Exhibit 10.4


 


NORTHWEST AIRLINES CORPORATION


E-COMMERCE INCENTIVE COMPENSATION PROGRAM


 


(As Amended and Restated as of April 22, 2004)


 


I                                       PURPOSE OF PROGRAM


 


This Northwest
Airlines Corporation E-Commerce Incentive Compensation Program (the “Program”)
is intended to provide a method for attracting, motivating, and retaining key
employees to assist in the development and growth of the Company and its
Subsidiaries.


 


II                                   DEFINITIONS AND CONSTRUCTION


 


2.1.                    Definitions.  Where the following words and phrases are used
in the Program, they shall have the respective meanings set forth below, unless
the context clearly indicates to the contrary:


 


(a)                   “Act” means The
Securities Exchange Act of 1934, as amended, or any successor thereto.


 


(b)                  “Award” means
the award of one or more Points to a Participant in accordance with Article IV.


 


(c)                   “Award Notice”
means a written notice issued by the Company to a Participant evidencing such
Participant’s receipt of an Award and setting forth certain terms and
conditions with respect thereto in accordance with Section 4.2.


 


(d)                  “Base Value”
means, with respect to each Phantom Unit subject to an Award, an amount equal
to (i) the sum of (A) the sum of the Investment Cost of each Investment to
which such Phantom Unit relates and (B) a fifteen percent compounded annual
return on the Investment Cost of each such Investment, as determined in the
sole discretion of the Committee, divided by (ii) the number of Phantom Units
into which such Investment or group of Investments is divided (with the result
rounded to the nearest cent). 
Notwithstanding the foregoing, at any time prior to a Change in Control
the Committee may, in its sole discretion, determine at the time of the grant
of any such Award that the Investment Cost component of the Base Value of such
a Phantom Unit shall be greater than the amount set forth in the preceding
sentence, and the Committee shall make each such determination based on such
factors and information as it deems relevant.


 


(e)                   “Beneficial
Owner” means a “beneficial owner”, as such term is defined in Rule 13d-3
under the Act (or any successor rule thereto).


 


(f)                     “Board” means
the Board of Directors of the Company.


 


(g)                  “Cause” means “Cause”
as defined in an employment agreement between the Participant and the Company
or a Subsidiary or if the Participant has not entered into an employment
agreement with the Company or a Subsidiary, the involuntary termination of such
Participant’s employment by the Company (or, if applicable, a Subsidiary) based


 





















 


upon a
determination by the Committee or an authorized officer of the Company (or such
Subsidiary) that such Participant has engaged in gross negligence or willful
misconduct in the performance of, or such Participant has abused alcohol or
drugs rendering him or her unable to perform, the material duties and services
required of him or her in his or her employment.


 


(h)                  “Change in
Control” means any one of the following:


 


(i)                            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”), other than one or more Permitted Holders or their Related Parties
or any group comprised exclusively of Permitted Holders or their Related
Parties, of beneficial ownership (within the meaning of Rule 13d-3 and 13d-5
promulgated under the Exchange Act, except that such person shall be deemed to
have “beneficial ownership” of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time) of 20% or more (or, if such Person is an Institutional
Investor (as such term is defined in the Rights Agreement dated as of November
20, 1998 between Northwest Airlines Corporation and Norwest Bank Minnesota,
N.A.), 25% or more), of either (A) the then outstanding shares of common stock
of the Company (or its successor by merger, consolidation or purchase of all or
substantially all of its assets) (the “Outstanding Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company
(or its successor by merger, consolidation or purchase of all or substantially
all of its assets) entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”), and (ii) the Permitted Holders or their
Related Parties collectively “beneficially own” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) a lesser percentage of that which is
described in each of clause (A) and  (B)
above and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of the Company or such successor;


 


(ii)                        Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(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 date hereof, whose
election, or nomination for election by the Company’s stockholders, 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 the Company; or


 


(iii)                     Consummation
by the Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (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 Common Stock and
Outstanding 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 from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Common Stock and Outstanding 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


 


(iv)          Approval by the stockholders
of the Company of a complete liquidation or dissolution of the Company.


 


(i)                      “Code” means
the Internal Revenue Code of 1986, as amended.


 


(j)                      “Committee”
means the Compensation Committee of the Board.


 


(k)                   “Company” means
Northwest Airlines Corporation, a Delaware corporation.


 


(l)                      “Date of
Grant” means the effective date of the grant of an Award to a Participant.


 


(m)                “Disability”
means, with respect to a Participant, such Participant’s disability entitling
him or her to benefits under the Company’s group long-term disability plan;
provided, however, that if such Participant is not eligible to participate in
such plan, then such Participant shall be considered to have incurred a “Disability”
if and when the Committee determines in its discretion that such Participant
has become incapacitated for a period of at least 180 days by accident,
sickness, or other circumstance which renders such Participant mentally or
physically incapable of performing the material duties and services required of
him or her in his or her employment on a full-time basis during such period.


 


(n)                  “Disposition”
means, with respect to each Investment, a transfer, sale, exchange or other
disposition (other than pursuant to Section 6.1 hereof) of all or a portion of
such Investment by the Company or a Subsidiary, as applicable, to one or more
Transferees.  A Disposition shall include
a Stockholder Disposition.  A Disposition
shall not include the exercise of a convertible security (including an option
or warrant), but such an exercise shall require an adjustment to related Awards
pursuant to Section 4.6.  The Committee
may determine that a transaction involving an exchange of a security for other
consideration is not a Disposition (1) to the extent such other consideration
consists of securities other than Publicly Traded securities that are Liquid,
or (2) to the extent that such transaction is effected on a tax- free basis to
the Company or the applicable


 





















 


Subsidiary
(and, in connection with such determination, the Committee may make any
appropriate adjustments to related Awards pursuant to Section 4.6).  For purposes of determining Market Value
under the Program, the net proceeds of a Disposition of an Investment shall be
allocated to Phantom Units in accordance with the number of Phantom Units into
which such Investment is divided.


 


(o)                  “Distribution”
means, with respect to each Investment, a dividend or other distribution (other
than a dividend or distribution that the Committee has determined should be
included as a part of such Investment or with respect to which an adjustment is
made to an outstanding Award pursuant to Section 4.6) received with respect to
such Investment by the Company or a Subsidiary, as applicable.


 


(p)                  “Effective Date”
means December 7, 2000.


 


(q)                  “Eligible Employee”
means any individual who is an officer or a highly compensated management level
employee of the Company or any parent corporation or Subsidiary.


 


(r)                     “Follow-up
Award” shall have the meaning assigned to such term in Section 4.5.


 


(s)                   “Follow-up Investment”
means, with respect to a then-existing Investment, any other equity holding
that is subsequently acquired by the Company or a Subsidiary based on the
satisfaction of performance targets, vesting provisions, or other terms and
conditions set forth in one or more agreements (as the same may be amended from
time to time) to which the Company or a Subsidiary is a party, which
agreement(s) were entered into in connection with such Investment.


 


(t)                     “Investment”
means each equity holding of the Company or a Subsidiary in an e-commerce or
internet-based business that is subject to the Program, as determined by the
Committee.  The term “Investment” shall
include a Follow-Up Investment, but each Follow-Up Investment shall be
considered a new separate Investment. 
For purposes of Section 2.1(s) and this Section 2.1(t), an “equity
holding” means any interest (including, without limitation, an option or
warrant) in an entity other than an instrument that is treated as indebtedness
under applicable local law and which has no substantial equity features.


 


(u)                  “Investment Cost”  means the actual out-of-pocket cost of an
Investment (as determined by the Committee) to the Company or a Subsidiary that
is paid to the issuer or seller of such Investment.


 


(v)                  “Investment
Period” means (i) with respect to an Investment (other than a Follow-up
Investment), the 10-year period beginning on the first Date of Grant of an
Award (or, with respect to an Investment added to an Award following the Date
of Grant, the date such Investment is added to an Award) to any individual with
respect to such Investment, and (ii) with respect to each Follow-up Investment,
the 10-year period beginning on the first Date of Grant of an Award (or, with
respect to an Investment added to an Award following the Date of Grant, the
date such Investment is added to an Award) to any individual with respect to
the original Investment to which such Follow-up Investment relates.


 





















 


(w)                “Liquid” means,
with respect to each Investment, a determination by the Committee that (i) the
Company or a Subsidiary, as applicable, could sell all or substantially all of
such Investment under Rule 144 promulgated under the Securities Act of 1933,
pursuant to an effective registration statement under the Securities Act of 1933
(or under a similar procedure under foreign law), or otherwise without material
transfer restrictions being imposed on a non-affiliate Transferee as a result
thereof, (ii) any such sale is not prohibited by law, regulation, court or
administrative order, rule of an exchange or market, contract, or otherwise,
(iii) any such sale will not result in liability of the Company or any
Subsidiary under Section 16(b) of the Securities Exchange Act of 1934, as
amended (either because of transactions (including Award redemptions) already
effected or because of prospective transactions (including Award redemptions)
determined by the Committee to be reasonably probable), and (iv) there is an
established public trading market for the securities comprising such Investment
which can be used to reasonably determine the Market Value of the Phantom Units
relating to such Investment.  Any other
Investment may be considered Liquid if the Committee so determines in its sole
discretion.


 


(x)                    “Market Value”
means, the amount as of  a date (with the
result rounded to the nearest cent) determined by the Committee as follows:


 


(i)                           If a
Disposition (other than a Stockholder Disposition) has occurred with respect to
all or a portion of the Investment or Investments to which such Phantom Unit
relates, then the Market Value as of the date of such Disposition shall equal
the sum of (A) the fair market value of the Distributions allocable to such
Phantom Unit that have been received by the Company or a Subsidiary with
respect to such Investment or Investments from the Date of Grant of the
applicable Award to the date of such Disposition (increased, in the case of any
Distribution received in cash, by 7% per annum from the date of receipt of such
Distribution by the Company or a Subsidiary to the date of such Disposition)
and (B) the fair market value of the net proceeds to the Company or a
Subsidiary with respect to such Disposition that are allocable to such Phantom
Unit.  The fair market value determinations
required pursuant to the preceding sentence shall be made in good faith by the
Committee as of the date of such Disposition.


 


(ii)                        If a
Disposition of all or a portion of the Investment or Investments to which such
Phantom Unit relates has not occurred and if such Investment or Investments are
Publicly Traded as of the date the Market Value is required to be determined
under the Program, then the Market Value as of such date shall equal the sum of
(A) the fair market value of the Distributions allocable to such Phantom Unit
that have been received by the Company or a Subsidiary with respect to such
Investment or Investments from the Date of Grant of the applicable Award to the
date of such valuation (increased, in the case of any Distribution received in
cash, by 7% per annum from the date of receipt of such Distribution by the
Company or a Subsidiary to the date of such valuation) and (B) the fair market
value of such Investment based on the average of the high and low sales price
of the security that constitutes the Investment or Investments as of the date
of such valuation (or the immediately preceding Trading Day on which a sale
occurs if no sale occurs on such date) on the principal exchange for such
Investment or Investments.  The fair
market value determinations required


 





















 


pursuant to
the preceding sentence shall be made in good faith by the Committee as of the
date of such valuation.


 


(iii)                     If a
Stockholder Disposition of the Investment or Investments to which such Phantom
Unit relates has occurred at a time when such Investment or Investments are
Publicly Traded, then the Market Value of such Phantom Unit as of the date of
such Stockholder Disposition shall be determined as provided in clause (ii)
above (applied by substituting the date of such Stockholder Disposition for the
date of such valuation referred to in clause (ii)).


 


(iv)                    If a
Disposition of such Investment or Investments has not occurred and the
Investment or Investments to which such Phantom Unit relates is not Publicly
Traded as of the date the Market Value of such Phantom Unit is required to be
made under the Program, then the Market Value shall be determined by the
Committee.  The Committee’s determination
shall be made in good faith and shall be based on a valuation opinion prepared
by a Valuation Expert who shall be selected by the Committee.  The Committee shall cause the opinion of the
Valuation Expert (who shall determine the fair market value of the Investment
to which such Phantom Unit relates) to be prepared no later than 60 days after
the date as of which the Market Value is being determined.  The Market Value determined by the Committee
based on the opinion of the Valuation Expert shall be increased by the
Committee to reflect the fair market value (determined in good faith by the
Committee) of the Distributions allocable to such Phantom Unit that have been
received by the Company or a Subsidiary with respect to such Investment from
the Date of Grant of the applicable Award to the date of such valuation
(increased, in the case of any Distribution received in cash, by 7% per annum
from the date of receipt of such Distribution by the Company or a Subsidiary to
the date of such valuation). All costs and expenses of the Valuation Expert
shall be borne by the Company.


 


(y)                  “Measurement
Date” shall have the meaning assigned to such term in Section 6.3.


 


(z)                    “PAR” means
the right to receive the excess, if any, of (i) the aggregate Market Value
attributable to all Investments relating to a Phantom Unit over (ii) the Base
Value of such Phantom Unit.


 


(aa)             “Participant” means
an Eligible Employee who has been granted an Award.


 


(bb)           “Permitted Holders”
means each of Alfred A. Checchi, Gary L. Wilson, Frederic V. Malek or Richard
C. Blum and Richard C. Blum & Associates — NWA Partners, L.P., and also
includes the Company and any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company.


 


(cc)             “Person” means a “person”,
as such term is used for purposes of Section 13(d) or 14(d) of the Act (or
any successor section thereto).


 





















 


(dd)           “Phantom Unit” means
the Committee’s determination of the unit by which to measure value, price, or
amount with regard to an Investment or group of Investments.   At the time that the first Award is made
with respect to an Investment or group of Investments, the Committee shall
determine in its sole discretion the number of Phantom Units into which such
Investment or group of Investments shall be divided.  If the Committee does not designate the number
of Phantom Units into which a particular Investment or group of Investments is
to be divided, then the Investment or group of Investments shall be divided
into one thousand Phantom Units.  The
Committee may, following the Date of Grant of an Award, add additional
Investments, Follow-Up Investments or groups of Investments for purposes of
determining the value, price or amount of a Phantom Unit subject to such Award.


 


(ee)             “Point” means .1% of
the Phantom Units relating to an Investment or group of Investments.


 


(ff)                 “Program” means
this Northwest Airlines Corporation E-Commerce Incentive Compensation Program,
as amended from time to time.


 


(gg)           “Publicly Traded”
means, with respect to a particular Investment, that securities which are of
the same class as the securities constituting all or substantially all of such
Investment are either (i) registered under section 12 of the Securities
Exchange Act of 1934, as amended, and listed on a U.S. national or regional
stock exchange or reported by the NASDAQ National Market System or (ii) listed
for trading on a national or regional stock exchange or market in a foreign
country.  An Investment shall also be
considered to be Publicly Traded if the Committee determines that the Company
or a Subsidiary could readily acquire by conversion, exchange, exercise or
otherwise one or more securities described in the preceding sentence with
respect to all or substantially all of such Investment, and, under such
circumstances, the Committee shall make appropriate and equitable adjustments
to affected PARs and Awards (including, without limitation, adjustments to the
determinations of the Base Value and Market Value applicable to related Phantom
Units) in connection with any redemption thereof under Article VI.


 


(hh)           “Redemption Amount”
means, with respect to the vested portion of a PAR, the excess, as of a
specified date of (i) the sum of (A) the Market Value as of such date of all or
any portion of Investments not subject to a Disposition and (B) the Market
Value of all or any portion of Investments subject to a Disposition (as of such
Disposition) over (ii) the sum of (A) the Base Value as of such date of such
Phantom Unit and (B) all allocations with respect to such Phantom Unit
attributable to Investments subject to a Disposition or Redemption Election.


 


(ii)                   “Redemption
Election” shall have the meaning assigned to such term in Section 6.1.


 


(jj)                   “Redemption
Election Date” shall have the meaning assigned to such term in
Section 6.1.


 


(kk)             “Related Parties”
with respect to any Permitted Holders means (i) any spouse or immediate family
member of such Permitted Holder, any trust created primarily for the benefit of
any such individual or such individual’s estate, executor,


 





















 


administrator,
committee or other personal representatives or beneficiaries; or (ii) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding a majority controlling
interest of which consist of one or more of such Permitted Holders and/or such
other Person referred to in the immediately preceding clause (i).


 


(ll)                   “Stockholder
Disposition” means, with respect to each Investment, a distribution or other
disposition of all or a portion of such Investment to the Company’s
stockholders on a pro-rata basis.


 


(mm)       “Subsidiary” means any
entity with respect to which the Company, directly or indirectly through one or
more other entities, owns equity interests possessing 50 percent or more of the
total combined voting power of all equity interests of such entity (excluding
voting power that arises only upon the occurrence of one or more specified
events).


 


(nn)           “Termination of Service”
means the termination of a Participant’s employment with the Company and its
Subsidiaries.


 


(oo)           “Trading Day” means,
with respect to any Investment, a day during which trading in securities
generally occurs in the principal securities market on which such Investment is
traded.


 


(pp)           “Transferee” means any
person, corporation, partnership, limited liability company or partnership,
association, trust, or other entity or organization that is not the Company or
a Subsidiary.


 


(qq)           “Valuation Expert”
means, with respect to each Investment, a nationally recognized investment
banking firm experienced in the valuation of property similar to such
Investment.


 


2.2.                    Number,
Gender, Headings, and Periods of Time. 
Wherever appropriate herein, words used in the singular shall be
considered to include the plural, and words used in the plural shall be
considered to include the singular.  The
masculine gender, where appearing in the Program, shall be deemed to include
the feminine gender.  The Section
headings herein are included solely for convenience.  If there is any conflict between such
headings and the text of the Program, the text shall control.  Any reference in the Program to a period or
number of days, weeks, months, or years shall mean, respectively, calendar
days, calendar weeks, calendar months, or calendar years unless expressly
provided otherwise.


 


III                               ADMINISTRATION


 


3.1.                    Administration
by the Committee.  The Program shall
be administered by the Committee.  The
Committee may delegate such administrative matters hereunder as it deems
appropriate to officers of the Company.


 


3.2.                    Powers
of the Committee.  The Committee
shall supervise the administration and enforcement of the Program according to
the terms and provisions hereof and shall have the sole discretionary authority
and all of the powers necessary to accomplish these purposes.  The Committee shall have all of the powers
specified for it under the Program, including, without


 





















 


limitation, the power: (a) to select Eligible
Employees to receive Awards; (b) to determine all provisions, conditions, and
terms relating to any Award, including, without limitation, determinations as
to the Date of Grant, the Base Value, the Market Value, the number of PARs
subject to an Award, and any adjustments thereto; (c) from time to time to
establish rules and procedures for the administration of the Program, which are
not inconsistent with the provisions of the Program, and any such rules and
procedures shall be effective as if included in the Program; (d) to construe in
its discretion all terms, provisions, conditions, and limitations of the
Program, any Award, and any Award Notice; (e) to correct any defect or to supply
any omission or to reconcile any inconsistency that may appear in the Program
or in any Award or Award Notice in such manner and to such extent as the
Committee shall deem appropriate; (f) to make determinations as to whether a
Disposition of an Investment has occurred; (g) to make determinations as to
whether an Investment is Publicly Traded and/or Liquid; (h) to make
determinations as to whether an equity holding constitutes a Follow-up
Investment; (i) to make determinations that an equity holding is not an
Investment;  and (i) to make all other
determinations necessary or advisable for the administration of the
Program.  If the Committee determines
that the cost of administration of the Program, or the cost to the Company or
its Subsidiaries of administration or oversight of Investments, becomes
material, the Committee may take such costs into account in determining Base
Value relating to future Awards.


 


3.3.                    Committee
Decisions Conclusive; Standard of Care. 
The Committee shall, in its sole discretion exercised in good faith
(which, for purposes of this Section 3.3, shall mean the application of
reasonable business judgment), make all decisions and determinations and take
all actions necessary in connection with the administration of the Program.  All such decisions, determinations, and
actions by the Committee shall be final, binding, and conclusive upon all
persons.  The Committee shall not be
liable for any decision, determination, or action taken in good faith or upon
reliance in good faith on the records of the Company or information presented
to the Committee by the Company’s officers, employees, or other persons
(including the Valuation Experts and their employees and representatives) as to
matters the Committee reasonably believes are within such other person’s
professional or expert competence.  If a
Participant disagrees with any decision, determination, or action made or taken
by the Committee, then the dispute will be limited to whether the Committee has
satisfied its duty to make such decision or determination or take such action
in good faith.  To the full extent
permitted by law, no liability whatsoever shall attach to or be incurred by any
officers or directors, as such, of the Company or any of its Subsidiaries,
under or by reason of the Program or the administration thereof.


 


IV                               PARTICIPATION, AWARDS AND AWARD NOTICES


 


4.1.                    Participation.  Each Eligible Employee shall be eligible to
be selected to be a Participant.  Subject
to the provisions of Sections 4.3, 4.4, and 4.5, (a) the granting of Awards to
Eligible Employees shall be determinations made by and in the discretion of the
Committee and (b) Awards shall be granted by the Committee from time to time,
and at such times, as the Committee in its sole discretion may determine.  The Committee may grant any number of Awards
to any one Eligible Employee without regard to the number of Awards granted to
any other Eligible Employee.


 


4.2.                    Award
Notices.  The Company shall provide
an Award Notice to each individual who receives an Award relating to a
particular Investment.  Each Award Notice
evidencing an Award shall specify (a) the Date of Grant of such Award, (b) the
Investment or group of


 





















 


Investments to which such Award relates, (c) the
number of Points subject to such Award, (d) the methodology for determining the
Base Value of each Phantom Unit subject to such Points, (e) the vesting
schedule and/or other requirements pursuant to which the Participant who holds
such Award shall obtain a vested interest in the Investments subject to the Award
(to the extent such schedule or requirements differ from the provisions
contained in Article V) and (f) such other terms and conditions as the
Committee may determine in its sole discretion.


 


4.3.                    Limitations
on PARs.  The aggregate number of
PARs that may be subject to Awards granted with respect to a particular
Investment shall not exceed, in the aggregate, 20% of the number of Phantom
Units into which such Investment has been divided.


 


4.4.                    Allocation
of PARs.  Up to the aggregate PARs
available under Section 4.3 may be allocated among Participants by the
Committee based on a number of Points that in the aggregate represent 20% of
such Phantom Units, with each Point representing .1% of such Phantom
Units.  For example, an Award of 10
Points would represent a grant of PARs on 1% of the total Phantom Units into
which the Investment was divided (Such an Award would also represent 5% of the
PARs available to be granted under the Program with respect to the Investment
or group of Investments).


 


4.5.                    Special
Provisions Concerning Awards with respect to Follow-up Investments.  If (a) a Participant has received an Award
with respect to an existing Investment or group of Investments prior to the
date a Follow up Investment with respect to such existing Investment or group
of Investments is acquired by the Company or a Subsidiary, (b) such Participant
is either an Eligible Employee or, in the case of a Follow-up Investment made
after a Change in Control, has a vested interest in such Award as of the date
of such acquisition and (c) such Award has not been canceled pursuant to
Section 5.3, then such Participant shall receive an Award with respect to such
Follow-up Investment (a “Follow-up Award”) as of the date the Follow-up
Investment is acquired by the Company or a Subsidiary.  In the case of a Participant who is an
Eligible Employee at the time such Follow-up Award is made, (i) such
Participant’s vested interest in such Follow-up Award shall at all times be
equal to his or her vested interest in his or her Award relating to the
existing Investment or group of Investments and (ii) the number of PARs subject
to such Follow-up Award shall be no less than an amount that bears the same
ratio to the number of Phantom Units into which such Follow-up Investment has
been divided as the number of PARs subject to such Participant’s Award relating
to the existing Investment or group of Investments bears to the number of
Phantom Units into which the existing Investment or group of Investments was
divided.  In the case of a Participant
who is not an Eligible Employee at the time such Follow-up Award is made, such
Participant shall have no interest in the Follow-up Award; provided that if
such Follow-up Award was made after a Change in Control, (A) the Participant’s
vested interest in such Follow-up Award shall at all times be equal to 100% and
(B) the number of PARs subject to such Follow-up Award shall equal (1) such
Participant’s vested interest in his or her Award relating to the existing
Investment multiplied by (2) an amount that bears the same ratio to the number
of Phantom Units into which such Follow-up Investment has been divided as the
number of PARs subject to such Participant’s Award relating to the existing
Investment or group of Investments bears to the number of Phantom Units into
which the existing Investment or group of Investments was divided.  The provisions of this Section 4.5 shall
apply separately to each Award held by a Participant with respect to such
existing Investment or group of Investments.


 





















 


4.6.                    Adjustments
to Outstanding Awards.  In the event
of (a) any recapitalization, reorganization, merger, consolidation,
combination, split-up, split-off, spin-off, exchange, or other relevant change
in capitalization of any company or other entity issuing securities
constituting an Investment occurring after the date of the grant of any Award
relating to such Investment, (b) a capital contribution by the Company or a
Subsidiary to any company or entity issuing securities constituting an
Investment occurring after the date of the grant of any Award relating to such
Investment, (c) the exercise by the Company or a Subsidiary of an option,
warrant, or other purchase right constituting an Investment after the date of
the grant of any Award relating to such Investment, or (d) the occurrence of
any other event which, in the judgment and sole discretion of the Committee,
should cause a change in the rights of the Participants with respect to their
Awards under the Program, then the Committee shall make such adjustments under
the Program and to any outstanding Awards with respect to the number of PARs
subject to such Awards, the Base Value of the Phantom Units subject to such
PARs, the number of Phantom Units relating to such Investment or any other term
or condition applicable to such PARs or Awards (including, without limitation,
dividing an Award into two or more Awards) as, in the sole discretion of the
Committee, shall (i) be equitable and appropriate under the circumstances, (ii)
be consistent with the intent of the Program, and (iii) preclude an increase in
the compensation payable to a Participant with respect to an Award beyond that
which was intended under the Program. 
Subject to the principles set forth in clauses (i), (ii), and (iii) of
the preceding sentence, Awards may also be adjusted by the Committee as
provided in other provisions of the Program. 
Any adjustments made by the Committee pursuant to this Section shall be
final, binding, and conclusive on all parties.


 


V                                   VESTING OF AWARDS


 


5.1.                    Determination
of Vested Interest.  Subject to the
provisions of Section 4.5, a Participant shall become vested in an Investment
subject to an Award at the rate of 25% for each full one-year period
(commencing on the Date of Grant of such Award or, with respect to an Investment
added to an Award following the Date of Grant, the date such Investment is
added to the Award) that the Participant remains continuously employed by the
Company or a Subsidiary, up to 100%. 
Further, if a Participant incurs a Termination of Service by reason of
death or Disability, then such Participant shall obtain on the date of such
termination a 100% vested interest in all the Investments then subject to
outstanding Awards held by such Participants. 
Notwithstanding the preceding provisions of this Section, the Committee
may, in its sole discretion, provide in an Award Notice or in an employment
agreement a different vesting schedule or vesting provisions pursuant to which
a Participant shall become vested in the Investment or Investments subject to his
or her Award(s).


 


5.2.                    Termination
of Service other than for Cause and not by reason of death or Disability.  Except as provided in Section 5.4 and unless
otherwise provided in an Award Notice or a Participant’s employment agreement,
as of the date a Participant incurs a Termination of Service other than for
Cause (and not by reason of death or Disability), (a) such Participant’s vested
interest in all Investments subject to Awards shall be frozen, (b) the vested
interest of such Participant in the Investment or Investments subject to his or
her Awards shall not increase after such date, and (c) the nonvested PARs
(determined as of such date) subject to such Awards shall be surrendered to the
Company and canceled.  Notwithstanding
the preceding provisions of this Section, the Committee may, in its sole
discretion, provide in an Award Notice or in an employment agreement a
different vesting schedule or vesting provisions pursuant to which a
Participant shall become vested in his or her Award(s).


 





















 


5.3.                    Termination
of Service for Cause.  Upon a
determination by the Committee that a Participant has incurred a Termination of
Service for Cause, (a) all outstanding Awards (including the vested PARs and
nonvested PARs subject thereto) shall be canceled, effective as of the date of
such Termination of Service, (b) no outstanding PARs under Awards held by such
Participant shall be redeemable, and (c) no amount, including, without
limitation, any amount payable under Article VI, shall be paid under the
Program to such Participant from and after the date of such Termination of
Service.  Such Participant shall
surrender all outstanding Awards to the Company, and all Awards of such
Participant shall be canceled.


 


5.4.                    Special
Change in Control Vesting Provisions. 
Notwithstanding any other provision of the Plan, in the event of a
Change in Control, Investments subject to outstanding Awards shall vest in
accordance with the following:


 


(a)                             If
the Change in Control occurs pursuant to Section 2.1(h)(i) hereof, the
Participant shall become 100% vested in all Investments subject to then
outstanding Awards held by such Participant immediately upon termination of the
Participant’s employment by the Company other than for Cause or by the
Participant with Good Reason (i) at any time after the occurrence of the Change
in Control or (ii) before the occurrence of the Change in Control if such
termination is in connection with such Change in Control; and


 


(b)                            If the
Change in Control occurs pursuant to Section 2.1(h)(ii), (iii) or (iv) hereof,
the Participant shall become 100% vested in all Investments subject to then
outstanding Awards held by such Participant immediately upon the effective date
of such Change in Control.


 


5.5.                    Accelerated
Vesting.  At any time, and from time
to time, the Committee may in its sole discretion accelerate the vesting of an
Investment subject to an Award such that the Participant who holds such Award
will have a greater vested interest than such Participant would have otherwise
had pursuant to the preceding provisions of this Article V or the vesting
schedule set forth in the Award Notice evidencing such Award or such
Participant’s employment agreement. 
Actions by the Committee pursuant to this Section may vary among
Participants and may vary among the Awards held by an individual Participant.


 


VI                               AWARD REDEMPTIONS


 


6.1.                    Redemptions
Elected by a Participant.  A
Participant may elect (a “Redemption Election”) by irrevocable written notice
to the Company to cause the Company to redeem as of the date of such notice
(the “Redemption Election Date”) all or any portion of such Participant’s
unredeemed vested PARs that relate to an Investment that as of the time of the
Redemption Election has been determined by the Committee to be Liquid; provided
that, unless otherwise determined by the Committee, a Participant shall not be
entitled to make a Redemption Election with respect to an Award prior to the
third anniversary of the Date of Grant of such Award.  Any Redemption Election must specify the
Award and the Investment(s) to which such election relates and the number of
such Participant’s unredeemed vested PARs under such Award to which such
election shall apply.  If a Participant
makes a Redemption Election with respect to vested PARs granted pursuant to an
Award, then the Company shall allocate to 
each such vested PAR an amount equal to the excess, if any, of (i) the
sum of (A) the Market Value (as of the applicable Redemption Election Date) of
the Investment subject to such Redemption Election


 





















 


and (B) the Market Value of Investments
subject to Dispositions or Redemption Elections prior to such date over (ii)
the sum of (A) the Base Value (as of such date) of such Award and (B) amounts
previously allocated to such Award as a result of prior Dispositions or Redemption
Elections.  For purposes of this Section
6.1, the Market Value of the Investment subject to the Redemption Election
shall be determined under (A) Section 2.1(x)(i) if the Company or a Subsidiary,
as applicable, makes a Disposition corresponding to a Participant’s Redemption
Election or (B) Section 2.1(x)(ii) if no such Disposition is made.  The amount allocated under this Section 6.1
to the vested PARs subject to the Redemption Election shall be paid to the
Participant as soon as administratively practicable, but not later than 30 days
after the applicable Redemption Election Date, and, in the sole discretion of
the Company, in either (i) a single lump sum cash payment or (ii) securities of
the Investment subject to the Redemption Election under this Section 6.1 (based
on the Market Value of such Investment on the Redemption Election Date).  Upon such redemption, the portion of the PARs
and of the corresponding Points applicable to such Investment so redeemed shall
be surrendered to the Company, and such redeemed portions shall be canceled,
provided that the portion of such PARS and Points applicable to any remaining
Investments shall not be surrendered or cancelled.  If a Participant makes a Redemption Election
with respect to an Award and the Investment subject to the Redemption Election
has not been determined by the Committee to be Liquid as of the applicable
Redemption Election Date, then such Redemption Election shall be void and of no
effect.


 


6.2.                    Redemption
Upon Disposition of All or a Portion of an Investment.


 


(a)                             As
soon as administratively feasible after the date of a Disposition, the
Committee shall determine, with respect to each outstanding Award relating to
the Investment subject to such Disposition, the number of PARS (other than PARS
to which a Redemption Election is outstanding), if any, outstanding and shall
allocate to each such PAR the amount equal to the excess, if any, of (i) the
sum of (A) the Market Value (as of the Disposition) of the Investment subject
to such Disposition and (B) the Market Value of Investments subject to
Dispositions and Redemption Elections prior to such date over (ii) the sum of
(A) the Base Value (as of such date) of such Award and (B) amounts previously
allocated to such Award as a result of prior Dispositions and Redemption
Elections.


 


(b)                            As
soon as practicable after such allocation, the Participant shall receive the
amount allocated to any of his or her vested PARs; provided, however, that,
unless otherwise determined by the Committee, no allocation shall be paid to a
Participant prior to the third anniversary of the Date of Grant.  Unless otherwise provided by the Committee,
the remainder of the allocated amount shall be paid out within 30 days after
the later of (i) the third anniversary of the Date of Grant of the Award and
(ii) each date on which the unvested Investments subject to PARs become vested,
together with 7% interest (compounded annually) on such additional payment for
the period beginning on the date of the payment pursuant to the preceding sentence
and ending on the date of payment of such additional payment.  Upon payment by the Company with respect to a
PAR as provided above, the portion of the PAR and the corresponding Points so
redeemed shall be surrendered to the Company and canceled.  All payments under this Section 6.2(b) shall
be made, in the sole discretion of the Company, in either (i) a lump sum cash
payment or (ii) publicly traded securities of the Investment subject to such
Disposition (based on the Market Value of the Investment).


 





















 


(c)                             Redemption
Upon Expiration of Investment Period. 
As soon as administratively feasible after the last day of the
Investment Period relating to an Investment or group of Investments, the
Company shall redeem the outstanding PARs (other than PARS to which a
Redemption Election is outstanding) relating to such Investment or group of
Investments under such Award.  The amount
paid by the Company to a Participant who is entitled to a redemption payment
pursuant to this Section 6.2(c) shall be the Redemption Amount applicable to
such PARs, determined as of the end of the Investment Period.  A redemption payment provided for in this
Section 6.2(c) shall be paid to the Participant as soon as administratively
practicable, but not later than 60 days, after the last day of the applicable
Investment Period, in the sole discretion of the Company, in either (i) a
single lump sum cash payment or (ii) publicly traded securities of the
Investment (based on the Market Value on the last day of the Investment Period)
subject to such redemption under this Section 6.2(c).


 


6.3.                    Limitations
with respect to Redemption Payments. 
Notwithstanding any provision herein to the contrary, (a) except as
expressly provided in this Article VI, a Participant shall not have any right
to any payment under the Program and (b) in no event shall a payment be made
with respect to the portion of an Award in which a Participant does not have a
vested interest.


 


VII                           TERMINATION, AND AMENDMENT OF PROGRAM


 


7.1.                    Inception,
Termination and Amendment.  The
Program shall commence on the Effective Date. 
The Committee may amend the Program at any time and from time to time,
and the Committee may at any time terminate the Program; provided, however,
that the Program may not be amended or terminated in a manner that would impair
(a) the rights of a Participant with respect to an outstanding Award or (b) the
right of a Participant with respect to an existing Investment or group of
Investments as of the date of such amendment or termination to receive (or the Base
Value of) an Award with respect to a related Follow-up Investment pursuant to
Section 4.5, without, in each such case, the consent of such Participant.  The Committee shall remain in existence after
the termination of the Program for the period determined necessary by the
Committee to facilitate the termination of the Program, and all provisions of
the Program that are necessary, in the opinion of the Committee, for equitable
operation of the Program during such period shall remain in force.


 


VIII                       MISCELLANEOUS PROVISIONS


 


8.1.                    No
Effect on Employment Relationship or any Employee Benefit Plan.  Nothing in the adoption of the Program, the
grant of Awards, or the payment of amounts under the Program shall confer on
any person the right to continued employment by the Company or any Subsidiary
or affect in any way the right of the Company (or a Subsidiary, if applicable)
to terminate such employment at any time. 
Unless otherwise provided in a written employment agreement, the
employment of each Participant shall be on an at-will basis, and the employment
relationship may be terminated at any time by either the Participant or the
Participant’s employer for any reason whatsoever, with or without cause.  Any amount paid with respect to any Award
constitutes a cash bonus paid under a long term incentive plan or program
adopted by Company and shall be excluded from such Participant’s compensation
for purposes of calculating benefits payable under any employee benefit plan of
the Company, its Subsidiaries and affiliates.


 





















 


8.2.                    Prohibition
Against Assignment or Encumbrance. 
No Award, PAR, or other right, title, interest, or benefit hereunder
shall be assignable or transferable, or liable for, or charged with any of the
torts or obligations of a Participant or any person claiming under a
Participant, or be subject to seizure by any creditor of a Participant or any
person claiming under a Participant.  No
Participant or any person claiming under a Participant shall have the power to
anticipate or dispose of any Award, PAR, or other right, title, interest, or
benefit hereunder in any manner until the same shall have actually been
distributed free and clear of the terms of the Program.  Payments with respect to an Award shall be payable
only to the Participant (or (a) in the event of a Disability, his or her duly
appointed legal representative and (b) in the event of the death, his or her
estate).  The provisions of the Program
shall be binding on all successors and assigns of a Participant, including
without limitation the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant’s creditors.


 


8.3.                    Unfunded,
Unsecured Program.  The Program shall
constitute an unfunded, unsecured obligation of the Company to make payments of
incentive compensation to certain individuals from its general assets in
accordance with the Program.  Each Award
and PAR granted under the Program merely constitutes a mechanism for measuring
such incentive compensation and does not constitute a property right or
interest in the Company, any Subsidiary, or any of their assets (including,
without limitation, any Investment or any Distribution with respect to any
Investment).  Neither the establishment
of the Program, the granting of Awards, nor any other action taken in
connection with the Program shall be deemed to (a) create any interest in an
Investment (nor to constitute the direct or indirect sale, transfer,
assignment, pledge or other disposition thereof (or of any part thereof) or of
any interest therein), (b) create an escrow or trust fund of any kind, (c)
create any fiduciary relationship of the Company or any Subsidiary, or of any
officer, director, employee or agent thereof, with respect to any Investment or
any Participant, or (d) restrict or affect in any way the acquisition, holding,
voting, disposition or the taking of any action with respect to any Investment
by the Company or any Subsidiary.


 


8.4.                    Tax
Withholding. The Company and the Subsidiaries may withhold, from a
Participant’s payment under the Program, or from any other payment to such
Participant, an amount necessary to satisfy any and all tax withholding
obligations arising under applicable local, state, federal, or foreign laws
associated with such payment, including, without limitation, having securities
otherwise deliverable to a Participant withheld by the Company with a fair
market value equal to the minimum statutory withholding rate.  The Company and the Subsidiaries may take any
other action as may in their opinion be necessary to satisfy all obligations
for the payment and withholding of such taxes.


 


8.5.                    Governing
Law.  The Program shall be construed,
enforced, and administered according to the laws of the State of Minnesota,
excluding any conflict-of-law rule or principle thereof.


 





















 


NORTHWEST
AIRLINES CORPORATION

E-COMMERCE INCENTIVE COMPENSATION PROGRAM


 


FORM OF
AWARD AGREEMENT


 


	
  Participant:

  	
  Date of Grant:

  



 


1.                        Grant of the Award.  The
Company hereby grants to the Participant, on the terms and conditions
hereinafter set forth, an award of                  
(     ) Points (the “Award”).  Each Point represents a PAR on .1% of the
Phantom Units relating to the Investments, subject to adjustment as provided in
the Program, listed on Exhibit A.  Each
PAR represents the right to receive the excess, if any, of (i) the
aggregate Market Value attributable to the Investments relating to a Phantom
Unit over (ii) the Base Value of such Phantom Unit.  The Base Value of each Phantom Unit that is
the subject of this Award is                            
Dollars ($          ).  This grant is made pursuant to the terms of
the Northwest Airlines Corporation E-Commerce Incentive Compensation Program
(as amended and restated, the “Program”), which Program, as amended from time
to time, is incorporated herein by reference and made a part of this
Agreement.  The Participant acknowledges
having received a copy of the Program as so amended and restated with this
Award Notice.  Capitalized terms not
otherwise defined herein shall have the same meanings as in the Program.


 


2.                        Vesting.


 


(a)                   Subject
to the Participant’s continued employment with the Company and its
Subsidiaries, each Investment subject to the Award shall vest as follows


 


 


(b)                  If
the Participant’s employment with the Company and its Subsidiaries terminates
for any reason, the Award, to the extent not then vested, shall be canceled
without consideration; provided, however, that if the Participant’s
employment is terminated due to death or Disability, the Investments subject to
the Award shall become 100% vested on the date of such termination.  If the Participant’s employment with the
Company and its Subsidiaries terminates for any reason, the Participant’s
vested interest in all Investments subject to the Award shall be frozen; provided,
however, that if the Participant’s employment is terminated by the
Company for Cause, the Participant’s vested interest in all Investments subject
to the Award shall be canceled without consideration.


 


(c)                   Notwithstanding
the foregoing, (i) in the event of a Change in Control pursuant to
Section 2.1(h)(i) of the Program, the Investments subject to the Award
shall become 100% vested immediately upon the termination of the Participant’s
employment by the Company other than for Cause or by the Participant for Good
Reason (A) at any time after the occurrence of the Change in Control or
(B) before the occurrence of the Change in Control if such termination is
in connection with such Change in Control and (ii) in the event of a
Change in Control pursuant to Section 2.1(h)(ii), (iii) or (iv) of the
Program, the Investments subject to the Award shall become 100% vested
immediately upon the effective date of such Change in Control.


 





















 


3.                        Award
Redemptions.                 [Notwithstanding
Sections 6.1 and 6.2 of the Program, the Committee determined in connection
with the grant of this Award that (i) a Participant may receive, in accordance
with the provisions of the Program, the amount allocated to any of his or her
vested PARs related to this Award at the time of such allocation, even if such
allocation occurs prior to the third anniversary of the Date of Grant of this
Award, and (ii) a Participant shall be entitled, in accordance with the
provisions of the Program, to a Redemption Notice with respect to this Award
prior to the third anniversary of the Date of Grant of this Award.]  All Award redemptions with respect to this
Award and any prior Awards granted to the Participant shall be paid to the
Participant, at the option of the Company, in accordance with the provisions of
Sections 6.1, 6.2(b) or 6.2(c), as applicable.


 


4.                     No Right to Continued Employment.  Neither
the Program nor this Agreement shall be construed as giving the Participant the
right to be retained in the employ of the Company or any Subsidiary.  Further, the Company or an Subsidiary may at
any time dismiss the Participant free from any liability or any claim under the
Program or this Agreement, except as otherwise expressly provided herein.


 


5.                     Transferability.  Payments with respect to the
Award shall be payable only to the Participant during the Participant’s
lifetime and may not be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Participant otherwise than by will
or by the laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Subsidiary.


 


6.                     Unfunded, Unsecured Award.  The Award
shall constitute an unfunded, unsecured obligation of the Company to make
payments of incentive compensation to the Participant from its general assets
in accordance with the Program.  The
Award merely constitutes a mechanism for measuring such incentive compensation
and does not constitute a property right or interest in the Company, any
Subsidiary, or any of their assets (including, without limitation, any
Investment or any Distribution with respect to any Investment).


 


7.                        Withholding.  The Company and the Subsidiaries
may withhold, from a Participant’s payment under the Award, or from any other
payment to such Participant, an amount necessary to satisfy any and all tax
withholding obligations arising under applicable local, state, federal, or
foreign laws associated with such payment. 
The Company and the Subsidiaries may take any other action as may in
their opinion be necessary to satisfy all obligations for the payment and
withholding of such taxes.


 


8.                         Notices.  Any notice necessary under this Agreement
shall be addressed to the Company in care of its Secretary at:


 


Northwest Airlines Corporation


2700 Lone Oak Parkway


Eagan, Minnesota  55121-1534


Attn: 
Secretary


 


and to the
Participant at the address appearing in the personnel records of the Company
for the Participant or to either party at such other address as either party
hereto may hereafter designate


 





















 


in writing to
the other.  Any such notice shall be
deemed effective upon receipt thereof by the addressee.


 


9.                         Choice of Law.  THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA, EXCLUDING ANY
CONFLICT-OF-LAW RULE OR PRINCIPLE THEREOF.


 


10.                   Award Subject to Program.  By
entering into this Agreement, the Participant agrees and acknowledges that the
Participant has received and read a copy of the Program.  The Award is subject to the Program.  In the event of a conflict between any term
or provision contained herein and a term or provision of the Program, the
applicable terms and provisions of the Program will govern and prevail.


 


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


 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.


 


	
   

  	
  NORTHWEST AIRLINES CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
  By: