**Exhibit 10.13**

 

EXECUTION VERSION

 

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT(“Agreement”) made as of April 14, 2008 between NORTHWEST AIRLINES,INC., a Minnesota corporation (the “Company”) and Douglas M. Steenland(the “Executive”).

 

WHEREAS, the Company and Executive have previously entered into aManagement Compensation Agreement dated as of September 14, 2005 (the “ManagementCompensation Agreement”) pursuant to Section 5.3 of which Executivewould be entitled to resign for any reason during the 30 day period commencingon the first anniversary of the effective date of the confirmed plan orreorganization of the Company under the Bankruptcy Code and receive certainseverance payments as set forth in the Management Compensation Agreement (the “EmergenceResignation Right”);

 

WHEREAS, Northwest Airlines Corporation has entered into an Agreementand Plan of Merger by and among Delta Air Lines Corporation, Delta Air LinesMerger Sub and Northwest Airlines Corporation dated as of April 14, 2008(the “Merger Agreement”) pursuant to which, subject to certainconditions described therein, it is anticipated that Delta Air Lines MergerCorporation will merge with and into Northwest Airlines Corporation withNorthwest Airlines Corporation continuing as the surviving corporation (asdescribed more fully in the Merger Agreement, the “Merger”);

 

WHEREAS, the Company recognizes that the period between the signing ofthe Merger Agreement and its consummation, or termination of the Merger Agreement,could be as long as 18 months during which Executive’s continued leadership asChief Executive Officer of the Company through the consummation of the Mergeris important to the ongoing success of the Company;

 

WHEREAS, the Company appreciates that, notwithstanding its best effortsand expectation that the Merger will be consummated, it is possible that forregulatory or other reasons the Merger Agreement could be terminated withoutthe Merger having occurred and that Executive’s continued leadership followingthe termination of the Merger Agreement would be critical;

 

WHEREAS, the Company recognizes Executive’s exercise of his EmergenceResignation Right and departure from the Company would be detrimental to thebest interests of the Company and could jeopardize the successful completion ofthe Merger and diminish the enterprise value of the Company;

 

WHEREAS, the Company desires that Executive waive his right to exercisethe Emergence Resignation Right and agree to non-competition andnon-solicitation restrictive covenants in consideration for the grant of the restrictedretention units pursuant to this Agreement as a form of retention compensationdesigned to encourage Executive to remain employed with the Company through theconsummation of the Merger and, if the Merger Agreement is terminated, tocontinue to serve as Chief Executive Officer over the four year

 

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period following the termination of the Merger Agreement, as more fullydescribed herein; and

 

WHEREAS, the Company and Executive desire to make certain otherclarifying and other modifications to the Management Compensation Agreement, asdescribed more fully herein.

 

Accordingly, as of the date hereof, the Company and Executive herebyagree as follows:

 

# (Capitalized terms used herein without definitionhave the meanings specified in Section 17 below).

#  

# 1.     **Grant of Restricted Retention Units**.  As of the date hereof, the Company herebygrants Executive 375,000 restricted retention units (“RRUs”), on theterms and conditions hereinafter set forth. Each RRU represents the unfunded, unsecured right of Executive toreceive a cash payment in the amount, and on the date(s) specified herein.

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# 2.     **Vesting****.**

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## (a)   Subject to Executive’s continuedemployment with the Company, the RRUs shall vest as follows:

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### (i)  If the Merger Agreement is terminated without the Mergerhaving occurred, then 25% of the RRUs shall vest on each of the first fouranniversaries of the date of the termination of the Merger Agreement (each a “ScheduledVesting Date”); and

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### (ii)  If (x) Executive’s employment with the Company isterminated by Executive for Good Reason or by the Company without Cause, or dueto Executive’s death or Disability (each a “Qualifying Termination”) or (y) theMerger contemplated by the Merger Agreement is consummated, then the unvestedportion of the RRUs, to the extent not previously forfeited, shall becomeimmediately vested on the date of such termination or consummation, as the casemay be (an “Accelerated Vesting Date”). Upon Executive’s termination of employment for any reason other than aQualifying Termination, any unvested RRUs shall immediately be forfeited andterminate and be of no further force and effect.

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# 3.     **Payment In Respect of RRUs**.  Upon each Vesting Date, the Company shall payExecutive an amount, in cash, equal to the product of (x) the number of RRUswhich vested as of such Vesting Date times (y) the Fair MarketValue per Share on the Vesting Date; provided that for this purpose, inno event shall the Fair Market Value per Share be deemed to exceed $22.00 perShare.

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# 4.     **Adjustments Upon Certain Events**.  In the event of any change in the outstandingShares after the date hereof by reason of any Share dividend or split,reorganization, recapitalization, merger, consolidation, spin-off, combinationor 

 

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# transaction or exchange of Shares or othercorporate exchange, or any distribution to shareholders of Shares other thanregular cash dividends or any transaction similar to the forgoing, the Committeeshall, without any liability to any person and in a manner determined in itsreasonable discretion, make an equitable substitution or adjustment (to theextent necessary to prevent dilution or enlargement of the benefits orpotential benefits intended to provided to Executive hereunder) as to (i) thenumber or kind of Shares to which the RRUs relate, (ii) the number of RRUsgranted hereunder, and/or (iii) any other affected term of the RRU award.

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# 5.     **No Right to Continued Employment**.  The granting of RRUs evidenced by thisAgreement shall impose no obligation on the Company or any Affiliate tocontinue the employment of Executive and shall not lessen or affect the Company’sor its Affiliate’s right to terminate the employment of Executive.

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# 6.     **No Rights of a Shareholder**.  Executive shall not have any rights as ashareholder of the Corporation as a result of the grant of the RRUs and allpayments in respect of RRUs will be made in cash.

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# 7.     **Transferability**.  The RRUs may not be assigned, alienated, pledged,attached, sold or otherwise transferred or encumbered by Executive otherwisethan by will or by the laws of descent and distribution, and any purportedassignment, alienation, pledge, attachment, sale, transfer or encumbrance notpermitted by this Section 7 shall be void and unenforceable against theCompany or any Affiliate.

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# 8.     **Restrictive Covenants**.

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## (a)   **Forfeiture UponCompeting Employment**.  Upon a termination of employment for anyreason, if Executive shall, during the one year period following Executive’stermination of employment with the Company (the “Restricted Period”)  become an employee, officer, or director ofany Competitive Airline (as defined below) or acquire a 10% or greater equityinterest in any such Competitive Airline, then if such activity is not ceasedwithin 5 business days of Executive’s receipt of written notice from theCompany of such activity (a “Compete Notice”), Executive shall beobligated, as liquidated damages, to promptly repay to the Company a portion ofthe aggregate amounts paid to Executive pursuant to Section 3 above (the “AggregateRRU Payment”) equal to the product of (x) the Aggregate RRUPayment times (y) the percentage of the Restricted Period which hadnot elapsed as of the date of the Compete Notice (the “Liquidated DamagesAmount”).  For the avoidance ofdoubt, the Company’s remedy in the event of the Executive’s breach of this Section 8(a) shallbe limited to its claim for the payment of the Liquidated Damages Amount fromExecutive.  “Competitive Airline”shall mean any of American Airlines, Continental Airlines, United Airlines orUS Airways (or any successor entities of any of them); provided that forthis purpose, Competitive Airline shall not include any non-continental UnitedStates affiliate of any such entity.

 

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## (b)   **No Solicitationof Employees**.  During the Restricted Period, Executive willnot, directly or indirectly: (A) solicit or encourage any employee of theCompany or its Affiliates to leave employment with the Company or itsAffiliates, (B) hire such employee who was employed by the Company or itsAffiliates on the date of Executive’s termination of employment with theCompany or who left the employment of the Company or its Affiliates coincidentwith, or within one year prior to or after, the termination of Executive’semployment with the Company; provided the restriction in this clause (B) shallnot apply with respect to any employee from and after the six month anniversaryof such employee’s termination of employment with the Company or (C) encourageto cease to work for the Company or its Affiliates any consultant then undercontract with the Company or its Affiliates. The foregoing shall not be violated by general advertising not targetedat Company employees nor by serving as a reference upon request with regard toan opportunity at an entity with which Executive is not affiliated.

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# 9.     **Amendments to Management CompensationAgreement.**

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## (a)   Emergence Resignation Right.  As of the date hereof, Executive herebywaives his right to exercise the Emergence Resignation Right and Section 5.3of the Management Compensation Agreement is hereby amended to delete thephrase:

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##  *“. . . or during the 30-day period commencing on thefirst anniversary of the effective date of a confirmed plan of reorganizationfor the Company under the Bankruptcy Code,”.*

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## (b)   IRC Section 409A Compliance. Section 17 of theManagement Compensation Agreement (relating to compliance with the provisionsof Internal Revenue Code Section 409A), is hereby amended and restated toread as follows:

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*“17. Compliancewith the Provisions of Code Section 409A.  Notwithstanding anything herein to thecontrary:*

 

*(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) theCompany will defer the commencement of the payment of any such payments orbenefits hereunder (without any reduction in such payments or benefitsultimately paid or provided to Executive) until the date that is six monthsfollowing Executive’s termination of employment with the Company (or theearliest date as is permitted under Section 409A of the Code), or*

 

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*(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 any incomeimputed to Executive under applicable tax rules as a result of anybenefits provided to Executive 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 17 (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 payments ofmoney or other benefits due to Executive hereunder could cause the applicationof an accelerated or additional tax under Section 409A of the Code, suchpayments or other benefits shall be deferred if deferral will make such paymentor other benefits compliant under Section 409A of the Code, or otherwisesuch payment or other benefits shall be restructured, to the extent possible,in a manner, determined by the Board, that does not cause such an acceleratedor additional tax.*

 

*TheCompany shall consult with Executive in good faith regarding the implementationof the provisions of this Section 17; provided that, notwithstandinganything in this Agreement to the contrary, neither the Company nor any of itsAffiliates, employees or representatives shall have any liability to Executivewith respect to any tax liabilities imposed on Executive under Section 409Aof the Code.”*

 

## (c)   Airline Pass.  Sections 3.1 and Section 7(b) ofthe Management Compensation Agreement, which currently provide Executive and hisEligible Individuals with lifetime Airline Pass privileges with respect to theCompany and any successor entity, are hereby amended to clarify and providethat, without prejudice to the benefits currently provided to Executivethereunder, in the event of a Change of Control (as defined in Section 17below), Airline Pass (as defined in the Management Compensation Agreement)privileges provided to Executive (including access to airline lounges under theWorldClub Pass or any similar program) will be provided to Executive andEligible Individuals (as defined in the Management Compensation Agreement) onterms and conditions no less favorable than those applicable to Executive andEligible Individuals immediately prior to such Change of Control, and the Companyshall provide (or shall cause any successor to the Company, whether bypurchase, merger, consolidation or otherwise, to provide) Executive andEligible Individuals with Airline Pass privileges equivalent to those providedunder the Airline Pass privileges described 

 

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## in the Management Compensation Agreement (asamended hereby) with respect to the Company (or its successor) and itsAffiliates.

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## (d)   MedicalCoverage.  Section 3.2 ofthe Management Compensation Agreement is hereby amended to clarify that,consistent with the Company’s current practices, Executive’s currententitlement to medical and dental coverage (including, but not limited to thatdescribed in Section 2.5 thereof) as described therein “without cost” toExecutive, is intended to mean “without cost, on an after tax basis” (otherthan Executive’s payment, until age 65, of the same percentage of the premiumcost of the Company’s current medical plan as is generally charged to otheractively employed officers of the Company; but in any event not to exceed 25%of the premium cost for such coverage).

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# 10.   **Notices****.** Any notice under this Agreement shall be addressed to the Company incare of its General Counsel at the principal executive office of the Companyand to Executive at the address appearing in the personnel records of theCompany for Executive or to either party at such other address as either partyhereto may hereafter designate in writing to the other.  Any such notice shall be deemed effectiveupon receipt thereof by the addressee.

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# 11.   **Withholding**.  Executive may be required to pay to theCompany or any Affiliate and the Company or any Affiliate shall have the rightand is hereby authorized to withhold from any payment due under this Agreementor from any compensation or other amount owing to Executive, applicablewithholding taxes with respect to any issuance or transfer under this Agreementand to take such action as may be necessary in the opinion of the Company tosatisfy all obligations for the payment of such withholding taxes.

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# 12.   **Entire Agreement/Choice of Law/Disputes**. This Agreement, together withthe Management Compensation Agreement (as amended hereby) contains the entireunderstanding between the Company and Executive with respect to the mattersdescribed herein.    **THE INTERPRETATION, PERFORMANCEAND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OFMINNESOTA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. **Any disputes under thisAgreement shall be subject to Section 10 of the Management CompensationAgreement.

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# 13.   **Compensation Not Taken Into Account**.  Unless otherwise determined by the Committeefor this purpose in writing, any amounts payable, or paid, to Executivehereunder shall not be taken into account in computing Executive’s salary,wages, base pay or compensation for the purposes of determining any benefits orcompensation under (i) any pension, retirement, life insurance, severance,welfare or other benefit plans, programs or arrangements of the Company or itsAffiliates and/or (ii) any agreement between Executive and the Company orits Affiliates.

 

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# 14.   **Signature in Counterparts**.  This Agreement may be signed in counterparts,each of which shall be an original, with the same effect as if the signaturesthereto and hereto were upon the same instrument.

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# 15.   **Compliance with the Provisions of Code Section 409A**. Notwithstanding anythingherein to the contrary:

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## (a)   if at the time of Executives’ terminationof employment with the Company Executive is a “specified employee” as definedin Section 409A of the Code and the deferral of the commencement of anypayment payable hereunder, or otherwise, as a result of such termination ofemployment is necessary in order to prevent any accelerated or additional taxunder Section 409A of the Code, then the Company will defer thecommencement of the payment (without any reduction in such payment ultimatelypaid or provided to Executive) until the date that is six months followingExecutive’s termination of employment with the Company (or the earliest date asis permitted under Section 409A of the Code) or (ii) if any otherpayments of money or other benefits due to Executive hereunder, or otherwise,could cause the application of an accelerated or additional tax under Section 409Aof the Code, such payments or other benefits shall be deferred if deferral willmake such payment or other benefits compliant under Section 409A of theCode, or otherwise such payment or other benefits shall be restructured, to theextent possible, in a manner, determined by the Board of Directors of theCorporation, that does not cause such an accelerated or additional tax.  The Company shall consult with Executive ingood faith regarding the implementation of the provisions of this Section 15;provided that, notwithstanding anything in this Agreement to thecontrary, neither the Company nor any of its Affiliates, employees orrepresentatives shall have any liability to Executive with respect to any taxliabilities imposed on Executive under Section 409A of the Code.

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# 16.   **Successors and Assigns.**

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## (a)   This Agreement shall bind anysuccessor to the Company, whether by purchase, merger, consolidation orotherwise, in the same manner and to the same extent that the Company would beobligated under this Agreement if no such succession had taken place.

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## (b)   This Agreement shall not beassignable by Executive.  This Agreementand all rights of Executive hereunder shall inure to the benefit of and beenforceable by, Executive’s personal or legal representatives, executors,administrators, successors, heirs, distributees, devises and legatees.

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# 17.   **Definitions**: For purposes of thisAgreement, the following terms shall have the meanings set forth below:

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### (i)  “Affiliate” means any entity which,directly or indirectly, controls, is controlled by, or is under common controlwith, the Company.  For purposes of thepreceding sentence, “control” (including, with correlative meanings, the terms “controlled

 

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### by” and “under common control with”), as used with respect to anyentity or organization, shall mean the possession, directly or indirectly, ofthe power (A) to vote more than 50% of the securities having ordinaryvoting power for the election of directors of the controlled entity ororganization or (B) to direct or cause the direction of management andpolicies of the controlled entity or organization, whether through theownership voting securities or by contract or otherwise.

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### (ii)  “Cause” shall mean (a) an actor acts of personal dishonesty by Executive intended to result in substantialpersonal enrichment of Executive at the expense of the Company, (b) an actor acts of personal dishonesty by Executive intended to cause substantialinjury to the Company, (c) material breach (other than as a result ofDisability) by Executive of Executive’s obligations under the ManagementCompensation Agreement which action was (x) undertaken without areasonable belief that the action was in the best interest of the Company and (y) notremedied within after receipt of written notice from the Company specifying thealleged breach, or (d) conviction of Executive of a felony.

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### (iii)  “Change of Control” shall havethe meaning specified in the Corporation’s 2007 Stock Incentive Plan, as ineffect as of the date hereof.

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### (iv)   “Code” means the Internal Revenue Code of1986, as amended.

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### (v)  “Committee” shall mean theCompensation Committee of the Board of Directors of the Corporation.

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### (vi)  “Corporation” shall mean NorthwestAirlines Corporation, a Delaware corporation.

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### (vii)  “Disability” shall mean Executive’sphysical and mental condition which prevents continued performance of hisduties under his Management Compensation Agreement (as amended), if Executiveestablishes by medical evidence that such condition will be permanent andcontinuous during the remainder of Executive’s life or is likely to be at leastthree years duration.

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### (viii)  “Effective Time” means “EffectiveTime” as defined in the Merger Agreement.

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### (ix)  “Fair Market Value” shall mean, with respect to anyparticular date, the closing price of a Share as reported on the consolidatedtape of the principal national securities exchange or reporting system on whichsuch Shares are listed or admitted to trading.

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### (x)  “Good Reason” shall mean (a) a material reduction inExecutive’s base compensation (within the meaning of Treas. Reg1.409A-1(n)(2)(A)(1)) except as permitted under the Management Compensation Agreement,(b) any material diminution in Executive’s authority or responsibilities, (c) Executivebeing required to report to anyone other than the ultimate parent Board ofDirectors, (d) the relocation of Executive’s principal place of employmentto a location other than at the Company’s principal executive offices in theMinneapolis-St. Paul Metropolitan Area (excluding travel requirements relatingto Executive’s duties), without Executive’s consent, or (e) a material 

 

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### breach by theCompany of the Management Compensation Agreement or any other materialagreement with Executive;

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provided, however, that theforegoing events shall constitute Good Reason only if the Company fails to curesuch event within thirty (30) days after receipt from Executive of writtennotice of the event which constitutes Good Reason; provided further,that “Good Reason” shall cease to exist for an event on the 60th dayfollowing the later of its occurrence or Executive’s knowledge thereof, unlessExecutive has given the Company written notice thereof prior to such date.  Any termination as a result of Good Reasonmust occur within 120 days of the later of the occurrence of an event orExecutive’s knowledge thereof.

 

###   (xi)   “Merger” means the “Merger” as defined in the MergerAgreement.

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###  (xii)  “Merger Agreement”means the Agreement and Plan of Merger By and Among Delta Air Lines, Inc.,Nautilus Merger Corporation and Northwest Airlines Corporation.

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### (xiii)   “Share” shall mean an issued or unissued shareof common stock, par value $.01 per share, of the Corporation.

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### (xiv)  “Vesting Date” shall meaneach of a Scheduled Vesting Date and Accelerated Vesting Date Date.

 

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IN WITNESS WHEREOF, the parties hereto have executedthis Agreement.

 

 
|   | NORTHWEST AIRLINES,  INC.      |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            |       */*s*/*  Roy J. Bostock |
|   |                           |
|   | Roy J. Bostock,  Chairman      |
|   |                           |
|   |                           |
|   | Douglas M. Steenland           |
|   |                           |
|   |                           |
|   | By:                            |       */*s*/*  Douglas M. Steenland |
|   |                           |
|   |                           |
|   | **AGREED AND ACKNOWLEDGED:**   |
|   | ** **                     |
|   |                           |
|   | NORTHWEST AIRLINES CORPORATION |
|   |                           |
|   |                           |
|   | By:                            |       */*s*/*  Roy J. Bostock |
|   |                           |
|   | Roy J. Bostock,  Chairman      |

 

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