to Section 4.2 for Misconduct,
the 2000 Stock Option, to the extent then vested, may be exercised
at any time within six months following the Termination Date, but
not thereafter (and in no event after January 5, 2010). To the
extent the 2000 Stock Option is not vested on such Termination Date,
the portion thereof that is not vested on such Termination Date
shall automatically lapse and be canceled unexercised as of such
Termination Date.
(e) The 2000 Stock Option shall become automatically vested in
full on the date of Franke's death and may be exercised at any time
within the one-year period beginning on the date of Franke's death,
but not thereafter (and in no event after January 5, 2010).
(f) In the event Franke's employment is terminated by reason
of Disability, the 2000 Stock Option shall become automatically
vested in full on the date of such Disability and may be exercised
at any time within the 36-month period beginning on the date of such
Disability, but not thereafter (and in no event after January 5,
2010).
(g) Notwithstanding the foregoing provisions of this Section
3.12, in the event Franke's employment is terminated by reason of
Retirement, the 2000 Stock Option may be exercised, to the extent
then vested, at any time within the 36-month period beginning on the
date of such Retirement, but not thereafter (and in no event after
January 5, 2010). To the extent that the 2000 Stock Option is not
vested on the date of such Retirement, the portion
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thereof that is not vested on the date of such Retirement shall
automatically lapse and be cancelled unexercised as of such date.
(h) Except as otherwise provided herein, the 2000 Stock Option
may be exercised in whole or in part or in two or more successive
parts.
(i) The 2000 Stock Option shall not be transferable by Franke
except for transfers permitted by the Incentive Plan and except for
transfers by will or by laws of descent and distribution. During the
lifetime of Franke, the 2000 Stock Option may not be exercised by
anyone other than Franke or the Person to whom the 2000 Stock Option
has been transferred in accordance with the Incentive Plan.
(j) The 2000 Stock Option may be exercised from time to time
by a notice in writing which identifies the 2000 Stock Option and
specifies the number of Shares in respect of which it is being
exercised. Such notice shall be delivered to the Secretary of
Holdings or addressed to the Secretary of Holdings at its principal
corporate offices. The date of exercise of the 2000 Stock Option
shall be the date the exercise notice is hand delivered or mailed to
the Secretary of Holdings, whichever is applicable. An election to
exercise the 2000 Stock Option shall be irrevocable.
(k) The 2000 Stock Option is not intended to qualify as an
incentive stock option under Section 422 of the Code.
(l) The provisions of this Section 3.12 shall survive the
termination of Franke's employment hereunder."
(h) NEW SECTION 3.13. A new Section 3.13 is added to the Amended Agreement
to read in its entirety as follows:
"With respect to the outstanding options granted to Franke
under the Incentive Plan prior to January 1, 1996 as listed in the
following table (the "Pre-1996 Options"), notwithstanding any
provisions to the contrary contained in the respective documents and
agreements evidencing such Pre-1996 Options:
(a) in the event Franke's employment is terminated by reason
of Retirement or Disability, such Pre-1996 Options may be
exercised at any time within the 36-month period beginning on
the date of such Retirement or Disability, but not thereafter
(and in no event after the 10th anniversary of the grant date
(the "Expiry Date") of each such Pre-1996 Option,
respectively, as indicated in the following table);
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(b) upon the occurrence of a Change in Control, or in the
event Franke's employment is terminated by Franke pursuant to
Section 4.1 for Good Reason or by Holdings pursuant to Section
4.2 for a reason other than Misconduct or Disability, the
Pre-1996 Options may be exercised at any time thereafter, but
in no event after their respective Expiry Dates;
(c) in the event of Franke's death, the Pre-1996 Options may
be exercised at any time within the one-year period beginning
on the date of Franke's death, but in no event after their
respective Expiry Dates; and
(d) in the event Franke's employment is terminated by Franke
pursuant to Section 4.1 other than for Good Reason or on
account of Disability or by Holdings pursuant to Section 4.2
for Misconduct, the Pre-1996 Options may be exercised at any
time within six months following the Termination Date, but not
thereafter (and in no event after their respective Expiry
Dates).
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GRANT DATE NUMBER EXPIRY DATE
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12/1/94 255,000 12/1/04
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12/1/94 100,000 12/1/04
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8/30/95 50,000 8/30/05
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8/30/95 100,000 8/30/95
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11/9/95 150,000 11/9/05
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(i) NEW SECTION 3.14. A new Section 3.14 is added to the Amended Agreement
to read in its entirety as follows:
"The maturity dates of those certain promissory notes listed
in the following table, which notes evidence loans made by Holdings
to Franke to enable Franke to pay a portion of the taxes
attributable to stock grants previously awarded to Franke, are
extended to the dates indicated, and the interest rates on such
notes are adjusted to the rates indicated, such maturity date
extensions and interest rate adjustments to be further evidenced by
such amendments, modifications or restatements of the notes and
related agreements as may be reasonably acceptable in form and
substance to Holdings and Franke:
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NOTE DATE PRINCIPAL CURRENT MATURITY DATES NEW MATURITY DATES CURRENT NEW INTEREST
AMOUNT INTEREST RATE
RATE
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9/20/94 $470,282 9/26/00 as to 50% 12/31/03 8.00% 6.51%
9/26/01 as to 50%
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11/15/95 $203,136 9/26/00 as to 50% 12/31/03 6.02% 6.51%
9/26/01 as to 50%
- --------------------------------------------------------------------------------------------------------------------
1/16/96 $ 40,000 9/26/00 as to 50% 12/31/03 6.02% 6.51%
9/26/01 as to 50%
- --------------------------------------------------------------------------------------------------------------------
1/31/96 $644,704 9/26/00 as to 50% 12/31/03 5.65% 6.51%
9/26/01 as to 50%
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4/9/97 $194,072 9/26/00 as to 50% 12/31/03 6.35% 6.51%
9/26/01 as to 50%
- --------------------------------------------------------------------------------------------------------------------
10/15/98 $549,540 10/15/03 as to 50% 12/31/03 as to 50% 5.06% 5.06%
10/15/04 as to 50% 10/15/04 as to 50% (unchanged)
- --------------------------------------------------------------------------------------------------------------------
(j) AMENDMENT OF SECTION 4.4(A). The phrase appearing in subclause (y) of
clause (ii) in the first sentence of Section 4.4(a) of the Amended Agreement
which currently reads "(y) 200% of the sum of Franke's Base Salary as in effect
on the date of termination plus a 50% target bonus" is hereby deleted and
replaced with a new phrase to read as follows:
"(y) 200% of the sum of Franke's Base Salary as in effect on the
date of termination plus a 60% target bonus or such higher target
bonus percentage as the Board may have established under Section 3.9
above"
(k) NEW SECTION 6.5. A new Section 6.5 is added to the Amended Agreement
to read in its entirety as follows:
"In addition to the piggyback and demand registration rights
provided by Sections 6.2 and 6.3 above, Holdings will use
Commercially Reasonable Efforts to maintain the effectiveness for
purposes of resale of Registrable Securities held by Franke of the
following currently effective registration statements: Form S-3 no.
333-02129 and Form S-8 no. 333-26935."
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2. MISCELLANEOUS PROVISIONS.
(a) ORIGINAL AGREEMENT. The Amended Agreement, as amended by this Second
Amendment, shall continue in full force and effect after the date hereof.
(b) WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in the Amended Agreement, as amended by this Second Amendment, have
been made or entered into by either party with respect to the subject matter of
this Second Amendment.
IN WITNESS WHEREOF, each of the parties has executed this Second
Amendment, in the case of the Employers by their duly authorized officers,
effective as of the day and year first above written.
AMERICA WEST HOLDINGS CORPORATION
By: /s/ Richard C. Kraemer
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Chairman of Compensation/Human
Resources Committee
AMERICA WEST AIRLINES, INC.
By: /s/ Richard C. Kraemer
--------------------------------------
Chairman of Compensation/Human
Resources Committee
THE LEISURE COMPANY
By: /s/ Richard C. Kraemer
--------------------------------------
Director
/s/ William A. Franke
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WILLIAM A. FRANKE
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