MANAGEMENT COMPENSATION AGREEMENT
between
NORTHWEST AIRLINES, INC.
and
XXXXXXX X. XXXXXX
dated as of
September 1, 1996
MANAGEMENT COMPENSATION AGREEMENT
MANAGEMENT COMPENSATION AGREEMENT made as of the 1st day of
September, 1996 between Northwest Airlines, Inc., a Delaware corporation (the
"Company")and Xxxxxxx X. Xxxxxx (the "Executive").
PREAMBLE
The Company and Executive previously entered into a Management
Compensation Agreement dated as of October 1, 1994 (the "Prior Agreement").
As of the date hereof, the Company and Executive have agreed to replace the
Prior Agreement with this Agreement with this Agreement, which shall
supersede the Prior Agreement in all respects.
In consideration of the foregoing and of the respective covenants
and agreements herein contained, the Company and Executive have agreed as
follows:
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. Executive shall continue to have his
powers and duties as on the Effective Date and shall have such other powers
and duties as may from time to time be prescribed by the Board, provided that
such powers and duties are consistent with or represent a promotion from
Executive's duties as of the Effective Date, unless otherwise consented to in
writing by Executive; provided, however, as long as Executive retains a
substantial portion of his then current oversight responsibility, the Board
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 efforts to the business and affairs of
the Company and its subsidiaries.
2. COMPENSATION.
2.1 BASE SALARY. Executive's Base Salary shall be his annual 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 Company-wide base wage reduction, by an amount
not to exceed 20% of Base Salary in effect on the date of such Company-wide
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 normal payroll polices.
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2.2 BONUS. Executive shall be entitled to participate in the
Company's Key Employee Cash Incentive Bonus Program, and any successor annual
bonus plan, the terms and conditions of which shall be established by the
Board in its sole discretion from time to time.
2.3 EXPENSES. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred in performing services hereunder, provided that
Executive properly accounts therefor in accordance with written 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 Company-wide benefit reduction, in
the same manner that Company employees are generally affected by such
reduction.
(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.
2.5 MEDICAL BENEFITS. While employed hereunder, Executive shall be
reimbursed by the Company for all out of pocket medical expenses incurred by
him and not otherwise paid or provided for under any medical plan maintained
for the benefit of Executive.
2.6 SERP. Executive shall be a participant in the Company's
Supplemental Executive Retirement Program (the "SERP"), a copy of which is
attached hereto, and shall be entitled to receive the benefits provided for
therein.
(a) As provided for in Section 4.1.1(a)(iii) of the SERP, the grant
to Executive of two additional years of Benefit Service for each actual year
of employment completed shall be with respect to Executive's employment
commencing on and after March 24, 1994.
(b) A pre-retirement death benefit shall be payable, in the event
of Executive's death while employed hereunder, to the individual who was
Executive's spouse on the date of death. Such benefit shall be in an amount
equal to 50% of the Executive's Base Salary at the time of his death and such
amount shall be payable annually for a maximum of ten years or, if earlier,
until Executive would have attained age 65; provided, however, that the
amounts payable hereunder shall be reduced by
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all pre-retirement death benefits payable to Executive's spouse under the
Company's qualified pension plan or a supplemental executive retirement plan.
3. OTHER BENEFITS.
3.1 AIRLINE PASS. Executive is entitled to receive a lifetime
airline pass for the personal use of such Executive and his spouse and
children so long as spouses and children of employees generally are eligible
for nonrevenue travel pursuant to the Company's pass policies (hereinafter,
"Eligible Individuals"). Such airline pass (the "Airline Pass") shall entitle
Executive and Eligible Individuals to travel on regularly scheduled Northwest
domestic and international flights, subject to charges then applicable to
senior executives of the Company and their dependents, with boarding priority
of (i) F-1 or the equivalent thereof for ten years from and after the date
such pass is issued, (ii) Y-1/F-2 or the equivalent thereof for the next
succeeding ten years and (iii) 2-R or the equivalent thereof after the
aggregate twenty-year period described in clauses (i) and (ii) above. Each
Executive shall be responsible for any personal income tax liability arising
from such pass travel. The Airline Pass shall be issued to Executive upon
Executive's termination of employment with the Company; provided, however,
that all benefits under this Section 3.1 shall immediately and permanently
cease in the event 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 (the "Top Five Airlines").
3.2 OTHER MEDICAL BENEFITS. In the event Executive remains an
employee of the Company from the date of this Agreement to September 1, 1998,
Executive and his covered dependents (only as long as they shall remain
dependents) shall be entitled to medical coverage for the life of Executive
and his spouse; provided, however, if and for so long as Executive is
employed by another employer, medical coverage hereunder will become
secondary to any coverage provided by the new employer.
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 30 days
advance written Notice of Termination
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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. Unless otherwise provided in Section 5, any amounts owed by the
Company to Executive pursuant to Section 5 shall be paid on the Date of
Termination.
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. Except as provided in Section 5.3, if
Executive's employment hereunder is terminated by the Company for Cause 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
payments or other rights or benefits Executive may be otherwise entitled to
receive pursuant to the terms of (i) any retirement, pension or other
employee benefit or compensation plan maintained by the Company at the time
or times provided therein or (ii) Sections 2.6 and 3 hereof.
5.2 PAYMENTS IN THE EVENT OF ANY OTHER TERMINATION OF EMPLOYMENT.
Except as provided in Section 5.3, if Executive's employment hereunder is
terminated by the Company other than for Cause, as a result of death or
Disability 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 payments or
other rights or benefits Executive may be otherwise entitled to receive
pursuant to the terms of (x) any retirement, pension or other employee
benefit or compensation plan maintained by the Company at the time or
times provided therein or (y) Sections 2.6 and 3 hereof.
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(b) In addition to the compensation and benefits described in
Section 5.2(a):
(i) The Company shall pay Executive a lump sum amount equal to
two times the sum of (i) Executive's 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) Executive's pension shall vest with respect to his years
of employment with the Company and any subsidiary of the Company.
In addition, irrespective of Executive's actual full years of
employment from March 25, 1994 through his termination under this
Section 5.2, Executive shall be granted service credit as if he
were an employee of Company for the number of full years necessary
to achieve the maximum additional accruals under Section 2.6(a)
herein and Section 4.1.1(a)(iii) of the SERP; provided, however,
that any SERP benefit shall continue to be subject to Section 7 of
the SERP. Any such vested pension benefits which cannot be paid
under the Company's qualified pension plan shall be paid directly
by the Company.
(iii) Executive and his covered dependents (only so long as
they shall remain dependents) shall be entitled to medical coverage
for the life of Executive and his spouse; provided, however, if
Executive is employed by another employer, medical coverage
hereunder will become secondary to any coverage provided by the new
employer. With regard to group life insurance and group disability
insurance, until the earlier of the second 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 such group life
insurance and group disability insurance as if Executive were still
employed by the Company hereunder during such period. If any such
benefits cannot be provided to Executive for any reason, the
Company shall pay to Executive, or pay Executive the cost of
obtaining, such benefits.
(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.
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5.3 PAYMENTS FOR CERTAIN TERMINATIONS OF EMPLOYMENT AFTER A CHANGE
IN CONTROL. If Executive elects to terminate his employment for any reason
during the six month period commencing on the second anniversary of the Change
in Control, or in the event of termination by the Company other than for
Cause or termination by Executive for Good Reason within two years after a
Change in Control, Executive shall receive all of the payments, and shall be
accorded all of the rights, set forth in Section 5.2. All other terminations
of Executive's employment shall be governed by Sections 4 and 5 of this
Agreement irrespective of a Change of Control.
5.4 EXCISE TAX.
(a) If any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable pursuant to this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5.4 (a "Payment")) is subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties thereon (together the
"Excise Tax") then Executive shall be entitled to an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive of all
taxes including, without limitation, any income taxes (together with any
interest or penalties thereon, the "Additional Income tax") or any Excise
Tax, imposed upon the Gross-Up Payment Executive retains an amount of the
Gross-up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to Section 5.4(c), all determinations required to be
made under this Section 5.4, including whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by the firm of
independent public accountants selected by the Company to audit its financial
statements (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and executive within fifteen (15) business
days after the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 5.4, shall be paid
to Executive within five (5) business days after the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
additional Gross-Up payments should have been made by the Company (an
"Underpayment"). If the Company exhausts its remedies pursuant to Section
5.4(c) and Executive thereafter is
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required to make a payment of any Excise Tax, the accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notice shall be given as soon
as practicable but no later than ten (10) business days after Executive knows
of such claim and shall apprise the Company of the nature and date of
requested payment of such claim. Executive shall not pay such claim before
the earlier of (x) the date thirty (30) days after Executive's notice to the
Company or (y) the date on which payment of taxes with respect to such claim
is due. If the Company notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive shall:
(i) give the Company any reasonable requested information relating
to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim; provided, however that the Company shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold such Executive harmless, on an after-tax basis, for any Excise
Tax or additional Income Tax imposed as a result of such representation
and payment of costs and expenses. Without limiting this Section 5.4(c),
the Company shall control all proceeding taken in connection with such
contest and, at its sole option, may (1) pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and (2) either direct
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner. Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company
directs such Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or Income Tax imposed with
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respect to such advance; and further provided that any extension of the
statute of limitations for the taxable year of Executive with respect to
which such contested amount is claimed to be due is limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of any amount advanced by
the Company pursuant to Section 5.4(c), Executive becomes entitled to
receive any refund with respect to such claim, executive shall (subject
to the Company's complying with the requirements of Section 5.4(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company
pursuant to Section 5.4(c), a determination is made that such Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of any Gross-Up Payment required to be
paid.
6. CONFIDENTIALITY; NON-COMPETE.
While employed by the Company and thereafter, Executive shall not
disclose any confidential information either directly or indirectly, to
anyone (other than the Company, its 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. Upon termination of this Agreement, Executive
shall promptly supply to the Company all property and any other tangible
product or document which 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, in the event Executive
resigns without Good Reason or is terminated for Cause during the term
hereof, Executive shall not at any time prior to the first anniversary of the
Date of Termination become an employee, consultant, officer, partner or
director of any air carrier which competes with the Company (or any of its
affiliates) or have any significant interest (I.E., 10% or more of the voting
stock) in any such air carrier. This covenant not to compete shall expire on
December 31, 1998 and thereafter shall no longer be applicable to Executive;
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provided, however, if on or prior to December 31, 1998, Executive has
resigned without Good Reason or has been terminated for Cause, the
non-compete shall remain in full force and effect and shall be enforceable
according to its terms until the first anniversary of Executive's Date of
Termination, notwithstanding the December 31, 1998 expiration of the covenant
not to compete provided for herein.
Executive agrees that any breach of 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, or otherwise, the parties hereto agree that the
covenant should be interpreted and enforced to the maximum extent which such
court deems reasonable. The provisions of this Section 6 shall survive any
termination of this Agreement and Executive's term of employment. The
existence of any claim or cause of action or otherwise, shall not constitute
a defense to the enforcement of the covenants and agreements of this Section
6.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall bind any successor to Significant Assets,
whether by purchase, merger, consolidation or otherwise, in the same manner
and to the same extent that the Company would be obligated under this
Agreement if no such succession had taken place. Notwithstanding that a
successor to Significant Assets becomes bound to this Agreement, the Company
shall continue to be liable for the obligations hereunder as a guarantor. In
any agreement providing for succession to Significant Assets, the Company
shall cause each and every successor expressly and unconditionally to assume
and agree to perform the Company's obligations under this Agreement.
(b) In the event that another air carrier directly or indirectly
acquires Significant Assets, the Company shall cause such airline to provide
Executive and Eligible Individuals with pass privileges equivalent to those
provided under the Airline Pass described in Section 3.1.
(c) This Agreement and all rights of Executive hereunder shall inure
to the benefit of and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees.
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8. TERM.
The term of this Agreement shall commence on the Effective Date and
end upon the Executive's termination of employment. The rights and obligations
of the Company and Executive shall survive the termination of this Agreement
to the extent necessary to give effect to the terms hereof.
9. NOTICES.
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered to and mailed by United States mail, addressed: (a) if to
Executive, Xxxxxxx X. Xxxxxx, 0000 X. Xxxx xx xxx Xxxx Xxxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, and
(b) if to the Company, c/o Northwest Airlines, Inc., 0000 Xxxxxxxxx
Xxxxx, Xx. Xxxx, Xxxxxxxxx 00000-0000, Attention: General Counsel, or to such
other address as may have been furnished in writing.
10. COUNSEL FEES AND INDEMNIFICATION.
(a) The Company shall pay, or promptly reimburse on an as-incurred
basis to Executive, the reasonable fees and expenses of Executive's legal
counsel for its services rendered in connection with, Executive's enforcement
of this Agreement provided, however, that if Executive institutes any
proceeding to enforce this Agreement and the judge, arbitrator or other
individual presiding over the proceeding affirmatively finds that Executive
instituted the proceeding in bad faith, Executive shall pay all costs and
expenses, including attorney's fees, of Executive and the Company.
(b) The Company shall indemnify and hold Executive harmless, to the
maximum extent permitted by law, against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys' fees incurred by
Executive, in connection with any action or proceeding (or any appeal from
any action or proceeding) with respect to the Company or activities engaged
in by Executive in the course of employment with the Company in which
Executive is made, or is threatened to be made, a party or a witness.
11. WITHHOLDING.
All payments required to be made by the Company hereunder shall be
subject to the withholding of such amounts as are required to be withheld
pursuant to any applicable law or regulation.
12. CERTAIN DEFINED TERMS.
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As used herein, the following terms have the following meanings:
"AGREEMENT" shall mean this Management Compensation Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.
"BASE SALARY" shall mean the annual salary of the Executive in
effect from time to time under Section 2.1.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE" shall mean with respect to termination of Executive's
employment hereunder (i) an act or acts of personal dishonesty by Executive
intended to result in substantial personal enrichment of Executive at the
expense of the Company, (ii) an act or acts of personal dishonesty by
Executive intended to cause substantial injury to the Company, (iii) material
breach (other than as a result of a Disability) by Executive of Executive's
obligations under this Agreement which action was (a) undertaken without a
reasonable belief that the action was in the best interest of the Company and
(b) not remedied within a reasonable period of time after receipt of written
notice from the Company specifying the alleged breach, or (iv) the conviction
of Executive of a felony.
"CHANGE IN CONTROL" means any one of the following:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of either (i) the then outstanding shares of Common Stock of
Parent (the "Outstanding Parent Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of Parent
entitled to vote generally in the election of directors (the
"Outstanding Parent Voting Securities"); provided, however, this
subsection (a) shall not apply to the Investor Stockholders party to the
Second Amended and Restated Stockholders' Agreement dated as of December
23, 1993; or
(b) Individuals who, as of June 1, 1994, constitute the Board of
Directors of Parent (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided, however, that
any individual becoming a director subsequent to June 1, 1994, whose
election, or nomination for election by Parent's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose
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initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors
of Parent; or
(c) Approval by the shareholders of Parent of a reorganization,
merger or consolidation (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Parent Common Stock and Outstanding
Parent Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns Parent through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business
Combination of the Outstanding Parent Stock and Outstanding Parent
Voting Securities, as the case may be and (ii) at least a majority of
the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of such
Board, providing for such Business Combination; or
(d) Approval by the shareholders of Parent of (i) a complete
liquidation or dissolution of Parent or (ii) the sale or other
disposition of all or substantially all of the assets of Parent, other
than to a corporation with respect to which following such sale or other
disposition, (X) 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 respectively, of
the Outstanding Parent Common Stock and Outstanding Parent Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership immediately prior
to such sale or other disposition of the Outstanding Parent Common Stock
and Outstanding Parent Voting Securities, as the case may be and (Y) at
least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement, or other action of such Board,
providing for such sale or
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other disposition of assets of Parent or were elected, appointed
or nominated by the Incumbent Board.
"COMMON STOCK" shall mean all issued and outstanding common stock,
of all classes, of the Parent, including any outstanding securities
convertible into such common stock.
"DATE OF TERMINATION" shall mean, with respect to Executive, the
date of termination of Executive's employment hereunder after the notice
period provided by Section 4.4.
"DISABILITY" shall mean Executive's physical and mental condition
which prevents continued performance of his duties hereunder, if Executive
establishes by medical evidence that such condition will be permanent and
continuous during the remainder of Executive's life or is likely to be of at
least three years' duration.
"EFFECTIVE DATE" shall mean September 1, 1996.
"GOOD REASON" shall mean with respect to an Executive, any one or
more of the following:
(a) a material reduction in Executive's compensation or other
benefits (except as permitted hereunder) including the Company's failure
to adopt and maintain an annual bonus plan in which Executive shall
participate on the terms and conditions applicable to similarly situated
executives;
(b) any material change in Executive's job responsibilities;
provided that, so long as Executive retains a substantial part of his
then current oversight responsibility, a transfer of a portion of such
oversight responsibility of Executive shall not in and of itself
constitute a material change in Executive's job responsibilities;
(c) the relocation of the Company's principal executive offices
to a location outside the Minneapolis-St. Xxxx Metropolitan Area;
(d) a failure by the Company to comply with any material provision
of this Agreement which has not been cured within ten (10) days after the
Company knows or has notice of such noncompliance;
(e) Xxxx Xxxxxxx no longer serves as the Chief Executive Officer
of Northwest Airlines Inc. and Executive is not appointed as his
immediate successor.
In order for an Executive's termination of his employment to be
considered for Good Reason, such termination must occur within one year
after the event giving rise to such Good Reason. Executive's continued
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employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder.
"NOTICE OF TERMINATION" shall mean a notice specifying the Date of
Termination, which notice shall (i) indicate the specific termination
provision (if any) in this Agreement applicable to the termination, and (ii)
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of Executive's employment under the provision so
indicated.
"PARENT" shall mean Northwest Airlines Corporation.
"PERSON" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a trust, an unincorporated organization
or a government or any agency, instrumentally or political subdivision
thereof.
"SIGNIFICANT ASSETS" shall mean (i) all or substantially all of the
assets and/or business or outstanding voting securities, of the Company (ii)
all or substantially all of Northwest's routes between the United States and
Japan.
"SUBSIDIARY" of a Person shall mean any corporation, partnership
(limited or general), trust or other entity of which a majority of the stock
(or equivalent ownership or controlling interest) having voting power to
elect a majority of the board of directors (if a corporation) or to select
the trustee or equivalent controlling interest, shall at the time such
reference becomes operative, be directly or indirectly owned or controlled by
such Person or one or more of the other subsidiaries of such Person or any
combination thereof.
"2-R" shall mean space available travel in first, business or coach
class, with boarding priority (i) ahead of the categories specified below
category "2-R" on Exhibit A attached hereto and (ii) within category "2-R,"
based on seniority with the Company.
"F-1" shall mean confirmed seating in first class or business class
if first class is not offered, with boarding priority (i) ahead of the
categories specified below category "F-I" on Exhibit A attached hereto and
(ii) within category "F-I," based on seniority with the Company.
"Y-1/F-2" shall mean confirmed seating travel in coach class and
space available travel in first or business class, with boarding priority (i)
ahead of the categories specified below category "Y-a/F-2" in Exhibit A
attached hereto, and (ii) within category "Y-1/F-2," based on seniority with
the Company.
13. MISCELLANEOUS.
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No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by Executive and such officer as may be specifically
designated by the Board. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement. There
shall be no right of set-off or counterclaim, in respect of any claim, debt
or obligation, against any payments to Executive, his dependents,
beneficiaries or estate provided for in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Minnesota, without regard to principles
of conflicts of laws.
14. VALIDITY.
The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement which shall remain in full force and effect.
15. DISPUTES; REMEDIES.
If either the Company, on the one hand, or Executive, on the other
hand, breaches or threatens to commit a breach of the terms and conditions
hereof, the other party shall have the following rights and remedies:
(a) Specific performance (I.E., the right and remedy to have
the terms and conditions hereof specifically enforced by any court
of competent jurisdiction), it being agreed that any breach or threatened
breach of the terms and conditions hereof would cause irreparable injury
and that money damages may not provide an adequate remedy; and
(b) Damages (I.E., the right to receive from any violator of
the terms and conditions hereof, any and all damages, costs and expenses
incurred by the injured party as a result of the breach of the terms and
conditions hereof).
16. PARENT UNDERTAKING.
Northwest Airlines corporation, as parent corporation to the
Company, hereby agrees to cause the Company to perform all
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of its obligations hereunder and Executive shall be deemed to have entered
into this Agreement in reliance upon the undertaking set forth herein.
NORTHWEST AIRLINES, INC.
by: /s/ Xxxxxxx X. Xxxxxxxxx
_______________________________________
NORTHWEST AIRLINES CORPORATION
by: /s/ Xxxxxxx X. Xxxxxxxxx
_______________________________________
/s/ Xxxxxxx X. Xxxxxx
_______________________________________
Xxxxxxx X. Xxxxxx
