EXHIBIT 10.2

 

July 1, 2005

 

Mr. J. Timothy Griffin

18060 Shavers Lane

Woodland, MN  55391

 

 

Re:                               Northwest Airlines Corporation E-Commerce
Incentive Compensation Program Award Agreement dated as of April 23, 2004 (the
“Award Agreement”) by and between Northwest Airlines Corporation (the “Company”)
and J. Timothy Griffin

 

 

Dear Mr. Griffin:

 

On April 23, 2004, you were granted an award (the “Award”) under the Northwest
Airlines Corporation E-Commerce Incentive Compensation Program (the “E-Commerce
Plan”) for 20 Points, the terms and conditions of which were evidenced by the
above-referenced Award Agreement.  The Compensation Committee of the Board of
Directors of the Company has approved certain amendments to your Award that are
set forth in this letter agreement (the “Agreement”).  You and the Company have
agreed as follows:

 

1.             As the result of the disposition in November 2004 by Northwest
Airlines, Inc. (“Northwest”), the principal operating subsidiary of the Company,
of certain shares of common stock of Orbitz, Inc. (“Orbitz”), which is one of
the e-commerce businesses covered by the Award, you were entitled, upon vesting
of the Award, to a redemption payment (the “Redemption Amount”), plus interest
from the date of such disposition to the payment date.  The Award Agreement
provides that the Award will vest, subject to your continued employment with
Northwest and the achievement of a financial target related to Northwest’s
e-commerce revenues, in three equal installments on April 23, 2005, April 23,
2006 and April 23, 2007.  The financial target related to Northwest’s e-commerce
revenues has been satisfied.  The first installment of the Redemption Amount
vested on April 23, 2005 and was paid to you in April 2005.  Notwithstanding the
provisions of the Award Agreement, the Company hereby agrees to pay you within
ten (10) business days after the date of this Agreement an amount equal to the
remaining, unvested portion of the Redemption Payment, which equals $1,850,034,
plus interest on such amount at the rate specified in the E-Commerce Plan from
the date of Northwest’s disposition of the Orbitz shares to the date of such
payment (collectively, the “Payment Amount”).

 

 

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2.             In the event that, on or before the first or second anniversary
of the date of this Agreement (as the case may be) your employment with
Northwest is terminated by the Company for Cause (as defined in Exhibit A
attached hereto) or by you without Good Reason (as defined in Exhibit A attached
hereto), you agree that you shall pay to the Company in cash within ten (10)
days after the date of such termination (i) 125% of the Payment Amount if such
termination occurs on or before the first anniversary of the date of this
Agreement or (ii) 62.5% of the Payment Amount if such termination occurs after
the first anniversary of the date of this Agreement and on or before the second
anniversary of the date of this Agreement.   If you fail to pay to the Company
any amount required to be paid by you pursuant to this Section 2, you agree that
the Company or any affiliate of the Company shall be permitted to off-set any
such amounts against other amounts that are owed to you by the Company or such
affiliate.

 

3.             You agree as follows:

 

(a)           While employed by Northwest and thereafter, you shall not disclose
any confidential information either directly or indirectly, to anyone (other
than the Company or an affiliate of the Company and their respective employees
and advisors), or use such information for your 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 your employment with Northwest,
you 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 you during or prior to your term of employment, and shall not
retain any copies thereof.

 

(b)          You acknowledge that your services are of special, unique and
extraordinary value to the Company.  Accordingly, you agree that you shall not
at any time prior to the first anniversary of the date of your termination of
employment with Northwest 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.

 

(c)           You agree that any breach of the terms of this Section 3 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.  You further agree that the provisions of the covenant not to compete
set forth in Section 3(b) hereof are reasonable.  Should a court determine,
however,

 

 

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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 that such
court deems reasonable.  The provisions of this Section 3 shall survive any
termination of your employment with Northwest.  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 3.

 

4.             Any redemption amount payable to you pursuant to the provisions
of the E-Commerce Plan and the Award Agreement with respect to any e-commerce
investment other than Orbitz shall not be modified or affected in any way by any
of the provisions contained herein.

 

5.             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.

6.             Except as otherwise provided in Section 3(c) of this Agreement,
all disputes and controversies arising under or in connection with this
Agreement shall be settled by mandatory arbitration conducted before one
arbitrator having knowledge of employment law in accordance with the rules for
expedited resolution of employment disputes of the American Arbitration
Association then in effect.  The arbitration shall be held in the
Minneapolis/St. Paul metropolitan area at a location selected by the Company. 
The determination of the arbitrator shall be made within thirty (30) days
following the close of the hearing on any dispute or controversy and shall be
final and binding on the parties.  The parties hereby waive their right to a
trial of any and all claims arising out of this Agreement or breach of this
Agreement.  All costs and expenses incurred in connection with any arbitration
including, without limitation, arbitrator and attorney’s fees, shall be paid by
the non-prevailing party in the arbitration unless the arbitrator determines
that such expenses must be otherwise allocated under applicable law to maintain
the validity of this Section 6.

7.             NO PROVISION OF THIS AGREEMENT MAY BE MODIFIED, WAIVED OR
DISCHARGED UNLESS SUCH WAIVER, MODIFICATION OR DISCHARGE IS AGREED TO IN WRITING
SIGNED BY YOU AND AN AUTHORIZED OFFICER OF THE COMPANY.  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.  THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS, EACH OF WHICH SHALL BE
AN ORIGINAL, WITH THE SAME EFFECT AS IF THE SIGNATURES THERETO AND HERETO WERE
UPON THE SAME INSTRUMENT.

Please indicate your acceptance and agreement with the provisions of this
Agreement by signing in the space provided below.

 

 

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Very truly yours,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Douglas M. Steenland

 

 

Douglas M. Steenland

 

 

President & Chief Executive Officer

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

     /s/ J. Timothy Griffin

 

 

     J. Timothy Griffin

 

 

 

 

 

Date:   July 1, 2005

 

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Exhibit A

 

 

                                “Cause” shall mean with respect to termination
by Northwest of your employment (i) an act or acts of dishonesty by you
resulting in, or intended to result in, directly or indirectly, any personal
enrichment of you, (ii) an act or acts of dishonesty by you intended to cause
substantial injury to the Company or any of its affiliates, (iii) material
breach (other than as a result of a Disability (as defined below)) by you of
your obligations under any Management Compensation Agreement between you and
Northwest, which action was (a) undertaken without a reasonable belief that the
action was in the best interests of the Company or any of its affiliates and
(b) not remedied within a reasonable period of time after receipt of written
notice from Northwest specifying the alleged breach, (iv) your conviction of, or
plea of nolo contendere to, a crime constituting (a) a felony under the laws of
any country, the United States or any state thereof or (b) a misdemeanor
involving moral turpitude or (v) a material breach of (a) the Company’s Code of
Business Conduct or (b) the provisions of any Management Compensation Agreement
between you and Northwest.

 

“Disability” shall mean your physical or mental condition which prevents
continued performance of your duties for Northwest, if you establish by medical
evidence that such condition will be permanent and continuous during the
remainder of your life or is likely to be of at least three (3) years duration.

“Good Reason” shall mean any one or more of the following:

(a)           a material reduction in your base salary or level of target bonus
under the KEACIP or any successor bonus plan (except to the extent of any
reduction in connection with a base wage reduction for salaried employees of
Northwest, by an amount not to exceed 20% of your base salary in effect on the
date of such wage reduction);

(B)           ANY SUBSTANTIAL AND SUSTAINED DIMINUTION IN YOUR AUTHORITY OR
RESPONSIBILITIES FOR NORTHWEST (PROVIDED, HOWEVER, THAT AS LONG AS YOU RETAIN A
SUBSTANTIAL PORTION OF YOUR THEN CURRENT OVERSIGHT RESPONSIBILITY, NORTHWEST
SHALL BE PERMITTED TO TRANSFER A PORTION OF YOUR OVERSIGHT RESPONSIBILITY
WITHOUT YOUR CONSENT; OR

(C)           THE RELOCATION OF THE COMPANY’S PRINCIPAL EXECUTIVE OFFICES TO A
LOCATION OUTSIDE THE MINNEAPOLIS-ST. PAUL METROPOLITAN AREA.

provided, however, that the foregoing events shall constitute Good Reason only
if Northwest fails to cure such event within thirty (30) days after receipt from
you of written notice of the event which constitutes Good Reason; provided,
further, that “Good Reason” shall cease to exist for an event on the 60th day
following the later of its occurrence or your knowledge thereof, unless you have
given Northwest written notice thereof prior to such date.

 

 

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 In order for the termination of your employment to be considered for Good
Reason, such termination must occur within one (1) year after the event giving
rise to such Good Reason.  Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.

 

 

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