EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the 'Agreement') is made and
entered into as of September 1, 1997 between United Air
Lines, Inc. ('UA') and UAL Corporation ('UAL') (UA and UAL
sometimes collectively referred to as 'United') and Joseph
R. O'Gorman residing at P.O. Box 422, Barrington, Illinois
60011 (sometimes referred to as 'Executive').
WHEREAS, Executive has served and is presently serving
as Executive Vice President-Fleet Operations and
Administration and as 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'); and
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 Position;
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 as
of September 1, 1997 (the 'Effective Date'). Thereafter,
Executive will continue to be actively employed by United,
but he will perform services for United by being 'on call',
including testifying on behalf on United, and subject to
such assignments consistent with Executive's experience as
may be reasonably requested by United's President and
reasonably acceptable to Executive. Executive and United
hereby agree and affirm that circumstances constituting an
event of 'Good Reason' or a termination of employment under
the UAL Agreement (as hereinafter defined) have not arisen
or are otherwise applicable and that this Agreement shall
not constitute such circumstances. The 'UAL Agreement'
shall mean, collectively, the 35 page agreement between
Executive and UAL dated as of July 1, 1993, and any and all
amendments or letters of agreement relating thereto.
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 September 1,
1997 through July 31, 1998, subject to sooner termination
pursuant to Paragraph 4 (such period, as it may be shortened
pursuant to Paragraph 4, being herein called the 'Term').
3. Payments and Benefits: A.(i) During the Term,
---------------------
United will pay Executive a salary of $28,333 per month.
Such payments 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. Executive will not be
entitled to any increase nor subject to any decrease in such
salary payments during the Term.
(ii) In addition to the payments specified in
Paragraph 3.A(i), on March 15, 1998, United will pay
Executive a lump sum severance payment of $183,333.
(iii) All payments under this Paragraph 3.A will be
subject to withholding for taxes and other purposes as
required by applicable law.
B. Notwithstanding what may be provided to other
active employees of United from time to time, the only
benefits that Executive shall be entitled to during the Term
are as follows, in each case subject to the rules and
regulations of United as from time to time are in effect
(except as otherwise stated below in this Paragraph 3.B):
(i) Free and Reduced Rate Transportation: United
shall provide to Executive and his eligibles free
and reduced rate transportation of the type
granted to actively employed officers in
accordance with company regulations as revised
from time to time.
(ii) United Air Lines, Inc. Management and Salaried
Employees' Retirement Plan: Executive shall
continue to participate in (i) the Retirement Plan
and (ii) The United Air Lines, Inc. Supplemental
Retirement Plan in accordance with their terms
(hereinafter collectively the 'Retirement Plans').
(iii) 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.
(iv) 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.
(v) 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 4 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 July
31, 2003. The terms of Executive's coverage and
option for continuation of the Officer's Split
Dollar Life Insurance thereafter will be explained
in a separate letter by July 31, 2003.
(vi) Disability Income Benefits: Executive, 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.
(vii) Stock: Executive shall continue to
participate in the UAL, Inc. 1981 Incentive Stock
Program (the 'Program') and the 1988 Restricted
Stock Plan ('1988 Plan'). Termination of
employment pursuant to Paragraph 4 of the
Agreement will be a cessation of employment within
the meaning of the Program and the 1988 Plan.
Nothing in this Agreement will increase or
diminish the right of Executive to exercise any
stock option that becomes exercisable according to
the terms of the Program and the relevant option.
Notwithstanding the foregoing, the parties hereby
agree that the Non-Qualified Stock Option
Agreements with Executive dated as of April 26,
1996 (the 'April 1996 Agreement') and May 20, 1997
(the 'May 1997 Agreement') and the Restricted
Stock Agreement with Executive dated May 17, 1995
(the 'May 1995 Agreement') are hereby amended as
follows:
(a) The unvested options to purchase up to
20,000 shares of UAL common stock that Executive
has remaining under the April 1996 Agreement that
are scheduled to vest after July 31, 1998 will be
forfeited on the Effective Date.
(b) The unvested options to purchase up to
11,775 shares of UAL common stock that Executive
has remaining under the May 1997 Agreement that
are scheduled to vest after July 31, 1998 will be
forfeited on the Effective Date.
(c) The 12,000 restricted shares of UAL
common stock that Executive has under the May 1995
Agreement that are not scheduled to be released
from restrictions until after July 31, 1998 will
be forfeited on the Effective Date.
Executive will not be eligible for any grants made
under the Program or the 1988 Plan after the
Effective Date.
(viii) 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.
(ix) Vacation and Holidays: Executive agrees to forego
any unused vacation time existing as of September
1, 1997 and no paid vacation or holiday time will
be accrued or taken after September 1, 1997.
(x) UAL Stock Ownership Plan: Because, among other
matters, Executive is receiving compensation pursuant
to this Agreement at a rate greater than that which
he had received after the commencement of the UAL Stock
Ownership Plan ('ESOP'), all parties acknowledge
and agree that Executive will no longer be
eligible to participate in the ESOP after August
31, 1997, and as of September 1, 1997 his
participation with respect to future accruals of
UAL stock shall cease, but he will retain whatever
stock or other benefits rights he may have accrued
prior to that date, all in accordance with the
ESOP's terms and conditions.
(xi) Company Owned Car: Executive will be entitled to
retain the company owned car provided to him by
United. In addition, no later than 31 days
following the Effective Date, United will pay off
all amounts due under the lease pertaining to the
vehicle, and United will cause title in the
vehicle to be conveyed to Executive. To the
extent there is any imputed income as a result of
the conveyance of title or the liquidation of the
lease or both, Executive will be deemed to have
received such imputed income and United may make
withholdings for income taxes and other purposes
as required by applicable law.
C. Each of the benefits enumerated in Paragraph 3.B.
is subject to the practices, rules, and regulations of
United, as in effect from time to time.
D. For purposes of clarity, if an Incentive
Compensation Plan (ICP) award is granted for 1997
performance or thereafter, Executive will not be eligible
under the ICP for any award.
4. 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
will no longer be entitled to any of the benefits of this
Agreement (including the entitlement to the payment and
benefits described in Paragraph 3 (other than those required
by law and otherwise vested)), on the happening of the
earliest of the following events:
(i) Executive's death.
(ii) Executive's discharge for cause.
(iii) Any action or communication by Executive
that adversely reflects upon United or the
service it provides or any action or
communication that causes, induces, or
facilitates others to act adversely to
United.
(iv) 11:59 p.m. on July 31, 1998, at which
time he will be deemed to have elected to
retire.
Notwithstanding such termination, Executive shall
continue to be bound by the provisions of Paragraphs 6
through 12 of this Agreement. Discharge for 'cause' shall
mean termination upon (a) willful and continued failure by
Executive to substantially perform the duties set forth in
Paragraph 1 of this Agreement (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) after written demand for substantial
performance is delivered to Executive by the Board of
Directors of UAL Corporation, which demand specifically
identifies the manner in which that Board believes Executive
has not substantially performed such duties, and reasonable
opportunity of Executive to perform, or (b) the willful
engaging by Executive in conduct which is demonstrably and
materially injurious to United or its subsidiaries or
affiliates monetarily or otherwise, or (c) any willful
breach by Executive of this Agreement. For purposes of this
definition, no act, or failure to act, on Executive's part
shall be deemed 'willful' unless done, or omitted to be
done, by Executive not in good faith and without the
reasonable belief that such action or omission was in the
best interest of United or its subsidiaries or affiliate.
B. Upon Retirement: If this Agreement and
---------------
Executive's employment under it have not otherwise
terminated pursuant to Paragraph 4 as of 11:59 p.m. of July
31, 1998, then effective as of that time and day Executive
hereby retires from United and Executive will be entitled to
the benefits of a retired United officer, as such may be
revised from time to time. In addition, United will pay
Executive a supplemental retirement benefit computed and
paid in accordance with the Retirement Plans ( as defined in
Paragraph 3.B.(ii)) but calculating Executive's accrued
benefit (the 'Additional Years of Service Credit') as if
Executive had been continuously employed by United from June
27, 1966 to the date of Executive's retirement from United.
The amount of this supplemental retirement benefit shall be
determined without decrement based on age at the time of
retirement, so that such benefit will be determined as if
Executive actually retired at age 65, regardless of the
actual age at which Executive retires. This supplemental
retirement benefit shall be offset by the accrued benefit
payable to Executive under the Retirement Plans, and shall
be paid out of United's general funds pursuant to United's
contractual obligation hereunder, but no funds shall be
placed in trust or otherwise set aside by United to provide
for payments hereunder. Such supplemental retirement
benefit shall be payable at the same time and in the same
manner as Executive elects to receive his benefits under the
Retirement Plans. The Additional Years of Service Credit
shall also apply in determining Executive's eligibility for,
and the amount of, Executive's other retiree benefits.
C. Election of Executive: If, prior to 11:59 p.m. on
---------------------
July 31, 1998, 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 monthly salary payments payable under
this Agreement between the effective date of Executive's
election to terminate his employment under this Agreement
and July 31, 1998 plus, if it has not otherwise been paid,
the lump sum severance payment specified in paragraph 3.
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 President 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 3).
5. Regulations: During his employment, Executive
-----------
will be governed by applicable United regulations, as in
effect from time to time.
6. Confidentiality:
---------------
A. Executive agrees to keep any proprietary or
confidential information concerning United which he has
gained through his employment confidential. Executive
agrees that money damages could not adequately
compensate United in case of a breach or threatened
breach of this promise of confidentiality and that,
therefore, United would be entitled to injunctive
relief upon such breach. Executive understands that it
is United's intent to have this promise of
confidentiality enforced to its fullest extent.
Accordingly, Executive and United agree that, if any
portion of this promise of confidentiality is
unenforceable, the court should still construe and
enforce this promise of confidentiality to the fullest
extent permitted by law.
B. Executive and United agree to keep the terms
of this Agreement, and of his working arrangement, as
defined herein, confidential except that the source and
amount of his income may be revealed as necessary for
implementation and fulfillment of this Agreement, tax,
loan purposes and the like and for disclosure to legal
counsel to carry out the review of this Agreement in
accordance with Paragraph 7.
C. During the term of this Agreement, United will
not take any action or make any communication that
adversely reflects upon Executive or that causes,
induces, or facilitates others to act adversely to
Executive.
7. Assent and Release: 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 the UAL Agreement,
Title VII of the Civil Rights Act of 1964, the federal
Age Discrimination in Employment Act of 1967, as
amended, 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 in the normal course of
Executive's employment through the Effective Date. It
is agreed that this paragraph shall survive termination
of the Agreement.
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 August 5, 1997, 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.
8. Non-Assignability; Assignment in the Event of
---------------------------------------------
Acquisition or Merger: This Agreement and the benefits
---------------------
hereunder are not assignable or transferable by Executive;
the rights and obligations of United under this Agreement
will automatically be deemed to by assigned by United to any
corporation or entity into which United may be merged or
consolidate.
9. Applicable Law: This Agreement shall be
--------------
construed in accordance with the laws of the State of
Illinois, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance
with, and governed by the laws of the State of Illinois,
without regard to principles of conflict of laws. Except
for an action seeking injunctive relief under Paragraph 6,
any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by
arbitration in Chicago, Illinois in accordance with the
rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. Each party shall be
responsible for its own attorneys fees, costs, and expenses
in connection with the arbitration.
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. Supersedes Prior Agreement(s): This Agreement
-----------------------------
supersedes and voids any prior oral or written agreement
relating in any way to Executive's employment with UA or UAL
which may have been entered into between the parties hereto
including, without limitation the UAL Agreement. Any change
to this Agreement after its Effective Date must be in
writing and must be executed by UA, UAL, and Executive.
Executive hereby expressly waives any and all rights to
which he may be entitled under the UAL Agreement.
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 this
Agreement effective as of August 8, 1997 at the World
Headquarters of United Air Lines, Inc., 1200 East Algonquin
Road, Elk Grove Twp., Illinois 60007.
UAL Corporation and
United Air Lines, Inc.
By: /s/ G. Greenwald /s/ J.R. O'Gorman
---------------- -----------------
Gerald Greenwald Joseph R. O'Gorman
Chairman & Chief Executive Officer
Employment Agreement - United Air Lines Inc. and Joseph R. O'Gorman
Was this helpful?