Exhibit (c)(5)
ASA Holdings, Inc.
TO: Xxxx X. Xxxxxx
FROM: ASA Holdings, Inc.
DATE: February 15, 1999
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ASA Holdings, Inc. (the "Company") has entered into an Agreement and Plan
of Merger among the Company, Delta Air Lines, Inc. ("Delta") and Delta Sub, Inc.
as of the date hereof (the "Merger Agreement"), pursuant to which the Company
will become an indirect wholly owned subsidiary of Delta effective as of the
Effective Time, as defined in the Merger Agreement (the "Effective Time"). The
Company and Delta have acknowledged that you possess extensive knowledge and
experience critical to the operations of the Company. Accordingly, the Company
has agreed to continue your service on the terms set forth in the attached Term
Sheet, which is incorporated herein by reference (the "Term Sheet"). In
consideration of the promises and benefits provided by the Company, you have
agreed to remain in the employment of the Company and honor the terms set forth
in the Term Sheet. You and the Company have agreed to negotiate in good faith to
enter into a formal written Employment and Consulting Agreement incorporating
the terms set forth in the Term Sheet, with the intention that such Employment
and Consulting Agreement will be executed prior to the Closing Date; provided,
however, that this letter agreement will remain effective and will be fully
binding upon you and the Company unless and until such Employment and Consulting
Agreement is executed and approved in writing by Delta. In addition, Delta has
agreed to execute this letter agreement and the Employment and Consulting
Agreement to evidence its agreement to guarantee payment of your benefit under
the Company SERP as set forth in the Term Sheet.
You have acknowledged that your agreement to the terms set forth in the
Term Sheet was a critical inducement for the Company and Delta to enter into the
Merger Agreement, and you have agreed to fully honor those terms.
Notwithstanding the foregoing, this letter agreement shall be null and void
if the Offer (as defined in the Merger Agreement) is not consummated for any
reason.
If the foregoing fully and accurately reflects our agreement regarding the
matters addressed, please indicate your acknowledgment and agreement by signing
in the space provided.
ASA Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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As evidence of the agreement of Delta to provisions of this letter
agreement and the Term Sheet relating to its guarantee of the benefit payments
to be made to you under the terms of the Company SERP, Delta has caused this
letter agreement to be executed by a duly authorized officer of Delta.
Delta Air Lines, Inc.
By: /s/ Xxxxxxx X. Worth
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I, Xxxx X. Xxxxxx, hereby acknowledge and agree to the terms set forth in this
letter and the attached Term Sheet and agree to be bound by those terms.
Acknowledged and Agreed:
/s/ Xxxx X.Xxxxxx
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TERM SHEET
Definitions: Except as otherwise provided, defined terms used herein
shall have the meaning set forth in the accompanying letter
agreement.
Position/Duties: Xxxx X. Xxxxxx (the "Executive") shall serve as President
and Secretary of the Company from the date hereof until the
Effective Time, or such shorter period as provided hereunder
(the "Employment Term"). The Executive shall serve as a
non-employee consultant of the Company from the Effective
Time until the 180th day following the Effective Time or
such shorter period as provided hereunder (the "Consulting
Term"). During the Employment Term and the Consulting Term
the Executive shall devote his efforts and attention to the
business of the Company on a full time basis (or such lesser
amount of time as required by the Company) and shall perform
such duties as shall reasonably be agreed between the
Executive and the Board of Directors of the Company;
provided, however, that such duties shall be reasonably
related to, and consistent with, the duties performed by the
Executive as of the date hereof.
Compensation: During the Employment Term the Company shall pay the
Executive a base salary at the rate in effect for the
Executive as of the date hereof (the "Base Salary"). During
the Consulting Term the Company shall pay the Executive a
consulting fee at same rate as the base salary rate in
effect for the Executive as of the date hereof (the
"Consulting Fee").
Bonus: During the Employment Term and the Consulting Term the
Executive shall continue to earn an annual bonus entitlement
equal to 40% of the Executive's Base Salary on the same
terms that currently apply to the Executive for 1999 annual
bonus period under the Company's annual bonus plan (the
"Bonus"), payable on a pro rata basis upon the termination
of the Consulting Period, as provided herein.
Special
Consideration: As of the 180th day following the Effective Time, the
Company shall pay to the Executive a lump sum payment equal
to $416,896, provided, however, that although the parties
believe and intend that this payment shall constitute
reasonable consideration for the Executive's agreement to
render the services and honor the non-competition covenant
as provided herein, the amount of this payment shall be
reduced to the extent necessary so that no portion of the
amount paid will be non-deductible under Section 280G of the
Internal Revenue Code (the "Special Consideration").
Benefits: During the Employment Term and the Consulting the Executive
shall receive benefits comparable to the benefits provided
to similarly situated senior executives of the Company.
Following any termination of the Executive's services
hereunder for any reason other than Cause (including the
expiration of the term hereof), the Executive, his spouse
and his dependent children under age 18 (or under age 23 if
a full-time student) shall be entitled to (i) "positive
space" privileges on the flights of Delta and its
subsidiaries world-wide ("Delta Service") for a period of
one year and (ii) "space available" privileges on Delta
Service for the duration of the Executive's natural life
thereafter.
Termination: Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company without Cause, the Executive shall be entitled to:
(i) accrued but unpaid Base Salary and Consulting Fees
in respect of service prior to such termination
("Accrued Compensation")
(ii) a pro rata portion of the Bonus in respect of the
period prior to such termination ("Pro Rata
Bonus")
(iii) the Special Consideration, payable as of the 180th
day following the Effective Time
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either
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case, due to death or disability, the Executive shall be
entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
(iii) The Special Consideration, payable within 30 days
after the Executive's last day of employment (but
in no event later than the 180th day following the
Effective Time)
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company for Cause or by the Executive for any reason, the
Executive shall be entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
No portion of the Special Consideration will be paid.
For purposes of this Term Sheet, "Cause" means (i) the
Executive's gross, willful and continued failure to
reasonably perform his essential duties hereunder after
written demand is delivered by the Company to the Executive
specifying manner in which the Executive has failed to
perform such duties; (ii) the Executive's misappropriation
of any assets or opportunities of the Company which are more
than de minimus; (iii) conduct by the Executive which is
grossly and demonstrably injurious to the business of the
Company; (iv) the Executive conviction of a felony or a
crime of moral turpitude which is materially and
demonstrably injurious to the business or reputation of the
Company; or (v) the Executive's breach of the Restrictive
Covenants below.
Restrictive
Covenants: For the period commencing on the date hereof and ending on
the second anniversary of the Effective Time, the Executive
shall not (i) directly or indirectly provide management or
executive services (whether as a consultant, advisor,
officer or director) to any person or entity operating or
seeking to operate a consumer airline using
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planes with a capacity of less than 70 seats in any market
in which the Company currently operates (a "Competitor"); or
(ii) solicit or hire any employee of the Company to perform
a service or function on behalf of a Competitor similar to
any service or function performed by such employee on behalf
of the Company. At no time shall the Executive divulge any
secret or confidential information, knowledge or data
relating to the Company or any of its affiliates which the
Executive has obtained in connection with his employment or
services on behalf of the Company and which has not have
become public knowledge (other than by the Executive's
violation of the foregoing). The foregoing Restrictive
Covenants shall be enforceable by injunction, it being
agreed that the damages suffered by the Company from any
breach or threatened breach of these Restrictive Covenants
could not be adequately remedied by monetary damages alone.
SERP: Notwithstanding the existing provisions of the ASA
Supplemental Executive Retirement Plan (the "SERP"), the
Executive and the Company agree that neither ASA nor any
other party shall be required to contribute any amounts to
any trust or other funding vehicle for the funding or
payment of any benefit accrued by the Executive under the
SERP and, accordingly, in calculating the amounts that must
be contributed to the ASA grantor trust under the terms of
the SERP, the SERP benefit accrued by the Executive shall be
excluded, it being intended that any SERP benefit payable to
the Executive under the SERP in accordance with its terms
shall be payable form the general assets of ASA or its
successor; provided, however, that Delta shall guarantee
full payment of the Executive's SERP benefit in accordance
with the benefit payment terms of SERP.
The terms of the SERP shall be deemed to be amended, and
shall be amended, in accordance with the foregoing.
Founder Agreement: The Amended and Restated Founding Officer Agreement between
the Company and the Executive dated April 16, 1997 shall
remain in effect and shall continue to apply in accordance
with its terms.
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