MANAGEMENT
COMPENSATION AGREEMENT
MANAGEMENT COMPENSATION
AGREEMENT made as of the 14
th day of January,
2002 between Northwest Airlines, Inc., a Minnesota corporation
(the “ Company ”) and Philip C. Haan (the
“ Executive ”).
PREAMBLE
The Company and Executive
hereby desire to enter into a Management Compensation Agreement
dated as of January 14, 2002.
1.
Terms of Employment
.
1.1
Employment.
The Company agrees to
continue to employ Executive, and Executive agrees to continue to
serve the Company, on the terms and conditions set forth
herein.
1.2
Position and Duties.
During the term of
Executive’s employment hereunder, Executive shall continue to
have his title, powers and duties as on the Effective Date or such
other powers and duties as may from time to time be prescribed by
the Company, provided that such powers and duties are consistent
with or represent a promotion from Executive’s powers and
duties as of the Effective Date, unless otherwise consented to in
writing by Executive; provided, however, that as long as
Executive retains a substantial portion of his then current
oversight responsibility, the Company shall be permitted to
transfer a portion of Executive’s oversight responsibility
without the consent of Executive. Executive shall devote
substantially all his working time and effort to the business and
affairs of the Company and its affiliates.
2.
Compensation .
2.1
Base Salary.
Executive’s Base
Salary shall be his base salary in effect on the Effective Date, as
increased thereafter by the Company. Executive’s Base Salary
in effect from time to time may only be reduced in connection with
a base wage reduction for salaried employees of the Company, by an
amount not to exceed 20% of Base Salary in effect on the date of
such wage reduction. For purposes of calculating any other payments
or benefits hereunder (except as specified in Section 2.4) any
reductions in Base Salary shall be disregarded. Executive’s
Base Salary shall be payable in accordance with the Company’s
payroll policies.
2.2
Bonus. Executive shall be entitled to
participate in the Company’s Key Employee Annual Cash
Incentive Plan (the “KEACIP”) or any successor annual
bonus plan, the terms and conditions of which shall be established
by the Board from time to time.
2.3
Expenses.
During the term of
Executive’s employment hereunder, Executive shall be entitled
to receive prompt reimbursements for all reasonable expenses
incurred in performing services hereunder, provided that
Executive properly accounts therefor in accordance with Company
policy.
2.4
Compensation and Benefit
Programs of the Company. Except as set forth below, Executive
shall continue while employed hereunder to participate in the
Company’s employee compensation and benefit programs (or any
successor programs) at levels in effect on the Effective Date.
Exceptions to the preceding sentence are:
(a)
Amounts payable to Executive
under the Company’s benefit programs may be reduced to
reflect a benefit reduction for salaried employees of the Company,
in the same manner that salaried employees are generally affected
by such reduction.
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(b)
Executive shall not participate
in any severance pay plan or annual bonus plan maintained by the
Company except to the extent necessary to receive any severance or
bonus payments specifically provided for hereunder.
3.
Other Benefits .
3.1
Airline Pass.
Executive shall be
entitled to receive upon termination of employment lifetime airline
pass privileges for the personal use of Executive and his or her
spouse or registered domestic partner and dependent children so
long as spouses, registered domestic partners and dependent
children of employees generally are eligible for nonrevenue travel
pursuant to the Company’s pass policies (hereinafter,
“Eligible Individuals”). Such airline pass privileges
(the “Airline Pass”) shall entitle Executive and
Eligible Individuals to travel on regularly scheduled Northwest
domestic and international flights, subject to all charges and fees
then applicable to active management employees of the Company and
their dependents and pursuant to the Company’s pass policies
in effect from time to time, with boarding priority of F-1 or the
equivalent thereof for ten (10) years from and after the date
such pass is issued and 1-R or the equivalent thereof after such
ten year period. Executive shall be responsible for any personal
income tax liability arising from such pass travel. Notwithstanding
the foregoing, all benefits under this Section 3 shall
immediately and permanently cease in the event Executive violates
the Company’s pass policies in connection with such travel
and/or in the event that Executive is or becomes, at any time
thereafter, an employee of any of the top five airlines in the
United States (other than the Company) ranked by revenue passenger
miles.
3.2
Medical and Dental
Benefits.
While employed by the Company and thereafter during the
Executive’s lifetime, Executive and his eligible dependents
shall be entitled to participate in the Company’s medical and
dental plans generally applicable to all management employees of
the Company under the same terms and conditions as shall apply to
such management employees; provided, however, that if in the future
Executive becomes employed by another employer, such coverage shall
become secondary to any coverage provided by such employer for the
period in which Executive is entitled to such coverage. In
addition, while employed by the Company hereunder, Executive shall
be reimbursed by the Company for all reasonable out of pocket
medical and dental expenses incurred by Executive and his eligible
dependents and not otherwise paid or provided for under any medical
plan maintained for Executive’s benefit.
4.
Termination of Employment
.
4.1
Upon Death.
Executive’s
employment hereunder shall terminate upon his death.
4.2
By the Company.
The Company may
terminate Executive’s employment hereunder at any time with
or without Cause.
4.3
By the Executive.
Executive may terminate
his employment hereunder at any time for any reason.
4.4
Notice of Termination,
Payments. Any
termination of Executive’s employment hereunder (other than
by death) shall be communicated by thirty (30) days’
advance written Notice of Termination by the terminating party to
the other party to this Agreement; provided that no advance
Notice of Termination of Executive for Cause by the Company is
required.
5.
Payments in the Event of
Termination of Employment .
5.1
Payments in the Event of
Termination by the Company for Cause or Voluntary Termination by
Executive. If
Executive’s employment hereunder is terminated by the Company
for Cause, as a result of death or Disability or by Executive other
than for Good Reason, the Company shall pay Executive (a) his
accrued and unpaid Base Salary through the Date of Termination and
(b) any vested or accrued and unpaid payments, rights or
benefits Executive may be otherwise entitled to receive pursuant to
the
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terms of any written
retirement, pension or other employee benefit or compensation plan
maintained by the Company at the time or times provided
therein.
5.2
Payments in the Event of Any
Other Termination of Employment. If Executive’s employment
hereunder is terminated by the Company other than for Cause, or by
Executive for Good Reason:
(a)
The Company shall pay Executive
(i) his accrued and unpaid Base Salary through the Date of
Termination, (ii) any bonus under the Key Employee Cash
Incentive Bonus Program, or any successor annual bonus plan, (the
“ Incentive Bonus ”) for any calendar year ended
before the Date of Termination, (iii) a pro rata share (based
on days employed during the applicable year) of the Incentive Bonus
Executive would otherwise have received with respect to the year in
which the Date of Termination occurs, payable at the time the
Incentive Bonus would otherwise be payable to Executive;
provided, however, that 100% of the Incentive Bonus shall be
determined solely with reference to the financial performance of
the Company for the year (based on the goals previously established
with respect thereto) (rather than a portion of the Incentive Bonus
determined on the basis of individual performance); provided,
further, in the event that Company’s performance exceeds
100% of the financial performance target for the year, that portion
of the Incentive Bonus that would have, but for this
Section 5.2(a), related to the achievement of the individual
performance target shall be 100% and (iv) any vested or
accrued and unpaid payments, rights or benefits Executive may be
otherwise entitled to receive pursuant to the terms of any written
retirement, pension or other employee benefit or compensation plan
maintained by the Company at the time or times provided
therein.
(b)
In addition to the compensation
and benefits described in Section 5.2(a):
(i)
The Company shall pay
Executive, no later than thirty (30) days following
Executive’s termination of employment, a lump sum amount
equal to two (2) times the sum of (i) Executive’s
annual Base Salary and (ii) the target Incentive Bonus for
Executive with respect to the year in which the Date of Termination
occurs (or if no target has been set for that year, the target
Incentive Bonus for the immediately preceding year).
(ii)
Until the earlier of the fourth
anniversary of Executive’s Date of Termination or the date
Executive is employed by a new employer, Executive, his dependents,
beneficiaries and estate shall be entitled to all benefits under
the Company’s group life insurance as if Executive were still
employed by the Company hereunder during such period.
(c)
Executive shall not be required
to mitigate the amount of any payment provided for in this
Section 5.2 by seeking other employment or otherwise, and no
such payment shall be offset or reduced as a result of Executive
obtaining new employment.
(d)
Notwithstanding anything else
to the contrary in this Agreement, the Company’s obligation
regarding the payments and other benefits provided for in Sections
5.2(a)(iii) and 5.2(b)(i) and (ii) is expressly
conditioned upon the execution, delivery and non-revocation of a
general release in the form attached hereto as Attachment
A.
5.3
Board/Committee
Resignation.
Executive’s termination of employment for any reason, shall
constitute, as of the date of such termination and to the extent
applicable, a resignation as an officer of the Company and a
resignation from the Board (and any committees thereof) and the
Board of Directors (and any committees thereof) of any of the
Company’s affiliates and from the board of directors or
similar governing body of any corporation, limited liability
company or other entity in which the Company or any affiliate holds
an equity interest and with respect to which board or similar
governing body Executive serves as the Company’s or such
affiliate’s designee or other representative.
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6.
Confidentiality; Non-Compete;
Non-Solicitation; Nondisparagement .
While employed by the
Company and thereafter, Executive shall not disclose any
Confidential Information either directly or indirectly, to anyone
(other than appropriate Company employees and advisors), or use
such information for his own account, or for the account of any
other person or entity, without the prior written consent of the
Company or except as required by law. This confidentiality covenant
has no temporal or geographical restriction. For purposes of this
Agreement, “Confidential Information” shall mean all
non-public information respecting the Company’s business,
including, but not limited to, its services, pricing, scheduling,
products, research and development, processes, customer lists,
marketing plans and strategies, financing plans and the terms and
provisions of this Agreement, but excluding information that is, or
becomes, available to the public (unless such availability occurs
through an unauthorized act on the part of the Executive). Upon
termination of this Agreement, Executive shall promptly supply to
the Company all property and any other tangible product or document
that has been produced by, received by or otherwise submitted to
Executive during or prior to his term of employment, and shall not
retain any copies thereof.
Executive acknowledges
that his services are of special, unique and extraordinary value to
the Company. Accordingly, Executive shall not at any time prior to
the first anniversary of the Date of Termination (i) become an
employee, consultant, officer, partner or director of any air
carrier which competes with the Company (or any of its affiliates)
or (ii) whether on Executive’s own behalf or on behalf
of or in conjunction with any person, company, business entity or
other organization whatsoever, directly or indirectly solicit or
encourage any employee of the Company or its affiliates to leave
the employment of the Company or its affiliates.
While employed by the
Company and thereafter, Executive agrees not to make any untruthful
or disparaging statements, written or oral, about the Company, its
affiliates, their predecessors or successors or any of their past
and present officers, directors, stockholders, partners, members,
agents and employees or the Company’s business practices,
operations or personnel policies and practices to any of the
Company’s customers, clients, competitors, suppliers,
investors, directors, consultants, employees, former employees, or
the press or other media in any country.
Executive agrees that any
breach of the terms of this Section 6 would result in
irreparable injury and damage for which there would be no adequate
remedy at law, and that, in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction
and restraining order to prevent such breach or threatened breach,
without having to prove damages, in addition to any other remedies
to which the Company may be entitled at law or in equity. Executive
further agrees that the provisions of the covenant not to compete
are reasonable. Should a court determine, however, that any
provision of the covenant not to compete is unreasonable, either in
period of time, geographical area,
