Back to top

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT

Employee Retention Agreement

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT | Document Parties: NORTHWEST AIRLINES CORP | Delta Air Lines Merger Corporation | NORTHWEST AIRLINES, INC You are currently viewing:
This Employee Retention Agreement involves

NORTHWEST AIRLINES CORP | Delta Air Lines Merger Corporation | NORTHWEST AIRLINES, INC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT
Governing Law: Minnesota     Date: 4/30/2008
Industry: Airline     Sector: Transportation

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT, Parties: northwest airlines corp , delta air lines merger corporation , northwest airlines  inc
50 of the Top 250 law firms use our Products every day

Exhibit 10.13

 

EXECUTION VERSION

 

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT (“ Agreement ”) made as of April 14, 2008 between NORTHWEST AIRLINES, INC., a Minnesota corporation (the “ Company ”) and Douglas M. Steenland (the “ Executive ”).

 

WHEREAS, the Company and Executive have previously entered into a Management Compensation Agreement dated as of September 14, 2005 (the “ Management Compensation Agreement ”) pursuant to Section 5.3 of which Executive would be entitled to resign for any reason during the 30 day period commencing on the first anniversary of the effective date of the confirmed plan or reorganization of the Company under the Bankruptcy Code and receive certain severance payments as set forth in the Management Compensation Agreement (the “ Emergence Resignation Right ”);

 

WHEREAS, Northwest Airlines Corporation has entered into an Agreement and Plan of Merger by and among Delta Air Lines Corporation, Delta Air Lines Merger Sub and Northwest Airlines Corporation dated as of April 14, 2008 (the “ Merger Agreement ”) pursuant to which, subject to certain conditions described therein, it is anticipated that Delta Air Lines Merger Corporation will merge with and into Northwest Airlines Corporation with Northwest Airlines Corporation continuing as the surviving corporation (as described more fully in the Merger Agreement, the “ Merger ”);

 

WHEREAS, the Company recognizes that the period between the signing of the Merger Agreement and its consummation, or termination of the Merger Agreement, could be as long as 18 months during which Executive’s continued leadership as Chief Executive Officer of the Company through the consummation of the Merger is important to the ongoing success of the Company;

 

WHEREAS, the Company appreciates that, notwithstanding its best efforts and expectation that the Merger will be consummated, it is possible that for regulatory or other reasons the Merger Agreement could be terminated without the Merger having occurred and that Executive’s continued leadership following the termination of the Merger Agreement would be critical;

 

WHEREAS, the Company recognizes Executive’s exercise of his Emergence Resignation Right and departure from the Company would be detrimental to the best interests of the Company and could jeopardize the successful completion of the Merger and diminish the enterprise value of the Company;

 

WHEREAS, the Company desires that Executive waive his right to exercise the Emergence Resignation Right and agree to non-competition and non-solicitation restrictive covenants in consideration for the grant of the restricted retention units pursuant to this Agreement as a form of retention compensation designed to encourage Executive to remain employed with the Company through the consummation of the Merger and, if the Merger Agreement is terminated, to continue to serve as Chief Executive Officer over the four year

 



 

period following the termination of the Merger Agreement, as more fully described herein; and

 

WHEREAS, the Company and Executive desire to make certain other clarifying and other modifications to the Management Compensation Agreement, as described more fully herein.

 

Accordingly, as of the date hereof, the Company and Executive hereby agree as follows:

 

(Capitalized terms used herein without definition have the meanings specified in Section 17 below).

 

1.      Grant of Restricted Retention Units .  As of the date hereof, the Company hereby grants Executive 375,000 restricted retention units (“ RRUs ”), on the terms and conditions hereinafter set forth.  Each RRU represents the unfunded, unsecured right of Executive to receive a cash payment in the amount, and on the date(s) specified herein.

 

2.      Vesting .

 

(a)    Subject to Executive’s continued employment with the Company, the RRUs shall vest as follows:

 

(i)  If the Merger Agreement is terminated without the Merger having occurred, then 25% of the RRUs shall vest on each of the first four anniversaries of the date of the termination of the Merger Agreement (each a “ Scheduled Vesting Date ”); and

 

(ii)  If (x) Executive’s employment with the Company is terminated by Executive for Good Reason or by the Company without Cause, or due to Executive’s death or Disability (each a “ Qualifying Termination ”) or (y) the Merger contemplated by the Merger Agreement is consummated, then the unvested portion of the RRUs, to the extent not previously forfeited, shall become immediately vested on the date of such termination or consummation, as the case may be (an “ Accelerated Vesting Date ”).  Upon Executive’s termination of employment for any reason other than a Qualifying Termination, any unvested RRUs shall immediately be forfeited and terminate and be of no further force and effect.

 

3.      Payment In Respect of RRUs .  Upon each Vesting Date, the Company shall pay Executive an amount, in cash, equal to the product of (x) the number of RRUs which vested as of such Vesting Date times (y) the Fair Market Value per Share on the Vesting Date; provided that for this purpose, in no event shall the Fair Market Value per Share be deemed to exceed $22.00 per Share.

 

4.      Adjustments Upon Certain Events .  In the event of any change in the outstanding Shares after the date hereof by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or

 

2



 

transaction or exchange of Shares or other corporate exchange, or any distribution to shareholders of Shares other than regular cash dividends or any transaction similar to the forgoing, the Committee shall, without any liability to any person and in a manner determined in its reasonable discretion, make an equitable substitution or adjustment (to the extent necessary to prevent dilution or enlargement of the benefits or potential benefits intended to provided to Executive hereunder) as to (i) the number or kind of Shares to which the RRUs relate, (ii) the number of RRUs granted hereunder, and/or (iii) any other affected term of the RRU award.

 

5.      No Right to Continued Employment .  The granting of RRUs evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to continue the employment of Executive and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the employment of Executive.

 

6.      No Rights of a Shareholder .  Executive shall not have any rights as a shareholder of the Corporation as a result of the grant of the RRUs and all payments in respect of RRUs will be made in cash.

 

7.      Transferability .  The RRUs may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Executive otherwise than by will or by the laws of descent and distribution, and any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance not permitted by this Section 7 shall be void and unenforceable against the Company or any Affiliate.

 

8.      Restrictive Covenants .

 

(a)    Forfeiture Upon Competing Employment .  Upon a termination of employment for any reason, if Executive shall, during the one year period following Executive’s termination of employment with the Company (the “ Restricted Period ”)  become an employee, officer, or director of any Competitive Airline (as defined below) or acquire a 10% or greater equity interest in any such Competitive Airline, then if such activity is not ceased within 5 business days of Executive’s receipt of written notice from the Company of such activity (a “ Compete Notice ”), Executive shall be obligated, as liquidated damages, to promptly repay to the Company a portion of the aggregate amounts paid to Executive pursuant to Section 3 above (the “ Aggregate RRU Payment ”) equal to the product of (x) the Aggregate RRU Payment times (y) the percentage of the Restricted Period which had not elapsed as of the date of the Compete Notice (the “ Liquidated Damages Amount ”).  For the avoidance of doubt, the Company’s remedy in the event of the Executive’s breach of this Section 8(a) shall be limited to its claim for the payment of the Liquidated Damages Amount from Executive.  “ Competitive Airline ” shall mean any of American Airlines, Continental Airlines, United Airlines or US Airways (or any successor entities of any of them); provided that for this purpose, Competitive Airline shall not include any non-continental United States affiliate of any such entity.

 

3



 

(b)    No Solicitation of Employees .  During the Restricted Period, Executive will not, directly or indirectly: (A) solicit or encourage any employee of the Company or its Affiliates to leave employment with the Company or its Affiliates, (B) hire such employee who was employed by the Company or its Affiliates on the date of Executive’s termination of employment with the Company or who left the employment of the Company or its Affiliates coincident with, or within one year prior to or after, the termination of Executive’s employment with the Company; provided the restriction in this clause (B) shall not apply with respect to any employee from and after the six month anniversary of such employee’s termination of employment with the Company or (C) encourage to cease to work for the Company or its Affiliates any consultant then under contract with the Company or its Affiliates.  The foregoing shall not be violated by general advertising not targeted at Company employees nor by serving as a reference upon request with regard to an opportunity at an entity with which Executive is not affiliated.

 

9.      Amendments to Management Compensation Agreement.

 

(a)    Emergence Resignation Right .  As of the date hereof, Executive hereby waives his right to exercise the Emergence Resignation Right and Section 5.3 of the Management Compensation Agreement is hereby amended to delete the phrase:

 

  “. . . or during the 30-day p








 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more