Employment Agreement - Delta Air Lines Inc. and Leo F. Mullin
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 29, 2002 (the "Effective Date"),
by and between Delta Air Lines, Inc., a Delaware corporation (the "Company"),
and Leo F. Mullin ("Executive");
WHEREAS, Executive currently serves as Chairman of the Board of Directors
of the Company (the "Board") and is currently employed as Chief Executive
Officer of the Company pursuant to the terms of an employment agreement dated as
of August 14, 1997 by and between the Company and Executive (the "Old Employment
Agreement");
WHEREAS, the Board desires to continue to employ Executive as Chief
Executive Officer of the Company, and Executive desires to accept such continued
employment; and
WHEREAS, the Company and Executive desire to enter into an agreement (this
"Agreement") embodying the new terms of such continued employment;
NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows (certain
capitalized terms used herein being defined in Article 9):
ARTICLE 1
TERM OF AGREEMENT
Section 1.01. Term. The term of this Agreement shall commence on the
Effective Date and shall expire on December 31, 2007 (such term, together with
any extension pursuant to Section 1.02, referred to hereinafter as the
"Agreement Term").
Section 1.02. Automatic Extension Upon Change In Control. In the event
that a Change in Control occurs during the Agreement Term as then in effect,
upon the effective date of such Change in Control the Agreement Term shall
automatically
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be extended by such period, if any, such that after such extension the Agreement
Term shall not be less than 36 months following the effective date of such
Change in Control (such 36 month period referred to hereinafter as the "Change
Period").
ARTICLE 2
POSITION; DUTIES
Section 2.01. Position. The Company shall continue to employ Executive as
Chief Executive Officer of the Company pursuant to the terms of this Agreement.
In addition, the Company shall use its best efforts to ensure Executive's
continued election as a member of the Board. Executive shall have such duties
and authority as shall be determined from time to time by the Board; provided
that such duties shall be consistent with the positions assigned to him pursuant
to this Section 2.01.
Section 2.02. Performance of Duties. While Executive is employed by the
Company hereunder, Executive shall devote substantially all of his business time
and best efforts to the business and affairs of the Company and the performance
of his duties under this Agreement. Subject to the foregoing, Executive shall
not be precluded from (i) continuing to serve on such boards of directors of
business corporations and/or charitable organizations as to which the Board
shall have given its prior written consent, which consent shall not be withheld
unreasonably; provided, however, that such consent shall not be necessary with
respect to Executive's continued service on the board of directors of BellSouth
Corporation and Johnson & Johnson; (ii) engaging in community affairs or
charitable activities (other than serving on the boards of directors of
charitable organizations, as to which clause (i) shall control), and (iii)
managing his personal investments and affairs.
ARTICLE 3
COMPENSATION
Section 3.01. Base Salary. While Executive is employed by the Company
hereunder, the Company shall pay Executive a base salary (the "Base Salary") at
the annual rate of not less than $795,000, payable in accordance with the usual
payment practices of the Company. Executive's Base Salary shall be subject to
review for increase annually and Executive shall be entitled to such increases
in his Base Salary, if any, as may be determined from time to time in the sole
discretion of the Board or the Personnel & Compensation Committee of the Board
(the "Compensation Committee").
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Section 3.02. Incentive Compensation Awards. (a) With respect to each
Fiscal Year beginning with the Fiscal Year ending December 31, 2002 during
which Executive is employed hereunder, Executive shall be eligible to receive in
addition to his Base Salary an annual incentive compensation award (the "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. The amount of the Annual Award, if any, with respect to any Fiscal
Year shall be based upon performance targets and award levels determined by the
Compensation Committee 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 ending after December 31, 2002 the award levels with
respect to Executive shall be established in such a manner as to provide
Executive with the opportunity to earn an award of at least 150% of his Base
Salary for such Fiscal Year, assuming performance at a target level, with a
maximum award opportunity of 300% of Base Salary for such Fiscal Year; provided,
further, however that the Annual Award shall in no event exceed the applicable
award limit under the governing shareholder approved incentive compensation
plan.
(b) In addition to the Annual Awards described above, Executive shall be
eligible to receive such additional bonuses as may be awarded by the
Compensation Committee in its sole discretion.
Section 3.03. Employee Benefits. While Executive is employed by the
Company hereunder, Executive (and, to the extent applicable, his eligible family
members, as defined in the applicable plan or policy) shall be entitled to
participate (or to receive benefits equivalent to such participation), on terms
no less favorable than the terms offered to other senior executives of the
Company, in any group and/or executive life, hospitalization or disability
insurance plan, health program, vacation policy, pension, profit sharing, ESOP,
401(k) and similar benefit plans (qualified, non-qualified and supplemental) and
other fringe benefits of the Company, including free and reduced-rate travel,
automobile allowance, club memberships and dues, and similar programs, as in
effect from time to time.
Section 3.04. Supplemental Pension Benefits. Executive shall be entitled
to receive from the Company the supplemental retirement benefit (the
"Supplemental Retirement Benefit") under and in accordance with the terms of the
Excess Benefit Agreement dated as of March 15, 2002 by and between the Company
and Executive, as the same may be amended by the parties from time to time (the
"Excess Benefit Agreement").
Section 3.05. Business Expenses. The Company shall reimburse promptly
such of Executive's travel, entertainment and other business expenses as are
reasonably and necessarily incurred by Executive in the performance of his
duties while
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employed hereunder, in accordance with the Company's policies as in effect from
time to time.
Section 3.06. Stock Incentive Awards. (a) Executive shall receive stock
incentive awards in accordance with the terms of the award agreement(s) attached
hereto as Exhibits A, B and C (such stock incentive awards referred to
hereinafter collectively as the "Renewal Award").
(b) Executive shall be eligible to receive any additional equity-based
incentive awards, including additional options and restricted stock unit awards,
as may be granted by the Compensation Committee in its sole discretion.
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. Without Cause; For Good Reason. In the event that
Executive's employment is terminated during the Agreement Term, other than by
reason of death, and other than during the Change Period or within one year
prior to, and in anticipation of, a Change in Control, (i) by the Company other
than for Cause or Disability or (ii) by Executive with Good Reason, Executive
shall be entitled to receive from the Company the benefits described in
Paragraphs (a) through (f) below (the "Severance Benefits"):
(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, with respect to the period through
and including the date of termination of Executive's employment, Executive shall
be entitled to any other benefits earned or accrued and payable 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 (such
amounts and benefits described in this Paragraph (a) referred to hereinafter as
the "Accrued Benefits").
(b) 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; provided, that if as of the date of Executive's termination
of employment pursuant to this Section 4.01, there remain less than three years
in the Agreement Term, the three times multiplier shall be reduced to a
fraction, the numerator of which is the number of whole months remaining in
the Agreement Term as of the date of Executive's termination of employment (the
"Remaining
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Months") and the denominator of which is 36, provided, further, however, that in
no event shall such fraction be less than 1.
(c) The Company shall pay Executive a lump sum, in cash, equal to the
amount of his Annual Award payable for the Fiscal Year in which occurs the
termination of his employment, calculated assuming performance at the target
level and prorated to reflect the portion of such Fiscal Year elapsed through
the date of termination of his employment. The amount of the payment under this
Paragraph (c) shall be reduced by the amount, if any, previously paid with
respect to such Fiscal Year under Section 5.01(i).
(d) Executive (and, to the extent applicable, his eligible family members)
shall continue to be eligible, for the lesser of (i) 36 months from the date of
such termination of Executive's employment and (ii) the greater of (A) 12 months
and (B) the balance of the Agreement Term, to participate in the benefit plans
and fringe benefits (other than any qualified or nonqualified retirement plans)
in which Executive and his eligible family members were entitled to participate
under Section 3.03 immediately prior to termination of Executive's employment,
including, but not limited to, any life insurance or survivor benefit
arrangements in effect at such time. If continued participation pursuant to this
Section 4.01(d) is not permitted under the terms of one or more of the
applicable benefit plans and programs, the Company shall, in lieu of continued
participation as to those benefits, pay Executive a lump sum, in cash, equal to
the present value (as of the date of the termination of his employment) of such
continued participation. In determining present value for this purpose, all
terms applicable to Executive under such benefit plans and fringe benefits
immediately prior to the date of termination of his employment (including the
level of premiums, if any, payable by Executive) shall be taken into account.
(e) On and after the first to occur of (i) the third anniversary of
Executive's termination of employment and (ii) the expiration of the Agreement
Term (but in no event prior to the first anniversary of Executive's termination
of employment), he shall be treated as a retired senior executive of the Company
for purposes of all benefit plans and arrangements of the Company (other than
retirement plans) providing for retiree benefits. For purposes of determining
any service-related premiums owed by Executive with respect to any such retiree
benefits, all years of service with which Executive is credited for purposes of
calculating the Supplemental Retirement Benefit shall be taken into account. If
such participation is not permitted under the terms of one or more of the
applicable benefit plans and programs, the Company shall, in lieu of such
participation as to those benefits, pay Executive a lump sum, in cash, equal to
the present value (as of the third anniversary of the termination of his
employment or as of the later of the expiration of the Agreement Term or the
first anniversary of his employment, as applicable) of such participation. In
determining present
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value for this purpose, all terms applicable to Executive under such retiree
benefit plans (including the level of premiums, if any, payable by Executive)
shall be taken into account.
(f) For purposes of calculating the Supplemental Retirement Benefit,
Executive shall be credited with additional years of service credit in an amount
equal to the lesser of (i) three years and (ii) the Remaining Months, provided,
however, that Executive shall be credited with at least one additional year of
service credit; provided further, however, that Executive's years of service
credit shall not exceed the maximum years of service credited under the Excess
Benefit Agreement.
The Severance Benefits (other than those described in Paragraph (f) and
the first sentence of each of Paragraphs (d) and (e) above) shall be paid or
provided to Executive as soon as practicable following the date of termination
of Executive's employment, but in no event later than 30 days from the date of
such termination of employment.
Section 4.02. For Cause; Without Good Reason. In the event Executive's
employment shall be terminated by the Company for Cause or by Executive other
than for Good Reason, the Company shall have no further obligations to Executive
hereunder, other than for Accrued Benefits. Notwithstanding any other provision
of this Agreement to the contrary, Executive shall not be liable to the Company
for breach of this Agreement as a result of termination of his employment other
than for Good Reason, provided Executive has furnished the Company at least 60
days prior written notice of such termination.
Section 4.03. Death or Disability. In the event of Executive's death or
termination by the Company for Disability during the Agreement Term, the Company
shall have no further obligations to Executive or his legal representatives
hereunder, other than for Accrued Benefits.
Section 4.04. Return of Materials. Executive agrees that upon termination
of his employment hereunder for any reason, he shall return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company or any of its affiliates, except that he may retain personal
notes, notebooks and diaries. Executive further agrees that he shall not retain
or use for his account at any time any trade name, trademark, service mark or
other proprietary business designation used or owned in connection with the
business of the Company or any of its affiliates.
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ARTICLE 5
OBLIGATIONS OF COMPANY ON CHANGE IN CONTROL
Section 5.01. Payment of Performance-Based Awards. In the event that a
Change in Control occurs during the Agreement Term 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 calculated, and 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 5.01 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 5.02. Stock Options, Stock Appreciation Rights and
Non-Performance-Based Awards. In the event that a Change in Control occurs
during the Agreement Term and while Executive is employed by the Company, all
outstanding stock options, stock appreciation rights, restricted stock (if not
performance-based), and other non-performance-based awards held by Executive
pursuant to the provisions of the Stock Incentive Plan or any successor plan
shall become immediately vested, nonforfeitable and exercisable as of the date
of the Change in Control.
Section 5.03. Additional Severance Benefits. In the event Executive's
employment is terminated under circumstances described in clauses (i) or (ii) of
Section 4.01 either (I) during the Change Period; or (II) within one year prior
to, and in anticipation of, a Change in Control, then, as of the later of the
date of termination of Executive's employment and the Change in Control,
Executive shall be entitled to the payments and benefits provided under Section
4.01 with the following changes:
(a) Section 4.01(b) shall be applied without giving effect to the proviso
included in such Section. The payment under this Section 5.03(a) shall be
reduced, if Executive's employment has been terminated in anticipation of a
Change in Control as described in clause (II) above, by the total payment (if
any) made to Executive under Section 4.01(b) between the date of termination of
Executive's employment and the date of payment under this Section 5.03(a).
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(b) Section 4.01(d) shall be applied (x) without giving effect to clause
(ii) of such Section (therefore continuing Executive's eligibility to
participate in applicable benefit plans and fringe benefits, to the extent
permitted, for a period of 36 months) and (y) eliminating the reference to life
insurance or survivor benefits coverage and any free or reduced rate flight or
other travel benefits or privileges to which Executive would otherwise be
entitled under Section 4.01(d) (which are dealt with in paragraphs (d) and (e)
below). For purposes of computing amounts payable under Section 4.01(d) (as
modified by the foregoing sentence), the present value referred to in such
Section shall be determined by the actuarial firm acting as actuary for the
Qualified Pension Plan at such time (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 to both the Company and Executive within fifteen business days of
the receipt of notice from Executive that a termination, or (if later) a Change
in Control, has occurred giving rise to the right to benefits under this Section
5.03, 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. If Executive's
employment has been terminated in anticipation of a Change in Control as
described in clause (II) above, and the Company has paid Executive the cash
present value of any coverage or benefits (other than life insurance or survivor
benefits coverage, or free or reduced rate flight or other travel benefits or
privileges) to which Executive or his eligible family members would otherwise
have been entitled under Section 4.01(d), the payments otherwise due Executive
under this Section 5.03(b) shall be reduced by the total amount of such cash
present value so paid to Executive.
(c) In lieu of any continued life insurance or survivor benefits coverage
or participation to which Executive would otherwise be entitled under Section
4.01(d), for a period of three years following the date of Executive's
termination of employment, Executive shall continue to be eligible to
participate in any life insurance or survivor benefit arrangements on the same
terms as in effect immediately preceding such termination of employment. If
Executive's employment has been terminated in anticipation of a Change in
Control as described in clause (II) above and the Company has paid Executive the
cash present value of any life insurance or survivor benefits coverage or
participation to which Executive or his eligible family members became entitled
under Section 4.01(d), any payments or benefits otherwise due Executive under
this Section 5.03(c) shall be reduced by the total amount of such cash present
value so paid to Executive.
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(d) In lieu of any free or reduced rate flight or other travel benefits or
privileges to which Executive would otherwise be entitled under Section 4.01(d),
but without limitation upon any retiree flight privileges for which Executive
may otherwise qualify, 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. If Executive's
employment has been terminated in anticipation of a Change in Control as
described in clause (II) above and the Company has paid Executive the cash
present value of any free or reduced rate flight or other benefits or privileges
to which Executive or his eligible family members became entitled under Section
4.01(d), any payments otherwise due Executive under this Section 5.03 shall be
reduced by the total amount of such cash present value so paid to Executive.
(e) Section 4.01(e) shall be applied on and after the third anniversary of
Executive's termination of Employment and if Executive has earned at least ten
years of continuous service under the Qualified Pension Plan as of the date of
termination of employment (after crediting Executive with three additional years
of service credit) the Company shall pay Executive a lump sum, in cash, equal to
the present value (as of the date of the termination of employment) of any
premium imposed solely because of early retirement.
(f) If Executive's employment has terminated in anticipation of a Change
in Control as described in clause (II), above, the Company shall pay Executive
the amount that would have been payable to him under Section 5.01 had the Change
in Control occurred as of the date of termination of his employment; provided,
however, that the payment under this Section 5.03(f) 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 5.01.
Section 5.04. Definition of Disability. After the occurrence of a Change
in Control, the term "Disability," as used in Article 4, shall mean Long-Term
Disability, as such term is defined in the Disability Plan.
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ARTICLE 6
CERTAIN TAX PAYMENTS
Section 6.01. Gross-Up Payment. In the event Executive becomes entitled
to benefits under Section 4.01 or Article 5 hereof, the Company shall pay to
Executive an additional lump sum payment (the "Gross-Up Payment"), in cash,
equal to the sum of the amounts, if any, described in paragraphs (a) and (b)
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 4.01(d) or 4.01(e),
to the extent such payments or coverage are provided in respect of benefits or
coverage which, if provided to Executive while employed by the Company, would
not have been taxable to Executive, 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
sufficient to pay 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 therefore (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 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 sufficient to pay the Excise Tax imposed on the Total Payments.
The amounts payable under this Section 6.01 shall be paid by the Company
as soon as practicable (but in no event more than 30 days) after the occurrence
of the events giving rise to Executive's right to benefits under Section 4.01 or
Article 5.
Section 6.02. Determinations. In the event of a Change in Control, all
determinations required to be made under this Article 6, including the amount of
the Gross-Up Payment, whether a payment is required under Paragraph (b) of
Section 6.01, and the assumptions to be used in determining the Gross-Up
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Payment, shall be made by Deloitte & Touche (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 an event giving rise to the right to benefits under Article 5, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for a 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 6.03. Subsequent Redeterminations. 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 previously
determined under this Article 6; 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 6, 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 applicable federal,
state and local taxes on such additional amount, Executive will retain an amount
sufficient to pay 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 6.03, 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 7
SUCCESSORS AND ASSIGNMENTS
Section 7.01. 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
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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 them if no such succession had taken place.
Section 7.02. 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 8
MISCELLANEOUS
Section 8.01. 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
Attention: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company, with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
Attention: Robert J. Stucker
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.
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Section 8.02. 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 in connection with the negotiation and
preparation of this Agreement or as a result of (i) the Company's refusal to
provide 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 6.03, or (v) Executive's pursuing any claim under
Section 8.18. Notwithstanding the foregoing, in the case of any such fees,
costs, interest or other expenses incurred prior to a Change in Control,
Executive shall be entitled to payment hereunder only if Executive is successful
to a material degree in the contest or dispute giving rise thereto.
Section 8.03. Calculation of Taxes. For purposes of any provision of this
Agreement requiring the payment by the Company of Executive's applicable
federal, state and local taxes with respect to any benefit or payment provided
for hereunder, such 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 by Executive of such benefit or payment.
Section 8.04. Arbitration. Executive and, unless a Change in Control shall
have occurred, the Company 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 job with the Company, in accordance with the rules of the
American Arbitration Association then in effect. Executive's or the Company'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 8.05. Unfunded Agreement. Except to the extent otherwise provided
in Section 3.04 and Article 5, 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 8.06. Covenants; Confidential Information. (a) Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company, or any of
its subsidiaries, affiliates
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and businesses, which shall have been obtained by Executive pursuant to his
employment by the Company or any of its subsidiaries and affiliates and which
shall not have become public knowledge (other than by acts by Executive or his
representatives in violation of this Agreement). After termination of
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
After the occurrence of a Change in Control, in no event shall an asserted
violation of the provisions of this Section 8.06 constitute a basis for
deferring or withholding any amounts otherwise payable to Executive under this
Agreement.
(b) Executive acknowledges and recognizes the highly competitive nature of
the business of the Company and its Affiliates and accordingly agrees that, in
consideration of the benefits and protections conferred under this Agreement,
during the term of Executive's employment with the Company and for 2 years
following the date of Executive's termination of employment, Executive shall
not, other than with the prior written consent of the Company, directly or
indirectly provide management or executive services (whether as a consultant,
advisor, officer or director) to any Person who is in direct and substantial
competition with the air transportation business of the Company or its
Subsidiaries.
(c) During the term of Executive's employment with the Company and for 2
years following the date of Executive's termination of employment, Executive
shall not recruit, solicit or induce any nonclerical employee or employees of
the Company or its Affiliates to terminate their employment with, or otherwise
cease their relationship with, the Company or its affiliates or hire or assist
another person or entity to hire any nonclerical employee of the Company or its
affiliates or any person who within twelve months before had been a nonclerical
employee of the Company or its Affiliates.
(d) If Executive breaches the non-competition covenant of paragraph (b)
above or the non-solicitation covenant of paragraph (c) above, (i) Executive
shall not be entitled to any further benefits under the Excess Benefit Agreement
and (ii) Executive shall repay to the Company in cash an amount equal to the
Liquidated Damages.
(e) 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 restrictions will adequately protect
the legitimate business interest of the Company. If any tribunal of competent
jurisdiction finds that any restriction contained in this Agreement is
unenforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
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(f) Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section 8.06
would be inadequate and, in recognition of this fact, Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to seek equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available.
(g) Notwithstanding any other provisions of this Agreement, the provisions
of this Section 8.06 shall survive and remain in effect notwithstanding the
termination of this Agreement or any breach by the Company or Executive of any
other term of this Agreement.
Section 8.07. 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
or becomes 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, the Retention Program and the Excess Benefit
Agreement, but excluding benefits under any broad-based severance plan), during,
at or subsequent to the date of termination of Executive's employment shall be
payable in accordance with such plan, policy, practice, or program except as
expressly modified by this Agreement.
Section 8.08. Compensation Taken Into Account. Severance Benefits provided
hereunder (other than, to the extent applicable, amounts payable pursuant to
Sections 4.01(a), 4.01(c) and 5.01) 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 Excess Benefit
Agreement).
Section 8.09. 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 8.10. 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.
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Section 8.11. 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, except that offsets for amounts
previously paid shall be permitted to the extent expressly provided in Sections
4.01(c) and 5.04.
Section 8.12. Entire Agreement. Except as provided in Section 8.07, this
Agreement, together with the Exhibits hereto, represents the entire agreement
between the parties with respect to Executive's employment and/or severance
rights (including upon a Change in Control), and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, the Old Employment Agreement and any prior severance agreement
made between Executive and the Company.
Section 8.13. 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 8.14. 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 8.15. Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Agreement, and this Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
Section 8.16. 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 8.17. 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 8.18. 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 8.18 nor Executive's failure to adhere to such procedure shall
derogate
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from Executive's right to enforce this Agreement through legal action, including
arbitration as provided in Section 8.04.
Section 8.19. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the 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 9
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 6.02.
"Accrued Benefits" has the meaning accorded such term in Section 4.01(a).
"Actuarial Firm" has the meaning accorded such term in Section 5.03(b).
"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.
"Agreement Term" has the meaning accorded such term in Section 1.01.
"Annual Award" has the meaning accorded such term in Section 3.02(a).
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"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.
"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 action 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
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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
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
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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.
"Change Period" has the meaning accorded such term in Section 1.02.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory paragraph
of this Agreement.
"Compensation Committee" has the meaning accorded such term in Section
3.01.
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"Disability" means, except to the extent modified pursuant to Section
5.04, Executive's inability due to physical or mental incapacity for a period of
six consecutive months or for an aggregate of nine months in any 18 consecutive
month period substantially to perform his duties hereunder.
"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 a 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.
"Employee Grantor Trust" has the meaning accorded such term in the Excess
Benefit Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Benefit Agreement" has the meaning accorded such term in Section
3.04(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excise Tax" has the meaning accorded such term in Section 6.01.
"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.
"Fiscal Year" means a fiscal year of the Company.
"Good Reason" means, other than by reason of the Company's compliance with
any legal, regulatory or corporate governance requirement, the occurrence of
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any one or more of the following, unless Executive has expressly consented in
writing thereto:
(a) The assignment to Executive of duties inconsistent with Executive's
authorities, duties, titles, responsibilities and status as an officer of the
Company, or a reduction or alteration in the nature or status of Executive's
authorities, duties, titles or responsibilities, from those in effect as of the
Effective Date and described in Section 2.01; 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 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
Executive's 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 Executive's 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 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 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 Executive
receives 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, or the failure of the Company to meet
the funding requirements, if any, of any such programs (other than pursuant to
an equivalent reduction in such benefits or pursuant to an equivalent failure to
meet the funding requirements of such programs applicable to all similarly
situated full-time domestic employees of the Company who are not subject to a
collective bargaining agreement);
(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 7 herein, provided that such successor has received at least ten days
written notice from the Company or Executive of the requirements of Article 7;
or
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(f) Executive's ceasing to be Chairman of the Board.
"Gross-Up Payment" has the meaning accorded such term in Section 6.01.
"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.
"Later Payment" has the meaning accorded such term in Section 6.03.
"Liquidated Damages" means the sum of (a) and (b) where:
(a) equals the sum of (x) all contributions (if any) made by the Company
to the Employee Grantor Trust, (y) all payments (if any) made directly to the
Executive, his spouse, eligible family member or beneficiary under the Excess
Benefit Agreement and (z) all related amounts with respect to such contributions
or payments withheld by the Company for the purpose of satisfying tax
withholding requirements; and
(b) equals the amount that would have been earned with respect to such
contributions or payments had such amounts been invested in an interest-bearing
account, compounded annually, using an annual interest rate equal to the sum of
(i) the prime rate as published in the Wall Street Journal on the date of such
contribution or payment was made to the trust and (ii) 2%.
"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 a Change in Control (subject to changes in coverage levels
applicable to all employees generally covered by such Plans).
"Old Employment Agreement" has the meaning accorded such term in the
second "Whereas" clause of this Agreement.
"Person" means an individual, corporation, partnership, association, trust
or any other entity or organization.
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"Qualified Pension Plan" means the Delta Family-Care Retirement Plan (or
any successor qualified defined benefit retirement plan adopted by the Company).
"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:
(a) for purposes Section 5.01 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 all other purposes hereunder, the greater of (A) the target annual
incentive compensation award or bonus most recently established prior to the
termination of Executive's employment and (B) the actual annual incentive
compensation award or bonus for the Company's most recently completed Fiscal
Year prior to the 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 Executive's annual rate of Base Salary as in
effect upon the date of termination of Executive's employment or, in the event
of such a termination during the Change Period, immediately prior to the Change
in Control, if higher.
"Remaining Months" has the meaning accorded such term in Section 4.01(b).
"Renewal Award" has the meaning accorded such term in Section 3.06.
"Retention Program" means the Company 2002 Retention Program.
"Retirement Age" means Executive's age on January 1, 2008.
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"Severance Benefits" has the meaning accorded such term in Section 4.01.
"Stock Incentive Plan" means the Company's 1989 Stock Incentive Plan and
the Company's 2000 Performance Compensation Plan.
"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.
"Supplemental Retirement Benefit" has the meaning accorded such term in
Section 3.04(a).
"Total Payments" has the meaning accorded such term in Section 6.01.
"Voting Stock" means securities of the Company entitled to vote generally
in the election of members of the Board.
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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.
By:
------------------------------ -----------------------------
Leo F. Mullin Name: Edward H. Budd
Title: Chairman, Personnel &
Compensation Committee
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EXHIBIT A
DELTA 2000 PERFORMANCE COMPENSATION PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
November 29, 2002
Leo F. Mullin
Chief Executive Officer
The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of a Non-Qualified Stock
Option, effective as of November 29, 2002, and has requested 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 or one or more of its Subsidiaries, hereby agree as follows:
1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 450,000 Non-Qualified Stock Options (each a "Stock Option"). Each Stock
Option may be exercised for one share of Company common stock (an "Option
Share"). This award is in all respects made subject to the terms and conditions
of the Plan and, in the event of any conflict between the Plan and this
Agreement, the Plan shall control. You acknowledge that you (a) have had a full
and adequate opportunity to read this Agreement and the Plan; (b) agree to all
of the terms and conditions thereof for yourself, any designated beneficiary and
your heirs, executors, administrators or personal representatives; and (c) have
received, and had a full and adequate opportunity to read, the Prospectus
relating to the Plan. Capitalized terms which are used but not defined in this
Agreement shall have the meanings set forth in the Plan.
2. Option Exercise Price. The Option Exercise Price of the Stock Options covered
by this award shall be $13.50, the closing price of the Company common stock on
the New York Stock Exchange on the date of this award.
3. Exercise Period. Subject to the terms and conditions of the Plan and this
Agreement, 100% of the Stock Options shall become exercisable on the earlier of
(a) the first business day of January 2008 and (b) the occurrence of a Change in
Control, and shall be exercisable through and including November 28, 2012. In
the event your employment with the Company terminates prior to the earlier of
(a) December 31, 2007 and (b) the occurrence of a Change in Control, the
This document constitutes part of a prospectus covering
securities that have been registered under the Securities Act of 1933.
<PAGE>
Stock Options and all associated rights shall be forfeited at the time of such
termination of employment.
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4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company; and
(ii) termination of employment with the Company means you are no longer an
employee of the Company or any of its Subsidiaries.
5. Stock Option Exercise Procedures. Subject to the terms and conditions of the
Plan and this Agreement, you (or, pursuant to Paragraph 7 of this Agreement, a
party acting on your behalf after your death) may exercise your Stock Options in
whole or, from time to time, in part pursuant to the procedures described in the
Prospectus relating to the Plan or as otherwise specified by the Company from
time to time. 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.
6. Tax Withholding. The Company may in its sole discretion withhold from the
shares of Company common stock issued to you a sufficient number of shares of
such 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, local or foreign tax laws, rules or regulations.
The fair market value for purposes of the second sentence of this paragraph
shall be as determined by the Committee.
7. Restrictions on Transferability. Your stock options are not transferable
otherwise than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan, and are exercisable during
your lifetime only by you. In the event that your Stock Options are to be
exercised by any person other than you, such person shall provide appropriate
proof of his or her right to exercise your Stock Options.
8. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock to
exercise your Stock Options or sales of Company common stock acquired pursuant
to the exercise of your Stock Options. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.
9. Miscellaneous
a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no
3
<PAGE>
obligation to construe this Agreement or treat your Stock Options in a manner
consistent with the treatment provided with respect to other Stock Options or
Participants.
b. No Rights as Shareholder. You will not have any rights to dividends nor
any other rights of a shareholder with respect to the Option Shares until the
Option Shares have been issued following a valid exercise of the Stock Option.
c. Entire Agreement. This Agreement and the Plan constitute the entire
agreement between you and the Company with respect to the subject matter hereof.
This Agreement may not be amended except by a writing signed by the parties.
This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.
4
<PAGE>
IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.
DELTA AIR LINES, INC.
By:
-------------------------------------
Edward H. Budd, Chairman
Personnel & Compensation Committee
PARTICIPANT
--------------------------------------------
Leo F. Mullin
5
<PAGE>
EXHIBIT B
DELTA 2000 PERFORMANCE COMPENSATION PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
November 29, 2002
Leo F. Mullin
Chief Executive Officer
The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of restricted stock units,
effective as of November 29, 2002, and has requested 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 or one or more of its Subsidiaries, hereby agree as follows:
1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 150,000 restricted stock units (each an "RSU"). Each RSU represents a
right to a payment equal to the value of one share of Company common stock (a
"Share") in the future. This award is in all respects made subject to the terms
and conditions of the Plan and, in the event of any conflict between the Plan
and this Agreement, the Plan shall control. This award represents a grant of an
"Other Equity Based Award" under the Plan. You acknowledge that you (a) have had
a full and adequate opportunity to read this Agreement and the Plan; (b) agree
to all of the terms and conditions thereof for yourself, any designated
beneficiary and your heirs, executors, administrators or personal
representatives; and (c) have received, and had a full and adequate opportunity
to read, the Prospectus relating to the Plan. Capitalized terms which are used
but not defined in this Agreement shall have the meanings set forth in the Plan.
2. Value. The value of one RSU on any given date will be equal to the closing
price of the Company common stock on the New York Stock Exchange as of such date
(or, in the event that no sale of the Company common stock takes place on the
New York Stock Exchange on such date, the closing price of such common stock on
the immediately preceding date).
3. Terms. Subject to the terms and conditions of the Plan and this Agreement,
you shall be entitled to receive (and the Company shall deliver to you) a
payment equal to the value of 100% of the Shares underlying the RSUs, on the
earlier of (a) the first business day of January 2008, subject to your continued
employment by the Company on December 31, 2007 and (b) the
This document constitutes part of a prospectus covering
securities that have been registered under the Securities Act of 1933.
<PAGE>
occurrence of a Change in Control, subject to your continued employment by the
Company on the date immediately preceding the Change in Control. Such payment
may, at the election of the Committee, be in cash or in Shares. In the event
your employment with the Company terminates prior to the date which immediately
precedes the earlier of (a) the first business day of January 2008 and (b) the
occurrence of a Change in Control, the RSUs and any and all associated rights
shall be forfeited at the time of such termination of employment.
4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company and (ii)
termination of employment with the Company means you are no longer an employee
of the Company or any of its Subsidiaries.
5. Tax Withholding. The Company may in its sole discretion withhold from the
payment to you hereunder a sufficient amount (in cash or Shares) 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 payment.
6. Restrictions on Transferability. Your RSUs are not transferable otherwise
than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan.
7. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock
acquired in connection with your RSUs. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.
8. Miscellaneous
a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no obligation to construe
this Agreement or treat your RSUs in a manner consistent with the treatment
provided with respect to other RSUs or Participants.
b. No Rights as Shareholder. An RSU does not represent an equity
interest in the Company, and carries no voting rights. You will not have any
rights of a shareholder with respect to the RSUs until the Shares have been
delivered to you.
c. Dividends. To the extent dividends are paid on Shares while the RSUs
remain outstanding, you shall be credited with corresponding notional dividends
with respect to the RSUs. The notional dividends credited to you shall be
subject to the same restrictions applicable to the RSUs and shall be paid to you
in accordance with Sections 3 and 5 of this Agreement.
2
<PAGE>
d. Entire Agreement. This Agreement and the Plan constitute the
entire agreement between you and the Company with respect to the subject
matter hereof. This Agreement may not be amended except by a writing signed
by the parties.
This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.
3
<PAGE>
IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.
DELTA AIR LINES, INC.
By:
-------------------------------------
Edward H. Budd, Chairman
Personnel & Compensation Committee
PARTICIPANT
-----------------------------------------
Leo F. Mullin
4
<PAGE>
EXHIBIT C
DELTA 2000 PERFORMANCE COMPENSATION PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
January [ ], 2004
Leo F. Mullin
Chief Executive Officer
The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of restricted stock units,
effective as of January [ ], 2004, and has requested 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 or one or more of its Subsidiaries, hereby agree as follows:
1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 150,000 restricted stock units (each an "RSU"). Each RSU represents a
right to a payment equal to the value of one share of Company common stock (a
"Share") in the future. This award is in all respects made subject to the terms
and conditions of the Plan and, in the event of any conflict between the Plan
and this Agreement, the Plan shall control. This award represents a grant of an
"Other Equity Based Award" under the Plan. You acknowledge that you (a) have had
a full and adequate opportunity to read this Agreement and the Plan; (b) agree
to all of the terms and conditions thereof for yourself, any designated
beneficiary and your heirs, executors, administrators or personal
representatives; and (c) have received, and had a full and adequate opportunity
to read, the Prospectus relating to the Plan. Capitalized terms which are used
but not defined in this Agreement shall have the meanings set forth in the Plan.
2. Value. The value of one RSU on any given date will be equal to the closing
price of the Company common stock on the New York Stock Exchange as of such date
(or, in the event that no sale of the Company common stock takes place on the
New York Stock Exchange on such date, the closing price of such common stock on
the immediately preceding date).
3. Terms. Subject to the terms and conditions of the Plan and this Agreement,
you shall be entitled to receive (and the Company shall deliver to you) a
payment equal to the value of 100% of the Shares underlying the RSUs, on the
earlier of (a) the first business day of January 2008, subject to your continued
employment by the Company on December 31, 2007 and (b) the occurrence of a
Change in Control, subject to your continued employment by the Company on
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
<PAGE>
the date immediately preceding the Change in Control. Such payment may, at the
election of the Committee, be in cash or in Shares. In the event your employment
with the Company terminates prior to the date which immediately precedes the
earlier of (a) the first business day of January 2008 and (b) the occurrence of
a Change in Control, the RSUs and any and all associated rights shall be
forfeited at the time of such termination of employment.
4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company and (ii)
termination of employment with the Company means you are no longer an employee
of the Company or any of its Subsidiaries.
5. Tax Withholding. The Company may in its sole discretion withhold from the
payment to you hereunder a sufficient amount (in cash or Shares) 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 payment.
6. Restrictions on Transferability. Your RSUs are not transferable otherwise
than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan.
7. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock
acquired in connection with your RSUs. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.
8. Miscellaneous
a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no obligation to construe
this Agreement or treat your RSUs in a manner consistent with the treatment
provided with respect to other RSUs or Participants.
b. No Rights as Shareholder. An RSU does not represent an equity interest
in the Company, and carries no voting rights. You will not have any rights of a
shareholder with respect to the RSUs until the Shares have been delivered to
you.
c. Dividends. To the extent dividends are paid on Shares while the RSUs
remain outstanding, you shall be credited with corresponding notional dividends
with respect to the RSUs. The notional dividends credited to you shall be
subject to the same restrictions applicable to the RSUs and shall be paid to you
in accordance with Sections 3 and 5 of this Agreement.
2
<PAGE>
d. Entire Agreement. This Agreement and the Plan constitute the entire
agreement between you and the Company with respect to the subject matter hereof.
This Agreement may not be amended except by a writing signed by the parties.
This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.
3
<PAGE>
IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.
DELTA AIR LINES, INC.
By:
-------------------------------------
Edward H. Budd, Chairman
Personnel & Compensation Committee
PARTICIPANT
-----------------------------------------
Leo F. Mullin
4