Exhibit 10.3


 


MANAGEMENT COMPENSATION AGREEMENT


 


between


 


NORTHWEST AIRLINES, INC.


 


and


 


NEAL S. COHEN


 


dated as of


 


May 2, 2005


 





















 


MANAGEMENT COMPENSATION AGREEMENT


 


MANAGEMENT COMPENSATION AGREEMENT made as of the 2nd
day of May, 2005 between Northwest Airlines, Inc., a Minnesota corporation
(the “Company”) and Neal S. Cohen (the “Executive”).


 


PREAMBLE


 


The Company and Executive hereby desire to enter
into a Management Compensation Agreement dated as of the date first above
written.


 


1.     Terms
of Employment.


 


1.1           Employment.  The Company agrees to employ
Executive, and Executive agrees to be employed by the Company, on the terms and
conditions set forth herein.


 


1.2           Position and Duties. 
During the term of Executive’s employment hereunder, Executive shall serve
as Executive Vice President & Chief Financial Officer of the Company
and shall have such powers and duties as may from time to time be prescribed by
the Company.  Executive shall devote
substantially all his working time and effort to the business and affairs of
the Company and its affiliates, provided that Executive shall be permitted to
serve on the board of directors of one or more companies so long as such
service does not interfere with Executive’s obligations hereunder and is in
accordance with the Company’s policies.


 


2.     Compensation
and Benefits.


 


2.1           Base Salary.  Executive’s Base Salary as of
the Effective Date shall be $425,000.  Executive’s
Base Salary in effect from time to time may only be reduced in connection with
a base wage reduction generally applicable to salaried employees of the Company
in an amount not more than any such reduction incurred by other senior
executives of the Company after the Effective Date, calculated as a percentage
of base salary, however, not to exceed twenty percent (20%) of Base Salary in
effect on the date of such wage reduction; provided further, however, that any
such reduction shall be disregarded for purposes of calculating the Severance
Payment pursuant to Section 5.2(b) hereof.  Executive’s Base Salary shall be payable in
accordance with the Company’s payroll policies.


 


2.2           Incentive Compensation Programs.  During
the term of Executive’s employment hereunder:


 


(a)  Executive shall be entitled to receive
from the Company, within ten (10) days after the date of this Agreement, a
lump-sum cash payment in the amount of $200,000, less all applicable
withholding taxes (the “Inducement Payment”); provided that, in the
event Executive’s employment with the Company terminates on or before the first
(1st) anniversary of the Effective Date, other than a termination by
the Company without Cause or by Executive for Good Reason, Executive shall
re-pay the full amount of the Inducement Payment to the Company within three (3) business
days after the Date of Termination, and the Company shall have the right to
offset any amount required to be


 





















 


repaid
by Executive pursuant to this Section 2.2(a) against any other
amounts payable to the Executive at the time of such termination of employment.


 


(b)  Executive shall be entitled to receive
from the Company five cash payments of $100,000 each, less all applicable
withholding taxes (the “Cash Retention Payments”), on May 1 of
2006, 2007, 2008, 2009 and 2010, so long as Executive remains an active
full-time employee of the Company on the applicable payment date.


 


(c)  Executive shall be entitled to participate
in the Company’s Key Employee Annual Cash Incentive Plan (the “KEACIP”)
or any successor annual incentive plan beginning with the 2005 plan year, the
terms and conditions of which shall be established from time to time by the
Compensation Committee.  For the 2005
plan year, Executive shall receive a target incentive payment equal to 60% of
Executive’s Base Salary (without reduction for the portion of 2005 that occurs
prior to the Effective Date)so long as Executive remains an active full-time
employee of the Company on the date the 2005 KEACIP is paid; provided, however,
that (i) at the election of the Compensation Committee, Executive’s KEACIP
payments may be payable in the form of a stock or phantom stock award with a
vesting period of not less than six (6) months; and (ii) any KEACIP
payments payable to Executive shall be subject to the provisions of the Bridge
Agreement dated as of November 22, 2004 between the Company and the Air
Line Pilots Association, International (the “Pilot Bridge Agreement”).


 


(d)  Executive shall be entitled to participate
in the Company’s Long-Term Cash Incentive Plan beginning with the two year
performance period commencing January 1, 2005, the terms and conditions of
which shall be established from time to time by the Compensation Committee.  Any payments under the Long-Term Cash
Incentive Plan shall be subject to the provisions of the Pilot Bridge
Agreement.


 


(e)  Executive shall be entitled to receive on
the Effective Date pursuant to the Company’s 2001 Stock Incentive Plan a non-qualified
stock option award with respect to 150,000 shares of Common Stock, such option
to have an exercise price equal to the fair market value of a share of Common
Stock on the Effective Date and become exercisable in four equal installments
on the first, second, third and fourth anniversaries of the Effective Date so
long as Executive remains an active full-time employee of the Company on such
dates, the terms and conditions of which award shall be set forth in a written agreement
or other documentation which shall be provided to Executive by the Company’s
Secretary.


 


(f)  Executive shall be entitled to receive on
the Effective Date pursuant to the Company’s 1999 Stock Incentive Plan (i) a
phantom stock award with respect to 100,000 shares of Common Stock, which award
shall vest in six (6) installments consisting of five (5) equal
installments of 16,666 shares each on each of the first five (5) six-month
anniversaries of the date of grant and one (1) installment of 16,670 on
the third anniversary of the date of grant so long as Executive remains an
active full-time employee of the Company on such dates, and (ii) a phantom
stock award with respect to 75,000 shares of Common Stock, which award shall
vest in full on the fifth anniversary of the Effective Date so long as
Executive remains an active full-time employee of the 


 


2





















 


Company
on such date.  The terms and conditions
of each phantom stock unit award granted pursuant to this Section 2.2(f) shall
be set forth in a written agreement or other documentation which shall be
provided to Executive by the Company’s Secretary.


 


(g)  All shares of Common Stock issued to
Executive pursuant to the awards set forth in this Section 2.2 shall be
covered by an effective registration statement filed by the Company with the
Securities and Exchange Commission, provided that at the time of such issuance the
Company remains a reporting company under the Securities Exchange Act of 1934,
as amended, and is otherwise eligible to register such shares on a registration
statement on Form S-8 (or a successor form).


 


2.3           Expenses.  During the term of Executive’s
employment hereunder, Executive shall be entitled to receive prompt
reimbursements for all reasonable business expenses incurred in performing
services hereunder in accordance with the Company’s business expense
reimbursement policies in effect from time to time.


 


2.4           Employee Benefit Programs of the Company. 
Except as set forth below, Executive shall be entitled to participate while
employed hereunder in the Company’s employee benefit programs at levels in
effect from time to time for salaried employees at a level comparable to
Executive, provided that Executive shall not participate in any severance pay
plan maintained by the Company except to the extent necessary to receive any
severance payments specifically provided for hereunder.


 


2.5           Retirement Plans. 
Executive shall be entitled to participate in the Northwest Airlines
Supplemental Executive Retirement Plan (the “SERP”) on the terms and
conditions set forth in an Ancillary Agreement to be provided to Executive by
the Company.  In addition, Executive’s
account under the SERP shall be credited with $200,000 of benefit accruals.


 


2.6           Indemnification. 
Executive shall be entitled to be indemnified by the Company in
accordance with the indemnification provision set forth in the Company’s Articles
of Incorporation or By-Laws (as either such document may be modified, amended
or replaced from time to time, collectively, the “Governing Instruments”).


 


3.     Other
Benefits.


 


3.1           Airline Pass.  In
the event (A) Executive remains an active full-time employee of the
Company continuously from the Effective Date through April 1, 2009 or (B) a
Change in Control occurs prior to April 1, 2009 and Executive’s employment
with the Company is terminated by the Company within six (6) months after
the occurrence of the Change in Control, then Executive shall be entitled to
receive, upon termination of employment, lifetime airline pass privileges for
the personal use of Executive and his spouse or registered domestic partner and
dependent children so long as spouses, registered domestic partners and
dependent children of employees generally are eligible for non-revenue travel
pursuant to the Company’s pass policies (hereinafter, “Eligible Individuals”).  Such airline pass privileges (the “Airline
Pass”) shall entitle Executive and Eligible Individuals to travel on regularly
scheduled domestic and international flights operated by the Company, subject
to all charges and fees then applicable


 


3





















 


to
active management employees of the Company and their dependents and pursuant to
the Company’s pass policies in effect from time to time, with boarding priority
of F1-R.  Executive shall be responsible
for any personal income tax liability arising from such pass travel.  Notwithstanding the foregoing, all benefits
under this Section 3.1 shall immediately and permanently cease in the
event Executive violates the Company’s pass policies in connection with such
travel and/or in the event that Executive is or becomes, at any time
thereafter, an employee of any of the largest five (5) airlines in the
United States (other than the Company) ranked by revenue passenger miles.


 


3.2           Medical and Dental Benefits.  In
the event (A) Executive remains an active full-time employee of the
Company continuously from the Effective Date through April 1, 2009 or (B) a
Change in Control occurs prior to April 1, 2009 and Executive’s employment
with the Company is terminated by the Company within six (6) months after
the occurrence of the Change in Control, then, following Executive’s
termination of employment and thereafter during the Executive’s lifetime,
Executive and his eligible dependents shall be entitled to participate in the
Company’s medical and dental plans generally applicable to all management
employees of the Company under the same terms and conditions as shall apply to
such management employees; provided, however, that if in the future Executive
becomes employed by another employer, such coverage shall become secondary to
any coverage provided by such employer for the period in which Executive is entitled
to such coverage.  In addition, while
employed by the Company hereunder, Executive shall be entitled to participate
in the Company’s Medical Expense Reimbursement Program on the same terms and
conditions generally applicable to other executives of the Company.


 


4.     Termination of Employment.


 


4.1           Upon Death.  Executive’s employment
hereunder shall terminate upon his death.


 


4.2           By the Company.  The
Company may terminate Executive’s employment hereunder at any time with or
without Cause.


 


4.3           By the Executive. 
Executive may terminate his employment hereunder at any time for any
reason.


 


4.4           Notice of Termination.  Any
termination of Executive’s employment hereunder (other than by death) shall be
communicated by thirty (30) days’ advance written Notice of Termination by
the terminating party to the other party to this Agreement; provided
that no advance Notice of Termination of Executive for Cause by the Company is
required.


 


4.5           Board/Committee Resignation. 
Executive’s termination of employment for any reason, shall constitute,
as of the Date of Termination and to the extent applicable, a resignation as an
officer of the Company and a resignation from the board of directors (and any
committees thereof) of any of the Company’s affiliates and from the board of
directors or similar governing body of any corporation, limited liability
company or other entity in which the Company or any affiliate holds an equity
interest and with respect to which board or similar


 


4





















 


governing
body Executive serves as the Company’s or such affiliate’s designee or other
representative.


 


5.     Payments
in the Event of Termination of Employment.


 


5.1           Payments in the Event of Termination by the
Company for Cause or Voluntary Termination by Executive.  If
Executive’s employment hereunder is terminated by the Company for Cause, as a
result of death or Disability or by Executive other than for Good Reason, the
Company shall pay Executive (a) his accrued and unpaid Base Salary through
the Date of Termination and (b) any vested or accrued and unpaid payments,
rights or benefits Executive may be otherwise entitled to receive pursuant to
the terms of any written retirement, pension or other employee benefit or
compensation plan maintained by the Company at the time or times provided
therein.


 


5.2           Payments in the Event of Any Other
Termination of Employment.  If Executive’s employment hereunder is
terminated by the Company other than for Cause, or by Executive for Good
Reason:


 


(a) 
subject to Section 2.2(a) hereof, the Company shall pay Executive (i) his
accrued and unpaid Base Salary through the Date of Termination, (ii) any incentive
payment under the Key Employee Annual Cash Incentive Program, or any successor
annual incentive plan, (the “Incentive Payment”) for any calendar year
ended before the Date of Termination, (iii) a pro rata share (based on
days employed during the applicable year) of the Incentive Payment Executive
would otherwise have received with respect to the year in which the Date of
Termination occurs, payable at the time the Incentive Payment would otherwise
be payable to Executive; provided, however, that 100% of the
Incentive Payment shall be determined solely with reference to the financial
performance of the Company for the year (based on the goals previously
established with respect thereto) (rather than a portion of the Incentive Payment
determined on the basis of individual performance); provided, further,
in the event that Company’s performance exceeds 100% of the financial
performance target for the year, that portion of the Incentive Payment that
would have, but for this Section 5.2(a), related to the achievement of the
individual performance target shall be 100% and (iv) any vested or accrued
and unpaid payments, rights or benefits Executive may be otherwise entitled to
receive pursuant to the terms of any written retirement, pension or other
employee benefit or compensation plan maintained by the Company at the time or
times provided therein.


 


(b)  subject to Section 2.2(a) hereof, in addition to
the compensation and benefits described in Section 5.2(a), the Company
shall pay Executive, no later than thirty (30) days following the Date of
Termination, a lump sum cash payment (the “Severance Payment”) equal to the
product of two (2) times the sum of (i) Executive’s annual Base
Salary and (ii) the target Incentive Payment for Executive with respect to
the year in which the Date of Termination occurs (or if no target has been set
for that year, the target Incentive Payment for the immediately preceding
year).


 


5





















 


(c)           Executive shall not be required to mitigate
the amount of any payment provided for in this Section 5.2 by seeking
other employment or otherwise, and no such payment shall be offset or reduced
as a result of Executive’s obtaining new employment.


 


(d)           Notwithstanding anything else to the
contrary in this Agreement, the Company’s obligation regarding the payments provided
for in Section 5.2(b) hereof is expressly conditioned upon the
execution, delivery and non-revocation of a general release in the form
attached hereto as Attachment A.


 


5.3           Compliance with Tax Regulations.  All
payments pursuant to this Section 5 shall be made in compliance with all
applicable laws, rules and regulations, including without limitation the
provisions of the American Jobs Creation Act of 2004 and all rules and regulations
promulgated thereunder.


 


6.     Confidentiality;
Non-Compete; Non-Solicitation; Non-Disparagement.


 


(a) While employed by the Company and
thereafter, Executive shall not disclose any Confidential Information either
directly or indirectly, to anyone (other than appropriate Company employees and
advisors), or use such information for his 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.  For purposes of this Agreement, “Confidential
Information” shall mean all non-public information respecting the Company’s
business, including, but not limited to, its services, pricing, scheduling,
products, research and development, processes, customer lists, marketing plans
and strategies, financing plans and the terms and provisions of this Agreement,
but excluding information that is, or becomes, available to the public (unless
such availability occurs through an unauthorized act on the part of the
Executive).  Upon termination of this
Agreement, Executive shall promptly supply to the Company all property and any
other tangible product or document that has been produced by, received by or
otherwise submitted to Executive during or prior to his term of employment, and
shall not retain any copies thereof.


 


(b) Executive acknowledges that his services
are of special, unique and extraordinary value to the Company.  Accordingly, so long as the Company has
complied with its obligations set forth in Section 5 hereof, Executive
shall not, without the consent of the Company, at any time prior to the first
anniversary of the Date of Termination and except as provided in Schedule A
attached hereto (i) become an employee, consultant, officer, partner or
director of any air carrier which competes with the Company (or any of its
affiliates) or (ii) whether on Executive’s own behalf or on behalf of or
in conjunction with any person, company, business entity or other organization
whatsoever, directly or indirectly solicit or encourage any employee of the
Company or its affiliates to leave the employment of the Company or its
affiliates.


 


(c) While employed by the Company and
thereafter, Executive agrees not to make any untruthful or disparaging
statements, written or oral, about the Company, its affiliates, their
predecessors or successors or any of their past and present officers,
directors, stockholders, partners, members, agents and employees or the Company’s
business practices, operations or personnel policies and practices to any of
the Company’s customers, clients, competitors,


 


6





















 


suppliers, investors,
directors, consultants, employees, former employees, or the press or other
media in any country.


 


(d)  Executive agrees that, following his
termination of employment, he will refer all inquiries by third parties
regarding his employment with the Company to the Senior Vice President – Human
Resources of the Company, and the Company agrees that, following Executive’s
termination of employment, neither the Chief Executive Officer nor the Senior
Vice President – Human Resources of the Company shall make, in response to any
such inquiry, any untruthful or disparaging statements, written or oral, about
Executive’s conduct during his employment with the Company.


 


(e)  Both the Company and Executive agree that
any breach of the terms of this Section 6 by such party would result in
irreparable injury and damage to the other party for which there would be no
adequate remedy at law, and that, in the event of said breach or any threat of
breach by such party, the other party 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 such
party may be entitled at law or in equity. Executive further agrees that the
provisions of the covenant not to compete are reasonable.  Should a court determine, however, 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 which such
court deems reasonable.  The provisions
of this Section 6 shall survive any termination of this Agreement and
Executive’s term of employment.  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 6.


 


7.     Successors
and Assigns.


 


(a) This Agreement
shall bind any successor to the Company, whether by purchase, merger,
consolidation or otherwise, in the same manner and to the same extent that the
Company would be obligated under this Agreement if no such succession had taken
place.  In any agreement providing for
the sale of all or substantially all of the Company’s assets, the Company shall
cause the acquiring party to assume and agree to perform the Company’s
obligations under this Agreement.


 


(b) This Agreement
shall not be assignable by Executive. 
This Agreement and all rights of Executive hereunder shall inure to the
benefit of and be enforceable by, Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees.


 


8.     Term.


 


The term of this Agreement shall commence on the Effective
Date and end upon the Executive’s termination of employment.  The rights and obligations of the Company and
Executive shall survive the termination of this Agreement to the fullest extent
necessary to give effect to the terms hereof.


 


7





















 


9.     Notices.


 


Notices and other communications provided for herein
shall be in writing (which shall include notice by facsimile transmission) and
shall be delivered or mailed (or if by graphic scanning or other facsimile
communications equipment of the sending party hereto, delivered by such
equipment), addressed as follows:


 


(a) 
if to Executive, to the address set forth on the signature page hereto,
and


 


(b) 
if to the Company, c/o Northwest Airlines, Inc., 2700 Lone Oak Parkway,
Eagan, Minnesota 55121, Attention: 
Secretary,


 


or,
in each case, to such other address as a party may from time to time designate
in writing in accordance with this Section. 
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given when delivered if delivered by hand, when transmission confirmation is
received if delivered by facsimile, three business days after mailing if
mailed, and one business day after deposit with an overnight courier service if
delivered by overnight courier. 
Notwithstanding the foregoing, if a notice or other communication is
actually received after 5:00 p.m. at the recipient’s designated address,
such notice or other communication shall be deemed to have been given the later
of (i) the next business day or (ii) the business day on which such
notice or other communication is deemed to have been given pursuant to the
immediately preceding sentence.


 


10.   Withholding.


 


All payments required to be made by the Company
hereunder shall be subject to the withholding and/or deduction of such amounts
as are required to be withheld or deducted pursuant to any applicable law or
regulation.  The Company shall have the
right and is hereby authorized to withhold or deduct from any compensation or
other amount owing to Executive, applicable withholding taxes and deductions
and to take such action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes or deductions.


 


11.   Certain
Defined Terms.


 


As used herein, the following terms have the
following meanings:


 


“Agreement” shall mean this Management
Compensation Agreement, as the same may be amended, supplemented or otherwise
modified from time to time in accordance herewith.


 


“Base Salary” shall mean the annual base salary
of the Executive in effect from time to time under Section 2.1.


 


“Board” shall mean the Board of Directors of
the Company.


 


“Cash Retention Payments” shall have the
meaning set forth in Section 2.2(b) hereof.


 


8





















 


“Cause” shall mean with respect to
termination by the Company of Executive’s employment hereunder (i) an act
or acts of dishonesty by Executive resulting in, or intended to result in,
directly or indirectly, any personal enrichment of Executive, (ii) an act
or acts of dishonesty by Executive intended to cause substantial injury to the
Company, (iii) material breach (other than as a result of a Disability) by
Executive of Executive’s obligations under this Agreement which action was (a) undertaken
without a reasonable belief that the action was in the best interests of the
Company and (b) not remedied within a reasonable period of time after
receipt of written notice from the Company specifying the alleged breach, (iv) Executive’s
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 this Agreement.


 


“Change in Control” shall mean any one of the
following, except to the extent that any such event results from or arises in
connection with a re-organization plan approved by the court in a
reorganization proceeding under Chapter 11 of the United States Bankruptcy Code:


 


(a) 
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”))
(a “Person”) of beneficial ownership (within the mean of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either (i) the then
outstanding shares of Common Stock of Parent (the “Outstanding Parent Common
Stock”) or (ii) the combined voting power of the then outstanding
voting securities of Parent entitled to vote generally in the election of
directors (the “Outstanding Parent Voting Securities”); provided,
however, this subsection (a) shall not apply to the Investor
Stockholders party to the Second Amended and Restated Stockholders’ Agreement
dated as of December 23, 1993; or


 


(b) 
Individuals who, as of the Effective Date, constitute the Board of Directors of
Parent (the “Incumbent Board”) cease for any reason to constitute at
least a majority of such Board; provided, however, that any
individual becoming a director subsequent to the Effective Date, whose
election, or nomination for election by Parent’s shareholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of Parent; or


 


(c) 
Consummation of a reorganization, merger or consolidation (a “Business
Combination”), in each case, unless, following such Business Combination, (i) all
or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Parent Common Stock and Outstanding
Parent Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting


 


9





















 


from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns Parent through one or more subsidiaries) in substantially
the same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Parent Stock and Outstanding Parent Voting
Securities, as the case may be and (ii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of such board, providing for such
Business Combination; or


 


(d) 
Consummation of (i) a complete liquidation or dissolution of Parent or (ii) the
sale or other disposition of all or substantially all of the assets of Parent,
other than to a corporation with respect to which following such sale or other
disposition, (X) more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners respectively, of the Outstanding Parent Common Stock
and Outstanding Parent Voting Securities immediately prior to such sale or
other disposition of the Outstanding Parent Common Stock and Outstanding Parent
Voting Securities, as the case may be and (Y)  at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement, or other
action of such Board, providing for such sale or other disposition of assets of
Parent or were elected, appointed or nominated by the Incumbent Board.


 


“Common Stock” shall have the meaning set
forth in Section 2.2(c) hereof.


 


“Compensation Committee” shall mean the
Compensation Committee of the Board of Directors of the Company or any
subcommittee thereof.


 


“Date of Termination” shall mean, with
respect to Executive, the date of termination of Executive’s employment
hereunder after the notice period provided by Section 4.4.


 


“Disability” shall mean Executive’s physical
or mental condition which prevents continued performance of his duties
hereunder, if Executive establishes by medical evidence that such condition
will be permanent and continuous during the remainder of Executive’s life or is
likely to be of at least three (3) years duration.


 


“Effective Date” shall mean May 2, 2005.


 


“Eligible Individuals” shall have the meaning
set forth in Section 3.1 hereof.


 


“Good Reason” shall mean with respect to an
Executive, any one or more of the following:


 


10





















 


(a) a
reduction in Executive’s Base Salary or level of target incentive payment under
the KEACIP or any successor annual incentive plan (except as permitted
hereunder);


 


(b) any
material change in Executive’s job responsibilities, provided that as
long as Executive retains a substantial portion of his then current oversight
responsibilities, a transfer of a portion of such oversight responsibilities
shall not in and of itself constitute a material change in Executive’s job
responsibilities;


 


(c) the
relocation of the Company’s principal executive offices to a location outside
the Minneapolis-St. Paul Metropolitan Area; or


 


(d) a
failure by the Company to comply with any provision of this Agreement;


 


provided, however, that the foregoing events
shall constitute Good Reason only if the Company fails to cure such event
within thirty (30) days after receipt from Executive 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 Executive’s knowledge thereof, unless Executive
has given the Company written notice thereof prior to such date.


 


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


 


“KEACIP” shall have the meaning set forth in Section 2.2(b) hereof.


 


“Notice
of Termination” shall mean a notice specifying the Date of Termination.


 


“Pilot
Bridge Agreement” shall have the meaning set forth in Section 2.2(c) hereof.


 


“SERP”
shall have the meaning set forth in Section 2.5 hereof.


 


“Severance
Payment” shall have the meaning set forth in Section 5.2(b) hereof.


 


“Inducement
Payment” shall have the meaning set forth in Section 2.2(a) hereof.


 


12.   Executive
Representation.


 


Except as disclosed on Schedule A attached
hereto, Executive hereby represents to the Company that the execution and
delivery of this Agreement by Executive and the Company and the performance by
Executive of Executive’s duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any employment agreement or other agreement
or policy to which Executive is a party or otherwise bound.


 


11





















 


13.   Amendment.


 


No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and an authorized officer of the Company.


 


14.   Governing
Law.


 


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.


 


15.   Validity.


 


The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.


 


16.   Arbitration.


 


Except as otherwise provided in Section 17 of
this Agreement, all disputes and controversies arising from or in conjunction
with Executive’s employment with, or any termination from, the Company and all
disputes and controversies arising under or in connection with this Agreement
(except claims for vested benefits brought under ERISA) 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.  In the event the parties cannot
agree upon a single arbitrator, each party shall select an arbitrator and the
two arbitrators so chosen shall then select a single arbitrator.  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 16.


 


17.   Specific
Performance.


 


Notwithstanding Section 16 of this Agreement,
if Executive breaches or threatens to commit a breach of Section 6 of this
Agreement, the Company shall have the right to specific performance (i.e., the
right and remedy to have the terms and conditions of Section 6
specifically enforced by any court of competent jurisdiction), it being agreed
that any breach or threatened breach of Section 6 would cause irreparable
injury and that money damages may not provide an adequate remedy.


 


12





















 


18.   Cooperation.  


 


Executive shall provide his reasonable cooperation
(subject to his reasonable availability) in connection with any investigation,
action or proceeding (or any appeal from any action or proceeding) which
relates to events occurring during Executive’s employment hereunder.  This provision shall survive any termination
of this Agreement.


 


19.   Entire
Agreement.


 


This Agreement, together with the Release contain
the entire understanding between the Company and Executive with respect to
Executive’s employment with the Company and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive with respect to Executive’s employment.


 


20.   Parent
Undertaking.


 


Northwest Airlines Corporation, as parent
corporation to the Company, hereby agrees to cause the Company to perform all
of its obligations hereunder and Executive shall be deemed to have entered into
this Agreement in reliance upon the undertaking set forth herein.


 


IN WITNESS WHEREOF, Northwest Airlines Corporation, the
Company and Executive have executed this Agreement as of the day and year first
above written.


 


 


	
   

  	
  NORTHWEST AIRLINES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
         /c/ Douglas M. Steeenland

  	
   

  
	
   

  	
   

  	
      Douglas M. Steenland

  	
   

  
	
   

  	
   

  	
      Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTHWEST AIRLINES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /c/ Douglas M. Steeenland

  	
   

  
	
   

  	
   

  	
      Douglas M. Steenland

  	
   

  
	
   

  	
   

  	
      Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
      /c/ Neal S. Cohen

  	
   

  
	
   

  	
   

  	
      Neal S. Cohen

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
      Executive’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


13





















 


Schedule A


 


Executive is entitled to receive a success fee in
certain circumstances in connection with services rendered by him prior to the
Effective Date to Wexford Capital, provided that all services to be rendered by
Executive in connection with such engagement shall be completed prior to the
Effective Date except that at the request of Wexford Capital Executive may be
required to provide such services during the ten (10) business day period
following Executive’s termination of such engagement, which shall occur no
later than the date of this Agreement. 
In addition, Executive remains subject to certain confidentiality
provisions related to his employment at US Airways and his engagement with
Wexford Capital.


 


14





















 


Attachment A


 


GENERAL RELEASE


 


WHEREAS,
                        
(the “Executive”) has been employed by Northwest Airlines, Inc. (“Northwest”);
and


 


WHEREAS,
Executive’s employment with Northwest has terminated; and


 


WHEREAS,
Executive and Northwest have reached a full and final compromise and settlement
of all matters, disputes, causes of action, claims, contentions and differences
between them and Northwest’s divisions, merged entities and affiliates,
subsidiaries, parents, branches, predecessors, successors, assigns, officers, directors,
trustees, employees, agents, stockholders, administrators, representatives,
attorneys, insurers or fiduciaries, past, present or future (the “Released
Parties”), including but not limited to any and all claims arising from or
derivative of Executive’s employment with Northwest and his termination from
employment with Northwest;


 


WHEREAS,
in return for Northwest performing its obligations as provided for herein and
as set forth in the Management Compensation Agreement dated as of                             ,
                            ,
by and between Northwest and Executive (the “Agreement”), Executive will
execute and comply fully with the terms of this General Release (the “Release”);


 


WHEREAS,
Executive (i) understands that in executing the Release he is, inter
alia, giving up rights and claims under the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. Section 621 et seq.  (“ADEA”), and (ii) has been given a
period of not less than twenty-one (21) days within which to consider this
Release;


 


NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, Executive and Northwest agree and covenant as follows:


 


1.             By entering into this Release, the Released
Parties do not admit, and each specifically denies any liability, wrongdoing or
violation of any law, statute, regulations, agreement or policy.


 


2.             Executive’s employment with Northwest shall
be terminated effective                             ,
                            .


 


3.             In consideration of the obligations of
Executive as set forth in this Release and the Agreement, and in full
settlement and final satisfaction of any and all claims, contractual or
otherwise, which Executive had, has or may have against Northwest and/or the
Released Parties with respect to his employment, termination from employment
with Northwest, or otherwise arising on or prior to the date of execution of
this Release, Northwest shall pay to Executive the payments and benefits to
which Executive is entitled under the Agreement.  This Release shall not pertain to any claim
alleging that Northwest has failed to comply with any obligations created by
this Release or that Northwest has failed to pay to Executive the payments and


 


15





















 


benefits
to which Executive is entitled under the Agreement upon termination of
Executive’s employment.


 


4.             (a)           Executive, for and in consideration of the
payments as set forth in the Agreement and for other good and valuable
consideration, hereby releases and forever discharges and covenants not to sue,
and by this Release does release and forever discharge, the Released Parties of
and from all debts, obligations, promises, covenants, collective bargaining
obligations, agreements, contracts, endorsements, bonds, controversies, suits
or causes of actions known or unknown, suspected or unsuspected, of every kind
and nature whatsoever, which may heretofore have existed or which may now
exist, including but not limited to those arising under the ADEA, Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e, et
seq., Executive Order 11246, 30 Fed. Reg. 12319; the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C. Section 1001, et
seq., the Americans With Disabilities Act, as amended, 42 U.S.C. Section 12101,
et  seq., the Federal Equal Pay Act, 29 U.S.C. Section 2061, et
seq., the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981,
et  seq., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701,
et  seq., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601,
et  seq., the Minnesota Human Rights Act, Minn. Stat. Section 363.01,
et  seq., and any all state or local constitutions and/or laws
regarding employment discrimination and/or federal, state or local
constitutions and/or laws of any type or description regarding employment as
well as any claim for breach of contract, wrongful discharge, breach of any
express or implied promise, misrepresentation, fraud, whistle-blowing, retaliation,
violation of public policy, infliction of emotional distress, defamation,
promissory estoppel, invasion of privacy or any other theory or claim, whether
legal or equitable, including but not limited to any claims arising from or
derivative of Executive’s employment with Northwest and Executive’s termination
of employment with Northwest or otherwise. 
Executive acknowledges that he has not been discriminated against on the
basis of age, sex, disability, race, ethnicity, religion or any other protected
class status.


 


(b)           Without in any way limiting the foregoing,
this Release shall not affect any present or future indemnification obligations
that Northwest and the Released Parties may have to Executive pursuant to any
charter, by-law, agreement or policy of insurance.


 


(c)           This Release shall not affect Executive’s
rights under one or more Non-Qualified Stock Option Agreements, Deferred Stock
Award Agreement or Phantom Stock Unit Award Agreement between Northwest and the
Executive governing the terms of any stock option grant or other stock award
outstanding on the date hereof, which rights shall continue to be governed by
the terms of the agreement applicable to such stock option or other stock
award.


 


5.     Executive covenants and agrees not to sue nor authorize any other
party, either governmental or otherwise, to file any grievances, arbitration or
commence any other proceeding, administrative or judicial, against the Released
Parties in any court of law or equity, or before any administrative agency,
with respect to any matter relating to this Agreement or to matters occurring
during Executive’s employment with Northwest.


 


6.     The Released Parties and Executive understand and agree that the terms
of this Release and the Agreement are confidential.


 


16





















 


7.             Executive agrees not to make any untruthful
or disparaging statements, written or oral, about Northwest, the Released
Parties or Northwest’s personnel policies and practices to any of Northwest’s
customers, competitors, suppliers, employees, former employees, or the press or
other media.  Except as herein
contemplated, Executive also agrees that he will not voluntarily participate in
any proceeding of any kind brought against the Released Parties relating to
this Agreement or to matters occurring during Executive’s employment with
Northwest.


 


8.             (a)           The parties agree that this Release should be
construed in accordance with the laws of the State of Minnesota, exclusive of
Minnesota choice of law provisions.


 


(b)           The parties agree that any and all further
legal proceedings between Executive and the Released Parties, whether arising
under statute, constitutions, contract, common law or otherwise, including the
issue of arbitrability, will be submitted for resolution exclusively pursuant
to the arbitration provision contained in the Agreement.  The parties hereby waive their right to a
trial of any and all claims arising out of this Release or breach of this
Release.


 


(c)           Should any provision of this Release be found
to be in violation of any law, or ineffective or barred for any reason
whatsoever, the remainder of this Release shall be in full force and effect to
the maximum extent permitted by law.


 


9.             Northwest and Executive agree to execute such
other documents to take such other actions as may be reasonably necessary to
further the purposes of this Release.


 


10.           (a)           Executive acknowledges and agrees that, in
deciding to execute this Release, he has had the opportunity to consult with
legal, financial and other personal advisors of his own choosing as he deems
appropriate, in assessing whether to execute this Release.  Executive represents and acknowledges that no
representations, statement, promise, inducement, threat or suggestion has been
made by Northwest or the Released Parties to influence Executive to sign this
Release except such statements as are expressly set forth herein.  Executive agrees that he has been given a
minimum of twenty-one (21) days within which to consider the terms and effects
of this Release insofar as it relates to settlement and release of potential
claims under the ADEA, and to consult with, and to ask any questions that he
may have of anyone, including legal counsel and other personal advisors of his
own choosing, and that he has executed this Release voluntarily and with full
understanding of its terms and effects.


 


(b)           Executive has the right to rescind this
Release as far as it extends to potential claims under Minn. Stat. Ch. 363
(prohibiting discrimination in employment) by written notice to Northwest
within 15 calendars days following the execution of this Release.  Executive also has the right to revoke this
Release as far as it extends to potential claims under the Age Discrimination
in Employment Act, 29 U.S.C. Section 621 et  seq., by
informing Northwest of his intent to revoke this Release within seven calendar
days following the execution of this Release. 
To be effective, notice, rescission or revocation must be in writing and
must be delivered either by hand or by mail to the Secretary of Northwest at
the following address:  Northwest
Airlines, Inc., Department A1180, 2700 Lone Oak Parkway, Dept. A1180,
Eagan, MN 55121, Attention:  Secretary,
within the specified period.  If a notice
of rescission or


 


17





















 


revocation
is delivered by mail, it must be:  (i) postmarked
within the 15 or 7 day period, respectively, (ii) properly addressed to
the Secretary of Northwest as set forth above, and (iii) sent by certified
mail return receipt requested.  This
Release shall not become effective or enforceable until the 15 or 7 day periods
described above have expired.  No
payments shall be due, owing or paid by Northwest unless and until this Release
becomes effective.


 


This
Release may not be changed or modified, except by a written instrument signed
by Executive and Northwest.


 


 


	
  NORTHWEST
  AIRLINES, INC.

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
							



 


18