Exhibit 10
COLLATERAL ASSIGNMENT AGREEMENT
This Assignment is made and entered into effective as of July 1, 2002, by the
undersigned as the owner (the "Owner") of the Life Insurance Policy Number
issued by Lincoln Life Insurance Company (the "Insurer"), upon the life
of Owner.
WHEREAS, the Owner is a valued employee of Delta Air Lines, Inc. (the
"Assignee"), a Delaware corporation, or a subsidiary of Assignee, and the
Assignee wishes to assist the Owner in the procurement of life insurance; and
WHEREAS, as an assistance to the Owner's financial ability to procure life
insurance, the Assignee wishes to loan sufficient amounts to pay premiums on the
Policy, as more specifically provided for in that certain Executive Life
Insurance Loan Agreement entered into between the Owner and the Assignee (the
"Agreement"); and
WHEREAS, in consideration of the Assignee agreeing to make the premium payments,
the Owner agrees to grant the Assignee a security interest in the Policy as
collateral security;
NOW, THEREFORE, the Owner hereby assigns, transfers and sets over to the
Assignee the following specific rights in the policy, subject to the following
terms and conditions;
1. This Assignment is made, and the Policy is to be held, as collateral
security for all liabilities of the Owner to the Assignee, whether now existing
or hereafter arising, pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
(a) The right to be paid the Assignee's portion of the death benefit in
the event of the death of the insured prior to Owner's termination of
employment with Employer (as defined in Section 7 of the Executive Loan
Agreement) in accordance with Section 4 of the Executive Loan Agreement;
(b) The right to receive an amount equal to the aggregate premiums
loaned by the Assignee, or if less, the entire cash surrender value of the
Policy (which right may be realized by Assignee's borrowing against the
Policy, withdrawing from the Policy or receiving a portion of the death
benefit under the Policy), upon Termination of the Executive Loan
Agreement as defined in Section 7; and
(c) The right to receive an amount equal to any federal, state or local
taxes that Assignee may be required to withhold and collect.
3. The Owner shall retain all incidents of ownership in the Policy, except as
otherwise limited by the Agreement. The Insurer is only authorized to recognize
(and is fully protected in recognizing) the exercise of any ownership rights by
Owner so long as the instrument by which Owner purports to exercise his
ownership rights is signed by the
Assignee; provided that, the consent of Assignee is not needed if Owner wishes
to change the beneficiary under the Policy. The Insurer shall not be responsible
to ensure that the actions of the Owner conform to the Agreement.
4. If the Policy is in the possession of the Assignee, the Assignee shall,
upon request, forward the Policy to the Insurer without unreasonable delay, for
endorsement of any designation or change of beneficiary or the exercise of any
other right reserved by the Owner.
5. (a) Assignee shall be entitled to exercise its right under the Agreement
by delivering a notice to Insurer requesting either (1) a withdrawal or
non recourse policy loan equal to the amount to which Assignee is entitled
under Section 7 of the Agreement or (2) the payment to the Assignee of
that portion of the death benefit under the Policy to which the Assignee
is entitled under Section 4 of the Agreement. So long as the notice is
also signed by Owner or his beneficiary, Insurer shall pay or loan the
specified amounts to Assignee without the need for any additional
documentation.
(b) Except to the extent otherwise required by subsection (a), the
Insurer is hereby authorized to recognize the Assignee's claims to rights
hereunder without investigating (1) the reason for such action taken by
the Assignee; (2) the validity or the amount of any of the liabilities of
the Owner to the Assignee under the Agreement; (3) the existence of any
default therein; (4) the giving of any notice required herein; or (5) the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The receipt of the Assignee for any sums received by it shall be
a full discharge and release therefor to the Insurer.
6. Upon the full payment of the liabilities of the Owner to the Assignee
pursuant to the Agreement, the Assignee shall execute an appropriate release of
this Assignment.
7. The Assignee shall have the right to request of the Insurer and/or the
Owner notice of any action taken with respect to the Policy by the Owner.
IN WITNESS WHEREOF, the Owner has executed this Assignment effective the day and
year first above written.
___________________________________
Signature of Employee
DELTA AIR LINES, INC. EXECUTIVE LIFE INSURANCE PLAN
LOAN AGREEMENT
This Agreement is entered into this 1st day of July 2002, by and between Delta
Air Lines, Inc., a Delaware corporation (the "Corporation") and .
("Employee") in reference to the following facts:
I. Employee is a valued employee of the Corporation.
II. The Employee's life is insured under life insurance policy
number (the "Policy") issued by Lincoln Life
Insurance Company (the "Insurance Company").
III. The owner of the Policy is the Employee or an insurance trust established
by the Employee for purposes of personal estate planning.
IV. The Corporation agrees to loan to the Employee sufficient amounts to pay
the premiums under the Policy as provided in Section 2 of this Agreement.
V. The Employee has agreed to assign an interest in the Policy to the
Corporation as collateral security for the premium payments on a form of
agreement approved by the Insurance Company (the "Collateral Assignment
Agreement").
VI. The parties desire to have a separate agreement outlining their respective
interests and obligations in the Policy.
NOW THEREFORE, in consideration of the facts set forth above and the promises
and covenants set forth below, the parties to this Agreement agree as follows:
1. OWNERSHIP OF THE POLICY.
The employee shall be the sole and absolute owner of the Policy, and may
exercise all ownership rights granted to the owner thereof by the terms of
the Policy, except as may otherwise be provided herein and in the
collateral assignment thereof to the Corporation hereunder.
Notwithstanding the foregoing and any provision hereof to the contrary,
the Corporation shall, until termination of the Agreement with respect to
an Employee, under the provisions of Section 7 or 8, have the sole
authority to direct the manner in which the Policy cash value shall be
allocated among the various investment options from time to time available
under the Policy and to change such allocation from time to time, all as
provided for in the Policy. After the Retirement of the Employee or the
termination of the Agreement with respect to an Employee under the
provisions of Sections 7 and 8, the Employee shall thereafter have and may
exercise all ownership rights in the Policy (subject to the continuing
collateral assignment thereof to the Company hereunder, if any), including
but not limited to the authority to direct the allocation of the policy
cash value among the investment options available under the Policy.
If required, the Employee will do everything necessary to cause the Policy
and increases thereon to be issued by the Insurance Company, including
applications, submission of medical examinations/laboratory tests and
authorization to release medical information to the Insurance Company.
2. PREMIUM PAYMENTS.
The Corporation agrees to loan to the Employee sufficient amounts to pay
periodic annual premiums on the Policy from time to time in amounts
sufficient to provide the benefits promised to the Employee's
beneficiary(ies) under this Agreement. The premiums shall be transmitted
directly by the Corporation to the Insurance Company no later than 30 days
following the premium due date.
Upon termination of this Agreement, in accordance with Section 7(b), the
Corporation agrees to make any premium adjustments necessary to provide
the Employee a policy which is projected to remain in effect until it
matures as a death claim, with no further premium payments, and with a
projected death benefit equal to two times the Employee's annual rate of
base salary on the day prior to his or her retirement from the
Corporation. Such projection will be based on a set of assumptions, with
such determination as to the assumptions used, at the sole discretion of
the Corporation.
3. THE CORPORATION'S SECURITY INTEREST.
The Corporation's security interest in the Policy is conditioned upon its
satisfactorily performing all the covenants under this Agreement. The
Corporation shall not have nor exercise any right in and to the Policy
which could, in any way, endanger, defeat or impair any of the rights of
the Employee in the Policy including, by way of illustration, any right to
collect the proceeds of the Policy in excess of the amount due the
Corporation as provided in this Agreement and in the Policy. The only
rights in and to the Policy granted to the Corporation in this Agreement
shall be limited to the Corporation's security interest in and to the
Policy cash value equal to its cumulative premium outlays, as defined
herein, and a portion of the death benefit of the Policy, as hereinafter
provided (the "Security Interest"). The Corporation shall not assign any
of its Security Interest to anyone other than the Employee.
4. DEATH OF THE EMPLOYEE.
(A) If the Employee dies while the Policy is in force and this Agreement
is in effect and prior to the Employee retiring on or after his or her
attaining age 62, the Employee's designated beneficiary(ies) shall be
entitled to receive a death benefit payable directly from the proceeds of
the Policy in an amount equal to two times the Employee's current annual
rate of base salary on the day preceding his or her death.
(B) If the Employee dies while the policy is in force and this Agreement
is in effect but after his or her retirement on or after age 62, the
Employee's designated beneficiary(ies) shall be entitled to receive as a
death benefit payable directly from the
proceeds of the Policy an amount equal to two times the Employee's annual
rate of base salary on the day prior to his or her retirement from the
Corporation.
(C) The remaining balance of any Policy proceeds in excess of the above
amount payable to the Employee's beneficiary(ies) shall be paid to the
Corporation.
5. POLICY BENEFICIARY DESIGNATION.
The rights to designate and change the beneficiary(ies) of the Policy and
to elect an optional mode of settlement are reserved to the Employee and
the Corporation with respect to their share of the Policy proceeds as
determined in Section 4 of this Agreement. Employee's beneficiary
designation shall be recorded on the appropriate forms provided by the
Insurance Company.
6. CORPORATION'S EXERCISE OF RIGHTS AS ASSIGNEE.
The Corporation, during the lifetime of the Employee and prior to the
termination of this Agreement, may exercise any of its rights as Assignee
of the Policy without the consent of the Employee. If a Policy loan is
made by the Corporation, it shall be responsible for the interest thereon
and shall pay such interest as it becomes due. However, in no event should
cumulative loans exceed the amount of premiums paid.
Subject to the Corporation's rights as Assignee, the Employee retains all
rights as Owner of the Policy. The Employee agrees not to withdraw,
surrender, borrow against, or pledge as security for a loan any portion of
the Policy cash values while this Agreement is in effect.
7. TERMINATION OF AGREEMENT.
This Agreement shall terminate upon the occurrence of one of the
following:
(A) Termination of the Employee's employment with the Corporation other
than on account of the Employee's retirement from the Corporation on or
after age 62 or other than on account of an approved long term disability,
as defined in the Corporation's applicable disability plan;
(B) The later of: the Employee's retirement from the Corporation on or
after age 62 and the completion of ten years of full-time employment with
the Corporation, with such determination as to the number of years to be
at the sole discretion of the Corporation;
(C) Demotion of the Employee to a position which is not eligible for the
benefits provided by this Agreement;
(D) The failure of the Corporation to make the required premium payments
as provided in Section 2 of this Agreement;
(E) Payment to the Corporation by the Employee of the aggregate amount
of
premiums paid by the Corporation pursuant to this Agreement;
(F) Termination of the Agreement pursuant to Section 8; or
(G) The death of the Employee provided the Insurance Company shall pay a
death benefit to the Employee's beneficiary(ies) in accordance with
Section 4 of this Agreement.
In the event of termination of this Agreement, the aggregate of the premiums
paid by the Corporation pursuant to this Agreement, less any outstanding policy
loans received by the Corporation prior to such termination, or if less, the net
cash surrender value of the Policy, shall become due and payable to the
Corporation. Upon receiving payment of such amount, whether from the Policy or
from the Employee, the Corporation shall execute a Release of Collateral
Security Assignment and deliver such Release and the Policy to the Employee.
8. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
(A) This Agreement shall not be modified or amended except in writing
signed by both parties hereto.
(B) This Agreement is binding upon the heirs, administrators or assigns
of each party.
(C) This Agreement may be terminated by either party by providing 30
days written notice to the other.
9. INSURANCE COMPANY NOT A PARTY.
The Insurance Company shall not be deemed to be a party to this Agreement
for any purpose nor shall it be deemed in any way responsible for its
validity. The Insurance Company shall not be obligated to inquire as to
the distribution or application of any monies payable or paid by it under
the Policy, and payments or other performance of its contract obligations
in accordance with the terms of the Policy shall fully discharge the
Insurance Company from any and all liability under the Policy.
10. EMPLOYEE'S REPORTABLE INCOME.
Each year, the Corporation shall report to the Internal Revenue Service
and the Employee shall recognize imputed income arising from the economic
benefit attributable to the Premium Payments described in Section 2 of
this Agreement.
11. EMPLOYMENT NOT GUARANTEED.
Nothing contained in this Agreement nor any action taken hereunder shall
be construed as a contract of employment or as giving any Employee any
right to continued employment with the Corporation.
12. SUCCESSORS.
This Agreement shall be binding and inure to the benefit of the parties
and their respective successors, assigns, heirs, and legal
representatives.
13. CONTROLLING LAW.
Except to the extent that is preempted by federal law, this Agreement
shall be construed, governed and administered in accordance with the laws
of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
______________________________
Signature of Employee
DELTA AIR LINES, INC.
By: __________________________
Title: _______________________