MANAGEMENT COMPENSATION AGREEMENT
between
NORTHWEST AIRLINES, INC.
and
XXXXXX X. XXXXXXXX
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 Xxxxxx X. Xxxxxxxx (the "Executive").
PREAMBLE
The Company and Executive previously entered into a Management
Compensation Agreement dated as of December 1, 1994 (the "Prior Agreement").
As of the date hereof, the Company and Executive have agreed to replace the
Prior 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 policies.
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) Amount 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
Supplement 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 Sections 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
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 so 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 his 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
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.
(d) Notwithstanding anything else to the contrary in this
Agreement, the Company's obligation to make the payments provided for in
Sections 5.2(a)(iii) and 5.2(b)(i),
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(ii) and (iii) is expressly conditioned upon the execution and delivery
of a release in the form attached hereto as Appendix A.
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 in 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
proceedings 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.
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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, 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.
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.
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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, Xxxxxx X. Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx, 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.
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.
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"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) or 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 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
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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 executions 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 that 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 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.
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"DISABILITY" shall mean Executive's physical and mental condition
which prevents continued performance of his duties hereunder, if Executive
established 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);
(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.
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 employment shall not constitute consent to, or 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.
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"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.
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.
15
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 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/ Xxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxx
