**Exhibit 10.1**

 

**Preliminary Confirmation**

 

October 29,2003

 

NorthwestAirlines Corporation

2700 Lone Oak Parkway

Eagan, Minnesota 55121

 

This Preliminary Confirmationconfirms the economic terms and conditions of a transaction (the “**Transaction**”) that you have agreed to enterinto with Citibank, N.A. (“**Citibank**”).  This is a summary that includes the basiceconomic and other terms of the Transaction; full documentation will be in theform of a final trade confirmation (the “**Confirmation**”),which will incorporate the terms of the Agreement (as defined below) and begoverned by the 2002 ISDA Equity Derivatives Definitions (the “**Equity Definitions**”), as published by theInternational Swaps and Derivatives Association (copies of which are availablefrom us upon request and if not previously furnished to you by us, willaccompany the Confirmation).  ThisPreliminary Confirmation constitutes a binding confirmation under the 1992(Multicurrency-Cross Border) ISDA Master Agreement (the “**Agreement**”), dated as of January 15,1997 between us, and will be replaced and superseded by the Confirmation uponexecution thereof.  Capitalized termsused herein but not defined herein shall have the meanings set forth in theAgreement or the Equity Definitions, as the case may be.

 
| Party A:           |   | Citibank                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |   |                                                                                                                                                                                                                                                                                                                                                                                    |
| Party B:           |   | Northwest Airlines Corporation                                                                                                                                                                                                                                                                                                                                                          |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                    |
| Calculation Agent: |   | Party A                                                                                                                                                                                                                                                                                                                                                                                 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                    |
| Trade Date:        |   | October 29, 2003                                                                                                                                                                                                                                                                                                                                                                   |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                    |
| Tranches:          |   | The Transaction will be divided into individual Tranches, each with  the terms set forth herein and the Expiration Date, Base Amount and  Additional Base Amount set forth below.   The payments and deliveries to be made upon settlement of the  Transaction will be determined separately for each Tranche as if each Tranche  were a separate Transaction under the Agreement. |

 

| **Tranche** |   | **Expiration  Date**    |   | **Base Amount** |   | **Additional  Base  Amount** |
|-------------|--------|-------------------------|--------|-----------------|--------|------------------------------|
| 1           |   | November 3,  2006  |   | 327,511         |   | 65,502                       |
| 2           |   | November 6,  2006  |   | 327,511         |   | 65,502                       |
| 3           |   | November 7,  2006  |   | 327,511         |   | 65,502                       |
| 4           |   | November 8,  2006  |   | 327,511         |   | 65,502                       |
| 5           |   | November 9,  2006  |   | 327,511         |   | 65,502                       |
| 6           |   | November 10,  2006 |   | 327,511         |   | 65,502                       |
| 7           |   | November 13,  2006 |   | 327,511         |   | 65,502                       |
| 8           |   | November 14,  2006 |   | 327,511         |   | 65,502                       |
| 9           |   | November 15,  2006 |   | 327,511         |   | 65,502                       |
| 10          |   | November 16,  2006 |   | 327,511         |   | 65,502                       |
| 11          |   | November 17,  2006 |   | 327,511         |   | 65,502                       |
| 12          |   | November 20,  2006 |   | 327,511         |   | 65,502                       |
| 13          |   | November 21,  2006 |   | 327,511         |   | 65,502                       |
| 14          |   | November 22,  2006 |   | 327,511         |   | 65,502                       |
| 15          |   | November 27,  2006 |   | 327,511         |   | 65,502                       |
| 16          |   | November 28,  2006 |   | 327,511         |   | 65,502                       |
| 17          |   | November 29,  2006 |   | 327,511         |   | 65,502                       |
| 18          |   | November 30,  2006 |   | 327,511         |   | 65,502                       |
| 19          |   | December 1,  2006  |   | 327,511         |   | 65,502                       |
| 20          |   | December 4,  2006  |   | 327,511         |   | 65,502                       |
| 21          |   | December 5,  2006  |   | 327,511         |   | 65,502                       |

 

----

 

| 22 |   | December 6,  2006  |   | 327,511 |   | 65,502 |
|----|--------|-------------------------|--------|---------|--------|--------|
| 23 |   | December 7,  2006  |   | 327,511 |   | 65,502 |
| 24 |   | December 8,  2006  |   | 327,511 |   | 65,502 |
| 25 |   | December 11,  2006 |   | 327,511 |   | 65,502 |
| 26 |   | December 12,  2006 |   | 327,511 |   | 65,502 |
| 27 |   | December 13,  2006 |   | 327,511 |   | 65,502 |
| 28 |   | December 14,  2006 |   | 327,511 |   | 65,502 |
| 29 |   | December 15,  2006 |   | 327,511 |   | 65,502 |
| 30 |   | December 18,  2006 |   | 327,504 |   | 65,507 |

 
| Settlement Dates:          |   | For any Expiration Date, the date that falls one ordinary settlement  cycle following that Expiration Date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Exchange:                  |   | The Nasdaq National Market of the Nasdaq Stock Market, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Shares:                    |   | The common stock of Northwest Airlines  Corporation, par value $0.01 per share (Exchange symbol “NWAC”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Final Share Price:         |   | For any Expiration Date, the Official  NASDAQ Closing Price (NOCP) of the Shares as reported by the Exchange on such  Expiration Date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Lower Strike Price:        |   | $22.9000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Upper Strike Price:        |   | $29.3355                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Initial  Payment Date:     |   | The  settlement date for the convertible notes offering to be priced by Party B on  or immediately after the Trade Date (the “**Convertible  Notes Offering**”), expected to be November 4, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Initial  Payment:          |   | $10,068,200.12,  such amount to be paid to Party A by Party B no later than the Initial  Payment Date, by wire transfer of immediately available funds to an account  designated by Party A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Initial  Purchaser Option: |   | If  Citigroup Global Markets Inc., as initial purchaser of the Convertible Notes  Offering, exercises its option to purchase up to an additional $45,000,000  principal amount of convertible notes (the “**Initial  Purchaser Option**”), the number of Shares subject to each Tranche  shall be increased, pro rata (with such adjustments as may be agreed by the  parties hereto to allocate such Shares among Tranches in appropriate  multiples) with the amount of the Initial Purchaser Option exercised, on the  same terms (including, without limitation, the Lower Strike Price, the Upper  Strike Price, and the pro rata portion of the Initial Payment) specified in  the Transaction. |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Settlement:                |   | On  each Settlement Date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                       |   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | if  the Final Share Price for the Expiration Date corresponding to such  Settlement Date is less than the Upper Strike Price, the parties shall make  payment or delivery pursuant to one of the three settlement options set forth  below, such settlement option to be selected by Party B: |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (1) | Party  A shall make a cash payment to Party B, by wire transfer of immediately  available funds to an account designated by Party B, in an amount (the “**Lower Settlement Amount**”) equal to the  product of (a) the Base Amount *times*  (b) the excess, if any, of (i) such Final Share Price *over* (ii) the Lower Strike Price; |
|                            |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |  |  |  |  |  |

 

2

----

 
|   |   |   | (2)                                                                                                                                                                                                                                                                                                                                              | Party  A shall deliver to Party B Shares with a value equal to the Lower Settlement  Amount; or                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | (3)                                                                                                                                                                                                                                                                                                                                              | Party  B shall make a cash payment to Party A, by wire transfer of immediately available  funds to an account designated by Party A, in an amount equal to the product  of (a) the Base Amount *times*  (b) the Lower Strike Price, and Party A shall deliver to Party B a number of  Shares equal to the Base Amount;                                                                                                                                                                                         |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | (b)    | if  the Final Share Price for the Expiration Date corresponding to such  Settlement Date is greater than or equal to the Upper Strike Price, but less  than or equal to $61.5130, the parties shall make payment or delivery  pursuant to one of the four settlement options set forth below, such  settlement option to be selected by Party B: |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | (1)                                                                                                                                                                                                                                                                                                                                              | Party  A shall make a cash payment to Party B, by wire transfer of immediately  available funds to an account designated by Party B, in an amount (the “**Intermediate Settlement Amount**”) equal to  (a) the product of (i) the Base Amount *times*  (ii) (A) the Upper Strike Price *minus*(B)  the Lower Strike Price, *minus*  (b) the product of (i) the Additional Base Amount *times* (ii) (A) such Final Share Price *minus*(B) the Upper Strike Price;                                     |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | (2)                                                                                                                                                                                                                                                                                                                                              | Party  A shall deliver to Party B Shares with a value equal to the Intermediate  Settlement Amount;                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | (3)                                                                                                                                                                                                                                                                                                                                              | Party  B shall make a cash payment to Party A, by wire transfer of immediately  available funds to an account designated by Party A, in an amount equal to  the product of (a) the Base Amount *times*(b)  the Lower Strike Price, and Party A shall deliver to Party B a number of  Shares equal to (i) the Base Amount *minus*  (ii) a number of Shares with a value equal to the product of (A) the  Additional Base Amount *times*(B)  (x) such Final Share Price, *minus*  (y) the Upper Strike Price; or |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |   | (4)                                                                                                                                                                                                                                                                                                                                              | Party  B shall make a cash payment to Party A, by wire transfer of immediately  available funds to an account designated by Party A, in an amount equal to  (a) the product of (i) the Base Amount *times*  (ii) the Lower Strike Price, *plus*  (b) the product of (i) the Additional Base Amount *times*(ii) (A) such Final Share Price *minus* the Upper Strike Price, and Party  A shall deliver to Party B a number of Shares equal to the Base Amount; and                                               |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | (c)    | if  the Final Share Price on the Expiration Date corresponding to such Settlement  Date is greater than $61.5130, Party B shall make payment or delivery  pursuant to one of the two settlement options set forth below, such settlement  option to be selected by Party B:                                                                      |
|   |   |   |                                                                                                                                                                                                                                                                                                                                             |
|   |   |   | (1)                                                                                                                                                                                                                                                                                                                                              | Party  B shall make a cash payment to Party A, by wire transfer of immediately  available funds to an account designated by Party A, in an amount (the “**Upper Settlement Amount**”) equal to (a)  the product of (i) the Additional Base Amount *times* (ii) (A) such Final Share Price *minus*(B) the Upper Strike Price, *minus* (b) the product of (i) the Base  Amount *times*  (ii) (A) the Upper Strike Price *minus*(B)  the Lower Strike Price; or                                         |

 

3

----

 
|   |   |   | (2) | Party  B shall deliver to Party A Shares with a value equal to the Upper Settlement  Amount, subject to the provisions set forth below. |
|--------|--------|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

 
| Settlement Modification:       |   | The parties hereto acknowledge and agree that prior to any Settlement  Date, the Calculation Agent may advise Party B that the settlement option  selected by Party B for such Settlement Date is inappropriate or inadvisable  (based on prevailing market conditions, including market liquidity and the  market price of the Shares and the potential effect thereon from any hedging  or hedge unwind activities in connection with the Transaction).  In such case, Party B agrees to consider  such advice and negotiate in good faith with Party A to reach a mutual  agreement to (a) elect to change the settlement option for one or more  remaining Settlement Dates, (b) modify the method of determining the payments  or deliveries to be made on one or more remaining Settlement Dates or (c)  make such other changes to the terms of the Transaction to which the parties  may mutually agree.                                                                                                                                                                                                           |
|--------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Delivery  of Shares:           |   | If, in respect of the Transaction,  Party B shall owe Party A any amount (i) pursuant to Sections 12.7 or 12.9 of  the Equity Definitions (except in the event of an Insolvency,  Nationalization, Tender Offer or Merger Event, in each case, in which the  consideration or proceeds to be paid to holders of Shares as a result of such  event consists solely of cash) or (ii) pursuant to Section 6(d)(ii) of  the Agreement (except in the event of an Event of Default in which Party B is  the Defaulting Party or a Termination Event in which Party B is the Affected  Party, other than an Event of Default of the type described in  Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or a Termination  Event of the type described in Section 5(b)(i), (ii), (iii), (iv), or  (v) of the Agreement that, in the case of either such an Event of Default or  such a Termination Event, resulted from an event or events outside Party B’s  control) (a “**Payment Obligation**”),  Party B may, in its sole discretion, satisfy such Payment Obligation by  delivery of Shares. |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Status  of Share Delivered:    |   | If  (a) Party B elects to satisfy a Payment Obligation by delivery of Shares or  (b) Party B elects to deliver Shares  pursuant to the provisions set forth above opposite the caption “Settlement,”  then, (i) such Shares shall be, at the time of such delivery, freely tradeable, (ii) such Shares  shall be, at the time of such delivery, covered by an effective registration  statement of Party B for immediate resale by Party A or (iii) if such Shares  are not freely tradeable or so registered, the value of such Shares as  determined by the Calculation Agent shall be reduced to reflect an  appropriate liquidity discount, and, in the case of either clause (ii) or  clause (iii), the parties hereto shall enter into transaction documentation  customary for an underwritten public offering or a private placement, as the  case may be, including without limitation the delivery of accountants’  comfort letters and disclosure and closing opinions and the opportunity to  conduct an appropriate due diligence investigation.                                                    |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Share Adjustments:             |   | Calculation Agent Adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
| Consequences of Merger Events: |   | Share-for-Share: Cancellation and Payment (Calculation Agent Determination)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                           |   | Share-for-Other: Cancellation and Payment (Calculation Agent  Determination)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                           |   | Share-for-Combined: Cancellation and Payment (Calculation Agent  Determination)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
| Tender Offer:                  |   | Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

 

4

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| Consequences of Tender Offers:            |   | Share-for-Share: Cancellation and Payment (Calculation Agent  Determination)    |
|-------------------------------------------|--------|---------------------------------------------------------------------------------|
|                                      |   |                                                                            |
|                                      |   | Share-for-Other: Cancellation and Payment (Calculation Agent  Determination)    |
|                                      |   |                                                                            |   |   |   |   |
|                                      |   | Share-for-Combined: Cancellation and Payment (Calculation Agent  Determination) |
|                                      |   |                                                                            |   |   |   |   |
| Composition of Combined Consideration:    |   | Not Applicable                                                                  |
|                                      |   |                                                                            |   |   |   |   |
| Nationalization, Insolvency or Delisting: |   | Cancellation and Payment (Calculation Agent Determination)                      |
|                                      |   |                                                                            |   |   |   |   |
| Additional Disruption Events:             |   | Change in Law:  Applicable                                                 |
|                                      |   |                                                                            |   |   |   |   |
|                                      |   | Failure to Deliver:  Applicable                                            |
|                                      |   |                                                                            |   |   |   |   |
|                                      |   | Insolvency Filing:  Applicable                                             |
|                                      |   |                                                                            |   |   |   |   |
|                                      |   | Hedging Disruption:  Applicable                                            |
|                                      |   |                                                                            |   |   |   |   |
|                                      |   | Increased Cost of Hedging:  Not  Applicable                                |
|                                      |   |                                                                            |   |   |   |   |

 
|   |   | Loss of Stock Borrow:  Applicable;  *provided*that, notwithstanding  any provision of the Equity Definitions to the contrary, if a Loss of Stock  Borrow occurs, then (a) Party B shall be entitled to loan Shares to Party A  pursuant to Section 12.9(b)(iv)(A) of the Equity Definitions only if (i)  such Shares shall be, at the time of any delivery pursuant to any such loan,  covered by an effective registration statement of Party B for immediate  resale by Party A (it being understood an agreed that such registration shall  satisfy the requirement in Section 12.9(b)(viii) of the Equity  Definitions that such Shares be freely tradeable without restrictions under  the federal securities laws), (ii) the parties hereto shall have entered into  transaction documentation customary for an underwritten public offering,  including without limitation the delivery of accountants’ comfort letters and  disclosure and closing opinions, (iii) Party A and its affiliates shall have  been afforded the opportunity to conduct an appropriate due diligence  investigation and the results of such investigation shall be reasonably  satisfactory to Party A, and (iv) Party B shall reimburse Party A for all  reasonable out-of-pocket costs and expenses (including reasonable legal fees)  incurred in connection with such loan, registration, documentation and  investigation, (b) any such Share loan provided by Party B to Party A shall  be at a rate equal to 0.15% per annum, (c) Party B shall pay Party A a fee  equal to $0.05 per Share so loaned, and (d) if the second and third sentences  of Section 12.9(b)(iv) of the Equity Definitions are applicable, then in  lieu of terminating the entire Transaction, the parties shall negotiate in  good faith to reduce the Additional Base Amount for one or more Tranches so  that it is no longer necessary or advisable for Party A to borrow Shares with  respect to the Transaction, and the Determining Party will then determine the  Cancellation Amount payable by one party to the other party in respect of  such reduction. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | Maximum Stock Loan  Rate:  2.00%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

5

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|                                                         |   | Increased Cost of Stock Borrow:   Applicable; *provided*  that, notwithstanding any provision of the Equity Definitions to the  contrary, Party A shall use commercially reasonable efforts to borrow Shares  in respect of the Transaction at a rate that is not greater then the Initial  Stock Loan Rate; and *provided further*that,  if an Increased Cost of Stock Borrow occurs, then (a) Party B shall be  entitled to loan Shares to Party A pursuant to Section 12.9(b)(v)(X) of  the Equity Definitions only if (i) such Shares shall be, at the time of any  delivery pursuant to any such loan, covered by an effective registration  statement of Party B for immediate resale by Party A (it being understood an  agreed that such registration shall satisfy the requirement in  Section 12.9(b)(viii) of the Equity Definitions that such Shares be  freely tradeable without restrictions under the federal securities laws),  (ii) the parties hereto shall have entered into transaction documentation customary  for an underwritten public offering, including without limitation the  delivery of accountants’ comfort letters and disclosure and closing opinions,  (iii) Party A and its affiliates shall have been afforded the opportunity to  conduct an appropriate due diligence investigation and the results of such  investigation shall be reasonably satisfactory to Party A, and (iv) Party B  shall reimburse Party A for all reasonable out-of-pocket costs and expenses  (including reasonable legal fees) incurred in connection with such loan,  registration, documentation and investigation, (b) any such Share loan  provided by Party B to Party A shall be at a rate equal to 0.15% per annum,  (c) Party B shall pay Party A a fee equal to $0.05 per Share so loaned, and  (d) if the second and third sentences of Section 12.9(b)(v) of the  Equity Definitions are applicable, then in lieu of terminating the entire  Transaction, the parties shall negotiate in good faith to reduce the  Additional Base Amount for one or more Tranches so that it is no longer  necessary or advisable for Party A to borrow Shares with respect to the  Transaction, and the Determining Party will then determine the Cancellation  Amount payable by one party to the other party in respect of such reduction. |
|--------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
|                                                         |   | Initial Stock Loan  Rate:  0.30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
|                                                         |   | Hedging Party:  Party A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Determining Party:                                           |   | Party A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Non-Reliance:                                                |   | Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Agreements and Acknowledgments Regarding Hedging Activities: |   | Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Additional Acknowledgments:                                  |   | Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Payments on Early Termination:                               |   | For purposes of the Transaction, Second Method and Loss Apply                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Non-Confidentiality:                                         |   | Party A and Party B agree that (i) Party B is not obligated to Party A  to keep confidential from any and all persons or otherwise limit the use of  any element of Party A’s descriptions relating to tax aspects of the  transaction and any part of the structure necessary to understand those tax  aspects, and (ii) Party A does not assert any claim of proprietary ownership  in respect of such descriptions contained herein of the use of any entities,  plans or arrangements to give rise to significant U.S. federal income tax  benefits for Party B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

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| No Material, Non-Public Information: |   | Party B is not entering into the Transaction while in possession of  material, non-public information concerning itself.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Delivery of Opinion:                 |   | On or  prior to the Initial Payment Date, Party B shall deliver to Party A customary  opinions of counsel as to due authorization, execution and delivery and  non-contravention.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |
| Early Unwind:                        |   | In  the event the Convertible Notes Offering is not consummated with Citigroup  Global Markets Inc. pursuant to the Purchase Agreement dated as of October 29, 2003 among Party B and Citigroup Global Markets Inc., as  initial purchaser, for any reason by the close of business in New York on  November 4, 2003 (or such later date as agreed upon by the parties,  which in no event shall be later than November 11, 2003) (November 4, 2003 or such later date being the “**Early Unwind Date**”), the Transaction  shall automatically terminate (the “**Early  Unwind**”) on the Early Unwind Date and the parties shall negotiate  in good faith the terms of such termination, taking into account any hedging  transaction that will be unwound. |
|                                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Designation  by Party A:             |   | Notwithstanding  any other provision in this Preliminary Confirmation to the contrary  requiring or allowing Party A to purchase, sell, receive or deliver any  Shares or other securities to or from Party B, Party A may designate any of  its US affiliates to purchase, sell, receive or deliver such Shares or  securities and otherwise to perform Party As obligations in respect of the  Transaction and any such designee may assume such obligations, Party A shall  be discharged of its obligations to Party B to the extent of such  performance.                                                                                                                                                                                                                                        |
|                                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Transfer:                            |   | Notwithstanding anything to the contrary in the Agreement, Party B may  assign its rights and obligations under the Transaction, in whole or in part  and without liability hereunder, with the prior written consent of Party A  (which consent shall not be unreasonably withheld, it being understood that  in granting or withholding such consent, Party A may consider such factors as  it deems appropriate, which may include the credit quality of the proposed  transferee and Party A’s and its affiliates’ existing credit exposure to such  proposed transferee).                                                                                                                                                                                                              |

 

**You acknowledge that we will enter into hedgingtransactions in reliance on your agreement to this Preliminary Confirmation.** You agree that you will return a signed copyof the Confirmation within thirty (30) days of the date the Confirmation isdelivered to you and if you fail to do so, Party A may elect to terminate theTransaction.  In the event of such a termination,the parties shall negotiate in good faith the terms ofsuch termination, taking into account any hedging transaction that will beunwound.

 

7

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Please indicate your understanding of and agreement with the aboveterms and conditions and your instruction for Citibank to complete execution bysigning below, and returning to Mr. Herman Hirsch by fax at (212) 723-8328 andby returning originals to the attention of Mr. Herman Hirsch at:

 

Citibank, N.A.

c/o CitigroupGlobal Markets Inc.

Equity Derivatives

390 Greenwich Street, 5th Floor

New York, NY 10013

Telephone No.: 212-723-7361

 
| Agreed to and accepted by:     |
|--------------------------------|
|                           |
| NORTHWEST AIRLINES CORPORATION |
|                           |
|                           |
| /s/ Daniel B. Matthews         |   |
| Name:                          |
| Authorized Signatory           |

 
|   | Agreed to and accepted by:      |
|--------|---------------------------------|
|   |                            |
|   | CITIBANK, N.A.                  |
|   |                            |
|   |                            |
|   | /s/ William Ortner              |   |
|   | Name:   /s/ William Ortner |
|   | Authorized Representative       |

 

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(Multicurrency - Cross Border)

 

ISDA®International Swap Dealers Association. Inc.

 

MASTER AGREEMENTdated as of January 15, 1997

 

Citibank, N. A., New York and Northwest Airlines, Inc. have enteredand/or anticipate entering into one or more transactions (each a “Transaction”)that are or will be governed by this Master Agreement, which includes theschedule (the “Schedule”), and the documents and other confirming evidence(each a “Confirmation”) exchanged between the parties confirming thoseTransactions.

 

Accordingly, the parties agree as follows:-

 

1. Interpretation

 

(a)          Definitions. The terms defined inSection 14 and in the Schedule will have the meanings thereinspecified for the purpose of this Master Agreement.

 

(b)         Inconsistency. In the event of anyinconsistency between the provisions of the Schedule and the other provisionsof this Master Agreement, the Schedule will prevail. In the event of anyinconsistency between the provisions of any Confirmation and this MasterAgreement (including the Schedule), such Confirmation will prevail for thepurpose of the relevant Transaction.

 

(c)          Single Agreement. All Transactions areentered into in reliance on the fact that this Master Agreement and allConfirmations form a single agreement between the parties (collectivelyreferred to as this “Agreement”), and the parties would not otherwise enterinto any Transactions.

 

2. Obligations

 

(a)          General Conditions.

 

(i) Each party will make each payment or delivery specified in eachConfirmation to be made by it, subject to the other provisions of thisAgreement.

 

(ii) Payments under this Agreement will bemade on the due date for value on that date in the place of the accountspecified in the relevant Confirmation or otherwise pursuant to this Agreement,in freely transferable funds and in the manner customary for payments in the requiredcurrency. Where settlement is by delivery (that is, other than by payment),such delivery will be made for receipt on the due date in the manner customaryfor the relevant obligation unless otherwise specified in the relevantConfirmation or elsewhere in this Agreement.

 

(iii) Each obligation of each party underSection 2(a)(i) is subject to (1) the condition precedent that no Event ofDefault or Potential Event of Default with respect to the other party hasoccurred and is continuing, (2) the condition precedent that no Early

 

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Termination Date in respect of the relevantTransaction has occurred or been effectively designated and (3) each otherapplicable condition precedent specified in this Agreement.

 

(b)         Change of Account. Either party may change itsaccount for receiving a payment or delivery by giving notice to the other partyat least five Local Business Days prior to the scheduled date for the paymentor delivery to which such change applies unless such other party gives timelynotice of a reasonable objection to such change.

 

(c)          Netting. If on any date amounts wouldotherwise be payable:-

 

(i) in the same currency; and

 

(ii) in respect of the same Transaction,

 

by each party to the other, then, on such date, each party’s obligationto make payment of any such amount will be automatically satisfied anddischarged and, if the aggregate amount that would otherwise have been payableby one party exceeds the aggregate amount that would otherwise have beenpayable by the other party, replaced by an obligation upon the party by whomthe larger aggregate amount would have been payable to pay to the other partythe excess of the larger aggregate amount over the smaller aggregate amount.

 

The parties may elect in respect of two or more Transactions that a netamount will be determined in respect of all amounts payable on the same date inthe same currency in respect of such Transactions, regardless of whether suchamounts are payable in respect of the same Transaction. The election may bemade in the Schedule or a Confirmation by specifying that subparagraph(ii) above will not apply to the Transactions identified as being subject tothe election, together with the starting date (in which case subparagraph (ii)above will not, or will cease to, apply to such Transactions from such date).This election may be made separately for different groups of Transactions andwill apply separately to each pairing of offices through which the parties makeand receive payments or deliveries.

 

(d)         Deduction or Withholding for Tax.

 

(i) Gross-Up. All payments under thisAgreement will be made without any deduction or withholding for or on accountof any Tax unless such deduction or withholding is required by any applicable law,as modified by the practice of any relevant governmental revenue authority,then in effect. If a party is so required to deduct or withhold, then thatparty (“X”) will:-

 

(1) promptly notify the other party (“Y”) ofsuch requirement;

 

(2) pay to the relevant authorities the fullamount required to be deducted or withheld (including the full amount requiredto be deducted or withheld from any additional amount paid by X to Y under thisSection 2(d)) promptly upon the earlier of determining that such deductionor withholding is required or receiving notice that such amount has beenassessed against Y;

 

(3) promptly forward to Y an official receipt(or a certified copy), or other documentation reasonably acceptable to Y,evidencing such

 

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payment to such authorities; and

 

(4) if such Tax is an Indemnifiable Tax, payto Y, in addition to the payment to which Y is otherwise entitled under thisAgreement, such additional amount as is necessary to ensure that the net amountactually received by Y (free and clear of Indemnifiable Taxes, whether assessedagainst X or Y) will equal the full amount Y would have received had no suchdeduction or withholding been required. However, X will not be required to payany additional amount to Y to the extent that it would not be required to bepaid but for:-

 

(A) the failure by Y to comply with orperform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

 

(B) the failure of a representation made by Ypursuant to Section 3(f) to be accurate and true unless such failure wouldnot have occurred but for (I) any action taken by a taxing authority, orbrought in a court of competent jurisdiction, on or after the date on which aTransaction is entered into (regardless of whether such action is taken orbrought with respect to a party to this Agreement) or (II) a Change in Tax Law.

 

(ii) Liability. If:-

 

(1) X is required by any applicable law, asmodified by the practice of any relevant governmental revenue authority, tomake any deduction or withholding in respect of which X would not be requiredto pay an additional amount to Y under Section 2(d)(i)(4);

 

(2) X does not so deduct or withhold; and

 

(3) a liability resulting from such Tax isassessed directly against X,

 

then, except to the extent Y has satisfied orthen satisfies the liability resulting from such Tax, Y will promptly pay to Xthe amount of such liability (including any related liability for interest, butincluding any related liability for penalties only if Y has failed to complywith or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or4(d)).

 

(e)          Default interest; Other Amounts. Prior to theoccurrence or effective designation of an Early Termination Date in respect ofthe relevant Transaction, a party that defaults in the performance of anypayment obligation will, to the extent permitted by law and subject toSection 6(c), be required to pay interest (before as well as afterjudgment) on the overdue amount to the other party on demand in the samecurrency as such overdue amount, for the period from (and including) theoriginal due date for payment to (but excluding) the date of actual payment, atthe Default Rate. Such interest will be calculated on the basis of dailycompounding and the actual number of days elapsed. If, prior to the occurrenceor effective designation of an Early Termination Date in respect of therelevant Transaction, a party defaults in the performance of any obligationrequired to be settled by delivery, it will compensate the other party ondemand if and to the extent provided for in the relevant Confirmation orelsewhere in this Agreement.

 

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3. Representations

 

Each party represents to the other party (which representations will bedeemed to be repeated by each party on each date on which a Transaction isentered into and, in the case of the representations in Section 3(f), atall times until the termination of this Agreement) that:-

 

(a)          Basic Representations.

 

(i) Status. It is duly organized and validlyexisting under the laws of the jurisdiction of its organizaion or incorporationand, if relevant under such laws, in good standing;

 

(ii) Powers. It has the power to execute thisAgreement and any other documentation relating to this Agreement to which it isa party, to deliver this Agreement and any other documentation relating to thisAgreement that it is required by this Agreement to deliver and to perform itsobligations under this Agreement and any obligations it has under any CreditSupport Document to which it is a party and has taken all necessary action toauthorise such execution, delivery and performance;

 

(iii) No Violation or Conflict. Suchexecution, delivery and performance do not violate or conflict with any lawapplicable to it, any provision of its constitutional documents, any order orjudgment of any court or other agency of government applicable to it or any ofits assets or any contractual restriction binding on or affecting it or any ofits assets;

 

(iv) Consents. All governmental and otherconsents that are required to have been obtained by it with respect to thisAgreement or any Credit Support Document to which it is a party have beenobtained and are in full force and effect and all conditions of any suchconsents have been complied with; and

 

(v) Obligations Binding. Its obligationsunder this Agreement and any Credit Support Document to which it is a partyconstitute its legal, valid and binding obligations, enforceable in accordancewith their respective terms (subject to applicable bankruptcy, reorganization,insolvency, moratorium or similar laws affecting creditors’ rights generallyand subject, as to enforceability, to equitable principles of generalapplication (regardless of whether enforcement is sought in a proceeding inequity or at law)).

 

(b)         Absence of Certain Events. No Event of Defaultor Potential Event of Default or, to its knowledge, Termination Event withrespect to it has occurred and is continuing and no such event or circumstancewould occur as a result of its entering into or performing its obligationsunder this Agreement or any Credit Support Document to which it is a party.

 

(c)          Absence of Litigation. There is not pendingor, to its knowledge, threatened against it or any of its Aftiliates anyaction, suit or proceeding at law or in equity or before any court, tribunal,governmental body, agency or official or any arbitrator that is likely toaffect the legality, validity or enforceability against it of this Agreement orany Credit Support Document to which it is a party or its ability to performits obligations

 

12

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under this Agreement or such Credit SupportDocument.

 

(d)         Accuracy of Specified Information. Allapplicable information that is furnished in writing by or on behalf of it tothe other party and is identified for the purpose of this Section 3(d) inthe Schedule is, as of the date of the information, true, accurate andcomplete in every material respect.

 

(e)          Payer Tax Representation. Each representationspecified in the Schedule as being made by it for the purpose of thisSection 3(e) is accurate and true.

 

(f)            Payee Tax Representations. Eachrepresentation specified in the Schedule as being made by it for the purposeof this Section 3(f) is accurate and true.

 

4.  Agreements

 

Each party agrees with the other that, so long as either party has ormay have any obligation under this Agreement or under any Credit SupportDocument to which it is a party:-

 

(a)          Furnish Specified Information. It willdeliver to the other party or, in certain cases under subparagraph (iii) below,to such government or taxing authority as the other party reasonably directs:-

 

(i) any forms, documents or certificatesrelating to taxation specified in the Schedule or any Confirmation;

 

(ii) any other documents specified in theSchedule or any Confirmation; and

 

(iii) upon reasonable demand by such otherparty, any form or document that may be required or reasonably requested inwriting in order to allow such other party or its Credit Support Provider tomake a payment under this Agreement or any applicable Credit Support Documentwithout any deduction or withholding for or on account of any Tax or with suchdeduction or withholding at a reduced rate (so long as the completion,execution or submission of such form or document would not materially prejudicethe legal or commercial position of the party in receipt of such demand), withany such form or document to be accurate and completed in a manner reasonablysatisfactory to such other party and to be executed and to be delivered withany reasonably required certification,

 

in each case by the date specified in the Schedule or suchConfimnation or, if none is specified, as soon as reasonably practicable.

 

(b)         Maintain Authorizations. It will use allreasonable efforts to maintain in full force and effect all consents of anygovernmental or other authority that are required to be obtained by it withrespect to this Agreement or any Credit Support Document to which it is a partyand will use all reasonable efforts to obtain any that may become necessary inthe future.

 

(c)          Comply with Laws. It will comply in allmaterial respects with all applicable laws and orders to which it may besubject if failure so to comply would materially impair its ability to performits obligations under this Agreement or any Credit Support Document to which itis a party.

 

13

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(d)         Tax Agreement. It will give notice of any failureof a representation made by it under Section 3(f) to be accurate and truepromptly upon learning of such failure.

 

(e)          Payment of Stamp Tax. Subject toSection 11, it will pay any Stamp Tax levied or imposed upon it or inrespect of its execution or performance of this Agreement by a jurisdiction inwhich it is incorporated, organised, managed and controlled, or considered tohave its seat, or in which a branch or office through which it is acting forthe purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and willindemnify the other party against any Stamp Tax levied or imposed upon theother party or in respect of the other party’s execution or performance of thisAgreement by any such Stamp Tax Jurisdiction which is not also a Stamp TaxJurisdiction with respect to the other party.

 

5.  Events of Default andTermination Events

 

(a)          Events of Default. The occurrence at any timewith respect to a party or, if applicable, any Credit Support Provider of suchparty or any Specified Entity of such party of any of the following eventsconstitutes an event of default (an “Event of Default”) with respect to suchparty:-

 

(i) Failure to Pay or Deliver. Failure by theparty to make, when due, any payment under this Agreement or delivery underSection2(a)(i) or 2(e) required to be made by it if such failure is notremedied on or before the third Local Business Day after notice of such failureis given to the party;

 

(ii) Breach of Agreement. Failure by theparty to comply with or perform any agreement or obligation (other than anobligation to make any payment under this Agreement or delivery underSection 2(a)(i) or 2(e) or to give notice of a Termination Event or anyagreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to becomplied with or performed by the party in accordance with this Agreement ifsuch failure is not remedied on or before the thirtieth day after notice ofsuch failure is given to the party;

 

(iii) Credit Support Default.

 

(1) Failure by the party or any CreditSupport Provider of such party to comply with or perform any agreement orobligation to be complied with or performed by it in accordance with any CreditSupport Document if such failure is continuing after any applicable graceperiod has elapsed;

 

(2) the expiration or termination of suchCredit Support Document or the failing or ceasing of such Credit SupportDocument to be in full force and effect for the purpose of this Agreement (ineither case other than in accordance with its terms) prior to the satisfactionof all obligations of such party under each Transaction to which such CreditSupport Document relates without the written consent of the other party; or

 

(3) the party or such Credit Support Providerdisaffirms,

 

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disclaims, repudiates or rejects, in whole orin part, or challenges the validity of, such Credit Support Document;

 

(iv) Misrepresentation. A representation(other than a representation under Section 3(e) or (f)) made or repeatedor deemed to have been made or repeated by the party or any Credit SupportProvider of such party in this Agreement or any Credit Support Document provesto have been incotrrect or misleading in any material respect when made orrepeated or deemed to have been made or repeated;

 

(v) Default under Specified Transaction. Theparty, any Credit Support Provider of such party or any applicable SpecifiedEntity of such party (1) defaults under a Specified Transaction and, aftergiving effect to any applicable notice requirement or grace period, thereoccurs a liquidation of, and acceleration of obligations under, or an earlytermination of, that Specified Transaction, (2) defaults, after giving effectto any applicable notice requirement or grace period, in making any payment ordelivery due on the last payment, delivery or exchange date of, or any paymenton early termination of, a Specified Transaction (or such default continues forat least three Local Business Days if there is no applicable notice requirementor grace period) or (3) disaffirms, disclaims, repudiates or rejects, in wholeor in part, a Specified Transaction (or such action is taken by any person orentity appointed or empowered to operate it or act on its behalf);

 

(vi) Cross Default. If “Cross Default” is specifiedin the Schedule as applying to the party, the occurrence or existence of(I) a default, event of default or other similar condition or event (howeverdescribed) in respect of such party, any Credit Support Provider of such partyor any applicable Specified Entity of such party under one or more agreementsor instruments relating to Specified Indebtedness of any of them (individuallyor collectively) in an aggregate amount of not less than the applicableThreshold Amount (as specified in the Schedule) which has resulted in suchSpecified Indebtedness becoming, or becoming capable at such time of beingdeclared, due and payable under such agreements or instruments, before it wouldotherwise have been due and payable or (a) a default by such party, such CreditSupport Provider or such Specified Entity (individually or collectively) inmaking one or more payments on the due date thereof in an aggregate amount ofnot less than the applicable Threshold Amount under such agreements orinstruments (after giving effect to any applicable notice requirement or graceperiod);

 

(vii) Bankruptcy. The party, any CreditSupport Provider of such party or any applicable Specified Entity of suchparty:-

 

(1) is dissolved (other than pursuant to aconsolidation, amalgamation or merger); (2) becomes insolvent or is unable topay its debts or fails or admits in writing its inability generally to pay itsdebts as they become due; (3) makes a general assignment, arrangement orcomposition with or for the benefit of its creditors; (4) institutes or hasinstituted against it a proceeding seeking a judgment of insolvency orbankruptcy or any other relief under any bankruptcy or insolvency law or othersimilar law affecting creditors’ rights, or a petition is presented for its winding-upor liquidation, and, in the case of any such proceeding or petition

 

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instituted or presented against it, suchproceeding or petition (A) results in a judgment of insolvency or bankruptcy orthe entry of an order for relief or the making of an order for its winding-upor liquidation or (B) is not dismissed, discharged, stayed or restrained ineach case within 30 days of the institution or presentation thereof; (5) has aresolution passed for its winding-up, official management or liquidation (otherthan pursuant to a consolidation, amalgamation or merger); (6) seeks or becomessubject to the appointment of an administrator, provisional liquidator,conservator, receiver, trustee, custodian or other similar official for it orfor all or substantially all its assets; (7) has a secured party takepossession of all or substantially all its assets or has a distress, execution,attachment, sequestration or other legal process levied, enforced or sued on oragainst all or substantially all its assets and such secured party maintainspossession, or any such process is not dismissed, discharged, stayed orrestrained, in each case within 30 days thereafter; (8) causes or is subject toany event with respect to it which, under the applicable laws of anyjurisdiction, has an analogous effect to any of the events specified in clauses(1) to (7) (inclusive); or (9) takes any action in furtherance of, orindicating its consent to, approval of, or acquiescence in, any of theforegoing acts; or

 

(viii) Merger Without Assumption. The partyor any Credit Support Provider of such party consolidates or amalgamates with,or merges with or into, or transfers all or substantially all its assets to,another entity and, at the time of such consolidation, amalgamation, merger ortransfer:-

 

(1) the resulting, surviving or transfereeentity fails to assume all the obligations of such party or such Credit SupportProvider under this Agreement or any Credit Support Document to which it or itspredecessor was a party by operation of law or pursuant to an agreementreasonably satisfactory to the other party to this Agreement; or

 

(2) the benefits of any Credit SupportDocument fail to extend (without the consent of the other party) to the performanceby such resulting, surviving or transferee entity of its obligations under thisAgreement.

 

(b)         Termination Events. The occurrence at any timewith respect to a party or, if applicable, any Credit Support Provider of suchparty or any Specified Entity of such party of any event specified belowconstitutes an Illegality if the event is specified in (i) below, a Tax Eventif the event is specified in (ii) below or a Tax Event Upon Merger if the eventis specified in (iii) below, and, if specified to be applicable, a Credit EventUpon Merger if the event is specified pursuant to (iv) below or an AdditionalTermination Event if the event is specified pursuant to (v) below:-

 

(i) Illegality. Due to the adoption of, orany change in, any applicable law after the date on which a Transaction isentered into, or due to the promulgation of, or any change in, theinterpretation by any court, tribunal or regulatory authority with competentjurisdiction of any applicable law after such date, it becomes unlawful (otherthan as a result of a breach by the party of Section 4(b)) for such party

 

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(which hill be the Affected Party):-

 

(1) to perform any absolute or contingentobligation to make a payment or delivery or to receive a payment or delivery inrespect of such Transaction or to comply with any other material provision ofthis Agreement relating to such Transaction; or

 

(2) to perform, or for any Credit SupportProvider of such party to perform, any contingent or other obligation which theparty (or such Credit Support Provider) has under any Credit Support Documentrelating to such Transaction:

 

(ii) Tax Event. Due to (x) any action takenby a taxing authority, or brought in a court of competent jurisdiction, on orafter the date on which a Transaction is entered into (regardless of whethersuch action is taken or brought with respect to a party to this Agreement) or(y) a Change in Tax Law, the party (which will be the Affected Party) will, orthere is a substantial likelihood that it will, on the next succeedingScheduled Payment Date (l) be required to pay to the other party an additionalamount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (exceptin respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2)receive a payment from which an amount is required to be deducted or withheldfor or on account of a Tax (except in respect of interest underSection 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to bepaid in respect of such Tax under Section 2(d)(i)(4) (other than by reasonof Section 2(d)(i)(4)(A) or (B));

 

(iii) Tax Event Upon Merger. The party (the“Burdened Party”) on the next succeeding Scheduled Payment Date will either (l)be required to pay an additional amount in respect of an Indemnifiable Taxunder Section 2(d)(i)(4) (except in respect of interest underSection 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which anamount has been deducted or withheld for or on account of any Indemnifiable Taxin respect of which the other party is not required to pay an additional amount(other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case asa result of a party consolidating or amalgamating with, or merging with orinto, or transferring all or substantially all its assets to, another entity(which will be the Affected Party) where such action does not constitute anevent described in Section 5(a)(viii);

 

(iv) Credit Event Upon Merger. If “CreditEvent Upon Merger” is specified in the Schedule as applying to the party,such party (“X”), any Credit Support Provider of X or any applicable SpecifiedEntity of X consolidates or amalgamates with, or merges with or into, ortransfers all or substantially all its assets to, another entity and suchaction does not constitute an event described in Section 5(a)(viii) butthe creditworthiness of the resulting, surviving or transferee entity ismaterially weaker than that of X, such Credit Support Provider or suchSpecified Entity, as the case may be, immediately prior to such action (and, insuch event, X or its successor or transferee, as appropriate, will be theAffected Party); or

 

(v) Additional Termination Event. If any“Additional Termination Event” is specified in the Schedule or anyConfirmation as applying, the

 

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occurrence of such event (and, in such event,the Affected Party or Affected Parties shall be as specified for suchAdditional Termination Event in the Schedule or such Confirmation).

 

(c)          Event of Default and Illegality. If an eventor circumstance which would otherwise constitute or give rise to an Event ofDefault also constitutes an Illegality, it will be treated as an Illegality andwill not constitute an Event of Default.

 

6. Early Termination

 

(a)          Right to Terminate Following Event ofDefault. If at any time an Event of Default with respect to a party (the“Defaulting Party”) has occurred and is then continuing, the other party (the“Non-defaulting Party”) may, by not more than 20 days notice to the DefaultingParty specifying the relevant Event of Default, designate a day not earlierthan the day such notice is effective as an Early Termination Date in respectof all outstanding Transactions. If, however, “Automatic Early Termination” is specifiedin the Schedule as applying to a party, then an Early Termination Date inrespect of all outstanding Transactions will occur immediately upon theoccurrence with respect to such party of an Event of Default specified inSection 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto,(8), and as of the time immediately preceding the institution of the relevantproceeding or the presentation of the relevant petition upon the occurrencewith respect to such party of an Event of Default specified inSection 5(a)(vii)(4) or, to the extent analogous thereto, (8).

 

(b)         Right to Terminate Following TerminationEvent.

 

(i) Notice. If a Termination Event occurs, anAffected Party will, promptly upon becoming aware of it, notify the otherparty, specifying the nature of that Termination Event and each AffectedTransaction and will also give such other information about that TerminationEvent as the other party may reasonably require.

 

(ii) Transfer to Avoid Termination Event. Ifeither an Illegality under Section 5(b)(i)(1) or a Tax Event occurs andthere is only one Affected Party, or if a Tax Event Upon Merger occurs and theBurdened Party is the Affected Party, the Affected Party will, as a conditionto its right to designate an Early Termination Date underSection 6(b)(iv), use all reasonable efforts (which will not require suchparty to incur a loss, excluding immaterial, incidental expenses) to transferwithin 20 days after it gives notice under Section 6(b)(i) all its rightsand obligations under this Agreement in respect of the Affected Transactions toanother of its Offices or Affiliates so that such Termination Event ceases toexist.

 

If the Affected Party is not able to makesuch a transfer it will give notice to the other party to that effect withinsuch 20 day period, whereupon the other party may effect such a transfer within30 days after the notice is given under Section 6(b)(i).

 

Any such transfer by a party under thisSection 6(b)(ii) will be subject to and conditional upon the prior writtenconsent of the other party, which consent will not be withheld if such otherparty’s policies in

 

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effect at such time would permit it to enterinto transactions with the transferee on the terms proposed.

 

(iii) Two Affected Parties. If an Illegalityunder Section 5(b)(i)(1) or a Tax Event occurs and there are two AffectedParties, each party will use all reasonable efforts to reach agreement within30 days after notice thereof is given under Section 6(b)(i) on action toavoid that Termination Event.

 

(iv) Right to Terminate. If:-

 

(1) a transfer under Section 6(b)(ii) oran agreement under Section 6(b)(iii), as the case may be, has not beeneffected with respect to all Affected Transactions within 30 days after anAffected Party gives notice under Section 6(b)(i); or

 

(2) an Illegality underSection 5(b)(i)(2), a Credit Event Upon Merger or an AdditionalTermination Event occurs, or a Tax Event Upon Merger occurs and the BurdenedParty is not the Affected Party,

 

either party in the case of an Illegality, the Burdened Party in thecase of a Tax Event Upon Merger, any Affected Party in the case of a Tax Eventor an Additional Termination Event if there is more than one Affected Party, orthe party which is not the Affected Party in the case of a Credit Event UponMerger or an Additional Termination Event if there is only one Affected Partymay, by not more than 20 days notice to the other party and provided that therelevant Termination Event is then continuing, designate a day not earlier thanthe day such notice is effective as an Early Termination Date in respect of allAffected Transactions.

 

(c)          Effect of Designation.

 

(i) If notice designating an EarlyTermination Date is given under Section 6(a) or (b), the Early TerminationDate will occur on the date so designated, whether or not the relevant Event ofDefault or Termination Event is then continuing.

 

(ii) Upon the occurrence or effectivedesignation of an Early Termination Date, no further payments or deliveriesunder Section 2(a)(i) or 2(e) in respect of the Terminated Transactionswill be required to be made, but without prejudice to the other provisions ofthis Agreement. The amount, if any, payable in respect of an Early TerminationDate shall be determined pursuant to Section 6(e).

 

(d)         Calculations.

 

(i) Statement. On or as soon as reasonablypracticable following the occurrence of an Early Termination Date, each partywill make the calculations on its part, if any, contemplated bySection 6(e) and will provide to the other party a statement (1) showing,in reasonable detail, such calculations (including all relevant quotations andspecifying any amount payable under Section 6(e)) and (2) giving detailsof the relevant account to which any amount payable to it is to be paid. In theabsence of written confirmation from the source of a quotation obtained indetermining a Market Quotation, the records of

 

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the party obtaining such quotation will be conclusiveevidence of the existence and accuracy of such quotation.

 

(ii) Payment Date. An amount calculated asbeing due in respect of any Early Termination Date under Section 6(e) willbe payable on the day that notice of the amount payable is effective (in thecase of an Early Termination Date which is designated or occurs as a result ofan Event of Default) and on the day which is two Local Business Days after theday on which notice of the amount payable is effective (in the case of an EarlyTermination Date which is designated as a result of a Termination Event). Suchamount will be paid together with (to the extent permitted under applicablelaw) interest thereon (before as well as after judgment) in the TerminationCurrency, from (and including) the relevant Early Termination Date to (butexcluding) the date such amount is paid, at the Applicable Rate. Such interestwill be calculated on the basis of daily compounding and the actual number ofdays elapsed.

 

(e)          Payments on Early Termination. If an EarlyTermination Date occurs, the following provisions shall apply based on theparties’ election in the Schedule of a payment measure, either “MarketQuotation” or’’Loss”, and a payment method, either the “First Method’’ or theSecond Method”. If the parties fail to designate a payment measure or paymentmethod in the Schedule, it will be deemed that “Market Quotation” or the“Second Method”, as the case may be, shall apply. The amount, if any, payablein respect of an Early Termination Date and determined pursuant to thisSection will be subject to any Set-off.

 

(i) Events of Default. If the EarlyTermination Date results from an Event of Default:-

 

(1) First Method and Market Quotation. If theFirst Method and Market Quotatation apply, the Defaulting Party will pay to theNon-defaulting Party the excess, if a positive number, of (A) the sum of theSettlement Amount (determined by the ‘on-defaulting Party) in respect of theTerminated Transactions and the Termination Currency Equivalent of the UnpaidAmounts owing to the Non-defaulting Party over (B) the Termination CurrencyEquivalent of the Unpaid Amounts owing to the Defaulting Party.

 

(2) First Method and Loss. If the FirstMethod and Loss apply, the Defaulting Party will pay to the Non-defaultingParty, if a positive number, the Non-defaulting Party’s Loss in respect of thisAgreement.

 

(3) Second Method and Market Quotation. Ifthe Second Method and Market Quotation apply, an amount will be payable equalto (A) the sum of the Settlement Amount (determined by the Non-defaultingParty) in respect of the Terminated Transactions and the Termination CurrencyEquivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) theTermination Currency Equivalent of the Unpaid Amounts owing to the DefaultingParty. If that amount is a positive number, the Defaulting Party will pay it tothe Non-defaulting Party; if it is a negative number, the Non-defaulting Partywill pay the absolute value of that amount to the Defaulting Party.

 

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(4) Second Method and Loss. If the SecondMethod and Loss apply, an amount will be payable equal to the Non-defaultingParty’s Loss in respect of this Agreement. If that amount is a positive number,the Defaulting Party will pay it to the Non-defaulting Party; if it is anegative number, the Non-defaulting Party will pay the absolute value of thatamount to the Defaulting Party.

 

(ii) Termination Events. If the EarlyTermination Date results from a Termination Event:-

 

(1) One Affected Party. If there is oneAffected Party, the amount payable will be determined in accordance withSection 6(e)(i)(3), if Market Quotation applies, orSection 6(e)(i)(4), if Loss applies, except that, in either case,references to the Defaulting Party and to the Non-defaulting Party will bedeemed to be references to the Affected Party and the party which is not theAffected Party, respectively, and, if Loss applies and fewer than all theTransactions arc being terminated, Loss shall be calculated in respect of allTerminated Transactions.

 

(2) Affected Parties. If there are twoAffected Parties:-

 

(A) if Market Quotation applies, each partywill determine a Settlement Amount in respect of the Terminated Transactions,and an amount will be payable equal to (I) the sum of (a) one-half of thedifference between the Settlement Amount of the party with the higherSettlement Amount (“X”) and the Settlement Amount of the party with the lowerSettlement Amount (“Y”) and (b) the Termination Currency Equivalent of theUnpaid Amounts owing to X less (II) the Termination Currency Equivalent of theUnpaid Amounts owing to Y; and

 

(B) if Loss applies, each party willdetermine its Loss in respect of this Agreement (or, if fewer than all theTransactions are being terminated, in respect of all Terminated Transactions)and an amount will be payable equal to one-half of the difference between theLoss of the party with the higher Loss (“X”) and the Loss of the party with thelower Loss (“Y”).

 

If the amount payable is a positive number, Ywill pay it to X; if it is a negative number, X will pay the absolute value ofthat amount to Y.

 

(iii) Adjustment for Bankruptcy. Incircumstances where an Early Termination Date occurs because “Automatic EarlyTermination” applies in respect of a party, the amount determined under thisSection 6(e) will be subject to such adjustments as are appropriate andpermitted by law to reflect any payments or deliveries made by one party to theother under this Agreement (and retained by such other party) during the periodfrom the relevant Early Termination Date to the date for payment determinedunder Section 6(d)(ii).

 

(iv) Pre-Estimate. The parties agree that ifMarket Quotation applies an amount recoverable under this Section 6(e) isa reasonable pre-estimate of loss and not a penalty. Such amount is payable for

 

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the loss of bargain and the loss ofprotection against future risks and except as otherwise provided in thisAgreement neither party will be entitled to recover any additional damages as aconsequence of such losses.

 

7.  Transfer

 

Subject to Section 6(b)(ii), neither this Agreement nor anyinterest or obligation in or under this Agreement may be transferred (whetherby way of security or otherwise) by either party without the prior writtenconsent of the other partly except that:-

 

(a)          a party may make such a transfer of thisAgreement pursuant to a consolidation or amalgamation with, or merger with orinto, or transfer of all or substantially all its assets to, another entity(but without prejudice to any other right or remedy under this Agreement); and

 

(b)         a party may make such a transfer of all or anypart of its interest in any amount payable to it from a Defaulting Party underSection 6(e).

 

Any purported transfer that is not in compliance with thisSection will be void.

 

8.  Contractual Currency

 

(a)          Payment In the Contractual Currency. Eachpayment under this Agreement will be made in the relevant currency specified inthis Agreement for that payment (the “Contractual Currency”). To the extentpermitted by applicable law, any obligation to make payments under thisAgreement in the Contractual Currency will not be discharged or satisfied byany tender in any currency other than the Contractual Currency, except to theextent such tender results in the actual receipt by the party to which paymentis owed, acting in a reasonable manner and in good faith in converting thecurrency so tendered into the Contractual Currency, of the full amount in theContractual Currency of all amounts payable in respect of this Agreement. Iffor any reason the amount in the Contractual Currency so received falls shortof the amount in the Contractual Currency payable in respect of this Agreement,the party required to make the payment will, to the extent permitted byapplicable law, immediately pay such additional amount in the ContractualCurrency as may be necessary to compensate for the shortfall. If for any reasonthe amount in the Contractual Currency so received exceeds the amount in theContractual Currency payable in respect of this Agreement, the party receivingthe payment will refund promptly the amount of such excess.

 

(b)         Judgments. To the extent permitted byapplicable law, if any judgment or order expressed in a currency other than theContractual Currency is rendered (i) for the payment of any amount owing inrespect of this Agreement, (ii) for the payment of any amount relating to anyearly termination in respect of this Agreement or (iii) in respect of ajudgment or order of another court for the payment of any amount described in(i) or (ii) above, the party seeking recovery, after recovery in full of theaggregate amount to which such party is entitled pursuant to the judgment ororder, will be entitled to receive immediately from the other party the amountof any shortfall of the Contractual Currency received by such party as aconsequence of sums paid in such other currency and will refund promptly to theother party any excess of the Contractual Currency received by such party as aconsequence of sums paid 

 

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in such other currency if such shortfall orsuch excess arises or results from any variation between the rate of exchangeat which the Contractual Currency is converted into the currency of thejudgment or order for the purposes of such judgment or order and the rate ofexchange at which such party is able, acting in a reasonable manner and in goodfaith in converting the currency received into the Contractual Currency, topurchase the Contractual Currency with the amount of the currency of thejudgment or order actually received by such party. The term “rate of exchange”includes, without limitation, any premiums and costs of exchange payable inconnection with the purchase of or conversion into the Contractual Currency.

 

(c)          Separate Indemnities. To the extent permittedby applicable law, these indemnities constitute separate and independentobligations from the other obligations in this Agreement, will be enforceableas separate and independent causes of action, will apply notwithstanding anyindulgence granted by the party to which any payment is owed and will not beaffected by judgment being obtained or claim or proof being made for any othersums payable in respect of this Agreement.

 

(d)         Evidence of Loss. For the purpose of thisSection 8, it will be sufficient for a party to demonstrate that it wouldhave suffered a loss bad an actual exchange or purchase been made.

 

9.  Miscellaneous

 

(a)          Entire Agreement. This Agreement constitutesthe entire agreement and understanding of the parties with respect to itssubject matter and supersedes all oral communication and prior writings withrespect thereto.

 

(b)         Amendments. No amendment, modification orwaiver in respect of this Agreement will be effective unless in writing(including a writing evidenced by a facsimile transmission) and executed byeach of the parties or confirmed by an exchange of telexes or electronicmessages on an electronic messaging system.

 

(c)          Survival of Obligations. Without prejudice toSections 2(a)(iii) and 6(c)(ii), the obligations of the parties under thisAgreement will survive the termination of any Transaction.

 

(d)         Remedies Cumulative. Except as provided inthis Agreement, the rights, powers, remedies and privileges provided in thisAgreement are cumulative and not exclusive of any rights, powers, remedies andprivileges provided by late.

 

(e)          Counterparts and Confirmations.

 

(i) This Agreement (and each amendment,modification and waiver in respect of it) may be executed and delivered incounterparts (including by facsimile transmission), each of which will bedeemed an original.

 

(ii) The parties intend that they are legallybound by the terms of each Transaction from the moment they agree to thoseterms (whether orally or otherwise). A Confirmation shall be entered into assoon as practicable and may be executed and delivered in counterparts(including by facsimile transmission) or be created by an exchange of telexesor by an exchange of electronic messages on an electronic messaging system,which in each case will be sufficient for all purposes to evidence

 

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a binding supplement to this Agreement. Theparties will specify therein or through another effective means that any suchcounterpart, telex or electronic message constitutes a Confirmation.

 

(f)            No Waiver of Rights. A failure or delay inexercising any right, power or privilege in respect of this Agreement will notbe presumed to operate as a waiver, and a single or partial exercise of anyright, power or privilege will not be presumed to preclude any subsequent orfurther exercise, of that right, power or privilege or the exercise of anyother right, power or privilege.

 

(g)         Headings. The headings used in this Agreementare for convenience of reference only and are not to affect the construction ofor to be taken into consideration in interpreting this Agreement.

 

10. Offices; Multibranch Parties

 

(a)          If Section 10(a) is specified in theSchedule as applying, each party that enters into a Transaction through anOffice other than its head or home office represents to the other party that,notwithstanding the place of booking office or jurisdiction of incorporation ororganization of such party, the obligations of such party are the same as if ithad entered into the Transaction through its head or home office. Thisrepresentation will be deemed to be repeated by such party on each date onwhich a Transaction Is entered into.

 

(b)         Neither party may change the Office throughwhich it makes and receives payments or deliveries for the purpose of aTransaction without the prior written consent of the other party.

 

(c)          If a party is specified as a Multibranch Partyin the Schedule, such Multibranch Party may make and receive payments ordeliveries under any Transaction through any Office listed in the Schedule, andthe Office through which it makes and receives payments or deliveries withrespect to a Transaction will be specified in the relevant Confirmation.

 

11. Expenses

 

A Defaulting Party will, on demand, indemnify and hold harmless theother party for and against all reasonable out-of-pocket expenses, includinglegal fees and Stamp Tax, incurred by such other party by reason of theenforcement and protection of its rights under this Agreement or any CreditSupport Document to which the Defaulting Party is a party or by reason of theearly termination of any Transaction, including, but not limited to, costs ofcollection.

 

12. Notices

 

(a)          Effectiveness. Any notice or othercommunication in respect of this Agreement may be given in any manner set forthbelow (except that a notice or other communication under Section 5 or 6may not be given by facsimile transmission or electronic messaging system) tothe address or number or in accordance with the electronic messaging systemdetails provided (see the Schedule) and will be deemed effective as indicated:-

 

(i) if in writing and delivered in person orby courier, on the date it is delivered;

 

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(ii) if sent by telex, on the date therecipient’s answerback is received:

 

(iii) if sent by facsimile transmission, onthe date that transmission is received by a responsible employee of therecipient in legible form (it being agreed that the burden of proving receiptwill be on the sender and will not be met by a transmission report generated bythe sender’s facsimile machine);

 

(iv) if sent by certified or registered mail(airmail, if overseas) or the equivalent (return receipt requested), on thedate that mail is delivered or its delivery is attempted; or

 

(v) if sent by electronic messaging system,on the date that electronic message is received, unless the date of that delivery(or attempted delivery) or that receipt, as applicable, is not a Local BusinessDay or that communication is delivered (or attempted) or received, asapplicable, after the close of business on a Local Business Day, in which casethat communication shall be deemed given and effective on the first followingday that is a Local Business Day.

 

(b)         Change of Addresses. Either party may bynotice to the other change the address, telex or facsimile number or electronicmessaging system details at which notices or other communications are to begiven to it.

 

13. Governing Law and Jurisdiction

 

(a)          Governing law. This Agreement will begoverned by and construed in accordance with the law specified in the Schedule.

 

(b)         Jurisdiction. With respect to any suit, actionor proceedings relating to this Agreement (“Proceedings”), each partyirrevocably:-

 

(i) submits to the jurisdiction of theEnglish courts, if this Agreement is expressed to be governed by English law,or to the non-exclusive jurisdiction of the courts of the State of New York;and the United States District Count located in the Borough of Manhattan in NewYork City, if this Agreement is expressed to be governed by the laws of theState of New York; and

 

(ii) waives any objection which it may haveat any time to the laying of venue of any Proceedings brought in any suchcourt, waives any claim that such Proceedings have been brought in aninconvenient forum and further waives the right to object, with respect to suchProceedings, that such court does not have any jurisdiction over such party.

 

Nothing in this Agreement precludes either party from bringingProceedings in any other jurisdiction (outside, if this Agreement is expressedto be governed by English law, the Contracting States, as defined in Section 1(3)of the Civil Jurisdiction and Judgments Act 1982 or any modification, extensionor re-enactment thereof for the time being in force) nor will the bringing ofProceedings in any one or more jurisdictions preclude the bringing ofProceedings in any other jurisdiction.

 

(c)          Service of Process. Each party irrevocablyappoints the Process Agent

 

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(if any) specified opposite its name in theSchedule to receive, for it and on its behalf, service of process in anyProceedings. If for any reason any party’s Process Agent is unable to act assuch, such party will promptly notify the other party and within 30 daysappoint a substitute process agent acceptable to the other party. The partiesirrevocably consent to service of process given in the manner provided fornotices in Section 12. Nothing in this Agreement will affect the right ofeither party to serve process in any other manner permitted by law.

 

(d)         Waiver of Immunities. Each party irrevocablywaives, to the fullest extent permitted by applicable law, with respect toitself and its revenues and assets (irrespective of their use or intended use),all immunity on the grounds of sovereignty or other similar grounds from (i)suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, orderfor specific performance or for recovery of property, (iv) attachment of itsassets (whether before or after judgment) and (v) execution or enforcement ofany judgment to which it or its revenues or assets might otherwise be entitledin any Proceedings in the courts of any jurisdiction and irrevocably agrees, tothe extent permitted by applicable law, that it will not claim any suchimmunity in any Proceedings.

 

14. Definitions

 

As used in this Agreement:-

 

“Additional Termination Event” has the meaning specified inSection 5(b).

 

“Affected Party” has the meaning specified in Section 5(b).

 

“Affected Transactions” means (a) with respect to any Termination Eventconsisting of an Illegality, Tax Event or Tax Event Upon Merger, allTransactions affected by the occurrence of such Termination Event and (b) withrespect to any other Termination Event, all Transactions.

 

“Affiliate” means, subject to the Schedule, in relation to any person,any entity controlled, directly or indirectly, by the person, any entity thatcontrols, directly or indirectly, the person or any entity directly orindirectly under common control with the person. For this purpose, “control” ofany entity or person means ownership of a majority of the voting power of theentity or person.

 

“Applicable Rate” means:-

 

(a)          in respect of obligations payable ordeliverable (or which would have been but for Section 2(a)(iii)) by aDefaulting Party, the Default Rate;

 

(b)         in respect of an obligation to pay an amountunder Section 6(e) of either party from and after the date (determined inaccordance with Section 6(d)(ii)) on which that amount is payable, theDefault Rate;

 

(c)          in respect of all other obligations payableor deliverable (or which would have been but for Section 2(a)(iii)) by aNon-defaulting Party, the Non-default Rate; and

 

(d)         in all other cases, the Termination Rate.

 

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“Burdened Party” has the meaning specified in Section 5(b).

 

“Change in Tax Law” means the enactment, promulgation, execution orratification of, or any change in or amendment to, any law (or in theapplication or official interpretation of any law) that occurs on or after thedate on which the relevant Transaction is entered into.

 

“consent” includes a consent, approval, action, authorization,exemption, notice, filing, registration or exchange control consent.

 

“Credit Event Upon Merger” has the meaning specified inSection 5(b).

 

“Credit Support Document” means any agreement or instrument that isspecified as such in this Agreement.

 

“Credit Support Provider” has the meaning specified in the Schedule.

 

“Default Rate” means a rate per annum equal to the cost (without proofor evidence of any actual cost) to the relevant payee (as certified by it) ifit were to fund or of funding the relevant amount plus 1% per annum.

 

“Defaulting Party” has the meaning specified in Section 6(a).

 

“Early Termination Date” means the date determined in accordance withSection 6(a) or 6(b)(iv).

 

“Event of Default” has the meaning specified in Section 5(a) and,if applicable, in the Schedule.

 

“Illegality” has the meaning specified in Section 5(b).

 

“Indemnifiable Tax” means any Tax other than a Tax that would not beimposed in respect of a payment under this Agreement but for a present orformer connection between the jurisdiction of the government or taxationauthority imposing such Tax and the recipient of such payment or a personrelated to such recipient (including, without limitation, a connection arisingfrom such recipient or related person being or having been a citizen orresident of such jurisdiction, or being or having been organised, present orengaged in a trade or business in such jurisdiction, or having or having had apermanent establishment or fixed place of business in such jurisdiction, butexcluding a connection arising solely from such recipient or related personhaving executed, delivered, performed its obligations or received a paymentunder, or enforced, this Agreement or a Credit Support Document).

 

“law” includes any treaty, law, rule or regulation (as modified, in thecase of tax matters, by the practice of any relevant governmental revenueauthority) and “lawful” and “unlawful” will be construed accordingly.

 

“Local Business Day” means, subject to the Schedule, a day on whichcommercial banks are open for business (including dealings in foreign exchangeand foreign currency deposits) (a) in relation to any obligation underSection 2(a)(i), in the place(s) specified in the relevant Confirmationor, if not so specified, as otherwise agreed by the parties in writing ordetermined pursuant to provisions contained, or incorporated by reference, inthis Agreement, (b) in relation to any other payment, in the place where therelevant account is located and, if different, in the principal financial

 

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centre, if any, of the currency of such payment, (c) in relation to anynotice or other communication, including notice contemplated underSection 5(a)(i), in the city specified in the address for notice providedby the recipient and, in the case of a notice contemplated bySection 2(b), in the place where the relevant new account is to be locatedand (d) in relation to Section 5(a)(v)(2), in the relevant locations forperformance with respect to such Specified Transaction.

 

“Loss” means, with respect to this Agreement or one or more TerminatedTransactions, as the case may be, and a party, the Termination CurrencyEquivalent of an amount that party reasonably determines in good faith to beits total losses and costs (or gain, in which case expressed as a negativenumber) in connection with this Agreement or that Terminated Transaction orgroup of Terminated Transactions, as the case may be, including any loss ofbargain, cost of funding or, at the election of such party but withoutduplication, loss or cost incurred as a result of its terminating, liquidating,obtaining or reestablishing any hedge or related trading position (or any gain resultingfrom any of them). Loss includes losses and costs (or gains) in respect of anypayment or delivery required to have been made (assuming satisfaction of eachapplicable condition precedent) on or before the relevant Early TerminationDate and not made, except, so as to avoid duplication, ifSection 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not includea party’s legal fees and out-of-pocket expenses referred to underSection 11. A party will determine its Loss as of the relevant Early TerminationDate, or, if that is not reasonably practicable, as of the earliest datethereafter as is reasonably practicable. A party may (but need not) determineits Loss by reference to quotations of relevant rates or prices from one ormore leading dealers in the relevant markets.

 

“Market Quotation” means, with respect to one or more TerminatedTransactions and a party making the determination, an amount determined on thebasis of quotations from Reference Market-makers. Each quotation will be for anamount, if any, that would be paid to such party (expressed as a negativenumber) or by such party (expressed as a positive number) in consideration ofan agreement between such party (taking into account any existing CreditSupport Document with respect to the obligations of such party) and the quotingReference Market-maker to enter into a transaction (the “ReplacementTransaction”) that would have the effect of preserving for such party theeconomic equivalent of any payment or delivery (whether the underlyingobligation was absolute or contingent and assuming the satisfaction of eachapplicable condition precedent) by the parties under Section 2(a)(i) inrespect of such Terminated Transaction or group of Terminated Transactions thatwould, but for the occurrence of the relevant Early Termination Date, have beenrequired after that date. For this purpose, Unpaid Amounts in respect of theTerminated Transaction or group of Terminated Transactions are to be excludedbut, without limitation, any payment or delivery that would, but for therelevant Early Termination Date, have been required (assuming satisfaction ofeach applicable condition precedent) after that Early Termination Dare is to beincluded. The Replacement Transaction would be subject to such documentation assuch party and the Reference Market-maker may, in good faith, agree. The partymaking the determination (or its agent) will request each ReferenceMarket-maker to provide its quotation to the extent reasonably practicable asof the same day and time (without regard to different time zones) on or as soonas reasonably practicable after the relevant Early Termination Date. The dayand time as of which those quotations are to be obtained will be selected ingood faith by the party obliged to make

 

28

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a determination under Section 6(e), and, if each party is soobliged. After consultation with the other. If more than three quotations areprovided, the Market Quotation will be the arithmetic mean of the quotations,without regard to the quotations having the highest and lowest values. Ifexactly three such quotations are provided, the Market Quotation will be thequotation remaining after disregarding the highest and lowest quotations. Forthis purpose, if more than one quotation has the same highest value or lowestvalue, then one of such quotations shall be disregarded. If fewer than threequotations are provided, it will be deemed that the Market Quotation in respectof such Terminated Transaction or group of Terminated Transactions cannot bedetermined.

 

“Non-default Rate” means a rate per annum equal to the cost (withoutproof or evidence of any actual cost) to the Non-defaulting Party (as certifiedby it) if it were to fund the relevant amount.

 

“Non-defaulting Party” has the meaning specified in Section 6(a)

 

“Office” means a branch or office of a party, which may be such party’shead or home office.

 

“Potential Event of Default” means any event which, with the giving ofnotice or the lapse of time or both, would constitute an Event of Default.

 

“Reference Market-makers” means four leading dealers in the relevantmarket selected by the party determining a Market Quotation in good faith (a)from among dealers of the highest credit standing which satisfy all thecriteria that such party applies generally at the time in deciding whether tooffer or to make an extension of credit and (b) to the extent practicable, fromamong such dealers having an office in the same city.

 

“Relevant Jurisdiction” means, with respect to a party, thejurisdictions (a) in which the party is incorporated, organised, managed andcontrolled or considered to have its seat, (b) where an Office through whichthe party is acting for purposes of this Agreement is located, (c) in which theparty executes this Agreement and (d) in relation to any payment, from orthrough which such payment is made.

 

“Scheduled Payment Date” means a date on which a payment or delivery isto be made under Section 2(a)(i) with respect to a Transaction.

 

“Set off’ means set-off, offset, combination of accounts, right ofretention or withholding or similar right or requirement to which the payer ofan amount under Section 6 is entitled or subject (whether arising underthis Agreement, another contract, applicable law or otherwise) that isexercised by, or imposed on, such payer.

 

“Settlement Amount” means, with respect to a party and any EarlyTermination Date, the sum of:-

 

(a) the Termination Currency Equivalent of the Market Quotations(whether positive or negative) for each Terminated Transaction or group ofTerminated Transactions for which a Market Quotation is determined; and

 

(b) such party’s Loss (whether positive or negative and withoutreference to any Unpaid Amounts) for each Terminated Transaction or group ofTerminated

 

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Transactions for which a Market Quotation cannot be determined or wouldnot (in the reasonable belief of the party making the determination) produce acommercially reasonable result.

 

“Specified Entity” has the meaning specified in the Schedule.

 

“Specified Indebtedness” means, subject to the Schedule, any obligation(whether present or future, contingent or otherwise, as principal or surety orotherwise) in respect of borrowed money.

 

“Specified Transaction” means, subject to the Schedule, (a) anytransaction (including an agreement with respect thereto) now existing orhereafter entered into between one party to this Agreement (or any CreditSupport Provider of such party or any applicable Specified Entity of suchparty) and the other party to this Agreement (or any Credit Support Provider ofsuch other party or any applicable Specified Entity of such other party) whichis a rate swap transaction, basis swap, forward rate transaction, commodityswap, commodity option, equity or equity index swap, equity or equity indexoption, bond option, interest rate option, foreign exchange transaction, captransaction, floor transaction, collar transaction, currency swap transaction,cross-currency rate swap transaction, currency option or any other similartransaction (including any option with respect to any of these transactions),(b) any combination of these transactions and (c) any other transactionidentified as a Specified Transaction in this Agreement or the relevantconfirmation.

 

“Stamp Tax” means any stamp, registration, documentation or similartax.

 

“Tax” means any present or future tax, levy, impost, duty, charge,assessment or fee of any nature (including interest, penalties and additionsthereto) that is imposed by any government or other taxing authority in respectof any payment under this Agreement other than a stamp, registration,documentation or similar tax.

 

“Tax Event” has the meaning specified in Section 5(b).

 

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

 

“Terminated Transactions” means with respect to any Early TerminationDate (a) if resulting from a Termination Event, all Affected Transactions and(b) if resulting from an Event of Default, all Transactions (in either case) ineffect immediately before the effectiveness of the notice designating thatEarly Termination Date (or, if “Automatic Early Termination” applies,immediately before that Early Termination Date).

 

“Termination Currency” has the meaning specified in the Schedule.

 

“Termination Currency Equivalent” means, in respect of any amountdenominated in the Termination Currency, such Termination Currency amount and,in respect of any amount denominated in a currency other than the TerminationCurrency (the “Other Currency”), the amount in the Termination Currencydetermined by the party making the relevant determination as being required topurchase such amount of such Other Currency as at the relevant EarlyTermination Date, or, if the relevant Market Quotation or Loss (as the case maybe), is determined as of a later date, that later date, with the TerminationCurrency at the rate equal to the spot exchange rate of the foreign exchangeagent

 

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(selected as provided below) for the purchase of such Other Currencywith the Termination Currency at or about 11:00 a.m. (in the city in which suchforeign exchange agent is located) on such date as would be customary for thedetermination of such a rate for the purchase of such Other Currency for valueon the relevant Early Termination Date or that later date. The foreign exchangeagent will, if only one party is obliged to make a determination underSection 6(e), be selected in good faith by that party and otherwise willbe agreed by the parties.

 

“Termination Event” means an Illegality, a Tax Event or a Tax EventUpon Merger or, if specified to be applicable, a Credit Event Upon Merger or anAdditional Termination Event.

 

“Termination Rate” means a rate per annum equal to the arithmetic meanof the cost (without proof or evidence of any actual cost) to each party (ascertified by such party) if it were to fund or of funding such amounts.

 

“Unpaid Amounts” owing to any party means, with respect to an EarlyTermination Date, the aggregate of (a) in respect of all TerminatedTransactions, the amounts that became payable (or that would have becomepayable but for Section 2(a)(iii)) to such party underSection 2(a)(i) on or prior to such Early Termination Date and whichremain unpaid as at such Early Termination Date and (b) in respect of eachTerminated Transaction, for each obligation under Section 2(a)(i) whichwas (or would have been but for Section 2(a)(iii)) required to be settledby delivery to such parry on or prior to such Early Termination Date and whichhas not been so settled as at such Early Termination Date, an amount equal tothe fair market value of that which was (or would have been) required to bedelivered as of the originally scheduled date for delivery, in each casetogether with (to the extent permitted under applicable law) interest, in thecurrency of such amounts, from (and including) the date such amounts orobligations were or would have been required to have been paid or performed to (butexcluding) such Early Termination Date, at the Applicable Rate. Such amounts ofinterest will be calculated on the basis of daily compounding and the actualnumber of days elapsed. The fair market value of any obligation referred to inclause (b) above shall be reasonably determined by the party obliged to makethe determination under Section 6(e) or, if each party is so obliged, itshall be the average of the Termination Currency Equivalents of the fair marketvalues reasonably determined by both parties.

 

IN WITNESS WHEREOF the parties have executed this document on therespective dates specified below with effect from the date specified on thefirst page of this document.

 
| CITIBANK, N.A.. NEW YORK |                                 |   | NORTHWEST AIRLINES, INC. |                                         |
|--------------------------|--------------------------------------|--------|--------------------------|----------------------------------------------|
| (Name of  Party)         |                                 |   | (Name of  Party)         |                                         |
|                     |                                 |   |                     |                                         |
|                     |                                 |   |                     |                                         |
| By:                      | /s/ Barbara A. Schweizer             |   |                     | By:                                          | /s/ Joseph E. Francht, Jr. |   |
| Name:                    | Barbara A. Schweizer, V.P.           |   | Name:                    | Joseph E. Francht, Jr.                       |
| Title:                   | Trading Products Documentation  Unit |   | Title:                   | Senior Vice President  Finance and Treasurer |
| Date:                    | 2/6/97                               |   | Date:                    | 2/12/97                                      |
|                          |                                      |        |                          |                                              |  |  |  |  |  |  |  |

 

31

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SCHEDULEto theMASTER AGREEMENT

 

dated as of January 15,1997

 

between Citibank, N.A., New York (“Party A”), a national bankingassociation organized under the laws of the United States and NorthwestAirlines, Inc. (“Party B”), a corporation organized under the laws of the Stateof Minnesota.

 

Scope ofAgreement

 

As of the date of this Agreement, all Transactions entered into(whether before or after this Agreement is entered into) between the parties tothis Agreement through Offices specified in Part 4(3) of thisSchedule (and the respective rights and obligations of the parties inrespect of those Transactions) shall be governed by, subject to, and determinedin accordance with, the terms and conditions set out in this Agreement and therelated Confirmations.

 

PART 1

TerminationProvisions

 

In this Agreement:

 

(1)          “Specified Entity” does not apply.

 

(2)          “Specified Transaction” will have the meaningspecified in Section l4 of the Agreement.

 

(3)          The “Cross-Default” provisions ofSection 5(a)(vi) of the Agreement will apply to Party A and Party B,provided, however, that Section 5(a)(vi) is hereby amended by deleting thefollowing text from the seventh line thereof: “, or becoming capable at suchtime of being declared,”.

 

“Specified Indebtedness” means any obligation (whether present orfuture, contingent or otherwise, as principal or surety or otherwise) inrespect of borrowed money, other than indebtedness in respect of deposits receivedand excluding any obligation under any contract, transaction of financialarrangement which, if entered into between Party A and Party B, would be aSpecified Transaction.

 

“Threshold Amount” means (i) with respect to Party A, 2% of thestockholders’ equity of Party A and (ii) with respect to Party B, $50,000,000.

 

(4)          The “Credit Event Upon Merger” provisions ofSection 5(b)(iv) of the Agreement will apply to Party A and Party B.

 

(5)          The “Automatic Early Termination” provisionof Section 6(a) of the Agreement will not apply to Party A or Party B.

 

(6)          Payments on Early Termination. For thepurpose of Section 6(e) of the Agreement:

 

The Second Method and Market Quotation willapply.

 

(7)          “Termination Currency” means United StatesDollars.

 

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PART 2

TaxRepresentations

 

(1)          Payer Representations.For the purpose of Section 3(e) of the Agreement, Party A and Party B willmake the following representation:

 

It is not required by any applicable law, as modified by the practiceof any relavent governmental revenue authority, of any Relevant Jurisdiction tomake any deduction or withholding for or on account of any Tax from any payment(other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement)to be made by it to the other party under this Agreement. In making thisrepresentation, it may rely on:

 

(x) the accuracy of any representation made by the other party pursuantto Section 3(f) of this Agreement;

 

(y) the satisfaction of the agreement contained in Section 4(a)(i)or 4(a)(iii) of this Agreement and the accuracy and effectiveness of anydocument provided by the other party pursuant to Section 4(a)(i) or4(a)(iii) of this Agreement; and

 

(z) the satisfaction of the agreement of the other party contained inSection 4(d) of this Agreement;

 

provided that itshall not be a breach of this representation where reliance is placed on clause(y) and the other party does not deliver a form or document underSection 4(a)(iii) by reason of material prejudice to its legal orcommercial position.

 

(2)          Payee Representations.For the purpose of Section 3(f) of the Agreement, Party A and Party B makethe representations specified below, if any:

 

The following representation will apply to Party A:

 

It is a national banking association organized under the laws of theUnited States and its U.S. taxpayer identification number is 13-5266470.

 

The following representation will apply to Party B:

 

It is a corporation created or organized under the laws of the State ofMinnesota and its U.S. taxpayer identification number is 41-0449230.

 

PART 3

Documents tobe Delivered

 

For the purpose of Section 4(a) of the Agreement:

 

(1)          Tax forms, documents or certificates to bedelivered are:

 

IRS Form W-9

 

Party required to deliver: Party B

 

Date by which to be delivered: Upon executionof this Agreement

 

(2)          Other documents to be delivered are:

 

(a)          Certified copies of alldocuments evidencing necessary corporate and other authorizations and approvalswith respect to the execution, delivery and performance by the party of thisAgreement.

 

Party required to deliver: Party A &Party B

 

Date by which to be delivered: Upon executionof this Agreement

 

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Covered by Section 3(d) Representation:Yes

 

(b)         A certificate of anauthorized officer of the party, certifying the names, true signatures andauthority of the officers of the party signing this Agreement.

 

Party required to deliver: Party A &Party B

 

Date by which to be delivered: Upon executionof this Agreement

 

Covered by Section 3(d) Representation:Yes

 

(c)          An opinion of counsel tothe party substantially in the form set forth in Exhibit I or II, as the casemay be, and covering such other matters as reasonably requested by the receivingpart.

 

Party required to deliver: Party A &Party B

 

Date by which to be delivered: Upon executionof this Agreement

 

Covered by Section 3(d) Representation:No

 

(d)         Such other documents asthe other party may reasonably request in connection with each Transaction.

 

Party required to deliver: Party A &Party B

 

Date by which to be delivered: Promptly uponrequest

 

Covered by Section 3(d) Representation:No, unless otherwise agreed to by the parties at the time such documents arerequested.

 

PART 4

 

Miscellaneous

 

(1) Governing Law. This Agreement will be governed by and construed inaccordance with the laws of the State of New York without reference to choiceof law doctrine.

 

(2) Process Agent. For the purpose of Section 13(c) of theAgreement:

 

Party B appoints its Process Agent in the State of New York: CTCorporation, 1630 Broadway, New York, New York 10019.

 

(3) Offices. The provisions of Section 10(a) of the Agreement willapply.

 

(4) Multibranch Party. For the purpose of Section 10 of the Agreement:

 

Party A is not a Multibranch Party.

 

Party B is not a Multibranch Party.

 

(5) Address for Notices. For the purpose of Section 12(a) of theAgreement:

 

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(a) Address for notice or communications to Party A:

 
| Citibank, N.A., New York head Office                       |
|------------------------------------------------------------|
| 399 Park Avenue, 7th Floor                                 |
| New York, New York 10043                                   |
| Attention: Vice President in Charge of  Global Derivatives |

 

(b) Address for notice or communications to Party B:

 
| Northwest Airlines, Inc.  |
|---------------------------|
| 5105 Northwest Drive      |
| Department A4192          |
| St. Paul, Minnesota 55111 |

Attention: David Zanussi, Fuel Department

 
| Telefax No.: (612) 726-4851                                                              | Telephone No.: (612) 726-7496 |
|------------------------------------------------------------------------------------------|-------------------------------|
| Courier Address: Northwest Airlines, Inc.  2700 Lane Oak Parkway, Eagan, Minnesota 55121 |
| (For all purposes)                                                                       |

 

(6) Calculation Agent. The Calculation Agent is Party A, unlessotherwise specified in a Confirmation in relation to the relevant Transaction.

 

(7) “Affiliate” will have the meaning specified in Section 14 ofthe Agreement.

 

(8) Credit Support Document. None

 

(9) The Credit Support Provider. None.

 

(10) Netting of Payments. Subparagraph (ii) of Section 2(c) of theAgreement will not apply with respect to Transactions entered into by the NewYork Office of party A which involve a “Commodity” as such term is defined inthe 1993 ISDA Commodity Derivatives Definitions (as published by theInternational Swaps and Derivatives Association).

 

PART 5

OtherProvisions

 

(1)                    SingleAgreement. The phrase “(evidencing Trnasactions heretofore or heareafterentered into between Party A and Party B)” is here by added after the workConfirmations” in Section 1(c).

 

(2)                    Confirmations.Notwithstanding anything to the contrary in the Agreement:

 

(a)                    the partieshereto agree that with respect to each Transaction hereunder a legally bindingagreement shall exist from the moment that the parties hereto agree on theessential terms of such Transaction, which the parties anticipate will occur bytelephone.

 

(b)                   For eachTransaction Party A and party B agree to enter into hereunder, Party A shallpromptly send to Party B a Confirmation setting forth the terms of suchTransaction. Party B shall execute and return the Confirmation to Party A orrequest correction of any error within three Business Days of receipt. Failureof Party B to respond within such period shall not affect the validity orenforceability of such Transaction and shall be deemed to be an affirmation ofsuch terms.

 

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(3)                    Deferral ofPayments and Deliveries in Connection with Illegality; Interest on DeferredPayments. The phrase “, Illegality” is hereby added after the word “default”the first time it appears in Section 2(a(iii). The following is added atthe end of Section 2(a)(iii):

 

“Any obligation deferred pursuant to this Section 2(a)(iii) as aresult of any of the foregoing, where the deferred obligation is subsequentlymet by the defaulting party and no early Termination Date in respect thereofwas designated or automatically deemed designated, shall bear interest at theNon-default Rate from the date such obligation would have been payable ordeliverable (but for this Section to but excluding the date, if any, suchobligation is paid.”

 

(4)                    Absence ofLitigation. Section 3(c) is hereby amended by adding in the second linethereof after the work “governmental” the words “or regulatory”.

 

(5)                    Accuracy ofSpecified Information. Section 3(d) is hereby amended by adding in thethird line thereof after the word “respect” and before the period: “or, in thecase of financial statements, a fair presentation of the financial condition ofthe relevant party”.

 

(6)                    AdditionalRepresentations. Section 3 of the Agreement is hereby amended by adding atthe end thereof the following subsections:

 

(g) Eligible Swap Participant. It is an“eligible swap participant” as that term is defined by the Commodity FuturesTrading Commission at 17 C.F.R. § 35.1 (b)(2).

 

(h) With respect to Party B, it is aproducer, processor, merchandiser or commercial user of the commodity relevantto each intended option, cap or floor transaction involving commodity pricesand will enter same solely for purposes related to said business.

 

(i) The economic terms of this Agreement andeach Transaction have been individually tailored and negotiated by it; and thecreditworthiness of the other party was or will be a material consideration inits entering into or determining the terms of this Agreement and suchTransaction.

 

(j) It has entered into this Agreement(including each Transaction evidenced hereby) in conjunction with its line ofbusiness (including financial intermediation services) or the financing of itsbusiness.

 

(k) The individual(s) executing anddelivering this Agreement and any other documentation (including anyConfirmation) relating to the Agreement to which it is a party or that it isrequired to deliver are duly empowered and authorized to do so, and it has dulyexecuted and delivered this Agreement.

 

(l) In connection with the negotiation of,the entering into, and the confirming of the execution of, this Agreement, eachTransaction and any other documentation relating to this Agreement to which itis a party hereto or thereto or that it is required by this Agreement todeliver: (i) the other party hereto or thereto is not acting as a fiduciary orfinancial investment advisor for it; (ii) it is not relying (for purposes ofmaking any investment decision or otherwise) upon any advice, counsel orrepresentations (whether written or oral) of the other party hereof or theretoother than the representations expressly set forth in this Agreement and in anyConfirmation; (iii) the other party hereto or thereto has not given to it(directly or indirectly through any other person) any assurance, guaranty, orrepresentation whatsoever as to the expected or projected success,profitability, return, performance, result, effect, consequence, or benefit(either legal, regulatory, tax, financial, accounting, or otherwise) of thisAgreement, such Transaction or other documentation; (iv) it has consulted withits own legal, regulatory, tax, business, investment, financial, and accountingadvisors to the extent it has deemed necessary, and it has made its owninvestment, hedging, and trading decisions (including decisions regarding thesuitability of any Transaction pursuant to this Agreement) based upon its ownjudgment and upon any advice from such advisors as it has deemed necessary andnot upon any view expressed by the other party hereto or thereto; (v) it hasdetermined that the rates, prices or amounts and other terms of eachTransaction and the indicative quotations (if any) provided by the other partyhereto or thereto reflect those in the relevant market

 

36

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for similar transactions, and all tradingdecisions have been the result of arm’s length negotiations between theparties; (vi) it is entering into this Agreement, each Transaction and anyother documentation relating to this Agreement with a fullunderstanding of allof the items, conditions and risks hereof and thereof (economic and otherwise),and it is capable of assuming and willing to assume (financially and otherwise)those risks; and (vii) it is a sophisticated investor.

 

(m) It is entering into this Agreement, eachTransaction and any other documentation relating to this Agreement or anyTransaction as principal (an not as agent or in any other capacity, fiduciaryor otherwise).

 

(7)                    Tax event. Thefollowing is hereby inserted in Section 5(b)(ii) before the words “thereis a substantial likelihood that”: “in the written opinion of counsel ofrecognized standing (which may include in-house legal counsel)”.

 

(8)                    Set-off.Section 6 of the Agreement is amended by adding the following newsubsection 6(f):

 

Setoff and Related Matters. Any amount (the “EarlyTermination Amount”) payable to one party (the Payee) by the other party (thePayer) under Section 6(e), in circumstances where there is a DefaultingParty will, at the option of the party (‘X’) other than the Defaulting Party(and without prior notice the Defaulting Party), be reduced by its set-offagainst any amount(s) (the “Other Agreement Amount”) payable (whether at suchtime or in the future or upon the occurrence of a contingency) by the Payee tothe Payer (irrespective of the currency, place of payment or booking office ofthe obligation) under any other agreement(s) between the Payee and the Payer orinstrument(s) or undertaking(s) issued or executed by one party to, or in favorof, the other party (and the Other Agreement Amount will be discharged promptlyand in all respects to the extent it is so set-off). X will give notice to theother party of any set-off effected under this Part 5(8).

 

For this purpose, either the EarlyTermination Amount or the Other Agreement Amount (or the relevant portion ofsuch amounts) may be converted by X into the currency in which the other isdenominated at the rate of exchange at which such party would be able, actingin a reasonable manner and in good faith, to purchase the relevant amount ofsuch currency.

 

If an obligation is unascertained, X may ingood faith estimate the obligation and set-off in respect of the estimate,subject to the relevant party accounting to the other when the obligation isascertained.

 

Nothing in this Part 5(8) shall be effective tocreate a charge or other security interest. This Part 5(8) shall be withoutprejudice and in addition to any right of set-off, combination of accounts,lien or other right to which any party is at any time otherwise entitled(whether by operation of law, contract or otherwise).

 

(9)                    NettingProvisions. If an Early Termination Date is designated, amounts determined inrespect of all Terminated Transactions shall, to the fullest extent permittedby law, be aggregated with and netted against one another in performing thecalculations contemplated by Section 6(e) of this Agreement. AnyTerminated Transaction(s) that cannot be so aggregated and netted pursuant tothe application of the previous sentence shall be aggregated and netted amongstthemselves to the fullest extent permitted by law. Any Terminated Transactionsthat cannot be so aggregated and netted amongst themselves shall instead be(and is hereby agreed always to have been) governed by, and subject to, (i) theterms and conditions set out in any relevant agreement otherwise superseded bythis Agreement or (ii) if no such agreement exists, the terms and conditionsset out in the relevant Confirmation(s) with respect to such Transaction(s).

 

(10)              Severability. Anyprovision of the Agreement which is prohibited or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remainingprovisions of the Agreement or affecting the

 

37

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validity or enforceability of such provisionin any other jurisdiction unless such severance shall substantially impair thebenefits of the remaining portions of this Agreement or changes the reciprocalobligations of the parties. The parties hereto shall endeavor in good faithnegotiations to replace the prohibited or unenforceable provision with a validprovision, the economic effect of which comes as close as possible to that ofth prohibited or unenforceable provision.

** **

**(11)****            WAIVER OF JURY TRIAL.EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANYPROCEEDINGS.**

 

(12)              TelephonicRecording. The parties agree, subject to any consent required by applicablelaw, that each may electronically record the telephonic conversations betweenthem and that any such tape recordings may be submitted in evidence in anyProceedings relating to the Agreement. In the event of any dispute between theparties as to the terms of a Transaction governed by the Agreement or the obligationsthereby created prior to the execution of a Confirmation for such Transaction,the parties may use electronic recordings between the persons who entered intosuch Transaction as the preferred evidence of the terms of such Transaction.

 

(13)              Transfer.Any assignment and transfer made in conformity with Section 7 shallrelease (i) the transferring party from its obligations under this Agreementand any Credit Support Document as it relates to any Transaction(s) so assignedand (ii) any Credit Support Provider of its obligation under any Credit SupportDocument as it relates to such Transaction(s) so assigned. Each party shallconsider promptly any request for any required consent to transfer made by theother party. No person other than the parties hereto and their respectivesuccessor and permitted assigns shall acquire or have any right under, or byvirtue of, this Agreement or any Credit Support Document.

 

(14)              Definitions. ThisAgreement and each Transaction are subject to the 1991 ISDA Definitions (exceptthat references to “Swap Transactions” will be deemed to be references to“Transactions”), and the 1993 ISDA Commodity Derivatives Definitions (the“Definitions”), each of which is incorporated herein by reference, and will begoverned by the provisions of the Definitions, without regard to any amendmentsto the Definitions subsequent to the date hereof unless agreed to in writing bythe parties hereto. In the event of any inconsistency between the provisions ofany Confirmation and this Agreement or the Definitions, such Confirmation willprevail for the purpose of the relevant Transaction.

 

IN WITNESS WHEREOF the parties have executed this document on therespective dates specified below with effect from the date specified on thefirst page of this document.

 
| CITIBANK, N.A.. NEW YORK |                                 |   | NORTHWEST AIRLINES, INC. |                                         |
|--------------------------|--------------------------------------|--------|--------------------------|----------------------------------------------|
| (Name of  Party)         |                                 |   | (Name of  Party)         |                                         |
|                     |                                 |   |                     |                                         |
|                     |                                 |   |                     |                                         |
| By:                      | /s/ Barbara A. Schweizer             |   |                     | By:                                          | /s/ Joseph E. Francht, Jr. |   |
| Name:                    | Barbara A. Schweizer, V.P.           |   | Name:                    | Joseph E. Francht, Jr.                       |
| Title:                   | Trading Products Documentation  Unit |   | Title:                   | Senior Vice President  Finance and Treasurer |
| Date:                    | 2/6/97                               |   | Date:                    | 2/12/97                                      |
|                          |                                      |        |                          |                                              |  |  |  |  |  |  |  |

 

38

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EXHIBIT I

 

 

FORM OFOPINION OF COUNSEL FOR CITIBANK

 

 

(Date satisfactory torecipient)

 

Address:

 

 

 

Ladies and Gentlemen:

 

This opinion is furnished to you pursuant to the Schedule to theMaster Agreement dated as of                          (the “Agreement”), between Citibank, N.A. (“Citibank”) and                        .Terms defined in the Agreement and used but not defined herein have themeanings given to them in the Agreement.

 

I am Legal Counsel to Citibank. In connection with the execution anddelivery of the Agreement, I have examined such documents as I have deemednecessary or appropriate for the opinions expressed herein.

 

Based on the foregoing and upon such investigation as I have deemednecessary, I am of the opinion that, so far as the laws of the United States ofAmerica and of the State of New York are concerned:

 

(1)          Citibank is a bankingassociation duly existing under the laws of the United States of America.

 

(2)          Citibank has fullcorporate power to execute and deliver the Agreement and to perform itsobligations thereunder.

 

(3)          Such actions have beenduly authorized by all necessary corporate action, and are not in conflict withthe corporate charter and related documents of Citibank.

 

(4)          No consents,authorizations or approvals are required for the execution and delivery byCitibank of the Agreement and the performance of its obligations thereunder,and no other action by, and no notice to or filing with, any governmentalauthority or regulatory body is required for such execution, delivery orperformance.

 

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(5)          The Agreement has beenduly executed and delivered by Citibank and constitutes the legal, valid andbinding obligation of Citibank enforceable in accordance with its terms (exceptas enforcement thereof may be limited by bankruptcy, reorganization, insolvency,moratorium or other laws affecting the enforcement of creditors’ rightsgenerally and by general principles of equity).

 
|   | Very truly yours,       |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | Legal Counsel  Citibank |

 

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EXHIBIT II

 

FORM OFOPINION OF COUNSEL FOR ý

 

(Date satisfactory torecipient)

 

Citibank, N.A.399 Park Avenue7th FloorNew York, New York 10043

 

Ladies and Gentlemen:

 

This opinion is furnished to you pursuant to the Schedule to theMaster Agreement dated as of              ,19    (the “Agreement”) between                          (“ý”) and you.Terms defined in the Agreement and used but not defined herein have themeanings given to them in the Agreement.

 

We have acted as counsel to ýin connection with the preparation, execution and delivery of the Agreement. Inthat connection we have examined such documents as we have deemed necessary orappropriate for the opinions expressed herein.

 

Based on the foregoing and upon such investigations as we have deemednecessary, we are of the opinion that, so far as the laws of                              are concerned:

 

(a)                                  ýis duly organized and validly existing and has the power and authority toexecute and deliver, and to perform its obligations under, the Agreement.

 

(b)                                 Theexecution and delivery of the Agreement by ýand the performance of its obligations thereunder have been and remain dulyauthorized by all necessary action and do not contravene any provision of itscertificate of incorporation or by-laws (or equivalent constituent documents)or any law, regulation or contractual restriction binding on or affecting it orits property.

 

(c)                                  Allconsents, authorizations and approvals (including, without limitation, exchangecontrol approvals) required for the execution and delivery by ýof the Agreement and the performance of its obligations thereunder have beenobtained and remain in full force and effect, all conditions thereof have beenduly complied with, and no other action by, and no notice to or filing with,any governmental authority or regulatory body is required for such execution,delivery or performance.

 

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(d)                                 TheAgreement is a legal, valid and binding obligation of ý,enforceable against ý in accordancewith its terms, subject to applicable bankruptcy, insolvency and similar lawsaffecting creditors’ rights generally, and subject, as to enforceability, togeneral principles of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

 

 
|   | Very truly yours, |
|--------|-------------------|

 

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