**Exhibit 10.12**

 

**FINAL**

 

**NORTHWEST AIRLINES, INC.**

**2008 RETENTION PLAN**

 

ARTICLE 1ESTABLISHMENT AND PURPOSE

 

NORTHWESTAIRLINES, Inc. has established this Northwest Airlines, Inc. 2008Retention Plan (the “Plan”).  Theprimary purpose of the Plan is to provide an incentive for employees to remainemployed with the Company or one of its Affiliates in light of a potentialmerger involving the Company and another major airline.

 

ARTICLE 2DEFINITIONS

 

Wheneverused in this Plan, the following terms shall have the meanings set forth below,and when the meaning is intended, the initial letter of the word iscapitalized:

 

“Administrator”means the Compensation Committee of the Board of Directors of NorthwestAirlines Corporation.

 

“Affiliate”means any entity which, directly or indirectly, controls, is controlled by, oris under common control with, the Company. For purposes of the preceding sentence, “control” (including, withcorrelative meanings, the terms “controlled by” and “under common control with”),as used with respect to any entity or organization, shall mean the possession,directly or indirectly, of the power (i) to vote more than 50% of thesecurities having ordinary voting power for the election of directors of thecontrolled entity or organization, or (ii) to direct or cause thedirection of management and policies of the controlled entity or organization,whether through the ownership voting securities or by contract or otherwise.

 

“Board”means the Board of Directors of the Company.

 

“Changeof Control” means a “Change of Control” as defined under the NorthwestAirlines Corporation 2007 Stock Incentive Plan, as in effect on the datehereof.

 

“Company”means Northwest Airlines, Inc., a Minnesota corporation.

 

“Cause”means “Cause” as defined in the Participant’s Retention Payment Award Letter,or, if not defined therein, (i) an act or acts of personal dishonesty bythe Participant intended to result in substantial personal enrichment of theParticipant at the expense of the Company or an Affiliate, (ii) an act oracts of personal dishonesty by the Participant intended to cause substantialinjury to the Company or an Affiliate, (iii) material breach (other thanas a result of a “disability”

 

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(withinthe meaning of Section 22(e) of the Code)) by the Participant of theParticipant’s obligations under the terms and conditions of the Employee’semployment, which action was (A) undertaken without a reasonable beliefthat the action was in the best interests of the Company or an Affiliate and (B) notremedied within fifteen days after receipt of written notice from the Companyor an Affiliate specifying the alleged breach; or (iv) the conviction ofthe Employee of a felony.

 

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

 

“GoodReason” means “Good Reason” as defined in the Participant’s RetentionPayment Award Letter, or, if not defined therein, (i) a material reductionin a Participant’s base salary or target bonus; or (ii) the relocation ofthe Participant’s principal place of employment by more than 50 miles(excluding travel requirements relating to the Participant’s duties), withoutthe Participant’s consent; provided, however, that the foregoingevents shall constitute Good Reason only if the Company fails to cure suchevent within thirty (30) days after receipt from the Participant of writtennotice of the event which constitutes Good Reason; and provided, further,that “Good Reason” shall cease to exist for an event on the 60th dayfollowing the later of its occurrence or the Participant’s knowledge thereof,unless the Participant has given the Company written notice thereof prior tosuch date.

 

 “Participant” means an employee of theCompany or an Affiliate selected by the Administrator who has been provided aRetention Payment Award Letter that specifies the details of the employee’sparticipation in, and Retention Payment opportunity under, the Plan.

 

“PaymentDate” means the date through which a Participant must remain in continuousemployment with the Company or an Affiliate in order to become entitled to allor a portion of a Retention Payment, as determined under Section 5.2 andset forth on the Participant’s Retention Payment Award Letter. A Participantmay have a single Payment Date or multiple Payment Dates, as determined under Section 5.2.

 

“RetentionPayment” means the amount described in Section 5.1 and specificallyset forth on the Participant’s Retention Payment Award Letter.

 

“RetentionPayment Award Letter” means the letter provided by the Administrator toeach Participant that sets forth the Retention Payment opportunity and PaymentDate(s) applicable to the Retention Payment opportunity, as described in Section 5.1.

 

“Subsidiary”means a subsidiary corporation, as defined in Section 424(f) of theCode (or any successor section thereto).

 

“Successor”means any person, firm, corporation, or business entity which at any time,whether by merger, purchase, or otherwise, acquires all or substantially all ofthe assets, stock or business of the Company.

 

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ARTICLE 3ADMINISTRATION

 

3.1        Administration of the Plan.  The Plan shall be administered by theAdministrator.

 

3.2        Authority of theAdministrator.  Subject tothe provisions herein, the Administrator shall have full power and authority:to select and approve Participants; to determine the amount of the RetentionPayment opportunity (which need not be the same for each Participant); todetermine the terms and conditions of each individual’s participation in amanner consistent with the provisions of the Plan; to establish Payment Datesand, if multiple Payment Dates are established for a Participant, then theportion of the Retention Payment payable upon each such Payment Date; todetermine whether any strategic, financial, and/or operational goals have beenmet; to interpret, in its sole discretion, the Plan and any agreement orinstrument entered into under the Plan; to establish, amend, rescind, or waive rules andregulations for the Plan’s administration; and in general to have the fullpower to make all other determinations which may be necessary or advisable forthe administration of the Plan, to the extent consistent with the provisions ofthe Plan.  Notwithstanding the foregoingor any provision of the Plan to the contrary, a Participant must exhaust alladministrative remedies established by the Administrator before bringing anyaction at law or equity.  TheAdministrator may delegate its power, authority and duties under the Plan tothe Chief Executive Officer of the Company pursuant to such conditions orlimitations as the Administrator may establish; provided, however,that the Administrator may not delegate its duties or authorities with respectto executive officers.

 

3.3        Decision of AdministratorFinal.  Subject to applicable law, anyinterpretation of the provisions of the Plan and any decision on any matterwithin the discretion of the Administrator made by the Administrator in goodfaith shall be final and conclusive and binding on all persons.

 

3.4        Interested Administrator.  For the avoidance of doubt, if anAdministrator is also a Participant in the Plan (i.e., by way of permissibledelegation), the Administrator may not decide or determine any matter orquestion concerning the Administrator’s own benefits.

 

ARTICLE 4PARTICIPATION

 

TheAdministrator shall identify which employees of the Company or an Affiliateshall participate in the Plan.  As soonas practicable following selection by the Administrator, each selected employeeshall be provided with a Retention Payment Award Letter which shall describethe terms and conditions of each individual’s participation in, and RetentionPayment opportunity under, the Plan.  Aselected employee shall become a Participant in the Plan as of such time as thedate set forth by the Administrator in the selected employee’s RetentionPayment Award Letter.

 

ARTICLE 5 RETENTION PAYMENT OPPORTUNITY

 

5.1        Establishmentof Retention Payment Amount.

 

(a)               Initial Awards.  The Administrator is authorized, but notobligated, to award Retention Payment opportunities on the terms of theRetention Payment Award Letter substantially in the form set forth on AppendixA to the individuals indicated by position, and 

 

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withRetention Payment opportunities expressed as a percentage of base salary listedon Appendix A-1 (the “Initial Awards”).

 

(b)              Discretionary Awards.  In addition to the Initial Awards, theAdministrator is authorized, but not obligated, from time to time and in itssole discretion, to make awards of additional Retention Payment opportunitiesunder the Plan, up to an aggregate amount of $25 million, to any one or moreemployees of the Company or an Affiliate of the Company as the Administratorshall select, on such terms and conditions as the Administrator shalldetermine, in its sole discretion (“Discretionary Awards”).  Any Discretionary Awards shall becommunicated to the affected Participant in the form of a Retention PaymentAward Letter provided to such Participant by the Company.  Any Discretionary Awards may, but need not,be subject to similar terms and conditions as are applicable under the InitialAwards.  Receipt of an Initial Award by aParticipant does not render a Participant ineligible for a DiscretionaryAward.  The accelerated paymentrequirements of Section 6.1 of the Plan are not required to apply to anyDiscretionary Awards.

 

5.2        Establishment of PaymentDate or Payment Dates. Subject to Section 6.1, and unless otherwise specified in theParticipant’s Discretionary Award Retention Payment Award Letter, eachParticipant must remain in continuous employment with the Company or anAffiliate through and including such Participant’s Payment Date or PaymentDates in order to become entitled to receive a Retention Payment under thisPlan.  The Administrator, in its solediscretion, shall determine whether a Participant has one or multiple PaymentDates, establish the Payment Date or Payment Dates for each Participant, and inthe event a Participant has multiple Payment Dates, determine the portion ofthe Retention Payment, which are not required to be in equal amounts for eachPayment Date, payable upon each such Payment Date, which need not be the samefor each Participant.  A Payment Date maybe based on (i) a fixed date, (ii) a number of days occurring after astrategic, financial, and/or operational goal as determined in the solediscretion of the Administrator, or (iii) such other criteria asdetermined in the sole discretion of the Administrator, with such date or datesset forth in the Participant’s Retention Payment Award Letter.  Notwithstanding the foregoing, theAdministrator shall have the discretion to waive any service, employment orother conditions to payment of a Retention Payment; provided that,unless otherwise specified in the Participant’s Discretionary Award RetentionPayment Award Letter, the Participant’s Retention Payment must in all events bepaid no later than two and one-half months after the conclusion of the year inwhich the Retention Payment opportunity ceases to be subject to a substantialrisk of forfeiture within the meaning of Section 409A of the Code.

 

5.3        Payment of Retention Payment.  Subject to Section 6.1, unless otherwisespecified in the Participant’s Discretionary Award Retention Payment Award Letter,any Retention Payment payable under this Plan shall be paid to the Participantas follows:

 

(a)               If a Participant has asingle Payment Date, the entire Retention Payment shall be paid in a singlelump sum within ten (10) days (or such fewer number of days as may bespecified in the Retention Payment Award Letter) after such Participant’sPayment Date; or

 

(b)              If a Participant hasmultiple Payment Dates, the portion of the Retention Payment assigned to aPayment Date shall be paid in a single lump sum within ten (10) days (orsuch 

 

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fewernumber of days as may be specified in the Retention Payment Award Letter) aftersuch Payment Date.

 

5.4        Withholding for Taxes.  Notwithstanding any other provisions of thePlan, the Company shall withhold from any payment to be made under the Plansuch amount or amounts as may be required for purposes of complying with thetax withholding provisions of the Code or any applicable federal, state, localor foreign laws, and in the case of expatriate employees, the withholdingrequired under the Company’s expatriate program, or such other amount oramounts as are agreed to by the Participant.

 

ARTICLE 6 TERMINATION OF EMPLOYMENT

 

6.1        Termination Without Cause orWith Good Reason.  Unlessotherwise specified in the Participant’s Discretionary Awards Retention PaymentAward Letter, in the event a Participant’s employment with the Company and itsAffiliates is terminated prior to or as of a Participant’s Payment Date byreason of a termination by the Company or an Affiliate without Cause or by theParticipant with Good Reason, such Participant shall receive the following:

 

(a)               In the event the Participanthas a single Payment Date, the entire Retention Payment; or

 

(b)              In the event the Participanthas multiple Payment Dates, (i) the entire Retention Payment, if suchtermination occurs prior to the Participant’s first Payment Date, or (ii) theunpaid portion of the Retention Payment, if such termination occurs after oneor more Payment Dates and payment of the corresponding portion of the RetentionPayment, but prior to the final Payment Date.

 

Theamount payable under clause (a) or (b) above shall be paid in asingle lump sum within ten (10) days following such termination event.

 

6.2        Termination For OtherReasons. Unless otherwise specified in the Participant’s Discretionary AwardRetention Payment Award Letter: (x) in the event a Participant’semployment with the Company and its Affiliates is terminated for any reason notdescribed in Section 6.1 prior to the Payment Date for a Participant whohas a single Payment Date or prior to the first Payment Date for a Participantwho has multiple Payment Dates, then all rights of such Participant to anyRetention Payment under the Plan (or any other benefit) shall be forfeited; and(y) with respect to a Participant who has multiple Payment Dates and whoseemployment with the Company and its Affiliates is terminated for any reason notdescribed in Section 6.1 after one or more Payment Dates, but prior to thefinal Payment Date, then all rights of such Participant to the unpaid portionof the Retention Payment under the Plan (or any other benefit) shall beforfeited.

 

6.3        Employment with Successors. For purposesof this Plan, employment with any Successor will be considered employment withthe Company (or an Affiliate).

 

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ARTICLE 7BENEFICIARY

 

AnyRetention Payment amounts that are payable under the Plan to the Participant,but which are not yet paid at the time of the Participant’s intervening death,shall be payable to the estate of the Participant.

 

ARTICLE 8RIGHTS OF PARTICIPANTS

 

8.1        No Employment or BenefitGuaranty. None of the establishment of the Plan, the receiptof a Retention Payment Award Letter, any modification or amendment thereof, orthe payment of any benefits shall be construed as giving to any Participant orother person any legal or equitable right against the Company, any Affiliate,or the Administrator except as expressly provided herein.  Under no circumstances shall the maintenanceof this Plan constitute a contract of employment or shall the terms ofemployment of any Participant be modified or in any way affected hereby.  Accordingly, neither participation in thePlan nor the payment of a Retention Payment amount shall be held or construedto give any Participant a right to be retained in the employ of the Company orany Affiliate.

 

8.2        No Assignment of Rights. The rights orinterests of a Participant under this Plan shall not be subject in any mannerto anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,charge, garnishment, executive or levy of any kind, either voluntarily orinvoluntarily, and any attempt to anticipate, alienate, sell, transfer, assign,pledge, encumber, charge, garnish, execute on, levy or otherwise dispose of anyright to an amount payable hereunder shall be void.  No Retention Payment amount shall be in anymanner subject to the debts, contracts, liabilities, engagements, or torts ofany Participant.

 

8.3        No Funding. All paymentsto be made under the Plan shall be paid from the general assets of the Companyor an Affiliate, and no special or separate fund shall be established and nosegregation of assets shall be made to assure payment of such amounts.  No Participants shall have any right, title,or interest whatsoever in or to any amounts under the Plan prior toreceipt.  Nothing contained in the Plan,and no action taken pursuant to its provisions, shall create or be construed tocreate a trust or fund of any kind, or a fiduciary relationship between theCompany or an Affiliate and any other person. The rights of any Participant (or beneficiary) to any amounts hereundershall be no greater than those of an unsecured general creditor of the Company.

 

8.4        Other Plans.  Unless otherwise determined by theAdministrator for this purpose in writing, any Retention Payment made underthis Plan shall not be taken into account in computing the Participant’ssalary, wages, base pay or compensation for the purposes of determining anybenefits or compensation under (i) any pension, retirement, lifeinsurance, severance, welfare or other benefit plans, programs or arrangementsof the Company or its Affiliates, and/or (ii) any agreement between theParticipant and the Company or its Affiliates.

 

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ARTICLE 9 MISCELLANEOUS PROVISIONS

 

9.1        Amendment and Termination.  The Board reserves the right to amend orterminate the Plan, in whole or in part, at any time.  Except as expressly provided in the Plan, noamendment or termination of the Plan shall adversely affect the rights of anyParticipant under a Retention Payment opportunity previously awarded to such Participant.

 

9.2        Headings.  The headings of the various Articles andSections in the Plan are solely for convenience and shall not be relied upon inconstruing any provisions hereof.  Anyreference to a Section shall refer to a Section of the Plan unlessspecified otherwise.

 

9.3        Evidence.  Evidence required of anyone under the Planshall be signed, made or presented by the proper party or parties and may be bycertificate, affidavit, document or other information which the person actingthereon considers pertinent and reliable.

 

9.4        Gender and Number.  Words denoting the masculine gender shallinclude the feminine and neuter genders, the singular shall include the pluraland the plural shall include the singular wherever required by the context.

 

9.5        Code Section 409A.  To the extent applicable, and notwithstandinganything herein to the contrary, this Plan and the Retention Paymentopportunities hereunder shall be interpreted in accordance with Section 409Aof the Code and Department of Treasury regulations and other interpretativeguidance issued thereunder, including without limitation any such regulationsor other guidance that may be issued after the effective date of thisPlan.  Notwithstanding anything herein to the contrary, (i) ifat the time of the Participant’s termination of employment with the Company andits Affiliates, the Participant is a “specified employee” as defined in Section 409Aof the Code and the deferral of the commencement of any payments or benefitsotherwise payable hereunder as a result of such termination of employment isnecessary in order to prevent any accelerated or additional tax under Section 409Aof the Code, then the Company will defer the commencement of the payment of anysuch payments or benefits hereunder (without any reduction in such payments orbenefits ultimately paid or provided to the Participant) until the date that issix months following the Participant’s termination of employment with theCompany and its Affiliates (or the earliest date as is permitted under Section 409Aof the Code) and (ii) if any other payments of money or other benefits dueto the Participant hereunder could cause the application of an accelerated oradditional tax under Section 409A of the Code, such payments or otherbenefits shall be deferred if deferral will make such payment or other benefitscompliant under Section 409A of the Code, or otherwise such payment orother benefits shall be restructured, to the extent possible, in a manner,determined by the Board, that does not cause such an accelerated or additionaltax.  The Company shall use commerciallyreasonable efforts to implement the provisions of this Section 9.5 in goodfaith; provided that neither the Company, its Affiliates, the Successor,the Administrator or any of its or their employees, directors orrepresentatives shall have any liability to Participants with respect to this Section 9.5.

 

9.6        Applicable Law; MandatoryArbitration.  The Planshall be construed in accordance with the laws of the State of Minnesota,without regard to its conflicts of laws doctrine.  The 

 

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Participantsshall settle by arbitration any dispute or controversy arising in connectionwith the Plan and any Retention Payment. Such arbitration will be conducted in St. Paul, Minnesota, applying thelaws of the State of Minnesota, without reference to principles of conflicts oflaws.  The award of an arbitrator shallbe final and non-appealable, and judgment may be entered on the award of thearbitrator in any court having proper jurisdiction.

 

9.7        Severability.  Whenever possible, each provision of the Planshall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of the Plan is held to be invalid, illegalor unenforceable in any respect under any applicable law or rule in anyjurisdiction, such invalidity, illegality or unenforceability shall not affectany other provision or any other jurisdiction, and the Plan shall be reformed,construed and enforced in such jurisdiction so as to best give effect to theintent of the Company under the Plan.

 

9.8        Effective Date.  This Plan shall be effective as of the dateof its adoption by the Board, or such later date, and subject to suchconditions and events, as may be specified by the Board of Directors of theCompany.

 

9.9        Successors.  This Plan shall constitute a bindingobligation to any successor to the Company, whether by purchase, merger,consolidation or otherwise, in the same manner and to the same extent that theCompany would be obligated under the Plan if no such succession had takenplace.  In any agreement providing forthe sale of all or substantially all of the Company’s assets, the Company shallcause the acquiring party to assume and agree to perform the Company’sobligations under the Plan.  Any suchsuccessor shall be deemed substituted for all purposes for the “Company”under the terms of this Plan.

 

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**Appendix A**

 

**Personal & Confidential**

 

April [], 2008

 

[NAME]

[ADDRESS]

 

Dear[FIRST NAME]:

 

Asyou know, Northwest Airlines has signed a merger agreement with Delta AirLines.  I am pleased to inform you thatyou have been selected to participate in the 2008 Northwest Airlines, Inc.Retention Plan (the “Plan”).  The Planhas been established to recognize employees who are in a position to makeimportant contributions to the successful completion of the merger, and toprovide a meaningful incentive for employees to stay committed and productiveduring this time of major organizational change.

 

Weare pleased to provide you with a Retention Payment opportunity in the amountof **[XX]**% of your annual basesalary (as of the date of payment).  Thisretention opportunity is intended to encourage you to stay with Northwestthrough the completion of the regulatory review and to assure that we continueto run the best airline in the industry during this process.

 

Ifyou remain employed with Northwest or an affiliate through the closing date ofthe merger, your Retention Payment will be made to you on the closing date ofthe merger.  Should the merger agreementbe formally terminated, your Retention Payment will be paid to you within10 days after the termination date of the merger agreement.  If you do not remain employed with Northwestor one of its affiliates through the payment date, you will forfeit your rightto receive your Retention Payment. However if your employment is terminated byNorthwest or an affiliate without Cause or you terminate your employment withGood Reason (each as defined in the Plan), prior to the payment date, you willbe entitled to an accelerated payment of your Retention Payment within 10 daysfollowing your termination of employment.

 

TheRetention Payment is subject to the terms and conditions outlined in the Plan,a copy of which will be provided to you.

 

Itis important that your Retention Payment information be kept confidential, asit only pertains to you.  If you have anyquestions regarding this letter or the Retention Plan, please direct thosequestions to your Human Resources representative.

 

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Withyour help, we can make this merger a success. I look forward to working with you during this exciting time.

 

Sincerely,

 

 

DouglasM. Steenland

ChiefExecutive Officer

 

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**Appendix A-1**

 

All salaried employees through the managingdirector level are eligible to participate. Payouts would be made upon the earlier of merger closing or rejection ofthe merger agreement.

 

| ** **                 | ** ** | **Award**                    | ** ** |
|----------------------------|------------|------------------------------|------------|
| ** **                 | ** ** | **As A % of** | ** ** |
| **Grade Level**       | ** ** | **Base Salary**         | ** ** |
|                       |       |                         |       |
| MDs                        |       | 35                           | %          |
|                       |       |                         |       |
| Directors                  |       | 25                           | %          |
|                       |       |                         |       |
| All Other                  |       |                         |       |
| Salaried Employees         |       | 20                           | %          |
| (Grades 3-9, 30-37, 50-55) |       |                         |       |

 

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