EXHIBIT 10.2
AGREEMENT BETWEEN
THE UNITED STATES OF AMERICA
AND
DELTA AIR LINES, INC.
THIS Agreement ("Agreement") is made and entered into on this 6th day of
May, 2003 ("Effective Date") by and between Delta Air Lines, Inc. ("Air
Carrier") and the United States of America, acting through the Transportation
Security Administration ("TSA").
1.0 AUTHORITY
TSA enters into this Agreement under the authority of the Title IV, Public
Law No. 108-11 (hereinafter P.L. 108-11), the Emergency Wartime Supplemental
Appropriations Act, 2003, (hereinafter Act), which requires the execution and
delivery of this Agreement as a condition to the remittance of the funds
provided for in the second proviso of Title IV, P.L. 108-11, except for any air
carrier that operates aircraft exclusively with 85 seats or less, any
Hawaii-based carrier or any carrier that does not operate trans-Pacific or
trans-Atlantic flights. Air Carriers that would be exempted from the
requirement to execute and deliver this Agreement but for the operation of
private charter flights, including flights provided to the United States under
the Civil Reserve Air Fleet (CRAF), for which no fees were incurred pursuant to
49 U.S.C. ss. 44940(a) for these flights, shall not be required to execute and
deliver this Agreement solely because of those flights for which no fees were
incurred.
2.0 PURPOSE
This Agreement describes the terms and conditions to which the Air Carrier
must agree to be eligible for remittance of the funds provided for in the
second proviso of Title IV, P.L. 108-11.
3.0 DEFINITIONS
3.1 "Excluded Compensation" means award of stock, stock options,
preexisting contracts governing retirement, health benefits, life insurance
benefits, and reimbursement of reasonable expenses to an executive officer.
Awards of stock and stock options shall include related granting, vesting,
issuance, exercise and sale events.
3.2 "Executive Officer" means the two most highly compensated named
executive officers (as that term is used in section 402(a)(3) of Regulation S-K
promulgated by the Securities and Exchange Commission under the Securities and
Exchange Act of 1934 (17 C.F.R. ss. 229.402(a)(3)). For the purposes of
applying this Agreement to an executive officer-
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(A) who was employed by Air Carrier for less than 12 months during Air
Carrier's fiscal year 2002, or whose employment began after the last day of the
last fiscal year of such Air Carrier ending before the date of enactment of
P.L. 108-11,
(i) the salary paid to that executive officer in Air Carrier's fiscal
year 2002, or in the next fiscal year of Air Carrier (if such next fiscal year
began before the date of enactment of P.L. 108-11), respectively, shall be
determined as an annual rate of pay;
(ii) that annual rate of pay shall be treated as if it were the annual
salary paid to that executive officer during Air Carrier's fiscal year 2002;
and
(iii) that executive officer shall be deemed to have been employed
during that fiscal year; and
(B) whose employment begins after the date of enactment of P.L. 108-11-
(i) the annual salary at which that executive officer is first
employed by Air Carrier may not exceed the maximum salary paid to any executive
officer by Air Carrier during Air Carrier's fiscal year 2002 with the same or
similar responsibilities;
(ii) that salary shall be treated as if it were the annual salary paid
to the executive officer during Air Carrier's fiscal year 2002; and
(iii) the executive officer shall be deemed to have been employed by
Air Carrier during Air Carrier's fiscal year 2002.
For purposes of (A) above, an employee promoted to a position during the Air
Carrier's fiscal year 2002 shall be treated as first employed by the Air
Carrier on the date of such promotion.
3.3 "Operates" means currently operating or did operate between February
1, 2002 and April 16, 2003.
3.4 "Salary" means the base salary of an individual, excluding any
bonuses, awards of stock or other financial benefits provided by an air carrier
to the individual.
3.5 "Total Cash Compensation" has the meaning given the term "total
compensation" by section 104(b) of the Air Transportation Safety and System
Stabilization Act, Public Law No. 107-42 (49 U.S.C. ss. 40101 note), but does
not include awards of stock or stock options or preexisting contracts governing
retirement. More specifically, "Total Cash Compensation" for purposes of this
Agreement shall mean any compensation, other than Excluded Compensation as
defined above, provided (including any amounts paid in cash during the 12-month
period beginning April 1, 2003 that were earned in prior periods and any
amounts which would have been paid but which were deferred) by the Air Carrier,
including all of its holding companies, subsidiaries, and affiliated entities,
as follows:
(a) Salary;
(b) Bonus;
(c) Employer contributions under any retirement plan (excluding
preexisting plans or contracts related to retirement);
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(d) Perquisites, including personal automobile allowances, positive
space travel benefits and any associated tax gross-ups, valued in a manner
consistent with the valuation of such perquisites for purposes of reporting
such perquisites in Air Carrier's proxy statement for its annual meeting of
stockholders (except that the reporting threshold of $50,000 or 10% of the
annual salary and bonus described in 17 C.F.R. ss.229.402(b)(1)(C)(1) shall not
apply to the Agreement);
(e) Any other compensation required to be disclosed in the Air
Carrier's proxy statement for its annual meeting of stockholders that is paid
(including amounts paid during the 12-month period beginning April 1, 2003 that
were earned in prior periods) during the 12-month period beginning April 1,
2003, including but not limited to any cash long-term incentive plan payouts;
and
(f) Other financial benefits, reasonably valued by the good faith
determination of the Compensation Committee of the Board of Directors of Air
Carrier, excluding Excluded Compensation.
3.6 "Total compensation" as defined by section 104(b) of the Air
Transportation Safety and System Stabilization Act, includes salary, bonuses,
awards of stock, and other financial benefits provided by an air carrier to an
officer or employee of the Air Carrier.
3.7 "Trans-Atlantic" means from one side of the Atlantic Ocean to the
other side, with or without intermediate stops. It does not include flights
that solely travel between the United States and the Caribbean or between North
America and South America. "Trans-Pacific" means from one side of the Pacific
Ocean to the other side, with or without intermediate stops.
4.0 RESTRICTIONS ON COMPENSATION
4.1 The Air Carrier, including all of its holding companies, subsidiaries,
and affiliated entities, agrees that it will not provide Total Cash
Compensation during the 12-month period beginning April 1, 2003, to an
executive officer in an amount equal to more than the annual Salary paid to
that officer with respect to the Air Carrier's fiscal year 2002; and
4.2 If the Air Carrier violates the agreement under paragraph 4.1, Air
Carrier will pay to the Secretary of the Treasury, within 60 days after the
date on which the violation occurs, an amount, determined by the Administrator
of the Transportation Security Administration, equal to the total amount of
assistance received by Air Carrier pursuant to the second proviso of Title IV,
P.L. 108-11.
4.3 Nothing in this Agreement shall be construed to prohibit or limit an
air carrier in providing health benefits, life insurance benefits, or
reimbursement of reasonable expenses to an executive officer as provided in
P.L. 108-11.
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5.0 COMPTROLLER GENERAL AUDIT AND EXAMINATION
The Air Carrier agrees that the Comptroller General of the
United States, or any of the Comptroller General's duly authorized
representatives, shall have access for the purpose of audit and
examination to any books, accounts, documents, papers, and records of
the Air Carrier, including all of its holding companies, subsidiaries,
and affiliated entities, that relate to the information required to
implement the provisions of this Executive Compensation Agreement.
6.0 REPRESENTATIONS
6.1 That the Air Carrier is duly incorporated, validly existing and in
good standing under the laws of Delaware.
6.2 The execution, delivery, and performance by the Air Carrier of this
Agreement has been duly authorized by all necessary corporate action; this
Agreement has been duly executed and delivered by the Air Carrier; and when
executed and delivered by a duly authorized representative of TSA, will
constitute a valid and binding obligation of the Air Carrier, enforceable
against it in accordance with its terms.
6.3 No authorization, approval, consent or order of any court or
governmental authority or agency or any other person or entity is required in
connection with the execution and delivery by the Air Carrier of this Agreement
or its performance hereunder.
7.0 NOTICES
The Air Carrier shall have the obligation to notify TSA no later than ten
(10) working days, following the occurrence of any event that constitutes a
breach of this Agreement. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (1) upon personal delivery to
the party to be identified below, (2) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (3) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (4) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth below or at such
other address as such party may designate by ten days advance written notice to
the other parties hereto.
If to AIR CARRIER: If to TSA:
----------------- ---------
Xxxxxx X. Xxxxxx Howard_Kass
Senior Vice President - General Counsel & Director, Economic and Regulatory Policy
Secretary 000 00xx Xxxxxx Xxxxx, 11th Floor North, TSA-9
Delta Air Lines, Inc. Xxxxxxxxx, XX 00000
0000 Xxxxx Xxxxxxxxx (571) 000-0000/xxxxxx.xxxx@xxx.xxx
Xxxxxxx, XX 00000
000-000-0000/xxx.xxxxxx@xxxxx.xxx
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8.0 GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with
Federal law.
9.0 SUCCESSORS AND ASSIGNS BOUND BY COVENANTS
This Agreement shall bind, and inure to the benefit of the parties and
their respective heirs, executors, administrators, successors, and assigns.
10.0 SEVERABILITY
In the event any term, covenant, condition or provision of this Agreement
is held to be invalid by any court or tribunal of competent jurisdiction, the
invalidity of any such covenant, condition or provision shall in no way affect
any other covenant, condition or provision herein contained.
11.0 AMENDMENT
This Agreement may not be amended, discharged or terminated without the
written consent of the parties hereto, and no provision hereof may be waived
without the written consent of the Administrator of the Transportation Security
Administration.
12.0 INTEGRATED AGREEMENT
This Agreement, upon execution, contains the entire agreement of the
parties, and no prior written or oral agreement, express or implied, shall be
admissible to contradict the provisions of this Agreement. There may exist
other agreements between the Parties as to other matters, which are not
affected by this Agreement and are not included within this integration clause.
13.0 WAIVER
No failure by either party to insist upon the strict performance of any
provision of this Agreement or to exercise any right or remedy consequent upon
a breach thereof, and no acceptance of full or partial assistance payments (if
applicable) or other performance by either party during the continuance of any
such breach shall constitute a waiver of any such breach of such provision.
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14.0 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have entered into this Agreement by their
duly authorized officers the day and year first above written.
AIR CARRIER
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Witness Name: Xxxxxx X. Xxxxxx
Position: Senior Vice President - General Counsel
& Secretary
TSA
By:
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Witness Name:
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Position:
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