**Exhibit 10.14**

 

**FINAL**

 

[Northwest Airlines, Inc. Letterhead]

 

[Date]

 

[Name]

[Title]

[Department]

 

Re:          Management Compensation Agreement dated asof [        ]

 

Dear                                   :

 

Northwest Airlines, Inc. (the “Company”)previously entered into a Management Compensation Agreement dated as of [      ]([as amended,] the “Agreement”) with you, pursuant to which the Company agreedto provide you with certain airline pass travel privileges for the personal useof you, your spouse or registered domestic partner and dependent children aswell as other benefits, upon the terms and conditions set forth in yourAgreement.  This letter agreement setsforth certain proposed changes to the Agreement that will become effective ifyou choose to execute this letter agreement in the space provided below andreturn it to the Company.  None of thesechanges, however, will become effective unless an executed copy of the originalof this letter agreement is returned to [Timothy J. Meginnes, Vice President –Compensation and Benefits, [Northwest Airlines, Inc.], Department A1445,2700 Lone Oak Parkway, Eagan, Minnesota, 55121, telephone 612-727-9444.]

 

1.             Section 3 of theAgreement is amended by adding thereto the following:

 

“Notwithstanding the continuingemployment requirement set forth above (if applicable), in the event thatExecutive’s employment is terminated by the Company without Cause or Executiveresigns for Good Reason within two years after a Change of Control, (x) if,at the time of such termination, Executive has been employed by the Company oran Affiliate for at least five (5) years, all Airline Pass privilegesunder this Section 3, to the extent not previously vested, shall be deemedvested, or (y) if, at the time of such termination, Executive has not beenemployed by the Company or an Affiliate for at least five (5) years, allAirline Pass privileges as set forth above that are not then vested shall beforfeited, and, in lieu thereof, Executive shall be entitled to vested AirlinePass privileges pursuant to the 

 

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Company’s pass policies for the personal useof Executive and the Eligible Individuals for ten (10) years after suchtermination of employment at a boarding priority of F3 B3.  In addition, in the event of a Change ofControl, Airline Pass privileges pursuant to the Company’s pass policies(including access to airline lounges under the WorldClub Pass or any similarprogram) (as applicable to Executive under the foregoing clause (x) or (y) above)will be provided to Executive and Eligible Individuals, to the extent vestedhereunder, on terms and conditions no less favorable than those applicable toExecutive and Eligible Individuals immediately prior to such Change of Control,and the Company shall provide (or shall cause any successor to the Company,whether by purchase, merger, consolidation or otherwise, to provide) Executiveand Eligible Individuals with Airline Pass privileges equivalent to thoseprovided under the Airline Pass privileges described in this Section 3with respect to the Company (or its successor) and its Affiliates.

 

In addition, if at the time ofExecutive’s termination of employment with the Company Executive is eligiblefor “retiree pass travel” under the Company’s Airline Pass policies, as then ineffect, the Company shall provide Executive with a gross-up payment for anypersonal income tax liability (based on an assumed marginal income tax rate ofthe highest Federal and State income tax rate in which State such individualresides) arising from the Airline Pass (and travel thereon) described in Section 3(the “Airline Pass Gross-Up”), such that after the payment of all personalincome tax liability associated with the Airline Pass (including any personalincome taxes on the Airline Pass Gross-Up) Executive retains an amount of thegross-up payment equal to the personal income tax liability arising from suchAirline Pass and travel. The Company shall pay the Airline Pass Gross-Up toExecutive no later than thirty (30) days after the end of the year in whichsuch taxes are incurred.”

 

2.             The following Section [5.4]is hereby added to the Agreement:

 

“[5.4]      Gross-Up Payment

 

(a) Excise Tax.

 

(i) If any payment or distribution bythe Company to or for the benefit of Executive (whether paid or payablepursuant to this Agreement or otherwise (a “Payment”)) is subject to the excisetax imposed by Section 4999 of the Internal Revenue Code of 1986, asamended (the “Code”) or any interest or penalties thereon (together, the “ExciseTax”), then Executive shall be entitled to an additional payment (a “Gross-UpPayment”) in an amount such that, after payment by Executive of all taxesincluding, without limitation, any income taxes (together with any interest orpenalties thereon, the “Additional Income Tax”) or any Excise Tax, imposed uponthe Gross-Up Payment Executive retains an amount of the 

 

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Gross-Up Payment equal to the Excise Taximposed upon the Payments; provided, however, the amount of any Gross-UpPayment shall in no events exceed $1 million ($1,000,000).  Notwithstanding the foregoing, if it shall bedetermined that the Executive would be entitled to a Gross-Up Payment, but thatthe Payment would not be subject to the Excise Tax if the total, aggregatePayments were reduced by an amount that is less than ten percent (10%) of thePayment that would be treated as “parachute payments” under Section 280Gof the Code, then the amounts payable to Executive shall be reduced (but notbelow zero) to the maximum amount that could be paid to Executive withoutgiving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Paymentshall be made to Executive.  Suchreduction of the amounts payable to the Safe Harbor Cap, if applicable, shallbe made by reducing the payments comprising the Payments in such order as electedby the Executive.

 

(ii) Subject to [Section 5.4(a)(iii)],all determinations required to be made under this [Section 5.4], includingwhether 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 theCompany to audit its financial statements (the “Accounting Firm”) which shallprovide detailed supporting calculations both to the Company and Executivewithin fifteen (15) business days after the receipt of notice from Executivethat there has been a Payment, or such earlier time as is requested by theCompany. All fees and expenses of the Accounting Firm shall be borne solely bythe 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 receiptof the Accounting Firm’s determination. Any determination by the AccountingFirm shall be binding upon the Company and Executive. As a result of theuncertainty in the application of Section 4999 of the Code at the time ofthe initial determination by the Accounting Firm hereunder, it is possible thatadditional Gross-Up Payments should have been made by the Company (an “Underpayment”).If the Company exhausts its remedies pursuant to Section [5.4(a)(iii)] andExecutive thereafter is required to make a payment of any Excise Tax, theAccounting Firm shall determine the amount of the Underpayment that hasoccurred and any such Underpayment shall be promptly paid by the Company to orfor the benefit of Executive.

 

(iii) Executive shall notify the Companyin 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 noticeshall be given as soon as practicable but no later than ten (10) businessdays after Executive knows of such Claim and shall apprise the Company of thenature and date of requested payment of such claim. Executive shall not paysuch claim before the earlier of (x) the date thirty (30) days afterExecutive’s notice to the Company or (y) the date on which payment oftaxes with respect to 

 

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such claim is due. If the Company notifiesExecutive in writing prior to the expiration of such period that it desires tocontest such claim, Executive shall:

 

(A) give the Company anyreasonably requested information relating to such claim;

 

(B) take such action inconnection with contesting such claim as the Company shall reasonably requestin writing from time to time, including, without limitation, accepting legalrepresentation with respect to such claim by an attorney reasonably selected bythe Company;

 

(C) cooperate with theCompany in good faith in order to effectively contest such claim; and

 

(D) permit the Company toparticipate in any proceedings relating to such claim; provided, however, thatthe Company shall bear and pay directly all costs and expenses (includingadditional interest and penalties) incurred in connection with such contest andshall indemnify and hold such Executive harmless, on an after-tax basis, forany Excise Tax or additional Income Tax imposed as a result of suchrepresentation and payment of costs and expenses. Without limiting this Section [5.4(iii)],the Company shall control all proceedings taken in connection with suchappeals, proceedings, hearings and conferences with the taxing authority inrespect of such claim and (2) either direct Executive to pay the taxclaimed and sue for a refund or contest the claim in any permissible manner.Executive agrees to prosecute such contest to a determination before anyadministrative tribunal, in a court of initial jurisdiction and in one or moreappellate courts, as the Company shall determine; provided, however, that ifthe Company directs such Executive to pay such claim and sue for a refund, theCompany shall advance the amount of such payment to Executive, on aninterest-free basis, and shall indemnify and hold Executive harmless, on anafter-tax basis, from any Excise Tax or Income Tax imposed with respect to suchadvance; and further provided that any extension of the statute of limitationsfor the taxable year of Executive with respect to which such contested amountis claimed to be due is limited to issues with respect to which a Gross-UpPayment would be payable hereunder and Executive shall be entitled to settle orcontest any other issue raised by the Internal Revenue Service or any othertaxing authority.

 

(iv) If, after the receipt by Executiveof any amount advanced by the Company pursuant to Section [5.4(a)(iii)],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(a)(iii)])promptly pay to the Company the amount of such refund (together with 

 

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any interest paid or creditedthereon after taxes applicable thereto). If, after the receipt by Executive ofan amount advanced by the Company pursuant to Section [5.4(a)(iii)], adetermination is made that such Executive shall not be entitled to any refundwith respect to such claim and the Company does not notify Executive in writingof its intent to contest such denial of refund prior to the expiration ofthirty (30) days after such determination, then such advance shall be forgivenand shall not be required to be repaid and the amount of such advance shalloffset, to the extent thereof, the amount of any Gross-Up Payment required tobe paid.

 

3.             [The following Section [5.5]is hereby added to the Agreement] [Section [5.3] of the Agreements ishereby deleted and replaced in its entirety with the following]:

 

“[5.5]      Compliance with theProvisions of Code Section 409A.

 

Notwithstandinganything herein to the contrary:

 

(i)            if at the time ofExecutive’s termination of employment with the Company Executive is a “specifiedemployee” as defined in Section 409A of the Code and the deferral of thecommencement of any payments or benefits otherwise payable hereunder as aresult of such termination of employment is necessary in order to prevent anyaccelerated or additional tax under Section 409A of the Code, then

 

(x)            the Company will defer thecommencement of the payment of any such payments or benefits hereunder (withoutany reduction in such payments or benefits ultimately paid or provided toExecutive) until the date that is six months following Executive’s terminationof employment with the Company (or the earliest date as is permitted under Section 409Aof the Code), or

 

(y)           (A) with respectto the provision of in-kind benefits hereunder which are otherwise not exemptfrom the six-month delay requirements, during the period beginning on theemployment termination date, and ending on the six-month anniversary of suchdate, Executive may be permitted to commence use of such benefits so long asExecutive reimburses the Company, on the last business day of each month, allor part of which occurs during such period, for the amount of 

 

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any income imputed to Executiveunder applicable tax rules as a result of any benefits provided toExecutive during such month, and

 

(B) insuch event, on the first business day of the first month following the month inwhich occurs the six-month anniversary of the termination date, the Companyshall make a one-time, lump sum cash payment to Executive in an amount equal tothe payments made by Executive in accordance with Section [5.5](i)(y)(A) above,together with interest thereon accruing at the applicable federal rate forinstruments of less than one year,****and

 

(ii)           if any other paymentsof money or other benefits due to Executive hereunder could cause theapplication of an accelerated or additional tax under Section 409A of theCode, such payments or other benefits shall be deferred if deferral will makesuch payment or other benefits compliant under Section 409A of the Code,or otherwise such payment or other benefits shall be restructured, to theextent possible, in a manner, determined by the Board, that does not cause suchan accelerated or additional tax.

 

The Company shall consult withExecutive in good faith regarding the implementation of the provisions of this Section [5.5];provided that, notwithstanding anything in this Agreement to the contrary,neither the Company nor any of its Affiliates, employees or representativesshall have any liability to Executive with respect to any tax liabilities imposedon Executive under Section 409A of the Code.”

 

4.             The definition of “Cause”under the Agreement is hereby deleted in its entirety and replaced with thefollowing:

 

““Cause” shall mean withrespect to termination of Executive’s employment hereunder (i) an act oracts of dishonesty by Executive resulting in, or intended to result in,directly or indirectly, any personal enrichment of Executive (ii) an actor acts of  dishonesty by Executiveintended to cause substantial injury to the Company, (iii) material breach(other than as a result of a Disability) by Executive of Executive’sobligations under this Agreement, which action was (a) undertaken withouta reasonable belief that the action was in the best interests of the Company oran Affiliate and (b) not remedied within fifteen (15) days after receiptof written notice from the Company or an Affiliate specifying the allegedbreach, (iv) Executive’s conviction of, or plea of nolo contendere to, acrime constituting (a) a felony under the laws of any country, the UnitedStates or any state thereof or (b) a misdemeanor involving moral turpitudeor (v) a material breach of (a) the Company’s Code of BusinessConduct or (b) the provisions of this Agreement.”

 

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5.             The Section entitled“Certain Defined Terms” is hereby amended by adding thereto the followingdefinitions:

 

““Affiliate” means any entity which, directly or indirectly,controls, is controlled by, or is under common control with, the Company.  For purposes of the preceding sentence, “control”(including, with correlative meanings, the terms “controlled by” and “undercommon control with”), as used with respect to any entity or organization,shall mean the possession, directly or indirectly, of the power (i) tovote more than 50% of the securities having ordinary voting power for theelection of directors of the controlled entity or organization, or (ii) todirect or cause the direction of management and policies of the controlledentity or organization, whether through the ownership voting securities or bycontract or otherwise.

 

“Change of Control”means “Change of Control” as defined in the Northwest Airlines Corporation 2007Stock Incentive Plan, as of the date hereof.”

 

6.             Clause (c) ofthe definition of “Good Reason” under the Agreement is hereby deleted in itsentirety and replaced with the following:

 

“(c) if Executive’s principalplace of employment is at the Company’s principal executive offices in theMinneapolis-St. Paul Metropolitan Area, the relocation of Executive’s principalplace of employment to a location other than at the Company’s principalexecutive offices in the Minneapolis-St. Paul Metropolitan Area (excludingtravel requirements relating to Executive’s duties), without Executive’sconsent, and, *in addition*, without prejudice tothe preceding clause, following a Change of Control, if Executive’s principal placeof employment is other than at the Company’s principal executive offices in theMinneapolis-St. Paul Metropolitan Area, the relocation of Executive’s principalplace of employment by more than 50 miles (excluding travel requirementsrelating to Executive’s duties), without Executive’s consent;”

 

7.             The definition of “GoodReason” under the Agreement is hereby further amended by adding thereto thefollowing:

 

“(e) following a Change ofControl, a material reduction in Executive’s short-term or long-term cashincentive compensation opportunities, or

 

(f) following a Change ofControl, the Company does not keep in effect compensation, incentive,retirement, health and welfare benefits, or perquisite programs under which theExecutive receives benefits 

 

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substantially comparable, in the aggregate,to those in effect prior to a Change of Control (other than a reductionpursuant to an equivalent reduction in such benefits for all full time domesticemployees who are not subject to a collective bargaining agreement).”

 

8.             [Section 16] underthe Agreement is hereby amended by thereto adding the following:

 

“Notwithstanding the above, following aChange of Control, all costs and expenses incurred in connection with anyarbitration including, without limitation, arbitrator and attorney’s fees,shall be paid by the Company, or the Company shall promptly reimburse Executiveon an as-incurred basis for such costs and expenses; provided, however, that ifExecutive institutes any arbitration to enforce this Agreement and thearbitrator presiding over the arbitration affirmatively finds that Executiveinstituted the arbitration in bad faith, Executive shall pay all costs andexpenses, including attorney’s fees, of Executive and the Company.”

 

9.             All terms nototherwise defined herein shall have the same meaning as specified in theAgreement.

 

10.           This letter agreementshall be binding upon and inure to the benefit of the parties hereto, theirrespective representatives, successor and assigns.

 

11.           This letter agreementshall be governed by and construed in accordance with the laws of the State ofMinnesota.

 

12.           Except as hereinprovided, the Agreement shall remain unchanged and in full force andeffect.  This letter agreement may beexecuted in multiple counterparts, each of which, when so executed, shall bedeemed to be an original copy hereof, and all such counterparts together shallconstitute but one single agreement.

 

If the provisions of thisletter agreement are acceptable to you, please indicate your agreement to theabove by signing in the space provided below.

 

Sincerely,

 

Northwest Airlines, Inc.

[Michael J. Becker]

[Senior Vice President – Human Resources &Labor Relations

 

ACCEPTED AND AGREED:

 
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| [Name]       |   |   |   |   |
| [Title]      |   |   |   |   |
| [Department] |   |   |   |   |

 

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