Employment Agreement - Delta Air Lines Inc. and Warren C. Jenson
March 23, 1998
Mr. Warren C. Jenson
284 Hawks Hill Road
New Canaan, CT 06840
Dear Warren:
I am pleased to confirm my verbal offer of employment for the position of
Executive Vice President and Chief Financial Officer (CFO) for Delta Air Lines,
Inc. (Delta or the Company), effective today. In this assignment, you will
report directly to me.
Your initial and minimum base salary will be $500,000 per annum, payable in
accordance with the usual payment practices of the Company.
With respect to each fiscal year beginning with the fiscal year ending June 30,
1999 during which you are employed by the Company, you will be eligible to
receive in addition to your base salary an annual incentive compensation award
(Annual Award) for services rendered during such fiscal year, subject to the
terms and conditions of the Company's annual incentive compensation plan as in
effect from time to time. Except as provided in the immediately following
paragraph, the amount of the Annual Award, if any, with respect to any fiscal
year will be based upon performance targets and award levels determined by the
Personnel & Compensation Committee of the Board of Directors (or any successor
committee designated by the Board) in its sole discretion, in accordance with
the Company's annual incentive compensation plan as in effect from time to time;
provided that for each fiscal year beginning with the fiscal year ending June
30, 1999, your target award level shall be established in such a manner as to
provide you with the opportunity to earn an award of at least 57.5% of your base
salary for such fiscal year, assuming performance at the target level.
<PAGE>
Mr. Warren C. Jenson
March 23, 1998
Page 2
Notwithstanding the preceding paragraph, you will receive an Annual Award of not
less than (1) $100,000 with respect to fiscal year 1998 and (2) $400,000 with
respect to fiscal year 1999, unless your employment is terminated by the Company
for Cause prior to June 30, 1998 or June 30, 1999, respectively; provided, that
if your employment terminates for any reason other than Cause prior to June 30,
1998 or June 30, 1999, respectively, the applicable minimum amount shall be
reduced by multiplication by a fraction which, (1) with respect to fiscal year
1998, the numerator of which is the number of days from March 23, 1998 through
the date of termination of your employment, and the denominator of which is 100
and (2) with respect to fiscal year 1999, the numerator of which is the number
of days from July 1, 1998 through the date of termination of your employment,
and the denominator of which is 365.
You will also be a participant in the 1989 Stock Incentive Plan in accordance
with the terms of that Plan. You will be granted an initial award with
non-qualified stock options on 250,000 shares of Delta common stock. The award
date will be March 23, 1998, and the exercise price will be the closing price of
Delta common stock on the New York Stock Exchange on that date. These options
will vest in 20% increments on each of the first five anniversaries of the award
date, subject to the terms and conditions set forth in the award agreement
attached as Exhibit A. Future grants, if any, will be in accordance with the
Plan.
To compensate you for benefits which you are forfeiting by resigning from NBC to
accept a position with the Company, you will be granted (1) 33,000 shares of
restricted stock, which will vest in equal amounts (11,000 shares) on each of
the first, second, and third anniversaries of March 23, 1998; and (2) an
additional 7,000 shares of restricted stock which will vest in equal amounts
(1,400 shares) on each of the first five anniversaries of March 23, 1998. These
restricted stock awards are subject to the terms and conditions set forth in the
award agreement attached as Exhibit B.
Delta will provide reimbursement for the reasonable cost of your legal counsel
in connection with the negotiation and preparation of this agreement. While
employed by the Company, you will be entitled to such fringe benefits as are
provided to Executive Vice Presidents of the Company,
<PAGE>
Mr. Warren C. Jenson
March 23, 1998
Page 3
including free and reduced-rate travel, automobile allowance, initiation fees
and monthly dues for one country club membership, and similar programs as in
effect from time to time.
Except as otherwise provided in this letter agreement, your employment with
Delta will be subject to Delta's standard policies and will be governed by the
terms and conditions of the Personnel Practices Manual, as may be amended from
time to time hereafter. You will be provided with vacation, sick leave, and paid
holidays in accordance with Delta's standard policy regarding these benefits for
Executive Vice Presidents of the Company.
You will also be eligible to participate in Delta's standard benefit programs,
as amended from time to time, including the following:
1. DeltaFlex, our flexible benefits plan, which provides you with a menu of
choices for medical, dental, life insurance, and disability benefits.
2. The Officer Life Insurance program.
3. The Delta Family-Care Disability and Survivorship Plan, which provides
certain disability benefits to you and certain benefits in the event of
your death.
4. The Delta Family-Care Retirement Plan benefit will accrue from the date you
join Delta. In addition, Delta has a nonqualified plan which will cover any
excess benefits not payable by the Delta Family-Care Retirement Plan (due
to Section 415 or 401(a)(17) limitations). For purposes of both vesting and
benefit accrual, you will be deemed to have eleven (11) additional years of
service with Delta, provided that you complete at least three (3) years of
actual service as an employee with Delta. The additional benefit will be
paid under the nonqualified plan.
5. After one year of service, the Delta Family-Care Savings Plan, which
currently features pre-tax or post-tax employee contributions of up to 12%
(up to the limits of the Internal Revenue Code), and a 50% match of your
contributions on the first 4% of salary, with Delta's maximum contribution
equal to 2% of your salary.
<PAGE>
Mr. Warren C. Jenson
March 23, 1998
Page 4
The Company will pay all costs of relocation of you and your family to the
Atlanta metropolitan area in accordance with the Company's relocation policy
supplemented as follows:
a) Reasonable temporary living expenses for you and your family in the
Atlanta metropolitan area for a period not to exceed six months from
April 23, 1998;
b) If you so elect prior to April 23, 1999, the Company will purchase
from you your primary residence as of the date hereof. The purchase
price will be equal to the average of the estimates of the fair market
value of the residence as determined, within 30 days of such election,
by two reputable and independent professional real estate appraisers,
one of which will be selected by you and one of which will be selected
by the Company;
c) The weight limitation for movement of your household effects will be
waived;
d) The Company will pay up to two discount points with respect to one
mortgage financing of your initial new residence in the Atlanta
metropolitan area; and
e) The Company will absorb any income tax liability resulting from
relocation benefits provided on your behalf.
Your eligibility for severance benefits is summarized below:
Change in Control
Your eligibility for benefits in conjunction with a Change in Control will be
governed by Delta's Retention Protection Agreement applicable to Executive Vice
Presidents of the Company.
Termination for Cause or Without Good Reason
No severance benefit provided.
<PAGE>
Mr. Warren C. Jenson
March 23, 1998
Page 5
Termination Without Cause or For Good Reason*
If your employment is terminated prior to March 23, 2001 (other than by reason
of death or disability) by the Company without Cause or by you with Good Reason,
you will receive: (1) the balance of your then current base salary and then
current target ICP award through March 22, 2001 (subject to a minimum of twelve
(12) months of such salary and award), (2) immediate vesting of any unvested
stock option and restricted stock awards which you have been granted on March
23, 1998, and (3) immediate vesting of all accrued retirement plan benefits,
including your eleven (11) additional years of service credit. For purposes of
this letter agreement, the terms "Cause" and "Good Reason" (and related terms)
shall have the meanings set forth in Exhibit C accompanying this letter
agreement.
Termination After Death or Disability*
If your employment is terminated due to death or disability prior to March 23,
2001, you will receive: (1) such death or disability benefits as shall then be
maintained by the Company for which you or your survivors are eligible; (2)
immediate vesting of any unvested stock option and restricted stock awards which
you have been granted on March 23, 1998, and (3) immediate vesting of all
accrued retirement plan benefits, including your eleven (11) additional years of
service credit.
In the event of any conflict between the terms of this letter agreement and the
terms of any other agreement, award or arrangement contemplated hereby, the
terms of this letter agreement shall control. This letter agreement supersedes
all prior discussions and documentation concerning your compensation
arrangements with the Company.
If the terms outlined above reflect your understanding of our offer and you
accept employment based on these terms, please indicate your acceptance by
signing the two original letters provided. Please keep one letter for your
records and return the other to me.
Warren, we are extremely pleased to have you join the Delta team, and I look
forward with great pleasure to our association with you in this important role
-------------------------------
* In the event a Qualifying Event (as defined in your Retention Protection
Agreement) occurs during the term of your Retention Protection Agreement, the
Retention Protection Agreement shall apply instead of these provisions.
<PAGE>
Mr. Warren C. Jenson
March 23, 1998
Page 6
at Delta. I anticipate benefiting from your expertise, and I believe you will
help us establish a winning formula for success in the future.
Sincerely,
Leo F. Mullin
Accepted and agreed to this
23rd day of March, 1998
----------------------
Warren Jenson
<PAGE>
EXECUTIVE RETENTION PROTECTION AGREEMENT
EXECUTIVE RETENTION PROTECTION AGREEMENT ("Agreement") dated as of
March 23, 1998 (the "Effective Date") by and between Delta Air Lines, Inc., a
Delaware corporation (the "Company"), and
Warren C. Jenson ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any pending or threatened change in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in control.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence
on the Effective Date and shall expire December 31, 1998 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 after the Effective
Date, the term of this Agreement shall automatically be extended by one year
(each such additional one-year period following the Initial Term a "Successive
Period") unless, at least sixty days prior to such December 31, (i) either party
has provided the other with written notice of such party's intent that the term
of this Agreement not be so extended or (ii) there occurs a termination of
Executive's employment with the Company.
<PAGE>
SECTION 1.03. Automatic Extension Upon Change in Control. In the event
that a Change in Control occurs during the Initial Term or any Successive
Period, upon the effective date of such Change in Control the term of this
Agreement shall automatically be extended for a period of 36 months from the
effective date of such Change in Control. The 36-month extension described in
this Section 1.03 shall take effect regardless of whether, before or after the
effective date of a Change in Control, Executive or the Company has given
written notice of intent not to extend the term of the Agreement pursuant to
Section 1.02 or there has occurred a termination of Executive's employment,
provided the term of the Agreement has not yet expired as of such effective
date.
ARTICLE 2
OBLIGATIONS OF COMPANY ON CHANGE IN CONTROL
SECTION 2.01. Deferred Compensation. (a) In the event that a Change in
Control occurs during the term of this Agreement, the Company shall promptly
thereafter cause to be irrevocably deposited in trust for the benefit of
Executive and his or her beneficiaries, on the terms set forth in Section
2.01(c), an amount equal to the balance as of the date of such deposit of
Executive's accounts under the Deferred Compensation Plan. (Such trust is
hereinafter referred to as the "Deferred Compensation Trust.") From and after
the date of such Change in Control, the Company shall cause to be irrevocably
deposited in the Deferred Compensation Trust any additional amounts that may be
deferred from time to time by Executive under the Deferred Compensation Plan.
Each such subsequent deposit shall be made on the date the applicable deferred
amount would otherwise have been received by Executive, but for Executive's
election to defer such receipt under the Deferred Compensation Plan.
(b) The trustee of the Deferred Compensation Trust shall be a bank that
is organized under the laws of the United States of America, has assets
exceeding $500,000,000, and may validly exercise trustee powers under Georgia
state law. All trustee's fees and other expenses of administering the Deferred
Compensation Trust shall be borne by the Company.
(c) The instrument governing the Deferred Compensation Trust (the
"Trust Instrument") shall, to the extent reasonably necessary to assure that the
Deferred Compensation Plan will continue to be treated as "unfunded" for
purposes of ERISA and the Code, provide that upon insolvency of the Company the
assets of the Trust will be subject to the claims of the Company's general
creditors. The Trust Instrument shall provide that in all other respects the
assets of the Deferred Compensation Trust will be maintained for the exclusive
benefit of Executive and his or her beneficiaries, and will otherwise be subject
to all fiduciary and other requirements of applicable state trust law. The Trust
Instrument shall require that the trustee invest the assets of the Trust in a
manner calculated to match as closely
<PAGE>
as the trustee deems reasonably possible the investment elections made from time
to time by Executive under the Deferred Compensation Plan, and shall provide for
payment of benefits in accordance with the terms of Executive's applicable
payment elections as in effect from time to time under the Deferred Compensation
Plan.
(d) After the date of a Change in Control, the Company shall not (other
than pursuant to Section 3.03(i) hereof) take any steps to disturb or alter
Executive's (or Executive's beneficiaries') rights to receive amounts deferred
under the Deferred Compensation Plan in accordance with such Executive's
applicable payment elections as in effect from time to time. Nothing herein or
in the Trust Instrument shall relieve the Company of its obligation to pay
benefits under the Deferred Compensation Plan in accordance with the terms of
such Plan, to the extent such benefits are not paid from the Deferred
Compensation Trust.
SECTION 2.02. Payment of Performance-Based Awards. In the event that a
Change in Control occurs during the term of this Agreement and while Executive
is employed by the Company, the Company shall promptly thereafter pay Executive
the sum of (i) the Reference Incentive Compensation Award, prorated to reflect
the portion of the fiscal year elapsed through the date of the Change in
Control, and (ii) the Reference Long-Term Award, for each performance period
that includes the date of the Change in Control under any long-term incentive
plan maintained by the Company, prorated to reflect the portion of such
performance period elapsed through the date of the Change in Control. The
amounts referred to in clauses (i) and (ii) above shall be paid in the form of
cash or shares of Company stock, in accordance with the terms of the applicable
award agreements. The payment under this Section 2.02 shall discharge all
liabilities of the Company to Executive under the Company's annual and long-term
incentive plans and programs, and under this Agreement, with respect to
performance-based incentive compensation (other than stock options and stock
appreciation rights) for the periods referred to in clauses (i) and (ii) above.
SECTION 2.03. Stock Options, Stock Appreciation Rights and
Non-Performance-Based Award. In the event that a Change in Control occurs during
the term of this Agreement and while Executive is employed by the Company, all
outstanding stock options, stock appreciation rights, restricted stock (if not
performance-based), or other non-performance-based awards held by Executive
pursuant to the provisions of the Company's 1989 Stock Incentive Plan or any
successor plan shall become immediately vested, nonforfeitable and exercisable
as of the date of the Change in Control.
SECTION 2.04. Gross-Up Payment. In the event that a Change in Control
occurs during the term of this Agreement, if any payment or acceleration of
vesting or exercisability under this Article 2 would result in the imposition of
excise tax under Section 4999 of the Code, or of any interest or penalties with
respect to such excise tax, then Executive shall be entitled to a Gross-Up
Payment with respect to
<PAGE>
such excise tax, interest or penalties. Such Gross-Up Payment shall be
determined in the manner set forth in Article 4 (excluding Paragraph A and the
last sentence of Paragraph B of Section 4.01), substituting the term "Change in
Control" for the term "Qualifying Event" in Section 4.02. In addition, such
Gross-Up Payment shall be subject to the provisions of Section 4.03 in the same
manner as if such Gross-Up Payment had been paid under Article 4. The Company
shall pay Executive the Gross-Up Payment described in this Section 2.04 as soon
as practicable following the Change in Control, but in no event later than 30
days from such Change in Control.
ARTICLE 3
SEVERANCE BENEFITS
SECTION 3.01. Right to Severance Benefits. In the event that a
Qualifying Event occurs during the term of this Agreement, Executive shall be
entitled to receive from the Company Severance Benefits as described in Section
3.03 and the Gross-Up Payment described in Section 4.01. The Severance Benefits
described in Sections 3.03(a), 3.03(b), 3.03(c), 3.03(d), 3.03(e), 3.03(f),
3.03(h) and 3.03(i), as well as the Gross-Up Payment, shall be paid or provided
to Executive as soon as practicable following the Qualifying Event, but in no
event later than 30 days from such Qualifying Event.
SECTION 3.02. Qualifying Event. A "Qualifying Event" means any of the
following events:
(a) The involuntary termination of Executive's employment by the
Company during the 36-month period following a Change in Control, other than (i)
for Cause, or (ii) by reason of Executive's death or Disability;
(b) Executive's voluntary termination of employment for Good Reason
during the 36-month period following a Change in Control; or
(c) The occurrence of a Change in Control within one year after (i) the
involuntary termination of Executive's employment by the Company other than (A)
for Cause, or (B) by reason of Executive's death or Disability; or (ii)
Executive's voluntary termination of employment for Good Reason; if, in the case
of either clause (i) or (ii), the involuntary termination or actions giving rise
to the existence of Good Reason, as the case may be, were undertaken by the
Company in anticipation of a Change in Control.
SECTION 3.03. Severance Benefits. Executive shall be entitled to the
following benefits (the "Severance Benefits") under the circumstances described
in Section 3.01:
<PAGE>
(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed business expenses. In addition, Executive shall be entitled to any
other benefits earned or accrued by Executive for the period through and
including the date of termination of Executive's employment under any other
employee benefit plans and arrangements maintained by the Company, in accordance
with the terms of such plans and arrangements, except as modified herein.
(b) In the case of a Qualifying Event described in Section 3.02(c), the
Company shall pay Executive the amount that would have been payable to Executive
under Section 2.02, had the Change in Control occurred as of the date of
termination of Executive's employment. The payment under this Section 3.03(b)
shall be reduced by any payments previously made to Executive under the
Company's annual and long-term incentive plans and programs, and under this
Agreement, with respect to performance-based incentive compensation (other than
stock options and stock appreciation rights) for the periods referred to in
clauses (i) and (ii) of Section 2.02.
(c) The Company shall pay Executive a lump sum, in cash, equal to three
times the sum of Executive's Reference Salary and Reference Incentive
Compensation Award.
(d) The Company shall pay Executive a lump sum, in cash, equal to the
actuarial present value of the difference between the retirement benefits
described in clauses (i) and (ii) below:
(i) The retirement benefits described in this clause shall be
the total benefits that would be payable to Executive and his or her
spouse under the Qualified Pension Plan and the Nonqualified Pension
Plans in the form of a monthly annuity commencing as of Executive's
Earliest Retirement Date, calculated in accordance with the terms of
such plans as in effect on the date of termination of Executive's
employment (or, if greater, as in effect immediately prior to the
Change in Control), and assuming:
(A) Executive is fully vested in his or her benefits
under such plans;
(B) The number of years of Executive's credited
service for purposes of benefit accrual under such plans is
equal to three plus the number of such years of service
credited under such plans without regard to this Section
3.03(d)(i)(B);
<PAGE>
(C) Executive's age as of the Earliest Retirement
Date is equal to Executive's actual age as of such date plus
three years, for purposes of calculating any reduction under
such plans for early commencement of benefits; and
(D) As of Executive's annuity starting date,
Executive has a spouse who meets the requirements set forth in
the Qualified Pension Plan for entitlement to automatic joint
and survivor annuity benefits.
(ii) The retirement benefits described in this clause shall be
the benefits that would be payable to Executive and his or her spouse
under the Qualified Pension Plan in the form of a monthly annuity
commencing as of Executive's Earliest Retirement Date, calculated in
accordance with the terms of such Plan, assuming that as of Executive's
annuity starting date Executive has a spouse who meets the requirements
set forth in the Qualified Pension Plan for entitlement to automatic
joint and survivor annuity benefits.
For purposes of this Section 3.03(d), "actuarial present value" shall be
calculated using the assumptions in effect, immediately prior to the Change in
Control, for purposes of calculating actuarial equivalence under the Qualified
Pension Plan. The payment under this Section 3.03(d) shall be reduced, in the
case of a Qualifying Event described in Section 3.02(c), by the total amount of
payments (if any) made to Executive and his or her spouse under the Nonqualified
Pension Plans between the date of termination of Executive's employment and the
date of payment under this Section 3.03(d). The payment under this Section
3.03(d) shall discharge all liabilities of the Company with respect to
retirement benefits of Executive under the Nonqualified Pension Plans.
(e) (i) If Executive has attained age 52 as of the date of termination
of his or her employment, Executive shall be entitled to retiree
medical and monthly survivor benefits from the Company commencing as of
the date of the Qualifying Event. Such benefits shall be provided at a
level of coverage no less generous, and at the same cost to Executive,
as the retiree medical and monthly survivor benefits for which
Executive would have been eligible upon retirement under the retiree
benefits program maintained by the Company as in effect immediately
prior to the Change in Control, provided, that if Executive has earned
at least ten years of Continuous Service under the Qualified Pension
Plan as of the date of termination of
<PAGE>
employment (taking into account the assumption set forth in Section
3.03(d)(i)(B)), the Company shall pay Executive a lump sum, in cash,
equal to the present value (as of the date of the Qualifying Event) of
any premium imposed solely because of early retirement. The assumption
set forth in Section 3.03(d)(i)(B) shall be taken into account in
determining the level of any service-related premium to which Executive
becomes subject at any time with respect to retiree medical benefits
provided by the Company.
(ii) If, after taking into account the assumption set forth in
Section 3.03(d)(i)(C), Executive has attained age 52 as of the date of
termination of his or her employment, the Company shall, at its
election, provide to Executive either: (A) retiree medical and monthly
survivor benefits described in (i) above; or (B) a lump sum, in cash,
equal to the present value (as of the date of the Qualifying Event) of
the retiree medical and monthly survivor benefits described in (i)
above.
(iii) If, after taking into account the assumption set forth
in Section 3.03(d)(i)(C), Executive has not attained age 52 as of the
date of termination of his or her employment, the Company shall pay
Executive a lump sum, in cash, equal to the present value (as of the
date of the Qualifying Event) of medical, disability and monthly
survivor coverage (as provided to active nonpilot personnel) of
Executive and Executive's eligible dependents under the Medical Plans
and Disability Plan for 36 months from the date of the Qualifying
Event.
(iv) In determining present value under clauses (i), (ii) and
(iii) above, all terms applicable to Executive under the Medical Plans
and Disability Plan immediately prior to the date of the Change in
Control (including the level of premiums payable by Executive) shall be
taken into account. The amount of such present value shall be
determined by Northern Trust Retirement Consulting Inc. (the "Actuarial
Firm") on the basis of such assumptions as the Actuarial Firm
determines to be reasonable. In the event that the Actuarial Firm is
serving as actuary for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally
recognized actuarial firm to make the determinations required hereunder
(which actuarial firm shall then be referred to as the Actuarial Firm
hereunder). The Actuarial Firm shall provide its determination and
detailed supporting calculations both to the Company and Executive
within fifteen business days of the receipt of notice from Executive
that there has been a Qualifying Event, or such earlier time as is
requested by the Company. All fees and expenses of the Actuarial Firm
shall be borne solely by the Company.
(f) The Company shall provide Executive with a fully paid-up term life
insurance policy (with premiums pre-paid for the remainder of Executive's life)
on
<PAGE>
Executive's life, providing Executive's beneficiaries with a death benefit of
$50,000. In addition, if Executive is eligible for early or normal retirement
benefits under the Qualified Pension Plan as of the date of termination of
Executive's employment, the Company shall provide Executive a fully paid-up term
life insurance policy (with premiums pre-paid for the remainder of Executive's
life) on Executive's life, providing Executive's beneficiaries with a death
benefit of two times Executive's Reference Salary. For purposes of determining
Executive's entitlement to the life insurance policy described in the preceding
sentence, the assumptions set forth in Sections 3.03(d)(i)(B) and 3.03(d)(i)(C)
shall be taken into account.
(g) Executive and Executive's spouse, for the remainder of their
respective lives, and Executive's dependent children, for so long as they are
under age 18 (or under age 23 if a full-time student), shall be entitled to free
system-wide flight privileges on Company flights to any location which the
Company serves. Such privileges shall entitle Executive, Executive's spouse and
Executive's dependent children to unlimited positive space (or space available,
at Executive's option) first-class tickets, but Executive's dependent children
shall not be entitled to first-class privileges if under age 8; provided further
that all of such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its retirees. Nothing herein
shall be deemed as a limitation upon any retiree flight privileges for which
Executive may otherwise qualify.
(h) In the case of a Qualifying Event described in Section 3.02(c), all
outstanding stock options, stock appreciation rights, restricted stock (if not
performance-based), or other non-performance-based awards held by Executive
pursuant to the provisions of the Company's 1989 Stock Incentive Plan or any
successor plan shall become immediately vested, nonforfeitable and exercisable
as of the date of the Change in Control. In addition, in the case of such a
Qualifying Event, the Company shall, with respect to any such stock option,
stock appreciation right, restricted stock or other nonperformance-based award
forfeited by Executive on or after the date of termination of Executive's
employment (except where such forfeiture occurs solely by reason of expiration
of the term of such award), pay to Executive a lump sum, in cash, equal to the
fair market value such award would have had as of the date of the Change in
Control, taking into account the exercise price, if any, associated with such
award and treating such award as fully vested and exercisable.
(i) The Company shall pay (or cause the Deferred Compensation Trust to
pay) to Executive a lump sum, in cash, equal to the balance of Executive's
accounts under the Deferred Compensation Plan.
(j) The Company shall indemnify Executive (and Executive's legal
representatives or other successors) to the fullest extent permitted by the
<PAGE>
Certificate of Incorporation and By-Laws of the Company, as in effect at such
time or on the Effective Date, or by the terms of any indemnification agreement
between the Company and Executive, whichever affords or afforded greater
protection to Executive, and Executive shall be entitled to the protection of
any insurance policies the Company may elect to maintain generally for the
benefit of its directors and officers (and to the extent the Company maintains
such an insurance policy or policies, Executive shall be covered by such policy
or policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company officer or director), against all costs,
charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company, or any Subsidiary or Executive's serving or
having served any other enterprise as a director, officer, employee or fiduciary
at the request of the Company.
ARTICLE 4
CERTAIN TAX PAYMENTS
SECTION 4.01. Gross-Up Payment. The Company shall pay to Executive an
additional lump sum payment (the "Gross-Up Payment"), in cash, equal to the sum
of the amounts described in Paragraphs A and B (if any), below:
A. Executive shall be entitled under this paragraph to the sum
of (i) the present value of all of Executive's applicable Federal,
state and local taxes arising due to payments or coverage provided
under Section 3.03(e), and (ii) an additional amount such that after
payment by Executive of all of Executive's applicable Federal, state
and local taxes on such additional amount, Executive will retain an
amount equal to the total of Executive's applicable Federal, state and
local taxes arising due to the payment required pursuant to clause (i)
above. For purposes of clause (i) above, present value shall be
determined using the appropriate "applicable federal rate" promulgated
by the Treasury Department under Code Section 1274(d) for the month in
which the Gross-Up Payment is made, assuming that all taxes will be
paid on the due date therefor (without regard to extensions).
B. If any portion of the Severance Benefits or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such
<PAGE>
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled under this paragraph to
an additional amount such that after payment by Executive of all of
Executive's applicable Federal, state and local taxes, including any
Excise Tax, imposed upon such additional amount, Executive will retain
an amount equal to the Excise Tax imposed on the Total Payments. The
amount determined under this Paragraph B upon the occurrence of a
Qualifying Event shall be reduced by the amount of any Gross-Up Payment
previously paid to Executive under Section 2.04.
For purposes of Paragraphs A and B above, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 4.02. Determinations. All determinations required to be made
under this Article 4, including the amount of the Gross-Up Payment, whether a
payment is required under Paragraph B of Section 4.01, and the assumptions to be
used in determining the Gross-Up Payment, shall be made by Arthur Andersen LLP
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and Executive within twenty business days of the receipt of
notice from Executive that there has been a Qualifying Event, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the Person effecting the Change in Control
or is otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 4.03. Subsequent Redetermination. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 4.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
taken into account and paid under this Article 4, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's
<PAGE>
applicable Federal, state and local taxes on such additional amount, Executive
will retain an amount equal to the total of Executive's applicable Federal,
state and local taxes arising due to the Later Payment. In the case of any
repayment of Excise Tax that Executive is required to make to the Company
pursuant to the second sentence of this Section 4.03, Executive shall also repay
to the Company the amount of any additional payment received by Executive from
the Company in respect of applicable Federal, state and local taxes on such
repaid Excise Tax, to the extent Executive is entitled to a refund of (or has
not yet paid) such Federal, state or local taxes.
ARTICLE 5
SUCCESSORS AND ASSIGNMENTS
SECTION 5.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under 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.
SECTION 5.02. Assignment by Executive. This Agreement shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If Executive should die while any amount is owed but
unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, or other designee, or if
there is no such designee, to Executive's estate. Executive's rights hereunder
shall not otherwise be assignable.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
if to the Company, to:
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Post Office Box 20706
Atlanta, GA 30320-2534
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
<PAGE>
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 6.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts in accordance herewith, (ii) the
Company's (or any third party's) contesting the validity, enforceability, or
interpretation of the Agreement, (iii) any conflict between the parties
pertaining to this Agreement, (iv) Executive's contesting any determination by
the Internal Revenue Service pursuant to Section 4.03, or (v) Executive's
pursuing any claim under Section 6.16 hereof.
SECTION 6.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of his or her job with the Company, in accordance with
the rules of the American Arbitration Association then in effect. Executive's
election to arbitrate, as herein provided, and the decision of the arbitrators
in that proceeding, shall be binding on the Company and Executive. Judgment may
be entered on the award of the arbitrator in any court having jurisdiction. All
expenses of such arbitration, including the fees and expenses reasonably
incurred by Executive, shall be borne by the Company.
SECTION 6.04. Unfunded Agreement. Except to the extent otherwise
provided in Article 2, the obligations of the Company under this Agreement
represent an unsecured, unfunded promise to pay benefits to Executive and/or
Executive's beneficiaries, and shall not entitle Executive or such beneficiaries
to a preferential claim to any asset of the Company.
SECTION 6.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under the
Qualified Pension Plan), at or subsequent to the date of termination of
Executive's employment shall be payable in accordance with
<PAGE>
such plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 6.06. Compensation Taken Into Account. Severance Benefits
provided hereunder (other than the Base Salary and Reference Incentive
Compensation Award payable pursuant to Sections 3.03(a) or 3.03(b)) shall not be
considered for purposes of determining Executive's benefits under any other plan
or program of the Company (including without limitation the Qualified Pension
Plan and the Nonqualified Pension Plans).
SECTION 6.07. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits and other amounts as may be required
hereunder.
SECTION 6.08. Mitigation. In no event shall Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation earned
by Executive as a result of employment by another employer.
SECTION 6.09. No Set-Off. The Company's obligations to make all
payments and honor all commitments under this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Executive.
SECTION 6.10. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to Executive's employment and/or
severance rights upon a Change in Control, and supersedes all prior discussions,
negotiations, and agreements concerning such rights, including, but not limited
to, any prior severance agreement made between Executive and the Company.
SECTION 6.11. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 6.12. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 6.13. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not
<PAGE>
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 6.14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without reference
to principles of conflict of laws.
SECTION 6.15. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 6.16. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 6.16 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 6.03.
ARTICLE 7
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in
Section 4.02.
"Actuarial Firm" has the meaning accorded such term in Section
3.03(e)(iv).
"Affiliate" and "Associate" have the respective meanings
accorded to such terms in Rule 12b-2 under the Exchange Act as in
effect on the Effective Date.
"Base Salary" means, at any time, the then-regular annual rate
of pay which Executive is receiving as annual salary.
"Beneficial Ownership." A Person shall be deemed the
"Beneficial Owner"of, and shall be deemed to "beneficially own,"
securities pursuant to Rule 13d-3 under the Exchange Act as in effect
on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
<PAGE>
"Cause" means the occurrence of any one or more of the
following:
(a) A demonstrably willful and deliberate act or
failure to act by Executive (other than as a result of
incapacity due to physical or mental illness) which is
committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company,
and which act or inaction is not remedied within fifteen
business days of written notice from the Company; or
(b) Executive's conviction for committing an act of
fraud, embezzlement, theft, or any other act constituting a
felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the
affirmative vote (which cannot be delegated) of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with Executive's
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, Executive is guilty of conduct set forth above in
clauses (a) or (b) of this definition and specifying the particulars
thereof in detail.
"Change in Control" means, and shall be deemed to have
occurred upon, the first to occur of any of the following events:
(a) Any Person (other than an Excluded Person)
acquires, together with all Affiliates and Associates of such
Person, Beneficial Ownership of securities representing 20% or
more of the combined voting power of the Voting Stock then
outstanding, unless such Person acquires Beneficial Ownership
of 20% or more of the combined voting power of the Voting
Stock then outstanding solely as a result of an acquisition of
Voting Stock by the Company which, by reducing the Voting
Stock outstanding, increases the proportionate Voting Stock
beneficially owned by such Person (together with all
Affiliates and Associates of such Person) to 20% or more of
the combined voting power of the Voting Stock then
outstanding; provided, that if a Person shall become the
Beneficial Owner of 20% or more of the combined voting power
of the Voting Stock then outstanding by reason of such Voting
Stock acquisition by the Company and shall thereafter become
the Beneficial Owner of any additional Voting Stock which
causes the proportionate voting power of Voting Stock
beneficially owned by such Person to increase to 20% or more
of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming
<PAGE>
the Beneficial Owner of such additional Voting Stock, be
deemed to have become the Beneficial Owner of 20% or more of
the combined voting power of the Voting Stock then outstanding
other than solely as a result of such Voting Stock acquisition
by the Company;
(b) During any period of two consecutive years (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination
for election by the Company's stockholders was approved by a
vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning of the
period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority of
Directors then constituting the Board;
(c) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately
following such reorganization, merger or consolidation, (i)
more than 50% of, respectively, the then outstanding shares of
common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners of the Voting Stock outstanding
immediately prior to such reorganization, merger or
consolidation, (ii) no Person (but excluding for this purpose
any Excluded Person and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or
<PAGE>
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) The shareholders of the Company approve (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to any corporation with
respect to which, immediately following such sale or other
disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners of the Voting
Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this
purpose any Excluded Person and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the voting power of the
outstanding Voting Stock) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation or the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the
board of directors of such corporation were members of the
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other
disposition of assets of the Company.
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a
Holding Company, or (ii) with respect to Executive, if Executive is
part of a "group," within the meaning of Section 13(d)(3) of the
Exchange Act as in effect on the Effective Date, which consummates the
Change in Control transaction. In addition, for purposes of the
definition of "Change in Control" a Person engaged in business as an
underwriter of securities shall not be deemed to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through
such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Deferred Compensation Plan" means the Company's Executive
Deferred Compensation Plan (or any similar successor plan adopted by
the Company), as in effect immediately prior to the Change in Control.
"Deferred Compensation Trust" has the meaning accorded such
term in Section 2.01.
"Disability" means Long-Term Disability, as such term is
defined in the Disability Plan.
"Disability Plan" means the Delta Family-Care Disability and
Survivorship Plan (or any successor disability and/or survivorship plan
adopted by the Company), as in effect immediately prior to the Change
in Control (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
"Earliest Retirement Date" means the earliest date, after the
date of termination of Executive's employment, as of which Executive
would be eligible to commence receiving retirement benefits under the
Qualified Pension Plan.
"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section
4.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; or (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant
to the terms of any plan described in clause (iv).
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
<PAGE>
"Good Reason" means, without Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment to Executive of duties
inconsistent with Executive's authorities, duties,
responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of Executive's
authorities, duties, or responsibilities, from those in effect
as of the Reference Date; other than an insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by Executive;
(b) The Company's requiring Executive to be based at
a location in excess of 50 miles from Executive's principal
job location or office immediately prior to the Reference
Date; except for required travel on the Company's business to
an extent consistent with Executive's business travel
obligations immediately prior to the Reference Date;
(c) A reduction by the Company of Executive's Base
Salary as in effect on the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all
full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or a reduction
in Executive's short-term or long-term incentive compensation
opportunities under the executive incentive compensation plans
of the Company for which Executive is eligible as in effect on
the Reference Date;
(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such
benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or
the failure of the Company to meet the funding requirements,
if any, of any of such programs; or
(e) Any material breach by the Company of its
obligations under this Agreement or any failure of a successor
of the Company to assume and agree to perform the Company's
entire obligations under this Agreement, as required by
Article 5 herein, provided that such successor has received at
least ten days written notice from the Company or Executive of
the requirements of Article 5.
"Gross-Up Payment" has the meaning accorded such term in
Section 4.01.
<PAGE>
"Holding Company" means an entity that becomes a holding
company for the Company or its businesses as a part of any
reorganization, merger, consolidation or other transaction, provided
that the outstanding shares of common stock of such entity and the
combined voting power of the then outstanding voting securities of such
entity entitled to vote generally in the election of directors is,
immediately after such reorganization, merger, consolidation or other
transaction, beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Voting Stock outstanding
immediately prior to such reorganization, merger, consolidation or
other transaction in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger,
consolidation or other transaction, of such outstanding Voting Stock.
"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
4.03.
"Medical Plans" means the DeltaFlex and the Delta Family-Care
Medical Plans (or any successor medical plans adopted by the Company),
as in effect immediately prior to the Change in Control (subject to
changes in coverage levels applicable to all employees generally
covered by such Plans).
"Nonqualified Pension Plans" means the 1991 Delta Excess
Benefit Plan and the Delta Supplemental Excess Benefit Plan (or any
successor nonqualified defined benefit retirement plans adopted by the
Company).
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualified Pension Plan" means the Delta Family-Care
Retirement Plan (or any successor qualified defined benefit retirement
plan adopted by the Company).
"Qualifying Event" has the meaning accorded such term in
Section 3.02.
"Reference Date" means the earlier to occur of (i) a Change in
Control and (ii) the date 90 days prior to the termination of
Executive's employment.
"Reference Incentive Compensation Award" means:
<PAGE>
(a) for purposes of Article 2 hereof, the greater of
the target annual incentive compensation award or bonus (A)
for the Company's most recently completed fiscal year prior to
the Change in Control; and (B) for the Company's fiscal year
that includes the Change in Control.
(b) for purposes of Article 3 hereof, the greater of
the target annual incentive compensation award or bonus (A)
for the Company's most recently completed fiscal year prior to
the termination of Executive's employment; and (B) for the
Company's fiscal year that includes Executive's termination of
employment.
For purposes of both parts (a) and (b) of this definition, the
"target annual incentive compensation award or bonus" with respect to
any fiscal year shall be determined by multiplying the target salary
percentage applicable to Executive for such year by the Reference
Salary.
"Reference Long-Term Award" means, for each performance period
that includes the date of a Change in Control under a long-term
incentive plan maintained by the Company, the greater of (i) the actual
award payable to Executive for such performance period, calculated as
if such performance period had ended on the date of the Change in
Control and (ii) the target award payable to Executive for such
performance period.
"Reference Salary" means the greater of Executive's annual
rate of Base Salary as in effect (i) upon the date of termination of
Executive's employment, and (ii) immediately prior to the Change in
Control.
"Severance Benefits" has the meaning accorded such term in
Section 3.03.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in
Section 1.02.
"Total Payments" has the meaning accorded such term in Section
4.01.
"Trust Instrument" has the meaning accorded such term in
Section 2.01.
<PAGE>
"Voting Stock" means securities of the Company entitled to
vote generally in the election of members of the Board.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, to
be effective as of the day and year first written above.
EXECUTIVE Delta Air Lines, Inc.
/s/ Warren C. Jenson By: /s/ Leo F. Mullin
------------------------ ------------------------------
Name: Leo F. Mullin
Title: President and Chief Executive Officer
<PAGE>
Attachment A
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE 1989 STOCK INCENTIVE PLAN
March 23, 1998
Warren C. Jenson
Executive Vice President and Chief Financial Officer
The 1989 Stock Incentive Plan of Delta Air Lines, Inc., as amended
("Plan"), is intended as an inducement for officers, executives and key
employees of Delta Air Lines, Inc. (the "Company") to continue in the employment
of the Company, and to provide a greater incentive to such employees to make
material contributions to the Company's success by increasing their proprietary
interest in the Company through increased direct stock ownership. The Plan,
which provides for certain awards to eligible employees, is administered by the
Personnel & Compensation Committee of the Board of Directors (the "Committee").
Pursuant to the Plan, the Committee selected you to receive an award of a
Nonqualified Stock Option under the Plan, effective as of the close of business
on March 23, 1998, and has instructed me, on behalf of the Company, to provide
this Agreement to you.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you as an employee of the
Company (hereinafter called "Employee"), do hereby agree as follows:
1. The Company hereby grants to Employee a Nonqualified Stock Option
("Stock Option") covering 250,000 shares of Stock, as defined in the Plan, a
copy of which has been furnished to Employee. This award is in all respects made
subject to the terms and conditions of the Plan and, by signing and returning a
copy of this Agreement to the Secretary of the Company, Employee acknowledges
that he has read this Agreement and the Plan and agrees to all of the terms and
conditions thereof for himself, any designated beneficiary and his heirs,
executors, administrators or personal representatives. Terms used in this
Agreement which are defined in the Plan shall have the meanings set forth in the
Plan. In the event of any conflict between the Plan and this Agreement, the Plan
shall control. Employee also acknowledges receipt of the Prospectus dated
October 23, 1997, relating to the Plan.
2. The Option Price of the Stock Option covered by this award shall be
$115.75 per share, the closing price of the Stock on the New York Stock Exchange
(the "NYSE") on March 23, 1998, the date of this award.
<PAGE>
3. Subject to the terms and conditions of the Plan and the other
provisions of this Agreement, the Stock Option shall become exercisable in
installments as follows, provided Employee continues to be employed by the
Company on the dates indicated:
Number of Shares with
Respect to which Option
First Becomes Exercisable Date
------------------------- --------------
50,000 March 23, 1999
50,000 March 23, 2000
50,000 March 23, 2001
50,000 March 23, 2002
50,000 March 23, 2003
In the event of the occurrence prior to March 23, 2001 of the termination of
Employee's employment (i) by the Company without Cause, (ii) by Employee with
Good Reason or (iii) by reason of Employee's death or Disability (as defined in
the Plan), the Stock Option shall immediately become fully exercisable, and the
termination of Employee's employment will be treated, for purposes of
determining the terms of exercise of the Stock Option under Section 10(b) of the
Plan, as having occurred because of Employee's Retirement. For purposes of this
Agreement, the terms "Cause" and "Good Reason" shall have the respective
meanings assigned such terms in Annex A attached hereto.
4. Subject to the terms and conditions of the Plan and the other
provisions of this Agreement, including Paragraph 8 below, the Stock Option
granted to Employee herein may be exercised during the period beginning as set
forth in Paragraph 3 above and ending March 22, 2008, except as provided in
Sections 5 and 10 of the Plan. Subject to the terms and conditions of the Plan,
Employee (or, if Employee is deceased, a party acting on his behalf pursuant to
Section 10 of the Plan) may exercise the Stock Option granted herein in whole
or, from time to time, in part by way of a written notice delivered to the
Secretary of the Company which includes the following: (i) name, mailing address
and social security number of Employee and the date, which shall be actual date
of the notice; (ii) the number of shares of Stock with respect to which the
Stock Option is being exercised; (iii) the date of grant and the Option Price
with respect to the Stock Option being exercised; and (iv) the signature of
Employee or a party acting on behalf of a deceased employee. Payment of the full
purchase price of the shares of Stock covered by the exercise shall be made in
the manner prescribed by the Committee from time to time. If the Committee, in
its sole discretion, shall determine that it is appropriate to do so, such
payment may be made in whole or in part by tender of shares of unrestricted
Stock, as set forth in Section 5 of the Plan, subject to such requirements or
procedures as the Committee may specify.
5. When the Stock Option is exercised, the Company shall make the
appropriate calculations under the Plan and deliver to Employee, as soon as
practicable, a certificate or certificates representing the net number of shares
of Stock due to Employee
2
<PAGE>
pursuant to such exercise, calculated in accordance with this paragraph. Unless
other tax withholding arrangements are made by Employee and the Company, the
Company shall withhold from the shares of Stock issued to Employee a sufficient
number of shares of Stock based on its fair market value on the date of exercise
to cover any amounts which the Company is required to withhold to comply with
withholding requirements of federal, state or local tax laws, rules or
regulations. The fair market value for purposes of the second sentence of this
paragraph shall be as reasonably determined by the Committee.
6. The Stock Option granted herein is not transferable otherwise than
by will, by the laws of descent and distribution, or by a written designation
referred to in Section 10(c) of the Plan, and is exercisable during Employee's
lifetime only by Employee. In the event that the Stock Option is exercised
pursuant to Section 10 of the Plan by any person other than Employee, such
notice shall be accompanied by appropriate proof of the right of such person to
exercise the Stock Option.
7. The Stock Option granted herein is subject to all terms of the Plan,
including but not limited to Section 10(b), which provides for the forfeiture of
certain benefits in certain circumstances in the event of Employee's Retirement
prior to his normal retirement date.
8. Employee acknowledges that the federal securities laws and/or the
Company's policies regarding trading in its securities may limit or restrict
Employee's right to buy or sell shares of Stock, including, without limitation,
sales of Stock to exercise the Stock Option or sales of Stock acquired pursuant
to the exercise of the Stock Option. Employee agrees to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.
This Agreement has been prepared in duplicate. Please note your
acceptance in the space provided therefor and return the original for the
Company's records.
IN WITNESS WHEREOF, the Company, acting through its duly authorized
officer, has caused this Agreement to be duly executed, and Employee has
hereunto set his hand, all as of the day and year first written above.
DELTA AIR LINES, INC.
BY________________________________
Leo F. Mullin
President and Chief Executive Officer
EMPLOYEE
__________________________________
Warren C. Jenson
3
<PAGE>
ANNEX A
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which act or inaction is
not remedied within fifteen business days of written notice from the Company; or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means March 23, 1998.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
(c) A reduction by the Company of your base salary as in effect on the
later of (i) the Effective Date or (ii) the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all full-time domestic
employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in your short-term or long-term incentive
compensation opportunities under the executive incentive
<PAGE>
compensation plans of the Company for which you are eligible as in effect on the
later of (i) the Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs; or
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Annex A relates or any failure of a successor of
the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
2
<PAGE>
Attachment B
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE 1989 STOCK INCENTIVE PLAN
March 23, 1998
Warren C. Jenson
Executive Vice President and Chief Financial Officer
The 1989 Stock Incentive Plan of Delta Air Lines, Inc., as amended
("Plan"), is intended as an inducement for officers, executives and key
employees of Delta Air Lines, Inc. (the "Company") to continue in the employment
of the Company, and to provide a greater incentive to such employees to make
material contributions to the Company's success by increasing their proprietary
interest in the Company through increased direct stock ownership. The Plan,
which provides for certain awards to eligible employees, is administered by the
Personnel & Compensation Committee of the Board of Directors (the "Committee").
Pursuant to the Plan, the Committee has selected you to receive an award of
Restricted Stock (as defined in the Plan) effective as of the close of business
on March 23, 1998, and has instructed me to direct this letter to you.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you as an employee of the
Company (hereinafter called "Employee"), do hereby agree as follows:
1. Grant of Shares. Pursuant to action of the Committee, the Company
hereby grants to Employee 40,000 shares of Restricted Stock (the "Shares"). This
award is in all respects made subject to the terms and conditions of the Plan, a
copy of which has been provided to Employee, and by signing and returning a copy
of this Agreement to the Secretary of the Company, Employee acknowledges that he
has read the Plan and agrees to all of the terms and conditions thereof for
himself, any designated beneficiary and his heirs, executors, administrators or
personal representatives. Terms used in this Agreement which are defined in the
Plan shall have the meanings set forth in the Plan. In the event of any conflict
between the Plan and this Agreement, the Plan shall control. Employee also
acknowledges receipt of the Prospectus dated October 23, 1997, relating to the
Plan.
As soon as practicable following Employee's execution of this
Agreement and the stock power described below in Section 6, a certificate or
certificates representing the Shares and bearing the legend described below in
Section 6 shall be issued to Employee. Upon issuance of the certificates
representing the Shares, Employee shall have all rights of a stockholder with
respect to the Shares, including the right to vote and, subject to Section 10 of
this Agreement, to receive all dividends or other distributions paid or made
with respect to the Shares; provided, however, that the Shares (and any
securities of the Company which may be issued with respect to the Shares by
virtue of any dividend reinvestment, stock split, combination, stock dividend or
recapitalization, which securities
<PAGE>
shall be deemed to be "Shares" hereunder) shall be subject to the terms and all
of the restrictions set forth in this Agreement.
2. Restriction. Until the restriction imposed by this Section 2 (the
"Restriction") has lapsed pursuant to Section 3 or 4 below, Employee shall not
be permitted to sell, exchange, assign, transfer, pledge or otherwise dispose of
the Shares and the Shares shall be subject to forfeiture as set forth in Section
5 below.
3. Lapse of Restriction by Passage of Time. The Restriction shall
lapse and have no further force or effect as follows: (a) with respect to 33,000
of the Shares, as to 33-1/3% of such Shares (including 33-1/3% of any additional
Shares which at the time have been purchased with dividends on such Shares) on
each of March 23, 1999, 2000 and 2001, provided Employee remains employed by the
Company on such dates; and (b) with respect to 7,000 of the Shares, as to 20% of
such Shares (including 20% of any additional Shares which at the time have been
purchased with dividends on such Shares) on each of March 23, 1999, 2000, 2001,
2002 and 2003, provided Employee remains employed by the Company on such dates.
4. Lapse of Restriction in Certain Cases. The Restriction shall lapse
and have no further force or effect with respect to all Shares hereunder upon
the occurrence prior to March 23, 2001 of the termination of Employee's
employment (i) by the Company without Cause, (ii) by Employee with Good Reason
or (iii) by reason of Employee's death or Disability (as defined in the Plan).
For purposes of this Agreement, the terms "Cause" and "Good Reason" shall have
the respective meanings assigned such terms in Annex A attached hereto. Employee
may provide to the Company written designation naming a person or persons who
shall receive the Shares in the event of Employee's death, and such designation
must be in a form approved by counsel for the Company. If there is no such
approved designation, Shares shall be distributed upon Employee's death pursuant
to Employee's last will and testament or as provided by law.
5. Forfeiture of Shares. In the event of termination of Employee's
employment with the Company other than in the circumstances described in clauses
(i), (ii) or (iii) of Section 4 and prior to lapse of the Restriction under
Section 3, Employee shall immediately forfeit all right, title, and interest to
the Shares which are still subject to the Restriction, and such Shares shall be
canceled or transferred to the Company by Employee, without consideration to
Employee or his heirs, executors, administrators or personal representatives.
6. Endorsement and Retention of Certificates. All certificates
representing the Shares shall be endorsed on the face thereof with the following
legend:
"The shares of stock represented by this certificate and the sale,
transfer or other disposition of such shares are restricted by and
subject to a Restricted Stock Award Agreement dated March 23, 1998
between Warren C. Jenson and the Company, a copy of which is on file
with the Secretary of the Company."
All certificates for Shares shall be held by the Company until the
restrictions thereon shall have lapsed and, as a condition to this award,
Employee shall execute and
<PAGE>
deliver to the Company a stock power, endorsed in blank and approved by counsel
for the Company, relating to the Shares, as set forth in the Plan.
Upon lapse of the Restriction pursuant to Section 3 or 4 of
this Agreement without a prior forfeiture of the Shares, a certificate or
certificates for an appropriate number of unrestricted Shares shall be delivered
to Employee and the certificate with the legend indicated above shall be
canceled.
7. Withholding Taxes. Upon lapse of the Restriction on the Shares
pursuant to Section 3 or 4 above, unless other tax withholding arrangements are
made by Employee and the Company, sufficient Shares shall be transferred to the
Company to provide for the payment of any taxes required to be withheld by
federal, state, or local law with respect to income resulting from such lapse.
The value of the Shares so transferred shall be the closing price of the Common
Stock on the NYSE on the date the Restriction lapses (or, in the event that no
sale of the Common Stock takes place on the NYSE on such date, the closing price
of the Common Stock on the NYSE on the immediately preceding date on which such
a sale occurred).
8. Rights Not Enlarged. Nothing herein confers on Employee any right
to continue in the employ of the Company or any of its subsidiaries.
9. Succession. This Agreement shall be binding upon and operate for the
benefit of the Company and its successors and assigns, and Employee and his
heirs, executors, administrators or personal representatives.
10. Dividends. Any cash dividends which may become payable on the
Shares shall be reinvested by the Company in shares of Common Stock, to the
extent Shares are available under the Plan. If shares are not so available,
dividends shall be paid in cash and held by the Company for the account of
Employee until the Restriction lapses. In such event the Company shall pay
interest on the amount so held as determined by the Committee, and the
accumulated amount of such dividends and interest shall be payable to Employee
upon the lapse of the Restriction. Those Shares and any cash held for the
account of the Employee shall be governed by the Restriction set forth in the
Agreement; the Restriction with respect to such Shares and such cash shall lapse
as provided in Sections 3 and 4 of this Agreement; and such shares and such cash
shall be forfeited pursuant to Section 5 to the extent that the Shares on which
such dividends were paid shall be so forfeited.
11. Fractional Shares. Upon lapse of the Restriction, certificates for
fractional Shares shall not be delivered to Employee, and the value of any
fractional Shares which may result from the application of Section 3 or 4 of
this Agreement shall be paid in cash to Employee, as determined in the last
sentence of Section 7 above.
This Agreement has been prepared in duplicate. Please note your
acceptance in the space provided therefor and return the original for the
Company's records.
<PAGE>
IN WITNESS WHEREOF, the Company, acting through its duly authorized
officer, has caused this Agreement to be duly executed, and Employee has
hereunto set his hand, all as of the day and year first written above.
DELTA AIR LINES, INC.
BY
--------------------------------------
Leo F. Mullin
President and Chief Executive Officer
EMPLOYEE
-----------------------------------
Warren C. Jenson
<PAGE>
ANNEX A
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which act or inaction is
not remedied within fifteen business days of written notice from the Company; or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means March 23, 1998.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
(c) A reduction by the Company of your base salary as in effect on the
later of (i) the Effective Date or (ii) the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all full-time domestic
employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in your short-term or long-term incentive
compensation opportunities under the executive incentive
<PAGE>
compensation plans of the Company for which you are eligible as in effect on the
later of (i) the Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs; or
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Annex A relates or any failure of a successor of
the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
<PAGE>
IRREVOCABLE STOCK POWER
The undersigned, Warren C. Jenson, does hereby assign, transfer and
deliver unto _____________________________________ all of those shares of common
stock of Delta Air Lines, Inc. (the "Company") granted as restricted stock (the
"Restricted Stock") pursuant to the Restricted Stock Award Agreement Under The
1989 Stock Incentive Plan dated as of March 23, 1998, between the Company and
Warren C. Jenson, as well as all of those shares of common stock of the Company
purchased for the undersigned with reinvested dividends from the Restricted
Stock (collectively, the "Shares").
The undersigned does hereby irrevocably constitute and appoint
_______________________________________ attorney-in-fact, with full power of
substitution, to transfer the Shares on the books of the Company, or to direct
the Transfer Agent of the Company to so transfer the Shares.
Signature:
---------------------
Printed Name:
---------------------
Date:
---------------------
Witness:
-------------------------------
<PAGE>
Exhibit C
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which action or inaction
is not remedied within fifteen business days of written notice from the Company;
or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means March 23, 1998.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
<PAGE>
(c) A reduction by the Company of your base salary as in effect on
the later of (i) the Effective Date or (ii) the Reference Date (other than
pursuant to a reduction by a uniform percentage of the salary of all
full-time domestic employees of the Company who are not subject to a
collective bargaining agreement); or a reduction in your short-term or
long-term incentive compensation opportunities under the executive incentive
compensation plans of the Company for which you are eligible as in effect on
the later of (i) the Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs; or
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Exhibit C relates or any failure of a successor
of the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
2
<PAGE>
EXCESS BENEFIT AGREEMENT
THIS EXCESS BENEFIT AGREEMENT ("Agreement") is made and entered into as
of the 1st day of May, 1998, by and between DELTA AIR LINES, INC. (hereinafter
the "Company") and Warren C. Jenson, (hereinafter "Key Employee"):
W I T N E S S E T H :
WHEREAS, the Company has implemented the 1991 Delta Excess Benefit
Plan, and the Delta Supplemental Excess Benefit Plan, both as amended
(collectively referred to as the "Plans"), and has entered into an Executive
Retention Protection Agreement with Key Employee; and
WHEREAS, Key Employee has been deemed to be a participant in the Plans
in accordance with their terms; and
WHEREAS, Key Employee has rendered valuable service to the Company in
various executive capacities and the Company believes it is in the best interest
of the Company in seeking to assure itself of Key Employee's continued best
efforts in the future to provide for the payment of full retirement and other
benefits to the Key Employee; and
WHEREAS, various sections of the Internal Revenue Code of 1986 (the
"Code"), including, but not limited to, Sections 79, 401(a)(4), 401(a)(17), 415,
and 505(b) restrict either: (i) compensation that may be taken into account in
determining benefits under a qualified pension plan; (ii) benefits that can be
paid from qualified pension plans; (iii) compensation that may be taken into
account in determining benefits for participants in a Voluntary Employee
Beneficiary Association ("VEBA") described in Section 501(c)(9) of the Code; or
(iv) restrict benefits that can be paid from a VEBA (such limitations
collectively or individually hereinafter referred to as the "Restrictions"); and
WHEREAS, the Company wishes to make up under nonqualified excess
benefit plans and/or this Agreement any reduction in Key Employee's monthly
retirement income benefit, disability or survivor benefits under either the
Delta Family-Care Retirement Plan (the "Retirement Plan") or the Delta
Family-Care Disability and Survivorship Plan (the "Disability and Survivorship
Plan") which results from the Restrictions, or any other applicable laws,
statutes, or regulations which restrict in any way the benefits that can be paid
from a VEBA or qualified pension plan; and
WHEREAS, the Board of Directors of the Company has authorized
post-retirement life insurance benefits for senior officers in excess of the
coverage provided to other employees of the Company through the Basic Lump Sum
Death Benefit under the Disability and Survivorship Plan; and
<PAGE>
WHEREAS, certain restrictions imposed by the Tax Equity and Fiscal
Responsibility Act of 1982 ("TEFRA") prohibit the Company from providing
post-retirement life insurance benefits to officers in excess of that provided
to other employees of the Company; and
WHEREAS, the Company wishes to make up any such loss of group life
insurance coverage for Key Employee which cannot be provided because of the
TEFRA restrictions;
NOW, THEREFORE, the parties hereby agree as follows:
1. Certain Requirements Not Applicable. The parties specifically
acknowledge that this Agreement and Key Employee's participation in the Delta
Supplemental Excess Benefit Plan is exempt from certain provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") including, but not
limited to, parts 2, 3 and 4 of Subtitle B of Title 1 of ERISA and is also
subject to limited reporting and disclosure requirements of part 1 of Subtitle B
of Title 1 of ERISA. The parties further acknowledge that the 1991 Delta Excess
Benefit Plan is an "excess benefit plan" as defined in section 3(36) of ERISA
and is unfunded and not subject to any provision of ERISA.
2. Incorporation of the Retirement Plan and the Disability and
Survivorship Plan. The terms of the Retirement Plan and the Disability and
Survivorship Plan are hereby incorporated into this Agreement by reference,
except that changes in those plans which reduce benefits (except such changes as
may be required by law) shall be incorporated as to Key Employee only if advance
notice of such proposed reduction is given to the Key Employee and the Key
Employee agrees to an amendment of this Agreement to incorporate the benefit
reduction. The incorporation of the Retirement Plan and the Disability and
Survivorship Plan is not intended to modify any provision of this Agreement, and
the benefits provided hereunder shall be governed only by the provisions hereof
and the Plans. Unless indicated otherwise, capitalized terms used in this
Agreement shall have the meaning given those terms in the Retirement Plan and
Disability and Survivorship Plan.
3. Supplemental Retirement Income. Subject to Sections 8 and 18, the
Company agrees to pay Key Employee, or, in the event of Key Employee's death,
Key Employee's Spouse, at the time and in the manner set forth below,
supplemental retirement income ("Supplemental Retirement Income") equal to (a)
minus (b) where
(a) equals the Early, Normal or Deferred Retirement
income benefit or deferred vested pension benefit
(whichever is appropriate) which Key Employee would
receive or survivor benefit to which his spouse would
receive under the Retirement Plan beginning on the
Benefit Commencement Date (as defined below) if the
Restrictions as reflected in the Retirement Plan and
the Code were not in effect;
2
<PAGE>
(b) equals the Early, Normal or Deferred Retirement
benefit, or deferred vested pension benefit
(whichever is appropriate) which Key Employee
actually receives or survivor benefit which his
Spouse actually receives under the Retirement Plan
beginning on the Benefit Commencement Date;
(c) For purposes of determining benefits under (a) and
(b) above, any Qualified Domestic Relations Order
(QDRO) will be taken into account, such that the
benefits payable hereunder will not exceed those
which would be payable absent the QDRO.
Except as provided in the next sentence, for purposes of calculating the
Supplemental Retirement Income, Key Employee shall be credited with an
additional 11 years of service for vesting and benefit accrual purposes under
the Retirement Plan (the "Additional Service Credit"). The Additional Service
Credit shall not apply if prior to March 23, 2001 either (i) Key Employee's
employment with the Company is terminated for Cause; or (ii) Key Employee
terminates employment with the Company without Good Reason. For purposes of this
paragraph, "Cause" and "Good Reason" shall have the same meaning as ascribed to
those terms in Exhibit C attached to the March 23, 1998 letter to Key Employee
from Leo Mullin.
The amount of Supplemental Retirement Income paid under this Agreement will be
adjusted when and if the amount in (b) above increases or decreases as a result
of a change in the Restrictions, including cost of living adjustments to such
Restrictions.
4. Supplemental Disability Income. Subject to Sections 8 and 18, the
Company agrees to pay Key Employee at the time set forth below a supplemental
monthly disability income ("Supplemental Disability Income") equal to (a) minus
(b), where
(a) equals the monthly disability benefit which the Key
Employee would receive under the Disability and
Survivorship Plan beginning on the Benefit
Commencement Date (as defined below) if the
Restrictions were not in effect and taking into
account his or her elections under the Delta Air
Lines, Inc. DELTAFLEX Plan; and
(b) equals the monthly disability benefit which the Key
Employee actually receives from the Disability and
Survivorship Plan beginning on the Benefit
Commencement Date, taking into account his or her
elections under the Delta Air Lines, Inc. DELTAFLEX
Plan.
The amount of Supplemental Disability Income paid under this Agreement will be
adjusted as permitted under the Plan, and if the amount in (b) above increases
or decreases as a result of a change in the Restrictions.
3
<PAGE>
5. Supplemental Monthly Survivor Income. Subject to Sections 8 and 18,
the Company agrees to pay to Eligible Family Member(s) (as defined in the
Disability and Survivorship Plan) of Key Employee at Key Employee's death a
supplemental monthly survivor income ("Supplemental Survivor Income") equal to
(a) minus (b), where
(a) equals the monthly survivor benefit which the
Eligible Family Member (s) of Key Employee would
receive under the Disability and Survivorship Plan
beginning on the Benefit Commencement Date (as
defined below) without considering any Restrictions
on any benefit plan; and
(b) equals the monthly survivor benefit which the
Eligible Family Member(s) of Key Employee actually
receives under the terms of the Disability and
Survivorship Plan.
The amount of Supplemental Survivor Income paid under this Agreement will be
adjusted as permitted under the Plan and the Code to account for, inter alia,
changes in the number of Eligible Family Members.
6. Benefit Commencement Date; Cessation of Benefits. Subject to Section
18 (Change In Control), the Company shall commence payment of the Supplemental
Retirement Income as of the Benefit Commencement Date under the Retirement Plan
and the Supplemental Disability or Survivor Income as of the Benefit
Commencement Date under the Disability and Survivorship Plan. Subject to Section
18, Benefit Commencement Date under this Agreement shall mean the day that the
retirement income benefit, disability benefit or survivor benefit, as the case
may be, commences under the Retirement Plan or Disability and Survivorship Plan
with respect to Key Employee or his Spouse, or Eligible Family Member(s);
Supplemental Retirement Income will cease upon the death of the last to die of
Key Employee or, if applicable, his Spouse, or if changes in the Restrictions
permit the full benefit due under the Retirement Plan to be paid from the
Retirement Plan and the Retirement Plan assumes such full payment, or if full
payment of retirement benefits due hereunder have already been made.
Supplemental Disability Income will cease if the full benefit due under the
Disability and Survivorship Plan may be paid from that Plan and the Disability
and Survivorship Plan assumes such full payment or when the Key Employee is no
longer eligible for disability benefits under that Plan. Supplemental Survivor
Income will cease if the full benefit due under the Disability and Survivorship
Plan may be paid from that plan, and the Disability and Survivorship Plan
assumes full payment of the benefit amount or when there are no remaining
Eligible Family Member(s) under that Plan. Subject to Section 18, all benefits
payable hereunder may cease pursuant to Section 8 at any time.
7. Supplemental Lump Sum Death Benefit. Subject to Sections 8 and 18,
the Company agrees to pay to the named beneficiary (as designated by Key
Employee for the Basic Life Benefit under the Disability and Survivorship Plan)
of Key Employee at Key Employee's death, a supplemental lump sum death benefit
in the amount necessary to
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provide a total lump sum death benefit of $50,000 when combined with the Basic
Life Benefit actually provided by the Disability and Survivorship Plan.
8. Certain Restrictions. Subject to Section 18 and the last sentence of
this section, or unless waived by the Committee under circumstances the
Committee deems appropriate, if a Key Employee terminates active employment with
the Company prior to his Normal Retirement Date and within two years of such
termination directly or indirectly provides management or executive services
(whether as a consultant, advisor, officer or director) to any Person (as
defined in Section 18) who is in direct and substantial competition with the air
transportation business of the Company or any of its subsidiaries, then (a) if
benefits under this Agreement shall have not yet commenced, no benefits shall be
paid under this Agreement to such Key Employee, his Spouse, Eligible Family
Member or beneficiary; and (b) if benefits under this Agreement have commenced,
no further benefits shall be paid. Because of the broad and extensive scope of
the Company's air transportation business, the restrictions contained in this
provision are intended to extend to management or executive services which are
directly related to the provision of air transportation services into, within or
from the United States, as no smaller geographical restriction will adequately
protect the legitimate business interest of the Company. This section shall be
deemed waived, but only with respect to the Supplemental Retirement Income, if
at any time subsequent to March 23, 2001 either (i) Key Employee's employment
with the Company is terminated for Cause; or (ii) Key Employee terminates his
employment with the Company without Good Reason; provided "Cause" and "Good
Reason" shall have the same meaning as ascribed to those terms in Exhibit C
attached to the letter dated March 23, 1998 to Key Employee from Leo Mullin.
9. Funding of Benefit. Subject to Section 18 (Change In Control) the
benefits provided by this Agreement shall be paid, as they become due, from the
Company's general assets or by such other means as the Company deems advisable,
including a trust or trusts established by the Company; provided however, if
such trusts are established, benefits shall be payable from such trusts only as
and to the extent provided therein. To the extent Key Employee acquires the
right to receive payments from the Company under this Agreement, such right
shall be no greater than that of a general creditor of the Company. The Company
shall have complete discretion under this Agreement to account for and report,
or to refrain from accounting for or reporting, its liabilities under this
Agreement. In the event that the Company in its sole discretion establishes a
reserve or bookkeeping account for the benefits payable under this Agreement,
the Key Employee shall have no proprietary or security interest in any such
reserve or account.
10. Nonassignability of Benefits. No benefit payable under this
Agreement may be assigned, transferred, encumbered or subjected to legal process
for the payment of any claim against Key Employee, his Spouse, Eligible Family
Member, or beneficiary.
11. No Right to Continued Employment. Nothing in this Agreement shall
be deemed to give Key Employee the right to be retained in the service of the
Company or to deny the Company any right it may have to discharge Key Employee
at any time, subject
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to the Company's obligation to provide benefits and amounts as may be required
hereunder.
12. Arbitration. The parties acknowledge that any claims or controversy
arising out of this Agreement is subject to arbitration in accordance with the
Plans.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without regard to its conflict
of laws rules.
14. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the parties hereto.
15. Amendment. This writing, including any terms or documents
incorporated herein by reference, supersedes any previous excess benefit
agreement between Key Employee and the Company. This Agreement may not be
modified orally, but only by writing signed by the parties hereto.
16. Notice. All notices, requests, demands and other communications
under this Agreement, shall be in writing and shall be delivered personally
(including by courier) or mailed by certified mail, return receipt requested.
Refusal to acknowledge receipt of such notice shall constitute receipt of such
notice upon the date it is returned to the sender. Any notice under this
Agreement shall be sent to Key Employee, Spouse, his Eligible Family Member or
beneficiary at the last known address of such person as reflected in the
Company's records. Notice to the Company or the Committee shall be sent to:
Delta Air Lines, Inc.
Law Department
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Robert S. Harkey,
Senior Vice President - General Counsel
17. Form of Payment; No Elections. Subject to Section 18 (Change In
Control), Key Employee shall not be permitted to exercise any election under the
Plans which affects the date of commencement, manner or form in which Key
Employee's Supplemental Retirement Income is paid. In addition, no election
under the Retirement Plan shall affect the manner or form in which Supplemental
Retirement Income is paid under the Plans. If Key Employee becomes entitled to
Supplemental Retirement Income under this Excess Benefit Agreement, such benefit
shall automatically be paid commencing with the date payments under the
Retirement Plan begin as follows:
(a) In every case in which the form of benefit payable
under the Retirement Plan is automatic and does not
depend on the election
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of the Participant thereunder, Supplemental
Retirement Income under this Excess Benefit Agreement
shall automatically be paid in the identical form
that it is payable under the Retirement Plan.
(b) In the case of any Key Employee who becomes eligible
for Early Retirement under the Retirement Plan and is
eligible to elect the level income option thereof,
such Key Employee's Supplemental Retirement income
under this Agreement, if any, shall be automatically
payable in the form that would have been payable
disregarding any election by such Key Employee of the
level income option.
18. Change In Control. Notwithstanding anything in this Agreement to
the contrary, in the event Key Employee has rights under an Executive Retention
Protection Agreement with the Company at the time a Change In Control (as
defined below) occurs, the Company shall, if not previously established,
establish a grantor trust (the "Trust") to provide benefits payable under this
Agreement and the Plans. Subject to the following paragraph, the Company shall
promptly cause to be irrevocably deposited in such Trust for the benefit of Key
Employee and his or her beneficiaries, on the terms set forth below, an amount
equal to the balance as of the date of such deposit of Key Employee's accrued
benefit under the Plans and Agreement, regardless of whether such benefit is
vested. From and after the date of such Change In Control, the Company shall
cause to be irrevocably deposited in the Trust any additional accruals under the
Plans and Agreement, regardless of whether such benefit is vested.
The instrument governing the Trust shall, to the extent reasonably
necessary to assure that the Plans and this Agreement will continue to be
treated as "unfunded" for purposes of ERISA and the Code, provide that upon
insolvency of the Company, the assets of the trust will be subject to the claims
of the Company's general creditors. The Trust instrument shall provide that in
all other respects the assets of the Trust will be maintained for the exclusive
benefit of Key Employee and his or her beneficiaries, and will otherwise be
subject to all fiduciary and other requirements of applicable state trust law.
In addition, in the event Employee's employment terminates as a result
of a Qualifying Event (as defined in any Executive Retention Protection
Agreement between Key Employee and the Company), Section 8 of this Agreement
shall be deemed waived and Section 6 of the 1991 Delta Excess Benefit Plan and
Section 6 of the Delta Supplemental Excess Benefit Plan shall not be applicable
to Key Employee. Further, the timing and payments of any retirement benefits to
be provided hereunder shall be governed by, and subject to, the terms of said
Executive Retention Protection Agreement to the extent such Agreement provides
for accelerated payments of retirement benefits otherwise payable under this
Agreement.
For purposes of this Agreement, "Change In Control" means, and shall be
deemed to have occurred upon, the first to occur of any of the following events:
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(a) Any Person (other than an Excluded Person)
acquires, together with all Affiliates and Associates of such
Person, Beneficial Ownership of securities representing 20% or
more of the combined voting power of the Voting Stock then
outstanding, unless such Person acquires Beneficial Ownership
of 20% or more of the combined voting power of the Voting
Stock then outstanding solely as a result of an acquisition of
Voting Stock by the Company which, by reducing the Voting
Stock outstanding, increases the proportionate Voting Stock
beneficially owned by such Person (together with all
Affiliates and Associates of such Person) to 20% or more of
the combined voting power of the Voting Stock then
outstanding; provided, that if a Person shall become the
Beneficial Owner of 20% or more of the combined voting power
of the Voting Stock then outstanding by reason of such Voting
Stock acquisition by the Company and shall thereafter become
the Beneficial Owner of any additional Voting Stock which
causes the proportionate voting power of Voting Stock
beneficially owned by such Person to increase to 20% or more
of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial
Owner of such additional Voting Stock, be deemed to have
become the Beneficial Owner of 20% or more of the combined
voting power of the Voting Stock then outstanding other than
solely as a result of such Voting Stock acquisition by the
Company;
(b) During any period of two consecutive years (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination
for election by the Company's stockholders was approved by a
vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning of the
period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority of
Directors then constituting the Board;
(c) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately
following such reorganization, merger or consolidation, (i)
more than 50% of, respectively, the then outstanding shares of
common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners of the Voting Stock outstanding
immediately prior to such reorganization, merger or
consolidation, (ii) no Person (but excluding for this purpose
any Excluded Person and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
voting power of the outstanding Voting Stock) beneficially
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owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members
of the Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) The shareholders of the Company approve (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to any corporation with
respect to which, immediately following such sale or other
disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners of the Voting
Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this
purpose any Excluded Person and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the voting power of the
outstanding Voting Stock) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation or the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the
board of directors of such corporation were members of the
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other
disposition of assets of the Company.
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a
Holding Company, or (ii) with respect to Key Employee, if Key Employee
is part of a "group," within the meaning of Section 13(d)(3) of the
Exchange Act as in effect on the Effective Date, which consummates the
Change in Control transaction. In addition, for purposes of the
definition of "Change in Control" a Person engaged in business as an
underwriter of securities shall not be deemed to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through
such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
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As used in the above definition, the terms "Person", "Excluded
Person", "Affiliate", "Associate", "Beneficial Ownership", "Voting
Stock", "Board", "Exchange Act", "Holding Company", and "Effective
Date" shall have the same meaning as ascribed to those terms in the
then current Executive Retention Protection Agreement between the
Company and Key Employee.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date(s) shown below.
DELTA AIR LINES, INC.
By:
-----------------------------
Leo F. Mullin
President and Chief Executive Officer
Date:
---------------------------
-------------------------------
Warren C. Jenson
Date:
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