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
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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.
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(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
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