1
EXHIBIT 10.50
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated November 9, 1995,
by and between AMERICA WEST AIRLINES, INC., a Delaware corporation ("Company"),
and WILLIAM A. FRANKE ("Franke").
WHEREAS, Franke currently serves the Company as its Chairman of
the Board ("COB") and Chief Executive Officer ("CEO"); and
WHEREAS, the Company desires for Franke to continue serving (i)
as COB through the Expiration Date (defined below) and (ii) as CEO until the
earlier of the Expiration Date and the date on which another person is appointed
CEO and assumes the responsibilities of such office, and Franke is willing to
continue serving in such capacities, all on the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretations
1.1. Definitions
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the following terms shall
have the following respective meanings:
"AmWest Registration Agreement" shall have the meaning specified
in Section 6.1.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as from time to time amended, and any successor
statute thereto.
"Base Salary" shall have the meaning specified in Section 3.1.
"Board" shall mean the Board of Directors of the Company.
"CEO" shall have the meaning specified in the first recital of
this Agreement.
"Change in Control" shall occur if, after the Transition Date:
(i) the individuals who, as of the date hereof,
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
the Company's stockholders, was
2
approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board; or
(ii) any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended) acquires (directly or
indirectly) the beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of more than 50% of the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors ("Voting Power"); or
(iii) any Shares or other voting securities of the
Company shall be purchased pursuant to a tender or exchange
offer (other than a tender or exchange offer made by the
Company); or
(iv) the Company's stockholders shall approve a merger
or consolidation involving the Company other than (A) a merger
or consolidation in which the voting securities of the Company
outstanding immediately prior thereto will become (by operation
of law), or are to be converted into, voting securities of the
surviving corporation or its parent corporation immediately
after such merger or consolidation that are owned by the same
person or entity or persons or entities as immediately prior
thereto and possess at least 75% of the Voting Power held by the
voting securities of the surviving corporation or its parent
corporation, (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in
which no person acquires more than 50% of the Voting Power or
(C) a merger or consolidation in which the Company is the
surviving corporation and such transaction was determined not to
be a Change in Control, which transaction and determination was
approved by a majority of the Board in actions taken prior to,
and with respect to, such transaction; or
(v) the Company's stockholders shall approve a merger,
consolidation, reorganization, disposition of assets,
liquidation or other transaction (or series of related
transactions) in which the Company will not survive as a
publicly-owned corporation.
"COB" shall have the meaning specified in the first recital of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as in
effect from time to time.
"Confidential Information" shall have the meaning specified in
Section 5.1(a).
"Disability" shall mean a physical or mental condition of Franke
that, in the good faith judgment of not less than a majority of the
entire membership of the Board, based upon
-2-
3
certification by a licensed physician reasonably acceptable to Franke and
the Board, (i) prevents Franke from being able to perform the services
required under this Agreement, (ii) has continued for a period of at
least six months during any period of twelve consecutive months and (iii)
is expected to continue.
"Dispute" shall have the meaning specified in Article VII.
"Employment Period" shall mean that the period commencing on the
Transition Date and ending on the Expiration Date; provided, however,
that if either party gives a Notice of Termination pursuant to Section
4.1 or 4.2, then the Employment Period shall not extend beyond the
relevant Termination Date.
"Expiration Date" shall mean December 31, 1998.
"Good Reason" shall mean any of the following:
(1) without Franke's express written consent, a
material alteration during Phase I in the nature or status of
Franke's positions, functions, duties or responsibilities with
the Company applicable to Phase I, including any change which
would (i) alter Franke's reporting responsibilities, (ii) cause
Franke's position with the Company to become of less dignity or
importance than the positions and attributes of COB and CEO
and/or (iii) cause Franke not to have all of the powers,
functions, duties and responsibilities described in the first
sentence of Section 2.2(a);
(2) without Franke's express written consent, a
material alteration during Phase II in the nature or status of
Franke's position, functions, duties or responsibilities with
the Company applicable to Phase II, including any alteration
which would (i) change Franke's reporting responsibilities, (ii)
cause Franke's position with the Company to become of less
dignity or importance than the position and attributes of COB
and/or (iii) cause Franke not to have all of the powers,
functions, duties and responsibilities described in the first
and last sentences of Section 2.2(b); provided, however, that
each such alteration shall cease to be a Good Reason on the date
which is 90 days after the occurrence of such alteration unless,
prior to such date, Franke gives a Notice of Termination
pursuant to Section 4.1 on account of such alteration;
(3) without Franke's express written consent, the
failure of the Company to perform any of its obligations under
this Agreement in any material regard, but only if such failure
shall continue unremedied for more than 15 days after written
notice thereof is given by Franke to the Company;
(4) without Franke's express written consent, the
relocation of the principal executive offices of the Company
outside the greater Phoenix, Arizona metropolitan area or the
Company's requiring Franke to be based other than at such
principal
-3-
4
executive offices; provided, however, that such relocation shall
cease to be a Good Reason on the date which is 90 days after the
occurrence of such relocation unless, prior to such date, Franke
gives a Notice of Termination pursuant to Section 4.1 on account
of such relocation;
(5) the failure the Company at any time during
Phase I to elect or re-elect, or to appoint or re-appoint,
Franke to the offices of COB and CEO;
(6) the failure the Company at any time during
Phase II to elect or re-elect, or to appoint or re-appoint,
Franke to the office of COB;
(7) any purported termination by the Company of
Franke's employment not in accordance with the provisions of
this Agreement;
(8) the failure of the Company to obtain any
assumption agreement required by Section 9.5(a); or
(9) the failure of Franke to be elected or
appointed, or to be re-elected or re-appointed, as a director of
the Company at any time during the Employment Period.
"Holders" shall have the meaning specified in Section 6.1.
"Incentive Plan" shall mean the Company's 1994 Incentive Equity
Plan effective as of December 1, 1994.
"Market Value per Share" means, at any date, the closing price
per Share on that date (or, if there are no sales on that date, the last
preceding date on which there was sale) in the principal market in which
the Shares are traded.
"Misconduct" shall mean one or more of the following:
(i) the willful and continued failure by Franke to
perform his duties described in Section 2.2 (other than any such
failure resulting from Franke's incapacity due to physical or
mental illness) after written notice of such failure has been
given to Franke by the Company and Franke has had a reasonable
period to correct such failure;
(ii) the willful commission by Franke of acts that are
both dishonest and demonstrably injurious to the Company
(monetarily or otherwise) in any material respect, provided that
no act taken by Franke shall be deemed to constitute Misconduct
if such act was taken by Franke in good faith and in the
reasonable belief that such act was in the best interest of the
Company or in furtherance of Franke's duties and
responsibilities described in Section 2.2;
-4-
5
(iii) the conviction of Franke for a felony offense
involving moral turpitude;
or
(iv) a material breach by Franke of any of the
covenants set forth in this Agreement, but only if such breach
shall continue unremedied for more than 15 days after written
notice thereof is given to Franke by the Company.
"New Stock Grant" shall have the meaning specified in Section
3.2(a).
"New Stock Option" shall have the meaning specified in Section
3.3(b).
"Notice of Termination" shall mean a notice purporting to
terminate Franke's employment in accordance with Section 4.1 or 4.2,
which notice shall set forth in reasonable detail the reason for such
termination and the facts and circumstances claimed to provide a basis
for such termination.
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust and an unincorporated organization.
"Phase I" shall mean the period commencing on the Transition
Date and ending on the earlier of the Expiration Date and the date on
which Franke's successor as CEO assumes the responsibilities of such
office.
"Phase II" shall mean that portion of the Employment Period
following Phase I.
"Piggyback Registration Notice" shall have the meaning specified
in Section 6.2(a).
"Registrable Securities" shall have the meaning specified in
Section 6.1.
"Restricted Period" shall have the meaning specified in Section
5.2(a).
"Restricted Shares" shall have the meaning specified in Section
3.2(a).
"SEC" shall mean the Securities and Exchange Commission.
"Share" shall mean a share of the Class B common stock, $.01 par
value, of the Company.
"Termination Date" shall mean the termination date specified in
a Notice of Termination delivered in accordance with Article IV, provided
that in no event shall such termination date be less than 30 nor more
than 60 days after the date such Notice of Termination is given.
-5-
6
"Transfer Restriction" shall have the meaning specified in
Section 3.2(c).
"Transitition Date" shall mean January 1, 1996, being the date
from and after which Franke's employment by the Company will be governed
by this Agreement rather than the 1994 Agreement.
"1994 Agreement" shall mean the Employment Agreement between
Franke and the Company dated as of December 1, 1994.
1.2. Interpretations
(a) In this Agreement, unless a clear contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) reference to any Article or Section,
means such Article or Section hereof, (iii) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term, and (iv) where any provision of this
Agreement refers to action to be taken by either party, or which such party is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such party.
(b) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against either party solely because that party or its legal
representative drafted such provision.
ARTICLE II
Employment; Term; Positions and Duties
2.1. Employment; Term
The Company agrees to continue Franke's employment as COB and
CEO during Phase I and Franke agrees to remain employed by the Company in such
capacities during Phase I, all on the terms and conditions set forth in this
Agreement. The Company agrees to continue Franke's employment as COB during
Phase II and Franke agrees to remain employed by the Company in such capacity
during Phase II, all on the terms and conditions set forth in this Agreement.
2.2. Positions and Duties
(a) During Phase I, Franke shall serve as COB and CEO and
shall have and may exercise all of the powers, functions, duties and
responsibilities normally attributable to the positions
-6-
7
of COB and CEO, including (without limitation) such duties and responsibilities
as are set forth with respect to such offices in the Company's certificate of
incorporation and bylaws (as from time to time in effect). During Phase I,
Franke shall have such additional duties and responsibilities commensurate with
the offices of COB and CEO as from time to time may be reasonably assigned to
him by the Board.
(b) During Phase II, Franke shall serve as COB and shall
have and may exercise all of the powers, functions, duties and responsibilities
normally attributable to the position of COB, including (without limitation)
such duties and responsibilities as are set forth with respect to such office in
the Company's certificate of incorporation and bylaws (as from time to time in
effect). During Phase II, Franke shall have such additional duties and
responsibilities commensurate with the office of COB (but not the office of CEO)
as from time to time may be reasonably assigned to him by the Board. During
Phase II, the CEO shall report directly to Franke.
(c) While employed hereunder, Franke shall report directly
and exclusively to the Board and shall observe and comply with all lawful
policies, directions and instructions of the Board which are consistent with
paragraphs (a) and (b) above.
(d) The Company agrees to use its reasonable best efforts
to cause Franke to be elected or appointed, or re-elected or re-appointed, as
director of the Company at all times during the Employment Period.
(e) During Phase I, Franke agrees to devote a substantial
portion of his business time, attention, skill and efforts to the faithful and
efficient performance of his duties hereunder as COB and CEO. During Phase II,
Franke agrees to devote a reasonable portion (which need not constitute a
substantial portion) of his business time, attention, skill and efforts to the
faithful and efficient performance of his duties hereunder as COB.
(f) During Phase I, Franke shall not accept employment with
or for any Person other than the Company and, during Phase II, Franke shall not
accept employment with or for any Person in violation of Section 5.2; provided,
however, that Franke may engage in the following activities so long as they do
not interfere in any material respect with the performance of Franke's duties
and responsibilities hereunder: (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach on a part-time basis at educational institutions, (iii) manage his
personal investments and (iv) render consultation and financial advisory
services to third parties. The Company acknowledges that Franke is the principal
owner of Franke & Company, Inc. through which Franke owns and oversees equity
interests in several enterprises and provides consultation and financial
advisory services to third parties.
-7-
8
2.3. Place of Employment
Franke's place of employment hereunder shall be at the Company's
principal executive offices in the greater Phoenix, Arizona metropolitan area.
ARTICLE III
Compensation and Benefits
3.1. Base Salary
(a) For services rendered by Franke under this Agreement,
the Company shall pay to Franke an annual cash base salary ("Base Salary") in
the amount (i) $500,000 during Phase I and (ii) $100,00 during Phase II. The
Base Salary shall be payable semi-monthly as earned.
(b) The amount of the Base Salary may be increased at any
time as the Board may deem appropriate. If the Base Salary is increased as
aforesaid, it may not thereafter be decreased unless a proportionally similar
decrease is made to the base compensation of all other senior executives of the
Company; provided that in no event may the Base Salary be decreased below the
applicable amount specified in the first sentence of paragraph (a) above.
3.2. Stock Grant
(a) On the Transition Date, the Company shall issue and
deliver to Franke 108,000 Shares (the "Restricted Shares") as additional
compensation for services rendered under this Agreement. The grant of the
Restricted Shares in accordance with this paragraph (a) (the "New Stock Grant")
shall be in lieu of, and not in addition to, the stock grants described in
Section 3.2(a)(3) of the 1994 Agreement.
(b) Except as expressly set forth below in this Section 3.2,
(i) the New Stock Grant shall be irrevocable and unconditional and (ii) none of
the Restricted Shares shall be subject to forfeiture or surrender for any
reason.
(c) Franke will not sell, transfer or otherwise dispose of
any of the Restricted Shares other than by will or by laws of descent and
distribution; provided, however, that the foregoing restriction (the "Transfer
Restriction") shall lapse with respect to any Restricted Shares which are no
longer subject to forfeiture by Franke pursuant to paragraph (d) below and,
provided further, that the Transfer Restriction shall automatically lapse in
full (i) upon the occurrence of a Change in Control, (ii) in the event of
Franke's death or (iii) in the event Franke's employment is terminated by Franke
for Good Reason or on account of Disability or by the Company for any reason
other than Misconduct on account of the conviction of Franke for a felony.
(d) In the event Franke's employment is terminated by Franke
pursuant to Section 4.1 other than for Good Reason or by the Company pursuant to
Section 4.2 for Misconduct, then
-8-
9
Franke shall forfeit and be obligated, for no consideration, to surrender to the
Company that number of Restricted Shares determined by multiplying 108,000 by a
fraction the numerator of which shall be the number of whole calendar months
within the period beginning on the Termination Date and ending on the Expiration
Date and the denominator of which shall be 36.
(e) The New Stock Grant shall be made pursuant to the
Incentive Plan and shall become vested when the Transfer Restriction has lapsed
with respect thereto.
(f) Certificates evidencing the Restricted Shares will be
issued by the Company in Franke's name. The Company may cause such certificates
to bear a legend setting forth or incorporating the Transfer Restriction, and
the Company may cause such certificates to be delivered upon issuance to the
Secretary of the Company (or such other depositary as may be designated by the
committee which administers the Incentive Plan) as a depositary for safe-keeping
until the Transfer Restriction lapses with respect thereto or until forfeiture
occurs with respect thereto pursuant to paragraph (d) above. If such
certificates bear a legend setting forth or incorporating the Transfer
Restriction, then upon the lapse of the Transfer Restriction without forfeiture,
the Company will cause a new certificate or certificates to be issued in the
name of Franke without such legend. The Company may require Franke to execute
and deliver stock powers in the event of forfeiture.
(g) Franke shall be entitled to receive all dividends and
distributions in respect of the Restricted Shares (subject to applicable tax
withholding), to vote the Restricted Shares and to give consents, waivers and
ratifications with respect to the Restricted Shares; provided, however, that
distributions applicable to any Restricted Shares shall be held by the Company
until (i) the Transfer Restriction lapses with respect to such Shares, at which
time such distributions shall be paid to Franke or his designee without interest
or (ii) forfeiture occurs with respect to such Shares pursuant to paragraph (d)
above, at which time such distributions shall be forfeited.
(h) If requested by Franke at any time, the Company shall
promptly request, and diligently seek in good faith to obtain, a no action
letter from the SEC to the effect that the date of purchase, within the meaning
and for the purposes of the short-swing profit provisions of Section 16(b) of
the Securities Exchange Act of 1934 (as amended), of the Restricted Shares is
the grant date thereof.
(i) If requested by Franke, the Company will loan Franke up
to $860,000 solely for the purpose of enabling Franke to pay all or portion of
the taxes (Federal and state) attributable to the New Stock Grant. Such loan
shall be evidenced by, and subject to the terms and conditions of, a promissory
note duly executed by Franke and payable to the order of the Company (the
"Promissory Note"). The Promissory Note shall be in form and substance
reasonably satisfactory to the Company and shall be secured by a pledge
agreement (the "Pledge Agreement") initially covering that number of the
Restricted Shares determined by dividing 150% of the principal amount of the
Promissory Note by the Market Value per Share on the day prior to the date the
loan is funded. The Pledge Agreement shall be in form and substance (including
release of collateral provisions based on a collateral value to loan ratio of
1.5 to 1.0) reasonably satisfactory to the Company and
-9-
10
shall be accompanied by appropriate stock powers. The Promissory Note shall be
payable in two equal installments on September 26, 2000 and September 26, 2001
and shall bear interest, compounded monthly, at the applicable federal rate
determined in accordance with section 1274(d) of the Code. Franke shall not be
personally liable for payments due under the Promissory Note, it being expressly
understood and agreed that the sole recourse of the Company for satisfaction of
the Promissory Note shall be against the Restricted Shares pledged as collateral
for the Promissory Note under the Pledge Agreement.
3.3. Stock Options
(a) Pursuant to the 1994 Agreement, the Company has
previously granted to Franke certain options to purchase Shares, including the
following:
(i) two 50,000 Share options awarded pursuant to
Section 3.3(b) of the 1994 Agreement;
(ii) one 50,000 Share option awarded pursuant to
Section 3.3(c) of the 1994 Agreement; and
(iii) one 100,000 Share option awarded pursuant to
Section 3.3(c) of the 1994 Agreement.
It is agreed that the vesting requirements set forth with
respect to the foregoing options in the 1994 Agreement are hereby rescinded and
terminated so that such options shall be fully exercisable as of the date
hereof.
(b) Franke is hereby granted pursuant to the Incentive Plan an
option (the "New Stock Option") to purchase 150,000 Shares, with an exercise
price per Share equal to $16.50, being the Market Value per Share on the date
hereof. The New Stock Option shall become exercisable as to one-third of the
Shares covered thereby on the December 31 immediately preceding each anniversary
of the Transition Date, so that the New Stock Option will be exercisable in full
on December 31, 1998.
(c) Upon the exercise of the New Stock Option, Franke shall pay
to the Company an amount equal to the relevant exercise price, such amount to be
paid (i) in cash, (ii) by delivering to the Shares already owned by Franke which
have an aggregate Market Value per Share at the date of exercise equal to the
relevant exercise price, (iii) by directing the Company to sell a sufficient
number of Shares to be acquired on exercise of the New Stock Option through a
broker approved by the Company, in which event the proceeds of such sale shall
be applied by the Company to the payment of the relevant exercise price, with
any surplus then remaining to be paid to Franke or his designee, or (iv) by any
combination of the foregoing.
-10-
11
(d) Upon the occurrence of a Change in Control, the New
Stock Option shall become automatically vested in full and may be exercised at
any time thereafter; provided, however, in no event shall the New Stock Option
be exercisable after the tenth anniversary of the date of this Agreement.
(e) 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 the Company pursuant to Section 4.2 for Misconduct, the New
Stock Option, to the extent then vested, may be exercised by Franke at any time
within six months following the Termination Date, but not thereafter; provided,
however, in no event shall the New Stock Option be exercisable after the tenth
anniversary of the date of this Agreement. To the extent the New Stock Option is
not vested on such Termination Date, the New Stock Option (or the portion
thereof that is not vested on such Termination Date) shall automatically lapse
and be cancelled unexercised as of such Termination Date.
(f) The New Stock Option shall become automatically vested
in full on the date of Franke's death and may be exercised by the person to whom
Franke's rights shall pass by will or by the laws of descent and distribution at
any time within the one-year period beginning on the date of Franke's death, but
not thereafter, and in no event shall the New Stock Option be exercisable after
the tenth anniversary of the date of this Agreement.
(g) In the event Franke's employment is terminated by
reason of Disability, the New 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 shall the New Stock Option be exercisable after the tenth
anniversary of the date of this Agreement.
(h) Except as otherwise provided herein, the New Stock
Option may be exercised in whole or in part or in two or more successive parts.
(i) The New Stock Option shall not be transferrable by
Franke, otherwise than by will or by laws of descent and distribution. During
the lifetime of Franke, the New Stock Option may not be exercised by anyone
other than Franke.
(j) The New Stock Option may be exercised from time to time
by a notice in writing which identifies the New 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 the Company or addressed to the Secretary of the
Company at its principal corporate offices. The date of exercise of the New
Stock Option shall be the date the exercise notice is hand delivered or mailed
to the Secretary of the Company, whichever is applicable. An election to
exercise the New Stock Option shall be irrevocable.
(k) The New Stock Option is not intended to qualify as an
incentive stock option under Section 422 of the Code.
-11-
12
(l) The New Stock Option shall be in lieu of, and not in
addition to, the stock options to be granted to Franke on August 25, 1996
pursuant to Section 3.3(c) of the 1994 Agreement.
3.4. Life Insurance
During the Employment Period, the Company agrees to maintain, at
all times and without cost to Franke, a term life insurance policy on the life
of Franke in the amount of $2 million, the proceeds of which, in the event of
Franke's death, shall be payable to one or more beneficiaries designated by
Franke or, in the absence of any such designation, to his estate. Such policy
shall be issued by a solvent insurance company reasonably acceptable to Franke.
3.5. Annual Administrative Expense Allowance
(a) During the Employment Period, the Company shall
continue to pay to Franke or his designee, in accordance with past practices, an
annual allowance of $50,000 (subject to adjustment as provided in paragraph (b)
below) for administrative expenses incurred by Franke in connection with the
performance of his duties and responsibilities and the exercise of his powers
and authority under this Agreement. Each such annual allowance shall be paid to
Franke in twelve equal monthly installments. So long as the Company is not in
default under this Section 3.5, Franke shall be responsible for providing, in
accordance with past practices, at least one administrative assistant/secretary.
(b) The amount of the annual allowance referred to in
paragraph (a) above shall be adjusted upwards or downwards, as the case may be,
for each calendar year commencing on or after January 1, 1996 by the amount of
the change, if any, in the Cost of Living during the prior calendar year based
on the Consumer Price Index for Urban Consumers All Items - Less Shelter - Index
(1967=100) as published with respect to the Phoenix metropolitan area by the
Bureau of Labor Statistics for the United States Department of Labor; provided,
however, than in no event shall the amount of any such annual adjustment exceed
6%. If such Index is discontinued or revised in any material respect, the
parties shall mutually agree upon a substitute index which shall thereafter be
used in order to obtain substantially the same result as would have been
obtained had such Index had not been so discontinued or revised.
3.6. Business Expenses
The Company shall, in accordance with the rules and policies
that it may establish from time to time for senior executives, reimburse Franke
for business expenses reasonably incurred in the performance of Franke's duties
hereunder. It is understood that Franke is authorized to incur reasonable
business expenses for promoting the business and reputation of the Company,
including reasonable expenditures for travel, lodging, meals and client and/or
business associate entertainment. Requests for reimbursement for such expenses
must be accompanied by appropriate documentation.
-12-
13
3.7. Other Benefits
Franke shall be entitled to receive all fringe benefits and
other perquisites that may be offered by the Company to its senior executives as
a group or to any of its senior executives individually or to the members of the
Board, including, without limitation, (i) participation in the various employee
benefit plans or programs provided to senior executives of the Company in
general (including the Company's split-dollar life insurance and disability
insurance programs), subject to meeting the eligibility requirements with
respect to each of such benefit plans or programs, (ii) tax/financial planning
assistance, (iii) automobile allowances, (iv) club memberships, (v) on-line and
interline, positive space travel privileges and (vi) participation in the
Company's retiree medical insurance program, subject to meeting the eligibility
requirements of such program other than the requirement relating to five years
service with the Company, which requirement is hereby waived. However, nothing
in this Section 3.7 shall be deemed to prohibit the Company from making any
changes in any of the plans, programs or benefits described herein, provided the
change similarly affects all senior executives of the Company or members of the
Board, as the case may be, similarly situated. Notwithstanding the foregoing,
Franke shall not be entitled to participate in the Incentive Plan or any other
incentive plans offered to key employees of the Company, except as expressly
provided herein.
ARTICLE IV
Termination of Employment
4.1. Termination by Franke
Franke may, at any time prior to the Expiration Date, terminate
his employment hereunder for any reason by delivering a Notice of Termination to
the Board.
4.2. Termination by the Company
The Company may, at any time prior to the Expiration Date,
terminate Franke's employment hereunder for any reason by delivering a Notice of
Termination to Franke; provided, however, that in no event shall the Company be
entitled to terminate Franke's employment prior to the Expiration Date unless
the Board shall duly adopt, by the affirmative vote of at least a majority of
the entire membership of the Board, a resolution authorizing such termination
and stating that, in the opinion of the Board, sufficient reason exists
therefor. Nothing in this Agreement shall preclude the Company from replacing
Franke as CEO at any time after the Transition Date, and such replacement alone
shall not be considered a termination of Franke's employment hereunder.
-13-
14
4.3. Accrued Base Salary, Vacation Pay, etc.
(a) Promptly upon the termination of Franke's employment
hereunder for any reason, the Company shall pay to Franke a lump sum amount for
(i) any unpaid Base Salary earned hereunder prior to the termination date, (ii)
all unused vacation time accrued by Franke as of the termination date in
accordance with the Company's vacation policy for senior executives, (iii) all
unpaid benefits earned by Franke as of the termination date under any and all
incentive compensation plans or programs of the Company, (iv) all amounts owing
to Franke under Sections 3.5 and 3.6 and (v) any additional amounts or benefits
which may be required to be paid in a lump sum by applicable law.
(b) A termination of Franke's employment in accordance with
this Agreement shall not alter or impair (i) any of Franke's rights or benefits
under any issued and outstanding stock options except as provided with respect
to the New Stock Option in Section 3.3, (ii) any of Franke's rights or benefits
under the 1994 Agreement except as expressly provided in Section 9.8(a) or (iii)
any of Franke's rights or benefits, if any, under employee benefit plans or
programs maintained by the Company.
4.4. Other Termination Benefits and Privileges
The following provisions shall apply if Franke terminates his
employment hereunder for Good Reason or if the Company terminates Franke's
employment hereunder for any reason other than Misconduct or Disability:
(i) Severance Payment. The Company shall promptly pay to
Franke a severance payment (in cash or other immediately available funds)
in the amount of (A) $1.5 million, if the Termination Date is during
Phase I and (B) $1 million, if the Termination Date occurs during Phase
II; provided, however, that such severance payment shall be reduced to
the extent necessary so that no portion of such payment (or of any other
payment or benefit which constitutes a "parachute payment" within the
meaning of Section 280G of the Code and which Franke has received or is
entitled to receive shall be subject to the excise tax imposed by Section
4999 of the Code, but only if, by reason of such reduction, Franke's net
after tax benefit shall exceed the net after tax benefit if such
reduction were not made.
(ii) Medical Insurance. During the 24-month period following
the Termination Date, the Company, at its cost, shall maintain in full
force and effect for the continued benefit of Franke and Franke's
dependents all benefits available to Franke and Franke's dependents under
all medical plans and programs of the Company, provided that (a) Franke's
continued participation is possible under the terms and provisions of
such plans and programs and (b) Franke pays the regular employee premium,
if any, required by such plans and programs. In the event that
participation by Franke (or his dependents) in any such plan or program
after the Termination Date is barred pursuant to the terms thereof, or in
the event the Company shall terminate any such plan or program, the
Company shall obtain for Franke (and/or his dependents) comparable
coverage under individual policies.
-14-
15
(iii) Life Insurance. During the 12-month period following the
Termination Date, the Company, at its cost, shall continue to provide
Franke all life insurance coverages (and in the same amounts) provided to
him by the Company immediately prior to the date on which the relevant
Notice of Termination is given in accordance with this Article IV.
(iv) Travel Privileges. The Company shall provide Franke (and
his wife and dependents) lifetime on-line and interline, positive space
travel privileges in accordance with the terms of the Company's
non-revenue travel policy as in effect on the date hereof; provided,
however, that the travel privileges to be provided to Franke (and his
wife and dependents) under this clause (iv) shall be at least as
favorable to Franke (and his wife and dependents) as the travel
priviledges generally provided by the Company to its senior executives
from time to time.
4.5. Company to Pay Benefits During Pendency of Dispute
Either party may, within 10 days after its receipt of a Notice
of Termination given by the other party, provide notice to the other party that
a dispute exists concerning the termination, in which event such dispute shall
be resolved in accordance with Article VII. Notwithstanding the pendency of any
such dispute and notwithstanding any provision herein to the contrary, the
Company will (i) continue to pay Franke the Base Salary in effect when the
notice giving rise to the dispute was given, (ii) make the New Stock Grant in
accordance with Section 3.2 and (iii) continue Franke as a participant in all
compensation and benefit plans in which Franke was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved or,
with respect to a Notice of Termination given by Franke, the date of termination
specified in such notice, if earlier, but, in each case, not past the Expiration
Date. If (i) the Company gives a Notice of Termination to Franke, (ii) Franke
disputes the termination as contemplated by this Section 4.5 and (iii) such
dispute is finally resolved in favor of the Company in accordance with Article
VII, then Franke shall be required to refund to the Company any amounts paid to
Franke under this Section 4.5 but only if, and then only to the extent, Franke
is not otherwise entitled to receive such amounts under this Agreement.
-15-
16
ARTICLE V
Confidential Information and Non-Competition
5.1. Confidential Information
(a) Franke recognizes that the services to be performed by
him hereunder are special, unique and extraordinary and that, by reason of his
employment with the Company, he may acquire Confidential Information (defined
below) concerning the Company, the use or disclosure of which would cause the
Company substantial loss and damages which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, Franke agrees that he
will not (directly or indirectly) at any time, whether during or after his
employment hereunder, disclose any such Confidential Information to any Person
except (i) in the performance of his obligations to the Company hereunder, (ii)
as required by applicable law, (iii) in connection with the enforcement of his
rights under this Agreement, the 1994 Agreement or any other agreement, (iv) in
connection with any disagreement, dispute or litigation (pending or threatened)
between Franke and the Company or (v) with the prior written consent of the
Board. As used herein, "Confidential Information" includes information with
respect to the Company's services, facilities and methods, research and
development, trade secrets and other intellectual property, systems, patents and
patent applications, procedures, manuals, confidential reports, financial
information, business plans, prospects or opportunities; provided, however, that
such term shall not include any information that (x) is or becomes generally
known or available other than as a result of a disclosure by Franke or (y) is or
becomes known or available to Franke on a nonconfidential basis from a source
(other than the Company) which, to Franke's knowledge, is not prohibited from
disclosing such information to Franke by a legal, contractual, fiduciary or
other obligation to the Company.
(b) Franke confirms that all Confidential Information is
the exclusive property of the Company. All business records, papers and
documents kept or made by Franke while employed by the Company relating to the
business of the Company shall be and remain the property of the Company at all
times. Upon the request of the Company at any time, Franke shall promptly
deliver to the Company, and shall retain no copies of, any written materials,
records and documents made by Franke or coming into his possession while
employed by the Company concerning the business or affairs of the Company other
than personal materials, records and documents (including notes and
correspondence) of Franke not containing proprietary information relating to
such business or affairs. Notwithstanding the foregoing, Franke shall be
permitted to retain copies of, or have access to, all such materials, records
and documents relating to any disagreement, dispute or litigation (pending or
threatened) between Franke and the Company.
5.2. Non-Competition
(a) While employed hereunder and for a period of 18 months
thereafter (the "Restricted Period"), Franke shall not, unless he receives the
prior written consent of the Board, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any Person which competes with the Company in the United States
other than Alaska Airlines, American Airlines, Continental Airlines, Delta
Airlines, Northwest Airlines, TWA, United
-16-
17
Airlines, USAir and ValueJet; provided, however, that the foregoing restriction
shall not apply at any time if Franke's employment is terminated by Employee for
Good Reason or by the Company for any reason other than Misconduct.
(b) Franke has carefully read and considered the provisions
of this Section 5.2 and, having done so, agrees that the restrictions set forth
in this Section 5.2 (including the Restricted Period, scope of activity to be
restrained and the geographical scope) are fair and reasonable and are
reasonably required for the protection of the interests of the Company, its
officers, directors, employees, creditors and shareholders. Franke understands
that the restrictions contained in this Section 5.2 may limit his ability to
engage in a business similar to the Company's business, but acknowledges that he
will receive sufficiently high remuneration and other benefits from the Company
hereunder to justify such restrictions.
(c) During the Restricted Period, Franke shall not, whether
for his own account or for the account of any other Person (excluding the
Company), intentionally (i) solicit, endeavor to entice or induce any employee
of the Company to terminate his employment with the Company or accept employment
with anyone else or (ii) interfere in a similar manner with the business of the
Company.
(d) In the event that any provision of this Section 5.2
relating to the Restricted Period and/or the areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, the Restricted Period
and/or areas of restriction deemed reasonable and enforceable by the court shall
become and thereafter be the maximum time period and/or areas.
5.3. Stock Ownership
Nothing in this Agreement shall prohibit Franke from acquiring
or holding any issue of stock or securities of any Person that has any
securities registered under Section 12 of the Exchange Act, listed on a national
securities exchange or quoted on the automated quotation system of the National
Association of Securities Dealers, Inc. so long as (i) Franke is not deemed to
be an "affiliate" of such Person as such term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act of 1933, as amended, and (ii) Franke and
members of his immediate family do not own or hold more than 5% of any voting
securities of any such Person.
5.4. Injunctive Relief
Franke acknowledges that a breach of any of the covenants
contained in this Article V may result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach, any payments remaining under the terms of this Agreement shall
cease and the Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining Franke from engaging in
activities prohibited by this Article V or such other
-17-
18
relief as may required to specifically enforce any of the covenants contained in
this Article V. Franke agrees to and hereby does submit to in personam
jurisdiction before each and every such court for that purpose.
ARTICLE VI
Piggyback Registration Rights
6.1. Definitions
Capitalized terms used herein and in Exhibit A hereto that are
not otherwise defined herein shall have the meanings ascribed to them in that
certain Registration Rights Agreement dated August 25, 1994 among the Company,
AmWest Partners, L.P., and others therein named ("AmWest Registration Rights
Agreement"), to which agreement reference is made for such definitions and for
all purposes. In addition, the following terms, as used in this Article VI, have
the following meanings:
"Holders" shall mean (i) Franke, his heirs and personal
representatives and (ii) any direct or indirect transferee of Registrable
Securities.
"Registrable Securities" means (1) the 125,000 Shares heretofore
granted to Franke as a bonus for his efforts relating to the successful
reorganization of the Company under the Bankruptcy Code, (2) all equity
securities of the Company acquired by Franke pursuant to the 1994
Agreement and (3) all equity securities of the Company acquired by Franke
pursuant to this Agreement, including, without limitation, (a) the New
Stock Grant, (b) the New Stock Option, (c) any Shares issued on exercise
of the New Stock Option and (d) any securities issued or issuable with
respect to any such securities by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to
the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with the plan of distribution set forth in such registration
statement, (ii) such securities shall have been distributed in accordance
with Rule 144, (iii) the Company has caused to be delivered an opinion of
counsel in accordance with Section 6.2(c) that such securities are
distributable in accordance with Rule 144 or (iv) such securities shall
have been otherwise transferred, new certificates therefor not bearing a
legend restricting further transfer shall have been delivered in exchange
therefor by the Company and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act
or any similar state law then in force.
-18-
19
6.2. Piggybank Registration
(a) Right to Include Registrable Securities. If the Company
at any time proposes to register any of its equity securities under the
Securities Act (other than by a registration (i) on Form S-4 or Form S-8, or any
successor or similar form then in effect or (ii) pursuant to Section 2.1 of the
AmWest Registration Rights Agreement) in a form and in a manner that would
permit registration of the Registrable Securities, whether or not for sale for
its own account, it will give prompt (but in no event less than 30 days prior to
the proposed date of filing the registration statement relating to such
registration) notice to all Holders of Registrable Securities of the Company's
intention to do so and of such Holders' rights under this Section 6.2. Upon the
request of any such Holder made within 20 days after the receipt by such Holder
of any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method or methods of
disposition thereof) (the "Piggyback Registration Notice"), the Company will use
Commercially Reasonable Efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered, provided that if,
at any time after giving notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such equity securities, the Company
may, at its election, give notice of such determination to each such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay all Registration Expenses in
connection therewith) and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other equity securities.
(b) Priority in Piggyback Registration. If (i) a
registration pursuant to this Section 6.2 involves an underwritten offering of
the securities being registered, whether or not for sale for the account of the
Company, to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction and (ii) the managing underwriter of such underwritten
offering shall inform the Company and the Holders requesting such registration
by letter of its belief that the amount of securities requested to be included
in such registration exceeds the amount which can be sold in (or during the time
of) such offering within a price range acceptable to the Company, then the
Company will include in such registration such amount of securities which the
Company is so advised can be sold in (or during the time of) such offering as
follows: first, all securities proposed by the Company to be sold for its own
account; second, such securities of the Company requested to be included in such
registration pursuant to the terms of the AmWest Registration Rights Agreement
and the GPA Registration Rights Agreement; third, such Registrable Securities
requested to be included in such registration by all Holders pro rata on the
basis of the amount of such securities so proposed to be sold and so requested
to be included by such Holders; and fourth, all other securities of the Company
requested to be included in such registration pro rata on the basis of the
amount of such securities so proposed to be sold and so requested to be
included.
-19-
20
(c) The Holders shall be entitled to exercise their
registration rights pursuant to this Section 6.2 at any time or times until all
of the Registrable Securities have been sold pursuant to an effective
registration statement under the Securities Act, or until the Company shall have
obtained an opinion of counsel reasonably acceptable to the Company and Holders
that such Registrable Securities may be sold without registration pursuant to
available exemptions under Rule 144 without limitation on amount.
6.3. Registration Procedures
Each registration pursuant to Section 6.2 shall be effected in
accordance with the procedures, and subject to the indemnification and other
provisions, set forth in Exhibit A hereto.
ARTICLE VII
Dispute Resolution
(a) In the event a dispute shall arise between the parties
as to whether the provisions of this Agreement have been complied with (a
"Dispute"), the parties agree to resolve such Dispute in accordance with the
following procedure:
(1) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) by one or more individuals with
decision-making authority regarding the Dispute, to attempt in good faith
to negotiate a resolution of the Dispute.
(2) If, within 10 days after such meeting, the parties have
not succeeded in negotiating a resolution of the Dispute, the parties
agree to submit the Dispute to mediation in accordance with the
Commercial Mediation Rules of the American Arbitration Association.
(3) The parties will jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the American Arbitration
Association if they have been unable to agree upon such appointment
within 10 days following the 10-day period referred to in clause (2)
above.
(4) Upon appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(5) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with the
Expedited Procedures of the Commercial Arbitration Rules of the American
Arbitration Association.
-20-
21
(6) The fees and expenses of the mediator/arbitrators shall
be borne solely by the non-prevailing party or, in the event there is no
clear prevailing party, as the mediator/arbitrators deem appropriate.
(7) If any dispute shall arise under this Agreement
involving termination of Franke's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse Franke, on
a current basis, for all legal fees and expenses, if any, incurred by
Franke in connection with such dispute, together with interest thereon at
the rate of 8% per annum, such interest to accrue from the date the
Company receives Franke's statement for such fees and expenses through
the date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Article VII includes a
finding denying, in all material respects, Franke's claims in such
dispute, Franke shall be required to reimburse the Company, over a period
not to exceed 12 months from the date of such resolution, for all sums
advanced to Franke with respect to such dispute pursuant to this
paragraph (7).
(8) Except as provided above, each party shall pay its own
costs and expenses (including, without limitation, attorneys' fees)
relating to any mediation/arbitration proceeding conducted under this
Article VII.
(9) All mediation/arbitration conferences and hearings will
be held in Phoenix, Arizona.
(b) In the event there is any disputed question of law
involved in any arbitration proceeding, such as the proper legal interpretation
of any provision of this Agreement, the arbitrators shall make separate and
distinct findings of all facts material to the disputed question of law to be
decided and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts may
be submitted by either party to a court of law for final determination by
initiation of a civil action in the manner provided by law. Such action, to be
valid, must be commenced within 20 days after receipt of the arbitrators'
decision. If no such civil action is commenced within such 20-day period, the
legal conclusion reached by the arbitrators shall be conclusive and binding on
the parties. Any such civil action shall be submitted, heard and determined
solely on the basis of the facts found by the arbitrators. Neither of the
parties shall, or shall be entitled to, submit any additional or different facts
for consideration by the court. In the event any civil action is commenced under
this paragraph (b), the party who prevails or substantially prevails (as
determined by the court) in such civil action shall be entitled to recover from
the other party all costs, expenses and reasonable attorneys' fees incurred in
connection with such action and on appeal.
(c) Except as limited by paragraph (b) above, the parties
agree that judgment upon the award rendered by the arbitrators may be entered in
any court of competent jurisdiction. In the event legal proceedings are
commenced to enforce the rights awarded in an arbitration proceeding,
-21-
22
the party who prevails or substantially prevails in such legal proceeding shall
be entitled to recover from the other party all costs, expenses and reasonable
attorneys' fees incurred in connection with such legal proceeding and on appeal.
(d) Except as provided above, (i) no legal action may be
brought by either party with respect to any Dispute and (ii) all Disputes shall
be determined only in accordance with the procedures set forth above.
ARTICLE VIII
Antidilution Provisions and Reservation of Shares
8.1. Antidilution
(a) In the event of any change after the date hereof in the
number of issued shares of common stock (or any class thereof) of the Company by
reason of any stock dividend, split-up, recapitalization, merger, combination,
conversion, exchange of shares or other change in the corporate or capital
structure of the Company, then there shall be appropriate and equitable
adjustments made (with adjustments being cumulative if more than one of such
events shall have occurred) in the number and kind of shares of stock or other
securities of the Company (i) thereafter issued to Franke pursuant to Section
3.2(a) and (ii) thereafter issued upon exercise of the New Stock Option.
Whenever an adjustment is made as required or permitted by the provisions of
this paragraph (a), the Company shall promptly deliver to Franke written notice
thereof setting forth a brief statement of the facts requiring such adjustment
and the computation thereof.
(b) In case of any liquidation, dissolution or winding up
of the affairs of the Company, the Company shall make prompt, proportionate,
equitable, lawful and adequate provision as part of the terms of such
dissolution, liquidation or winding up such that Franke may thereafter receive,
in lieu of each Share which Franke would have been entitled to receive under
Section 3.2(a) or upon exercise of the New Stock Option, the same kind and
amount of any stock, securities or assets as may be issuable, distributable or
payable on any such dissolution, liquidation or winding up with respect to each
outstanding Share.
8.2. Covenant to Reserve Shares for Issuance
The Company covenants that it will at all times reserve and keep
available (free of preemptive rights) out of its authorized and unissued Shares,
solely for the purpose of issuance pursuant to Section 3.2 or upon exercise of
the New Stock Option, the full number of Shares, if any, then issuable under
Section 3.2 or upon exercise of the New Stock Option. The Company further
covenants that all Shares which shall be so issuable shall be duly and validly
issued and fully paid and non-assessable.
-22-
23
ARTICLE IX
Miscellaneous
9.1. No Mitigation
The provisions of this Agreement are not intended to, nor shall
they be construed to, require that Franke mitigate the amount of any payment
provided for in this Agreement by seeking or accepting other employment, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by Franke as the result of employment by another employer or
otherwise. Without limitation of the foregoing, the Company's obligations to
make the payments to Franke required under this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against Franke.
9.2. Assignability
The obligations of Franke hereunder are personal and may not be
assigned or delegated by Franke or transferred in any manner whatsoever, nor are
such obligations subject to involuntary alienation, assignment or transfer. The
Company shall have the right to assign this Agreement and to delegate all
rights, duties and obligations hereunder as provided in Section 9.5.
9.3. Notices
All notices and all other communications provided for in the
Agreement shall be in writing and addressed (i) if to the Company, at its
principal office address or such other address as it may have designated by
written notice to Franke for purposes hereof, directed to the attention of the
Board with a copy to the Secretary of the Company and (ii) if to Franke, at his
residence address on the records of the Company or to such other address as he
may have designated to the Company in writing for purposes hereof. Each such
notice or other communication shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, except that any notice of change of address shall be effective
only upon receipt.
9.4. Severability
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
-23-
24
9.5. Successors; Binding Agreement
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably acceptable to Franke, to expressly assume 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. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement. As
used herein, the term "Company" shall include any successor to its business
and/or assets as aforesaid which executes and delivers the Agreement provided
for in this Section 9.5 or which otherwise becomes bound by all terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Franke hereunder shall
inure to the benefit of and be enforceable by Franke's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Franke should die while any amounts would be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Franke's devisee, legatee, or other designee or, if there be no such designee,
to Franke's estate.
9.6. Tax Withholdings
The Company shall withhold from all payments hereunder all
applicable taxes (federal, state or other) which it is required to withhold
therefrom unless Franke has otherwise paid to the Company the amount of such
taxes.
9.7. Amendments and Waivers
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Franke and such member of the Board as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
9.8. Entire Agreement; Termination of Employment under 1994 Agreement
(a) The parties acknowledge, confirm and agree that
Franke's employment under the 1994 Agreement shall automatically terminate on
December 31, 1995 and shall not be subject to extension as contemplated by
Section 2.3 of the 1994 Agreement.
(b) This Agreement is an integration of the parties
agreement and no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
-24-
25
9.9. Governing Law
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ARIZONA WITHOUT
REGARD TO ITS CONFLICT OF LAWS PROVISION.
9.10. Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
9.11. Payment of Certain Taxes
The Company will from time to time promptly pay all transfer,
stamp or similar taxes that may be imposed in respect of the initial issuance of
any Shares hereunder, but the Company shall not be obligated to pay any such
taxes in respect of any transfer of Shares effected by Franke.
9.12. Indemnification
Without Franke's prior written consent, the Company will not
amend, modify or repeal any provision of its certificate of incorporation or
bylaws if such amendment, modification or repeal would materially adversely
affect Franke's rights to indemnification by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
AMERICA WEST AIRLINES, INC.
By:
--------------------------------------
Chairman of Compensation/Human
Resources Committee
-----------------------------------------
William A. Franke
-25-