Skip to main content
Find a Lawyer

Employment Agreement - United Air Lines Inc. and John A. Edwardson

                      EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the 'Agreement') is made and 
entered into as of September 18, 1998 between United Air
Lines, Inc. ('United') and UAL Corporation ('UAL', UA and
UAL sometimes collectively referred to as 'United') and John
A. Edwardson residing at 747 Sheridan Road, Wilmette,
Illinois 60091 (sometimes referred to as 'Executive').

     WHEREAS, Executive has served and is presently serving
as President and Chief Operating Officer (hereinafter
referred to as 'Executive Position'); and as a Director of
UAL, a Director of UA and holds various other positions and
directorships with subsidiaries and affiliates of UA or UAL
(hereinafter collectively referred to as 'Executive Positions');

     WHEREAS, Executive is desirous of pursuing interests
outside of United; and

     WHEREAS, United wishes to facilitate Executive's
desires as stated above but also to retain Executive's
services on the basis described herein; and

     WHEREAS, Executive has agreed in this Agreement to
provide such services and to release United from any
liability arising out of his hire and employment with United
and his resignation from his Executive Positions;

     NOW, THEREFORE, it is agreed by and between United and
Executive as follows:

     1.  Resignation; Continued Employment:  Executive hereby
resigns from his Executive Positions all effective September
18, 1998 and this Agreement otherwise shall become effective
as of September 25, 1998 (the 'Effective Date').  Thereafter, 
Executive will be employed by United, and he will perform 
services for United by being 'on call', including testifying 
on behalf of United, and such assignments consistent with 
Executive's experience as may be reasonably requested by 
United's Chairman and reasonably acceptable to Executive.

     2.  Time Period of Employment:  United agrees to
employ Executive and Executive agrees to be employed by
United on the basis stated in Paragraph 1 from the Effective
Date  through September 24, 2001, subject to sooner
termination pursuant to Paragraph 5 (such period, as it may
be shortened pursuant to Paragraph 5, being herein called
the 'Term').

     3.  Compensation:
         A.  United will pay Executive a salary of
         $41,348.67 per month beginning with the Effective
         Date and continuing through December 31, 1998.
         B.  United will pay Executive a salary of
         $2,500.00 per month beginning January 1, 1999 and
         continuing for the Term.
         C.  On January 4, 1999 United will pay Executive
         a lump sum severance payment in the amount of
         $2,501,816.13.  Such lump sum payment will not be
         considered earnings for any employee benefit plan
         except as specified in Paragraph 4.H.
         D.  The salary payments provided for in
         Paragraphs 3.A and 3.B will be made on the same
         schedule as actively employed officers of United
         from time to time, currently the 15th and last day
         of each month.  Any amounts will be prorated for
         any partial month.  All payments, including the
         lump sum payment in paragraph 3.C., will be
         subject to withholding for taxes and other
         purposes as required by applicable law.  During
         the Term, Executive will not be entitled to any
         increase nor subject to any decrease in such payments.

     4.  Benefits:  Notwithstanding what may be provided to
other active employees of United from time to time,
Executive shall be entitled to the following benefits, and
only the following benefits, during the Term as follows:

     A.  Free and Reduced Rate Transportation:  United
         shall provide to Executive and his eligibles free
         and reduced rate transportation of the type
         granted to active officers in accordance with
         company regulations as revised from time to time.
         At the regular September, 1998 UAL board of
         directors meeting, United shall also seek the
         designation Director Emeritus for Executive from
         the UAL board of directors, to confer upon
         Executive the travel and cargo privileges accorded
         a Director Emeritus.  If Executive is designated
         Director Emeritus at any time during the Term,
         Executive and his eligibles will thereafter no
         longer be entitled to the free and reduced rate
         transportation granted to active officers.  United
         shall have no responsibility to Executive with
         respect to transportation after the Term if the
         UAL board of directors does not approve such
     B.  United Air Lines, Inc. Management and Salaried
         Employees' Retirement Plan:
         Executive's participation in (i) the United Air Lines,
         Inc. Management and Salaried Employees' Retirement Plan
         (the 'Qualified Retirement Plan') and (ii) the United
         Air Lines, Inc. Supplemental Retirement Plan (the
         'Supplemental Plan') shall be in accordance with their
         terms (collectively, the 'Retirement Plan') and the
         provisions of this Agreement.
         For purposes of determining the amount of the
         Executive's pension benefit under the Retirement Plan,
         United agrees that (a) Executive's Final Average
         Earnings shall be $1,029,643.32 ($85,803.61 when
         expressed as a monthly amount), which takes into
         account the payments to be made to the Executive under
         Paragraph 3 above, (b) Executive's years of
         participation credit shall be 16.167, (c) the service
         requirement for retirement is waived, and (d) no
         decrement based upon the Executive's age shall be
         imposed.  Notwithstanding Executive's continued
         employment during the Term or otherwise, in no event
         shall the Executive's Final Average Earnings or years
         of participation credit exceed the amounts set forth
         above.  Based on the foregoing, Executive is entitled
         to a monthly single life annuity of $21,827.13 (.016
         times 16.167 times $85,803.61 less $367.86 for the cost
         of the pre-retirement survivor benefit), commencing on
         the first day of the month following the Executive's
         attainment of age 55.  Except as provided in the last
         sentence of the following paragraph, to the extent the
         retirement benefit cannot be paid from the Qualified
         Retirement Plan due to IRS limitations, the payment
         shall be paid from the Supplemental Plan.
         Executive may elect in writing prior to December 31,
         1998 to receive a lump sum payment in lieu of the
         portion of such benefit payable under the Supplemental
         Plan.  The lump sum payment will be equal to the
         actuarial equivalent lump sum value of the $21,827.13
         monthly life annuity described above, reduced by the
         actuarial lump sum value of the portion of such annuity
         expected to be paid under the Qualified Retirement
         Plan.  The actuarial lump sum values shall be
         calculated as of January 1, 1999, using the following
         assumptions:  the GAM-83 unisex mortality table, the
         current FAS-87 discount interest rate of 7% and by
         increasing Executive's attained age as of January 1,
         1999 by three (3) years.  The lump sum payment shall be
         made to the Executive on January 4, 1999.  In the event
         Executive has elected to receive the lump sum payment
         and he dies prior to the payment thereof, then the lump
         sum amount shall be paid to the Executive's surviving
         spouse on January 4, 1999, as if the Executive had
         survived to that day (or, if his spouse does not
         survive to January 4, 1999, then his estate).  Upon
         receipt of the lump sum payment, neither Executive nor
         Executive's spouse or estate shall be entitled to any
         additional payments under the Supplemental Plan and the
         only benefits payable shall be those under the
         Qualified Retirement Plan in accordance with its terms.
         United agrees to provide Executive with a calculation
         of the estimated amount of the lump sum payment within
         twelve (12) business days of the date of this
         Agreement.  Executive acknowledges that the benefits
         payable hereunder will be subject to withholding for
         taxes and will not be considered earnings for the
         purposes of any employee benefit plan.  Executive
         further acknowledges that he shall not be entitled to
         any additional participation credit under the
         Retirement Plan with respect to employment during the
         Term hereof.
     C.  Management Medical/Dental:  Executive and his
         eligible dependents shall continue to be covered
         by the Management Medical/Dental Plan in the same
         manner as other active employees.
     D.  Group Life Insurance:  Executive shall continue to
         be covered by Group Life Insurance including
         Contributory Life Insurance (if so covered), on
         the same basis as other active employees, provided
         the appropriate payroll deductions are authorized
         and in accordance with the terms of the policies.
     E.  Officer's Accidental Death and Dismemberment
         Insurance/Split Dollar Life Insurance:
         Executive's Officer's Accidental Death and
         Dismemberment coverage of $250,000 will continue
         until the termination of this Agreement as
         provided in Paragraph 5 herein.  Executive will
         have the option of converting up to $100,000 of
         this coverage to a private policy within 31 days
         of termination, if Executive so chooses.
         Executive will continue to be covered by the
         Officer's Split Dollar Life Insurance until
         termination of this Agreement.  The terms of
         Executive's coverage and option for continuation
         of the Officer's Split Dollar Life Insurance after
         termination of this Agreement will be explained in
         a separate letter upon termination of this Agreement.
     F.  Disability Income Benefits:  Executive will
         continue to be covered by the Long Term Disability
         plan and provided he is qualified under the terms
         of the Plan, and provided he makes such payments
         as may be required by the Plan Administrator, will
         be eligible for any disability income benefits
         from company disability insurance plans.
     G.  Stock:  Stock grants or awards made to Executive under the
         UAL, Inc. 1981 Incentive Stock Plan (the 'Plan') and the 1988
         Restricted Stock Plan ('1988 Plan') before the Effective Date
         will immediately vest upon the Effective Date.  Executive's
         resignation of his employment under Paragraph 1 is an early
         retirement under the Supplemental Plan within the meaning of the
         Plan and the Option Agreements.  Accordingly, Executive shall
         have until the expiration date as originally fixed to exercise
         each such option.  Executive will not be eligible for any grants
         made under the Plan or the 1988 Plan after the Effective Date.
     H.  Employee Stock Ownership Plan:  Executive will
         continue to be eligible to participate in the
         current ESOP and to receive future stock
         allocations in accordance with the terms of the
         plan. For the purpose of determining the amount of
         stock to be allocated to Executive's ESOP account
         for the 1999 and 2000 plan years, the compensation
         described in Paragraph 3.B will be excluded and
         the lump sum payment provided in Paragraph 3.C.
         will be deemed to have been paid as follows:
         Executive's monthly salary will be deemed to be
         $41,348.67 and a bonus deemed to have been
         received as follows - $362,596 paid March, 1999
         and $421,756 paid March, 2000.  Such stock
         allocation will be made to the Supplemental ESOP.
     I.  Financial Planning Services:  Executive will be
         eligible to utilize financial planning services on
         the same basis as an actively employed senior
         officer of United as of the Effective Date.
         Annual allocations of $4,000 each will be made in
         the years 1999, 2000 and 2001.
     J.  Club Fees:  United will continue to reimburse
         Executive for club membership fees for each year
         during the Term up to the annual amount United
         reimburses Executive as of the Effective Date.
     K.  Other Fees:  United will reimburse Executive for
         expenses for office space and secretarial support
         for up to one year following the Effective Date of
         this Agreement.  United will also reimburse
         Executive for legal, accounting and advisor fees
         and expenses reasonably incurred by the Executive
         in connection with the negotiation and preparation
         of this Agreement and media communications
         concerning Executive's resignation of his
         Executive Positions.  The maximum amount United
         will reimburse for all expenses described in this
         Paragraph 4.K. is $75,000.
     L.  Automobile: Executive will dispose of the vehicle
         United currently leases for Executive in
         accordance with directions provided by United.
         United will pay to Executive an annual car
         allowance of $7,500.  Such allowance shall be
         payable no later than January 15 of each year and
         will be subject to withholding for taxes and other
         purposes as required by applicable law.
     M.  Other Benefits:  Executive will continue to be
         eligible to participate in the stock purchase
         plan, 401(k) plan, Flexible Spending Account, and
         be eligible for payroll savings bonds on the same
         basis as other active employees.  Executive will
         also be eligible to utilize the Credit Union
         subject to its rules.
     N.  Vacation and Holidays:  Executive will be paid for
         any accrued but unused vacation time accrued as of
         the Effective Date.  Such payment will be made
         within 30 days of the Effective Date of this Agreement.
     O.  Each of the benefits enumerated in Paragraph 4 is
         subject to the practices, rules, and regulations
         of United, as in effect from time to time.

     5.   Termination of Employment Under Agreement:
          A.  Non-Election of Executive:  Executive's employment
under this Agreement shall terminate and Executive will no
longer have the status of an active employee of United and,
except as specifically provided in this Agreement, will no
longer be entitled to any of the benefits of this Agreement
(including the entitlement to the payment and benefits
described in Paragraph 4, other than those required by law
or otherwise vested), on the happening of the earliest of
the following events:
                   (i)  Executive's death;
                  (ii)  11:59 p.m. on September 24, 2001.
          Notwithstanding such termination, Executive shall
continue to be bound by the provisions of Paragraphs 6
through 20 of this Agreement.

          B.  Election of Executive:  During the Term, if
Executive elects to terminate his employment for any reason,
Executive will receive a one time lump sum payment (subject
to withholding for taxes and other purposes as required by
applicable laws) in an amount equal to the sum of the
remaining payments payable under Paragraph 3 of this
Agreement between the effective date of Executive's election
to terminate his employment under this Agreement and
September 24, 2001.  Such payment will be made promptly
following Executive's termination of employment, but not
earlier than January 1, 1999.  Before Executive's election
to terminate under this paragraph can become effective,
Executive must have provided United seven (7) days' written
notice of his election by registered mail addressed to the
Chairman of United at its principal World Headquarters
offices.  Executive's termination of employment will be as
of the seventh (7th) day after receipt by United of such
notice, at which time he will no longer have the status of
an active employee of United (including the entitlement to
benefits described in Paragraph 4, other than those required
by law or otherwise vested).

          6.   [Reserved]

          7.  Assent and Release:  A.  In consideration for the
payments and benefits provided in this Agreement, Executive
hereby voluntarily, knowingly, willingly, irrevocably, and
unconditionally releases UA and UAL together with their
respective parents, subsidiaries and affiliates, and each of
their respective officers, directors, employees,
representatives, attorneys and agents, and each of their
respective predecessors, successors and assigns
(collectively, the 'Releasees') from any and all charges,
complaints, claims, liabilities, obligations, promises,
agreements, causes of action, rights, costs, losses, debts,
and expenses of any nature whatsoever, known or unknown,
which against them Executive or his successors or assigns
ever had, now have or hereafter can, shall or may have
(either directly, indirectly, derivatively or in any other
representative capacity) by reason of any matter, fact or
cause whatsoever arising from the beginning of time to the
date of this Agreement, including without limitation all
claims arising under Title VII of the Civil Rights Act of
1964, the federal Age Discrimination in Employment Act of
1967, as amended ('ADEA'), and all other federal, state or
local laws, rules, regulations, judicial decisions or public
policies now or hereafter recognized.  This release by
Executive of the Releasees also includes, without
limitation, all claims arising under each employee pension,
employee welfare, and executive compensation plan of United
now in effect or hereafter adopted, except for any benefits
to be provided to Executive under this Agreement or
resulting, in the normal course, from Executive's employment
through the Effective Date.  It is agreed that this
paragraph shall survive termination of this Agreement.

          B.  Executive expressly acknowledges and agrees that,
by entering into this Agreement, Executive is waiving any
and all rights or claims that he may have arising under the
Age Discrimination in Employment Act of 1967, as amended,
which have arisen on or before the date of execution of this
Agreement.  Executive further expressly acknowledges and
agrees that:
          (i)  In return for this Agreement, Executive will
     receive compensation beyond that which he was already
     entitled to receive before entering into this Agreement;
         (ii)  Executive has been advised by United to
     consult with an attorney before signing this Agreement;
        (iii)  Executive was given a copy of this
     Agreement on September 12, 1998 and informed that
     Executive had twenty-one (21) days within which to
     consider the Agreement and, if Executive considers this
     Agreement for fewer than 21 days, then Executive agrees
     that he has had a reasonable period of time to consider
     the Agreement; and
         (iv)  Executive was informed that Executive had
     seven (7) days following the date of execution of the
     Agreement in which to revoke the Agreement.  After
     seven (7) days this Agreement will become effective,
     enforceable and irrevocable unless written revocation
     is received by the undersigned from Executive on or
     before the close of business on the seventh (7th) day
     after Executive executed this Agreement.  If Executive
     revokes this Agreement it shall not be effective or
     enforceable and Executive will not receive the
     compensation or benefits described in this Agreement,
     other than those required by law or otherwise vested.
          8.  Non-Assignability:  This Agreement and the
benefits hereunder are not assignable or transferable by

          9.  Binding of Successors.  United will be required to have
any successor to all or substantially all of its business and/or
assets expressly assume and agree to perform this  Agreement in
the same manner and to the same extent that United would be
required to perform if no such succession had taken place.
         10.  Paragraph Reference:  Any reference to paragraphs
or subparagraphs shall be references to paragraphs or
subparagraphs of this Agreement unless expressly stated otherwise.

         11.  Severability:  If any provision of this Agreement
or the application thereof is held invalid, the invalidity
shall not affect other provisions or applications of this
Agreement which can be given effect without the invalid
provisions or application in accordance with the essential
intent and purpose of this Agreement, and to this end the
provisions of this Agreement are declared to be severable.

         12.  Gross-Up Payment for Golden Parachute Taxes.  
If it is determined that any payment by United to or for the benefit 
of the Executive, under the Agreement or otherwise, would be subject
to the federal excise taxes imposed on golden parachute payments,
United will make an additional payment to the Executive (the
'Gross-Up Payment') in amount sufficient to cover:
         (a)  Any golden parachute excise tax payable by the Executive,
         (b)  All taxes on the Gross-Up Payment, and
         (c)  All interest and/or penalties imposed with respect to 
              such taxes.
         13.  Withholding.  Anything in this Agreement to the
contrary notwithstanding, all payments required to be made by the
Employer hereunder to the Executive shall be subject to
withholding of such amounts, at the time payments are actually
made to the Executive and received by him, relating to taxes as
United may reasonably determine it should withhold pursuant to
any applicable law or regulation.  In lieu of withholding such
amounts, in whole or in part, United may, in its sole discretion,
accept other provision for payment of taxes as required by law,
provided that it is satisfied that all requirements of law
affecting its responsibilities to withhold such taxes have been

         14.  No Duty to Mitigate.  After termination of
employment, the Executive will not be obligated to mitigate
damages by seeking other comparable employment, and any severance
benefits payable to the Executive will not be subject to
reduction for any compensation received from other employment.

         15.  Confidentiality.  The Executive shall hold in fiduciary
capacity for the benefit of United all secret or confidential
information, knowledge or data relating to United, or its
subsidiaries, affiliates and businesses, which shall have been
obtained by the Executive pursuant to his employment by United or
any of its subsidiaries and affiliates and which shall not have
become public knowledge (other than by acts by the Executive or
his representatives in violation of this Agreement).  After
termination of the Executive's employment with United, the
Executive shall not, without the prior written consent of United,
communicate or divulge any such information, knowledge or data to
anyone other than United and those designated by it.  In no event
shall an asserted violation of the provisions of this Paragraph
15 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.  The
Executive acknowledges and agrees that due to the confidential
and proprietary nature of the Confidential Information he
possesses, a breach or threatened breach by him of any of the
provisions contained in this Paragraph 15 will cause United
irreparable injury.  Therefore, in addition to any other rights
or remedies, the Executive agrees that United shall be entitled
to a temporary, preliminary, and permanent injunction enjoining
or restraining the Executive from any such violation or
threatened violation, with the necessity of proving inadequacy of
monetary damages or the posting of any bond or security.

         16.  Public Relations:  United agrees to reasonably
cooperate with Executive regarding internal and media
communications concerning Executive's resignation of his
Executive Positions, it being understood that United ultimately
shall have sole and complete discretion regarding the timing,
content, and other aspects of its internal and media
communication.  The initial media communication regarding
Executive's resignation will be substantially in the form of
Exhibit A attached hereto.

         17.  Indemnification.  To the fullest extent permitted by
law, United will indemnify the Executive (including the
advancement of expenses) for any judgments, fines, amounts paid
in settlement and reasonable expenses, including attorney's fees,
incurred by the Executive in connection with the defense of any
lawsuit or other claim to which he is made a party by reason of
being or having been an officer, director or employee of UAL,
United Airlines or any of their  subsidiaries.  In addition,
United will maintain, with coverage for the Executive, director
and officer liability insurance at least as comprehensive as, and
in an amount at least equal to, that maintained by United on
September 1, 1998.

         18.  Payment of Legal and other Fees.  If either party is
required to seek enforcement of this Agreement, each party will
be responsible for paying its own attorneys' fees and expenses.

         19.  Arbitration.  Any controversy or claim relating to this
Agreement (except for court action initiated by United to enforce
the Executive's covenants as to confidentiality) will be settled
exclusively by arbitration in Chicago, Illinois in accordance
with the rules of the American Arbitration Association then in
effect.  Any arbitration award will be binding on the parties and
may be enforced in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific
performance of his right to be paid during the pendency of any
dispute or controversy arising under or in connection with this

         20.  Supersedes Prior Agreement.  This Agreement supersedes
and voids any prior oral or written agreement relating in any way
to the Executive's employment with United Airlines or UAL which
may have been entered into between parties hereto.  Any change to
the Agreement after its Effective Date must be in writing and
must be executed by United Airlines, UAL and the Executive.

         21.  Miscellaneous.
              (a)  This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, without
reference to principles of conflict of laws.  The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
              (b)  All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
               If to the Executive:
               Mr. John A. Edwardson
               747 Sheridan Road
               Wilmette, Illinois 60091
               with a copy to:
               Robert J. Stucker
               Vedder, Price, Kaufman, and Kammholz
               222  North LaSalle Street
               Chicago, Illinois 60601-1003
               If to United:
               1200 East Algonquin Road
               Elk Grove Township, Illinois   60007
               Attn:  General Counsel
or to such other address as any of the parties shall have
furnished to the other in writing in accordance herewith.  Notice
and communications shall be effective when actually received by
the addressee.
              (c)  None of the provisions of the Agreement shall be
deemed to be a penalty.
              (d)  The invalidity or unenforceablity of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
              (e)  Either party's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision hereof.
              (f)  This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
              (g)  United and Executive, having read and understood
this Agreement and having consulted with others as appropriate,
hereby agree to be bound by its terms.

IN WITNESS WHEREOF, the parties have executed the Agreement as of
September 18, 1998 at the World Headquarters of United Air Lines,
Inc., 1200 East Algonquin Road, Elk Grove Twp., Illinois 60007.

United Air Lines, Inc.,       UAL Corporation           Executive

By:/s/ G. Greenwald           By:/s/ G. Greenwald       By:/s/ John Edwardson
Its:  Chairman and            Its:  Chairman and        John A. Edwardson
Chief Executive Officer       Chief Executive Officer
Was this helpful?

Copied to clipboard