September 17, 1998
[Delta Letterhead]
Mr. Robert L. Colman
7535 Legends Lane
Cincinnati, OH 45244
Dear Bob:
I am pleased to confirm my verbal offer of employment for the position of
Executive Vice President - Human Resources for Delta Air Lines, Inc. (Delta or
the Company). In this assignment, you will report directly to me. The date for
commencement of your active employment will be as you and the Company agree, but
in any event not later than October 14, 1998 (the commencement date being
referred to as the Starting Date).
Your initial and minimum base salary will be $400,000 per annum, payable in
accordance with the usual payment practices of the Company.
With respect to each fiscal year beginning with the fiscal year ending June 30,
1999 during which you are employed by the Company, you will be eligible to
receive in addition to your base salary an annual incentive compensation award
(Annual Award) for services rendered during such fiscal year, subject to the
terms and conditions of the Company's annual incentive compensation plan as in
effect from time to time. Except as provided in the immediately following
paragraph, the amount of the Annual Award, if any, with respect to any fiscal
year will be based upon performance targets and award levels determined by the
Personnel & Compensation Committee of the Board of Directors (or any successor
committee designated by the Board) in its sole discretion, in accordance with
the Company's annual incentive compensation plan as in effect from time to time;
provided that for each fiscal year beginning with the fiscal year ending June
30, 1999, your target award level shall be established in such a manner as to
provide you with the opportunity to earn an award of at least 57.5% of your base
salary for such fiscal year, assuming performance at the target level.
Notwithstanding the preceding paragraph, you will receive an Annual Award of not
less than (1) $225,000 with respect to fiscal year 1999 and (2) $115,000 with
respect to fiscal year 2000, unless your employment is terminated by the Company
for Cause prior to June 30, 1999 or June 30, 2000, respectively; provided, that
if your employment terminates for any reason other than Cause prior to June 30,
1999 or June 30, 2000, respectively, the applicable minimum amount shall be
prorated by multiplication by a fraction determined as follows: (1) with respect
to fiscal year 1999, the numerator of which is the number of days from the
Starting Date through the date of termination of your employment, and the
denominator of which is the number of days from the Starting Date through June
30, 1999 and (2) with respect to fiscal year 2000, the numerator of which is the
number of days from July 1, 1999 through the date of termination of your
employment, and the denominator of which is 365.
You will also be a participant in the 1989 Stock Incentive Plan in accordance
with the terms of that Plan. You will be granted an initial award with
non-qualified stock options on 150,000 shares of Delta common stock. The award
date will be the Starting Date, and the exercise price will be the closing price
of Delta common stock on the New York Stock Exchange on that date. These options
will vest according to the following schedule: 78,000 of these options will vest
immediately; 72,000 of these options will vest in 20% increments on each of the
first five anniversaries of the award date, and all of the options will be
exercisable in accordance with, and otherwise subject to, the terms and
conditions set forth in the award agreement attached as Exhibit A. Future
grants, if any, will be in accordance with the Plan.
To compensate you for benefits which you are forfeiting by resigning from GE to
accept a position with the Company, (1) you will be granted 20,000 shares of
restricted stock, which will vest in equal amounts (33 1/3% each year) on each
of the first, second, and third anniversaries of the Starting Date; and (2) you
will be paid a signing bonus in the amount of $718,885, payable promptly after
the Starting Date, which signing bonus you will promptly refund to Delta if,
within six (6) months after the Starting Date, your employment with Delta is
terminated by the Company for Cause or by you other than for Good Reason;
provided, however, that the amount of that signing bonus will not constitute
earnings for purposes of determining your benefits under any employee benefit
plan, program or policy of Delta. The
2
restricted stock award is subject to the terms and conditions set forth in the
award agreement attached as Exhibit B.
Delta will provide reimbursement for the reasonable cost of your legal counsel
in connection with the negotiation and preparation of this agreement. While
employed by the Company, you will be entitled to such fringe benefits as are
provided to Executive Vice Presidents of the Company, including free and
reduced-rate travel, automobile allowance, initiation fees and monthly dues for
one country club membership, and similar programs as in effect from time to
time.
Except as otherwise provided in this letter agreement, your employment with
Delta will be subject to Delta's standard policies and will be governed by the
terms and conditions of the Personnel Practices Manual, as may be amended from
time to time hereafter. You will be provided with vacation, sick leave, and paid
holidays in accordance with Delta's standard policy regarding these benefits for
Executive Vice Presidents of the Company.
You will also be eligible to participate in Delta's standard benefit programs,
as amended from time to time, including the following:
1. DeltaFlex, our flexible benefits plan, which provides you with a menu
of choices for medical, dental, life insurance, and disability
benefits.
2. The Officer Life Insurance program.
3. The Delta Family-Care Disability and Survivorship Plan, which provides
certain disability benefits to you and certain benefits in the event of
your death.
4. The Delta Family-Care Retirement Plan benefit will accrue from the date
you join Delta. In addition, Delta has a nonqualified plan which will
cover any excess benefits not payable by the Delta Family-Care
Retirement Plan (due to Section 415 or 401(a)(17) limitations). For
purposes of both vesting and benefit accrual under the nonqualified
plan, you will be deemed to have eighteen (18) additional years of
service with Delta, provided that you complete at least two (2) years
of actual service as an employee with Delta. In addition, if your
3
employment is terminated by the Company without Cause or by you for
Good Reason before your earnings history for retirement benefit
purposes has been credited with your Annual Awards for both fiscal
years 1999 and 2000, your final average earnings for purposes of
determining your benefits under the nonqualified plan will be
calculated as if your employment had continued through fiscal year 2000
and you had received your minimum Annual Awards of $225,000 for fiscal
year 1999 and $115,000 for fiscal year 2000; provided, however, that if
your actual Annual Award for fiscal year 1999 exceeds $225,000, that
actual amount will be used instead of $225,000 in determining your
retirement benefits. However, the benefit under the nonqualified plan
will be reduced by the amount of any retirement benefits which you
receive under any qualified or nonqualified defined benefit retirement
plan of General Electric Company.
5. After one year of service, the Delta Family-Care Savings Plan, which
currently features pre-tax or post-tax employee contributions of up to
12% (up to the limits of the Internal Revenue Code), and a 50% match of
your contributions on the first 4% of salary, with Delta's maximum
contribution equal to 2% of your salary.
The Company will pay all costs of relocation of you and your family to the
Atlanta metropolitan area in accordance with the Company's relocation policy
supplemented as follows:
a) Reasonable temporary living expenses for you and your family
in the Atlanta metropolitan area for a period not to exceed
six months from the Starting Date;
b) If you so elect prior to the first anniversary of the Starting
Date, the Company will purchase from you your primary
residence as of the date hereof. The purchase price will be
equal to the average of the estimates of the fair market value
of the residence as determined, within 30 days of such
election, by two reputable and independent professional real
estate appraisers, one of which will be selected by you and
one of which will be selected by the Company;
4
c) The weight limitation for movement of your household effects
will be waived;
d) The Company will pay up to two discount points with respect to
one mortgage financing of your initial new residence in the
Atlanta metropolitan area; and
e) The Company will absorb any income tax liability resulting
from relocation benefits provided on your behalf.
Your eligibility for severance benefits is summarized below:
Change in Control*
- ------------------
Your eligibility for benefits in conjunction with a Change in Control will be
governed by Delta's Retention Protection Agreement applicable to Executive Vice
Presidents of the Company.
Termination for Cause or Without Good Reason
- --------------------------------------------
No severance benefit provided, except as specifically provided below under the
heading "Other Separation Compensation."
Termination Without Cause or For Good Reason*
- ---------------------------------------------
If your employment is terminated prior to the third anniversary of the Starting
Date (other than by reason of death or disability) by the Company without Cause
or by you for Good Reason, you will receive: (1) the balance of your then
current base salary and then current target incentive compensation Annual Award
through the end of the month in which the third anniversary of the Starting Date
occurs (subject to a minimum of
- --------
* In the event a Qualifying Event (as defined in your Retention Protection
Agreement) occurs during the term of your Retention Protection Agreement, the
Retention Protection Agreement shall apply instead of these provisions, it being
understood that the Retention Protection Agreement will be appropriately amended
to preserve the retirement benefits and "Other Separation Compensation"
described in this letter agreement.
5
twelve (12) months of such salary and Annual Award), (2) immediate vesting of
any unvested stock option and restricted stock awards which you have been
granted on the Starting Date, and (3) immediate vesting of all accrued
retirement plan benefits, including your eighteen (18) additional years of
service credit, reduced by the above-referenced offset for GE retirement
benefits. For purposes of this letter agreement, the terms "Cause" and "Good
Reason" (and related terms) shall have the meanings set forth in Exhibit C
accompanying this letter agreement.
Termination After Death or Disability*
- --------------------------------------
If your employment is terminated due to death or disability prior to the third
anniversary of the Starting Date, you will receive: (1) such death or disability
benefits as shall then be maintained by the Company for which you or your
survivors are eligible; (2) immediate vesting of any unvested stock option and
restricted stock awards which you have been granted on the Starting Date, and
(3) immediate vesting of all accrued retirement plan benefits, including your
eighteen (18) additional years of service credit, reduced by the
above-referenced offset for GE retirement benefits.
Other Separation Compensation*
- ------------------------------
If your employment is terminated prior to June 1, 2005 by the Company without
Cause or by you for Good Reason, or if your employment terminates for any reason
after May 31, 2005, you will be treated as a retiree for purposes of Delta's
Family-Care benefit plans and will receive (in addition to any other benefits
which may be payable to you) a lump sum payment determined pursuant to the table
set forth in Exhibit D accompanying this letter agreement.
- --------------
* In the event a Qualifying Event (as defined in your Retention Protection
Agreement) occurs during the term of your Retention Protection Agreement, the
Retention Protection Agreement shall apply instead of these provisions, it being
understood that the Retention Protection Agreement will be appropriately amended
to preserve the retirement benefits and "Other Separation Compensation"
described in this letter agreement.
6
In the event of any conflict between the terms of this letter agreement and the
terms of any other agreement, award or arrangement contemplated hereby, the
terms of this letter agreement shall control. This letter agreement supersedes
all prior discussions and documentation concerning your compensation
arrangements with the Company.
If the terms outlined above reflect your understanding of our offer and you
accept employment based on these terms, please indicate your acceptance by
signing the two original letters provided. Please keep one letter for your
records and return the other to me.
Bob, we are extremely pleased to have you join the Delta team, and I look
forward with great pleasure to our association with you in this important role
at Delta. I anticipate benefiting from your expertise, and I believe you will
help us establish a winning formula for success in the future.
Sincerely,
/s/ Leo F. Mullin
Leo F. Mullin
Agreed and accepted to this 17th day of
September, 1998
/s/ Robert L. Colman
---------------------------------------
Robert L. Colman
7
Exhibit A
---------
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE 1989 STOCK INCENTIVE PLAN
September 17, 1998
Robert L. Colman
Executive Vice President - Human Resources
The 1989 Stock Incentive Plan of Delta Air Lines, Inc., as amended
("Plan"), is intended as an inducement for officers, executives and key
employees of Delta Air Lines, Inc. (the "Company") to continue in the employment
of the Company, and to provide a greater incentive to such employees to make
material contributions to the Company's success by increasing their proprietary
interest in the Company through increased direct stock ownership. The Plan,
which provides for certain awards to eligible employees, is administered by the
Personnel & Compensation Committee of the Board of Directors (the "Committee").
Pursuant to the Plan, the Committee selected you to receive an award of a
Nonqualified Stock Option under the Plan, effective as of the close of business
on the date you begin active employment with the Company (the "Starting Date"),
which date will be mutually agreed upon by you and the Company, but which will
be no later than October 14, 1998. The Committee has instructed me, on behalf of
the Company, to provide this Agreement to you.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you as an employee of the
Company (hereinafter called "Employee"), do hereby agree as follows:
1. The Company hereby grants to Employee a Nonqualified Stock Option
("Stock Option") covering 150,000 shares of Stock, as defined in the Plan, a
copy of which has been furnished to Employee. This award is in all respects made
subject to the terms and conditions of the Plan and, by signing and returning a
copy of this Agreement to the Secretary of the Company, Employee acknowledges
that he has read this Agreement and the Plan and agrees to all of the terms and
conditions thereof for himself, any designated beneficiary and his heirs,
executors, administrators or personal representatives. Terms used in this
Agreement which are defined in the Plan shall have the meanings set forth in the
Plan. In the event of any conflict between the Plan and this Agreement, the Plan
shall control. Employee also acknowledges receipt of the Prospectus dated
October 23, 1997, relating to the Plan.
2. The Option Price of the Stock Option covered by this award shall be
the closing price of the Stock on the New York Stock Exchange (the "NYSE") on
the Starting Date, the date of this award.
3. Subject to the terms and conditions of the Plan and the other
provisions of this Agreement, the Stock Option shall become exercisable in
installments as follows, provided Employee continues to be employed by the
Company on the dates indicated:
Number of Shares of Stock with
Respect to which Stock Option
First Becomes Exercisable Date
------------------------- ----
92,400 The first anniversary of the Starting Date
14,400 The second anniversary of the Starting Date
14,400 The third anniversary of the Starting Date
14,400 The fourth anniversary of the Starting Date
14,400 The fifth anniversary of the Starting Date
If, prior to the fifth anniversary of the Starting Date, Employee's employment
with the Company is terminated (i) by the Company without Cause, (ii) by
Employee with Good Reason or (iii) due to Employee's death or Disability
(collectively, a "Termination Event"), then (x) the Stock Option shall
immediately become fully exercisable; and (y) the termination of Employee's
employment will be treated, for purposes of determining the terms of exercise of
the Stock Option, as having occurred because of Employee's Retirement under
Section 10(b) of the Plan (other than the first sentence of such Section 10(b)).
For purposes of this Agreement, the terms "Cause" and "Good Reason" shall have
the respective meanings assigned such terms in Annex A attached hereto.
If Employee's employment with the Company terminates (i) for any reason, other
than a Termination Event, prior to the fifth anniversary of the Starting Date,
or (ii) for any reason on or after the fifth anniversary of the Starting Date,
then (x) subject to the next paragraph of this Paragraph 3, the termination of
Employee's employment will be treated, for purposes of determining the terms of
exercise of the then exercisable portion of the Stock Option, as having occurred
because of Employee's Retirement under Section 10(b) of the Plan (other than the
first sentence of such Section 10(b)); and (y) Employee shall immediately
forfeit that portion of the Stock Option not then exercisable; provided,
however, that, only for purposes of determining whether a forfeiture shall occur
in accordance with this sentence, the portion of the Stock Option attributable
to 78,000 shares of Stock which becomes exercisable on the first anniversary of
the Starting Date shall be deemed to become exercisable six months after the
Starting Date.
Notwithstanding anything in this Paragraph 3 to the contrary, if Employee's
employment with the Company is terminated by the Company at any time for Cause,
Employee shall immediately forfeit the then outstanding Stock Option, whether or
not then exercisable.
4. Subject to the terms and conditions of the Plan and the other
provisions of this Agreement, including Paragraph 8 below, the Stock Option
granted to Employee herein may be exercised during the period beginning as set
forth in Paragraph 3 above and ending on the business day immediately preceding
the tenth anniversary of the Starting Date. Subject to the terms and conditions
of the Plan, Employee (or, if Employee is deceased, a party acting on his behalf
pursuant
to Section 10 of the Plan) may exercise the Stock Option granted herein in whole
or, from time to time, in part by way of a written notice delivered to the
Secretary of the Company which includes the following: (i) name, mailing address
and social security number of Employee and the date, which shall be the actual
date of the notice; (ii) the number of shares of Stock with respect to which the
Stock Option is being exercised; (iii) the date of grant and the Option Price
with respect to the Stock Option being exercised; and (iv) the signature of
Employee or a party acting on behalf of a deceased employee. Payment of the full
purchase price of the shares of Stock covered by the exercise shall be made in
the manner prescribed by the Committee from time to time. If the Committee, in
its sole discretion, shall determine that it is appropriate to do so, such
payment may be made in whole or in part by tender of shares of unrestricted
Stock, as set forth in Section 5 of the Plan, subject to such requirements or
procedures as the Committee may specify.
5. When the Stock Option is exercised, the Company shall make the
appropriate calculations under the Plan and deliver to Employee, as soon as
practicable, a certificate or certificates representing the net number of shares
of Stock due to Employee pursuant to such exercise, calculated in accordance
with this paragraph. Unless other tax withholding arrangements are made by
Employee and the Company, the Company shall withhold from the shares of Stock
issued to Employee a sufficient number of shares of Stock based on its fair
market value on the date of exercise to cover any amounts which the Company is
required to withhold to comply with withholding requirements of federal, state
or local tax laws, rules or regulations. The fair market value for purposes of
the second sentence of this paragraph shall be as reasonably determined by the
Committee.
6. The Stock Option granted herein is not transferable otherwise than
by will, by the laws of descent and distribution, or by a written designation
referred to in Section 10(c) of the Plan, and is exercisable during Employee's
lifetime only by Employee. In the event that the Stock Option is exercised
pursuant to Section 10 of the Plan by any person other than Employee, such
notice shall be accompanied by appropriate proof of the right of such person to
exercise the Stock Option.
7. The Stock Option granted herein is subject to all terms of the Plan,
including but not limited to Section 10(b), which provides for the forfeiture of
certain benefits in certain circumstances in the event of Employee's Retirement
prior to his normal retirement date.
8. Employee acknowledges that the federal securities laws and/or the
Company's policies regarding trading in its securities may limit or restrict
Employee's right to buy or sell shares of Stock, including, without limitation,
sales of Stock to exercise the Stock Option or sales of Stock acquired pursuant
to the exercise of the Stock Option. Employee agrees to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.
This Agreement has been prepared in duplicate. Please note your
acceptance in the space provided therefor and return the original for the
Company's records.
IN WITNESS WHEREOF, the Company, acting through its duly authorized
officer, has caused this Agreement to be duly executed, and Employee has
hereunto set his hand, all as of the day and year first written above.
DELTA AIR LINES, INC.
BY
-----------------------------------
Leo F. Mullin
President and Chief Executive Officer
EMPLOYEE
-----------------------------------
Robert L. Colman
ANNEX A
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which action or inaction
is not remedied within fifteen business days of written notice from the Company;
or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means the Starting Date.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
(c) A reduction by the Company of your base salary as in effect on the
later of (i) the Effective Date or (ii) the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all full-time domestic
employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in your short-term or long-term incentive
compensation opportunities under the executive incentive compensation plans of
the Company for which you are eligible as in effect on the later of (i) the
Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs; or
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Annex A relates or any failure of a successor of
the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
Exhibit B
---------
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE 1989 STOCK INCENTIVE PLAN
September 17, 1998
Robert L. Colman
Executive Vice President - Human Resources
The 1989 Stock Incentive Plan of Delta Air Lines, Inc., as amended
("Plan"), is intended as an inducement for officers, executives and key
employees of Delta Air Lines, Inc. (the "Company") to continue in the employment
of the Company, and to provide a greater incentive to such employees to make
material contributions to the Company's success by increasing their proprietary
interest in the Company through increased direct stock ownership. The Plan,
which provides for certain awards to eligible employees, is administered by the
Personnel & Compensation Committee of the Board of Directors (the "Committee").
Pursuant to the Plan, the Committee has selected you to receive an award of
Restricted Stock (as defined in the Plan) effective as of the close of business
on the date you begin active employment with the Company (the "Starting Date"),
which date will be mutually agreed upon by you and the Company, but which will
be no later than October 14, 1998. The Committee has instructed me to direct
this letter to you.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you as an employee of the
Company (hereinafter called "Employee"), do hereby agree as follows:
1. Grant of Shares. Pursuant to action of the Committee, the Company
hereby grants to Employee 20,000 shares of Restricted Stock (the "Shares"). This
award is in all respects made subject to the terms and conditions of the Plan, a
copy of which has been provided to Employee, and by signing and returning a copy
of this Agreement to the Secretary of the Company, Employee acknowledges that he
has read the Plan and agrees to all of the terms and conditions thereof for
himself, any designated beneficiary and his heirs, executors, administrators or
personal representatives. Terms used in this Agreement which are defined in the
Plan shall have the meanings set forth in the Plan. In the event of any conflict
between the Plan and this Agreement, the Plan shall control. Employee also
acknowledges receipt of the Prospectus dated October 23, 1997, relating to the
Plan.
As soon as practicable following Employee's execution of this Agreement and
the stock power described below in Section 6, a certificate or certificates
representing the Shares and bearing the legend described below in Section 6
shall be issued to Employee. Upon issuance of the certificates representing the
Shares, Employee shall have all rights of a stockholder with respect to the
Shares, including the right to vote and, subject to Section 10 of this
Agreement, to receive all dividends or other distributions paid or made with
respect to the Shares; provided, however, that the Shares (and any securities of
the Company which may be issued with respect to the Shares by virtue of any
dividend reinvestment, stock split, combination, stock dividend or
recapitalization, which securities shall be deemed to be "Shares" hereunder)
shall be subject to the terms and all of the restrictions set forth in this
Agreement.
2. Restriction. Until the restriction imposed by this Section 2 (the
"Restriction") has lapsed pursuant to Section 3 or 4 below, Employee shall not
be permitted to sell, exchange, assign, transfer, pledge or otherwise dispose of
the Shares and the Shares shall be subject to forfeiture as set forth in Section
5 below.
3. Lapse of Restriction by Passage of Time. The Restriction shall lapse
and have no further force or effect as to 33-1/3% of such Shares (including
33-1/3% of any additional Shares which at the time have been purchased with
dividends on such Shares) on each of the first, second and third anniversaries
of the Starting Date, provided Employee remains employed by the Company on such
dates.
4. Lapse of Restriction in Certain Cases. The Restriction shall lapse
and have no further force or effect with respect to all Shares hereunder upon
the occurrence prior to the third anniversary of the Starting Date of the
termination of Employee's employment (i) by the Company without Cause, (ii) by
Employee with Good Reason or (iii) by reason of Employee's death or Disability
(as defined in the Plan). For purposes of this Agreement, the terms "Cause" and
"Good Reason" shall have the respective meanings assigned such terms in Annex A
attached hereto. Employee may provide to the Company written designation naming
a person or persons who shall receive the Shares in the event of Employee's
death, and such designation must be in a form approved by counsel for the
Company. If there is no such approved designation, Shares shall be distributed
upon Employee's death pursuant to Employee's last will and testament or as
provided by law.
5. Forfeiture of Shares. In the event of termination of Employee's
employment with the Company other than in the circumstances described in clauses
(i), (ii) or (iii) of Section 4 and prior to lapse of the Restriction under
Section 3, Employee shall immediately forfeit all right, title and interest to
the Shares which are still subject to the Restriction, and such Shares shall be
canceled or transferred to the Company by Employee, without consideration to
Employee or his heirs, executors, administrators or personal representatives.
6. Endorsement and Retention of Certificates. All certificates
representing the Shares shall be endorsed on the face thereof with the following
legend:
"The shares of stock represented by this certificate and the sale,
transfer or other disposition of such shares are restricted by and
subject to a Restricted Stock Award Agreement dated September 17, 1998
between Robert L. Colman and the Company, a copy of which is on file
with the Secretary of the Company."
All certificates for Shares shall be held by the Company until the
restrictions thereon shall have lapsed and, as a condition to this award,
Employee shall execute and deliver to the Company a stock power, endorsed in
blank and approved by counsel for the Company, relating to the Shares, as set
forth in the Plan.
Upon lapse of the Restriction pursuant to Section 3 or 4 of this
Agreement without a prior forfeiture of the Shares, a certificate or
certificates for an appropriate number of unrestricted Shares shall be delivered
to Employee and the certificate with the legend indicated above shall be
canceled.
7. Withholding Taxes. Upon lapse of the Restriction on the Shares
pursuant to Section 3 or 4 above, unless other tax withholding arrangements are
made by Employee and the Company, sufficient Shares shall be transferred to the
Company to provide for the payment of any taxes required to be withheld by
federal, state, or local law with respect to income resulting from such lapse.
The value of the Shares so transferred shall be the closing price of the Common
Stock on the NYSE on the date the Restriction lapses (or, in the event that no
sale of the Common Stock takes place on the NYSE on such date, the closing price
of the Common Stock on the NYSE on the immediately preceding date on which such
a sale occurred).
8. Rights Not Enlarged. Nothing herein confers on Employee any right to
continue in the employ of the Company or any of its subsidiaries.
9. Succession. This Agreement shall be binding upon and operate for the
benefit of the Company and its successors and assigns, and Employee and his
heirs, executors, administrators or personal representatives.
10. Dividends. Any cash dividends which may become payable on the
Shares shall be reinvested by the Company in shares of Common Stock, to the
extent Shares are available under the Plan. If shares are not so available,
dividends shall be paid in cash and held by the Company for the account of
Employee until the Restriction lapses. In such event the Company shall pay
interest on the amount so held as determined by the Committee, and the
accumulated amount of such dividends and interest shall be payable to Employee
upon the lapse of the Restriction. Those Shares and any cash held for the
account of the Employee shall be governed by the Restriction set forth in the
Agreement; the Restriction with respect to such Shares and such cash shall lapse
as provided in Sections 3 and 4 of this Agreement; and such shares and such cash
shall be forfeited pursuant to Section 5 to the extent that the Shares on which
such dividends were paid shall be so forfeited.
11. Fractional Shares. Upon lapse of the Restriction, certificates for
fractional Shares shall not be delivered to Employee, and the value of any
fractional Shares which may result from the application of Section 3 or 4 of
this Agreement shall be paid in cash to Employee, as determined in the last
sentence of Section 7 above.
This Agreement has been prepared in duplicate. Please note your
acceptance in the space provided therefor and return the original for the
Company's records.
IN WITNESS WHEREOF, the Company, acting through its duly authorized
officer, has caused this Agreement to be duly executed, and Employee has
hereunto set his hand, all as of the day and year first written above.
DELTA AIR LINES, INC.
BY
-----------------------------------
Leo F. Mullin
President and Chief Executive Officer
EMPLOYEE
-----------------------------------
Robert L. Colman
ANNEX A
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which action or inaction
is not remedied within fifteen business days of written notice from the Company;
or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means the Starting Date.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
(c) A reduction by the Company of your base salary as in effect on the
later of (i) the Effective Date or (ii) the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all full-time domestic
employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in your short-term or long-term incentive
compensation opportunities under the executive incentive compensation plans of
the Company for which you are eligible as in effect on the later of (i) the
Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs; or
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Annex A relates or any failure of a successor of
the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
IRREVOCABLE STOCK POWER
The undersigned, Robert L. Colman, does hereby assign, transfer and
deliver unto _____________________________________ all of those shares of common
stock of Delta Air Lines, Inc. (the "Company") granted as restricted stock (the
"Restricted Stock") pursuant to the Restricted Stock Award Agreement Under The
1989 Stock Incentive Plan dated as of September 17, 1998, between the Company
and Robert L. Colman, as well as all of those shares of common stock of the
Company purchased for the undersigned with reinvested dividends from the
Restricted Stock (collectively, the "Shares").
The undersigned does hereby irrevocably constitute and appoint
_______________________________________ attorney-in-fact, with full power of
substitution, to transfer the Shares on the books of the Company, or to direct
the Transfer Agent of the Company to so transfer the Shares.
Signature:
-----------------------------
Printed Name:
-----------------------------
Date:
-----------------------------
Witness:
- -------------------------------
Exhibit C
---------
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by you
(other than as a result of incapacity due to physical or mental illness) which
is committed in bad faith, without reasonable belief that such action or
inaction is in the best interests of the Company, and which action or inaction
is not remedied within fifteen business days of written notice from the Company;
or
(b) Your conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than three-quarters of the entire membership of the Board
of Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, you are guilty of conduct set forth above in clauses (a) or (b) of this
definition and specifying the particulars thereof in detail.
"Effective Date" means the Starting Date under the letter agreement to which
this Exhibit C is attached.
"Good Reason" means the occurrence of any one or more of the following, unless
you have expressly consented in writing thereto:
(a) The assignment to you of duties inconsistent with your authorities,
duties, titles, responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature or status of your authorities, duties,
titles or responsibilities, from those in effect as of the Effective Date, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by you;
(b) The Company's requiring you to be based at a location in excess of
50 miles from your principal job location or office on the later of (i) the
Effective Date or (ii) immediately prior to the Reference Date; except for
required travel on the Company's business to an extent consistent with your
business travel obligations on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date;
(c) A reduction by the Company of your base salary as in effect on the
later of (i) the Effective Date or (ii) the Reference Date (other than pursuant
to a reduction by a uniform percentage of the salary of all full-time domestic
employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in your short-term or
long-term incentive compensation opportunities under the executive incentive
compensation plans of the Company for which you are eligible as in effect on the
later of (i) the Effective Date or (ii) the Reference Date;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which you
receive benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date (other than pursuant to an equivalent
reduction in such benefits of all full-time domestic employees of the Company
who are not subject to a collective bargaining agreement); or the failure of the
Company to meet the funding requirements, if any, of any of such programs;
(e) Any material breach by the Company of its obligations under the
letter agreement to which this Exhibit C relates or any failure of a successor
of the Company to assume and agree to perform the Company's entire obligations
under that letter agreement, provided that such successor has received at least
ten days written notice from the Company or you of the requirement to assume
those obligations.
"Reference Date" means the date 90 days prior to the termination of your
employment.
2
Exhibit D
---------
ADDITIONAL SEPARATION COMPENSATION
Amount of
If termination occurs between: Separation Compensation:
- ------------------------------ ------------------------
Starting Date and September 30, 1999 $185,000
October 1, 1999 and September 30, 2000 $179,000
October 1, 2000 and September 30, 2001 $172,000
October 1, 2001 and September 30, 2002 $168,000
October 1, 2002 and September 30, 2003 $162,000
October 1, 2003 and September 30, 2004 $155,000
October 1, 2004 and September 30, 2005 $146,000
October 1, 2005 and September 30, 2006 $136,000
October 1, 2006 and September 30, 2007 $124,000
October 1, 2007 and September 30, 2008 $110,000
October 1, 2008 and September 30, 2009 $ 93,000
October 1, 2009 and June 1, 2010 $ 81,000