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EXHIBIT 10.16
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE 1989 STOCK INCENTIVE PLAN
October 27, 1999
Xxx X. Xxxxxx
President and Chief Executive Officer
The 1989 Stock Incentive Plan, as amended (the "Plan"), is a
stock-based incentive compensation plan for officers and key employees of Delta
Air Lines, Inc. (the "Company") and its Subsidiaries. The Plan is administered
by the Personnel & Compensation Committee of the Company's Board of Directors
(the "Committee"). The Committee has selected you to receive an award of a
Non-Qualified Stock Option under Section 5 of the Plan, effective as of October
27, 1999, and has requested 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 or one or more of its Subsidiaries, hereby agree as follows:
1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby
grants to you a Non-Qualified Stock Option ("Stock Option") covering 500,000
shares (the "Option Shares") of Stock, as defined in the Plan, a copy of which
has been provided to you. This award is in all respects made subject to the
terms and conditions of the Plan and, in the event of any conflict between the
Plan and this Agreement, the Plan shall control. You acknowledge that you (a)
have had a full and adequate opportunity to read this Agreement and the Plan;
(b) agree to all of the terms and conditions thereof for yourself, any
designated beneficiary and your heirs, executors, administrators or personal
representatives; and (c) have received, and had a full and adequate opportunity
to read, the Prospectus relating to the Plan. Capitalized terms which are used
but not defined in this Agreement shall have the meanings set forth in the
Plan.
2. Option Price. The Option Price of the Stock Option covered by this
award shall be $49.9375, the closing price of the Stock on the New York Stock
Exchange on October 27, 1999, the date of this award.
3. Exercise Period - General Rule. Subject to the terms and conditions of
the Plan and this Agreement, the Stock Option (a) shall become exercisable with
respect to 100% of the Option Shares on October 27, 2004; and (b) shall be
exercisable through and including October 26, 2009.
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
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4. Special Rules Regarding Stock Option Exercise Period. The Stock Option
exercise period set forth in Paragraph 3 of this Agreement is subject to the
following terms and conditions (which shall apply in lieu of the provisions of
Section 10 of the Plan):
a. Termination of Employment Prior to October 27, 2004 Because
of Disability or Death. If your employment with the Company terminates prior to
October 27, 2004 due to Disability or death (such termination date is defined
as the "Employment Termination Date"), the Stock Option (i) may be exercised,
to the extent not previously forfeited, revoked or modified, with respect to
25% of the Option Shares for each full year which shall have elapsed between
October 27, 1999 and the Employment Termination Date (but not to exceed 100% of
the Option Shares), but only during the period (A) beginning on the Employment
Termination Date and (B) ending on and including the third anniversary of the
Employment Termination Date; and (ii) shall otherwise be forfeited on the
Employment Termination Date.
b. Termination of Employment Prior to October 27, 2004 for
Reasons Other than Disability or Death. If your employment with the Company
terminates prior to October 27, 2004 for any reason, including Retirement,
other than due to Disability or death, the Stock Option shall be forfeited at
the time of such termination of employment.
c. Termination of Employment On or After October 27, 2004
Because of Retirement, Disability or Death. If your employment with the Company
terminates on or after October 27, 2004 due to Retirement, Disability or death,
the Stock Option may be exercised, in whole or in part, to the extent not
previously exercised, forfeited, revoked or modified, only during the period
(i) beginning on the date your employment with the Company terminates due to
Retirement, Disability or death; and (ii) ending on and including the earlier
of (A) October 26, 2009 or (B) the third anniversary of the date your
employment with the Company terminates due to Retirement, Disability or death.
d. Termination of Employment On or After October 27, 2004 for
Reasons Other than Retirement, Disability or Death. If your employment with the
Company terminates on or after October 27, 2004 for any reason other than
Retirement, Disability or death, the Stock Option, to the extent not previously
exercised, shall be forfeited at the time of such termination of employment.
e. Definitions. For purposes of Paragraphs 4 and 8 of this
Agreement, (i) employment with the Company includes employment with any
Subsidiary of the Company; and (ii) termination of employment with the Company
means you are no longer an employee of the Company or any of its Subsidiaries.
5. Stock Option Exercise Procedures. Subject to the terms and conditions
of the Plan and this Agreement, you (or, pursuant to Paragraph 7 of this
Agreement, a party acting on your behalf after your death) may exercise the
Stock Option in whole or, from time to time, in part by way of a written notice
delivered to the Corporate Secretary of the Company which includes the
following: (i) your name, mailing address and social security number and the
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 you or a party acting on your behalf after your death. Payment of the full
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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.
6. Tax Withholding. When the Stock Option is exercised, the Company shall
make the appropriate calculations under the Plan and deliver to you, as soon as
practicable, a certificate or certificates representing the net number of
shares of Stock due to you pursuant to such exercise, calculated in accordance
with this paragraph. The Company shall withhold from the shares of Stock issued
to you 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, local or
foreign tax laws, rules or regulations. The fair market value for purposes of
the second sentence of this paragraph shall be as determined by the Committee.
7. Restrictions on Transferability. The Stock Option 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 your lifetime only by you. In the event that the Stock
Option is to be exercised by any person other than you, the written notice
referred to in Paragraph 5 of this Agreement shall be accompanied by
appropriate proof of the right of such person to exercise the Stock Option.
8. Forfeiture, Revocation or Modification of Award. In addition to
Paragraphs 4(a), 4(b) and 4(d) of this Agreement (and in lieu of the provisions
of Section 10 of the Plan), the Stock Option shall be subject to forfeiture,
revocation or modification as follows:
a. Non-Competition Agreement After Early Retirement. If your
employment with the Company terminates on or after October 27, 2004 due to
Retirement prior to your normal retirement date (as determined under the
retirement or pension plan of the Company or its Subsidiary applicable to you)
and, within two years after your early Retirement and without the Committee's
approval, you directly or indirectly provide management or executive services
(whether as a consultant, advisor, officer or director) to any Person who is in
direct and substantial competition with the air transportation business of the
Company or its Subsidiaries, the Stock Option shall be forfeited at the time
you first provide such management or executive services. Because of the broad
and extensive scope of the Company's air transportation business, you
acknowledge that the restrictions in this paragraph are intended to extend to
management or executive services which are directly related to the provision of
air transportation services into, within or from the United States, as no
smaller geographical restriction will adequately protect the legitimate
business interests of the Company.
b. Demotion. If, prior to October 27, 2004, you voluntarily
suggest and then accept a demotion, or are involuntarily demoted, to a position
with the Company involving lesser responsibilities than those of the job held
by you on October 27, 1999, the Committee may in its sole discretion, not later
than six months from the date of the demotion, revoke or modify the Stock
Option in any manner it deems appropriate under the circumstances. The
Committee will
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determine in its sole discretion what constitutes a demotion to a job involving
lesser responsibilities under this paragraph.
9. Federal Securities Law; Company Policies. You acknowledge that the
federal securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your 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. You agree
to comply with such federal securities law requirements and Company policies,
as such laws and policies are amended from time to time.
10. Miscellaneous
a. Authority of the Committee. The Committee has the sole and
complete authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no obligation to construe
this Agreement or treat the Stock Option in a manner consistent with the
treatment provided with respect to other Stock Options or Participants.
b. No Rights as Shareholder. You will not have any rights to
dividends nor any other rights of a shareholder with respect to the Option
Shares until the Option Shares have been issued following a valid exercise of
the Stock Option.
c. Entire Agreement. Subject to any written employment or
executive retention protection agreement, if any, entered into between and
executed by you and the Company, this Agreement and the Plan constitute the
entire agreement between you and the Company with respect to the subject matter
hereof. This Agreement may not be amended except by a writing signed by the
parties.
This Agreement has been prepared in duplicate. Please note your
acceptance in the space provided therefor and return one original to the
Corporate Secretary for the Company's records.
IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.
DELTA AIR LINES, INC.
By:
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Xxxxxx X. Xxxx
Member, Personnel & Compensation Committee
PARTICIPANT
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lpk/worddoc/Stock Incentive Plan/Xxxxxx, Xxx/stock option award agreement.doc
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