**Exhibit 10.3**

 

MANAGEMENT COMPENSATION AGREEMENT

 

between

 

NORTHWEST AIRLINES, INC.

 

and

 

NEAL S. COHEN

 

dated as of

 

May 2, 2005

 

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MANAGEMENT COMPENSATION AGREEMENT

 

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

 

PREAMBLE

 

The Company and Executive hereby desire to enterinto a Management Compensation Agreement dated as of the date first abovewritten.

 

1.     Termsof Employment.

 

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

 

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

 

2.     Compensationand Benefits.

 

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

 

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

 

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

 

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repaidby Executive pursuant to this Section 2.2(a) against any otheramounts payable to the Executive at the time of such termination of employment.

 

(b)  Executive shall be entitled to receivefrom the Company five cash payments of $100,000 each, less all applicablewithholding taxes (the “Cash Retention Payments”), on May 1 of2006, 2007, 2008, 2009 and 2010, so long as Executive remains an activefull-time employee of the Company on the applicable payment date.

 

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

 

(d)  Executive shall be entitled to participatein the Company’s Long-Term Cash Incentive Plan beginning with the two yearperformance period commencing January 1, 2005, the terms and conditions ofwhich shall be established from time to time by the Compensation Committee.  Any payments under the Long-Term CashIncentive Plan shall be subject to the provisions of the Pilot BridgeAgreement.

 

(e)  Executive shall be entitled to receive onthe Effective Date pursuant to the Company’s 2001 Stock Incentive Plan a non-qualifiedstock option award with respect to 150,000 shares of Common Stock, such optionto have an exercise price equal to the fair market value of a share of CommonStock on the Effective Date and become exercisable in four equal installmentson the first, second, third and fourth anniversaries of the Effective Date solong as Executive remains an active full-time employee of the Company on suchdates, the terms and conditions of which award shall be set forth in a written agreementor other documentation which shall be provided to Executive by the Company’sSecretary.

 

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

 

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

 

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

 

2.3           Expenses.  During the term of Executive’semployment hereunder, Executive shall be entitled to receive promptreimbursements for all reasonable business expenses incurred in performingservices hereunder in accordance with the Company’s business expensereimbursement policies in effect from time to time.

 

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

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#### 2.5           Retirement Plans. Executive shall be entitled to participate in the Northwest AirlinesSupplemental Executive Retirement Plan (the “SERP”) on the terms andconditions set forth in an Ancillary Agreement to be provided to Executive bythe Company.  In addition, Executive’saccount under the SERP shall be credited with $200,000 of benefit accruals.

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

 

3.     OtherBenefits.

 

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

 

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

 

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

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4.     Termination of Employment.

 

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

 

4.2           By the Company.  TheCompany may terminate Executive’s employment hereunder at any time with orwithout Cause.

 

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

 

4.4           Notice of Termination.  Anytermination of Executive’s employment hereunder (other than by death) shall becommunicated by thirty (30) days’ advance written Notice of Termination bythe terminating party to the other party to this Agreement; providedthat no advance Notice of Termination of Executive for Cause by the Company isrequired.

 

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

 

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governingbody Executive serves as the Company’s or such affiliate’s designee or otherrepresentative.

 

5.     Paymentsin the Event of Termination of Employment.

 

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

 

5.2           Payments in the Event of Any OtherTermination of Employment.  If Executive’s employment hereunder isterminated by the Company other than for Cause, or by Executive for GoodReason:

 

#### (a) subject to Section 2.2(a) hereof, the Company shall pay Executive (i) hisaccrued and unpaid Base Salary through the Date of Termination, (ii) any incentivepayment under the Key Employee Annual Cash Incentive Program, or any successorannual incentive plan, (the “Incentive Payment”) for any calendar yearended before the Date of Termination, (iii) a pro rata share (based ondays employed during the applicable year) of the Incentive Payment Executivewould otherwise have received with respect to the year in which the Date ofTermination occurs, payable at the time the Incentive Payment would otherwisebe payable to Executive; provided, however, that 100% of theIncentive Payment shall be determined solely with reference to the financialperformance of the Company for the year (based on the goals previouslyestablished with respect thereto) (rather than a portion of the Incentive Paymentdetermined on the basis of individual performance); provided, further,in the event that Company’s performance exceeds 100% of the financialperformance target for the year, that portion of the Incentive Payment thatwould have, but for this Section 5.2(a), related to the achievement of theindividual performance target shall be 100% and (iv) any vested or accruedand unpaid payments, rights or benefits Executive may be otherwise entitled toreceive pursuant to the terms of any written retirement, pension or otheremployee benefit or compensation plan maintained by the Company at the time ortimes provided therein.

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

 

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#### (c)           Executive shall not be required to mitigatethe amount of any payment provided for in this Section 5.2 by seekingother employment or otherwise, and no such payment shall be offset or reducedas a result of Executive’s obtaining new employment.

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#### (d)           Notwithstanding anything else to thecontrary in this Agreement, the Company’s obligation regarding the payments providedfor in Section 5.2(b) hereof is expressly conditioned upon theexecution, delivery and non-revocation of a general release in the formattached hereto as Attachment A.

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5.3           Compliance with Tax Regulations.  Allpayments pursuant to this Section 5 shall be made in compliance with allapplicable laws, rules and regulations, including without limitation theprovisions of the American Jobs Creation Act of 2004 and all rules and regulationspromulgated thereunder.

 

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

 

(a) While employed by the Company andthereafter, Executive shall not disclose any Confidential Information eitherdirectly or indirectly, to anyone (other than appropriate Company employees andadvisors), or use such information for his own account, or for the account ofany other person or entity, without the prior written consent of the Company orexcept as required by law.  Thisconfidentiality covenant has no temporal or geographical restriction.  For purposes of this Agreement, “ConfidentialInformation” shall mean all non-public information respecting the Company’sbusiness, including, but not limited to, its services, pricing, scheduling,products, research and development, processes, customer lists, marketing plansand strategies, financing plans and the terms and provisions of this Agreement,but excluding information that is, or becomes, available to the public (unlesssuch availability occurs through an unauthorized act on the part of theExecutive).  Upon termination of thisAgreement, Executive shall promptly supply to the Company all property and anyother tangible product or document that has been produced by, received by orotherwise submitted to Executive during or prior to his term of employment, andshall not retain any copies thereof.

 

(b) Executive acknowledges that his servicesare of special, unique and extraordinary value to the Company.  Accordingly, so long as the Company hascomplied with its obligations set forth in Section 5 hereof, Executiveshall not, without the consent of the Company, at any time prior to the firstanniversary of the Date of Termination and except as provided in Schedule Aattached hereto (i) become an employee, consultant, officer, partner ordirector of any air carrier which competes with the Company (or any of itsaffiliates) or (ii) whether on Executive’s own behalf or on behalf of orin conjunction with any person, company, business entity or other organizationwhatsoever, directly or indirectly solicit or encourage any employee of theCompany or its affiliates to leave the employment of the Company or itsaffiliates.

 

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

 

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

 

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

 

(e)  Both the Company and Executive agree thatany breach of the terms of this Section 6 by such party would result inirreparable injury and damage to the other party for which there would be noadequate remedy at law, and that, in the event of said breach or any threat ofbreach by such party, the other party shall be entitled to an immediateinjunction and restraining order to prevent such breach or threatened breach,without having to prove damages, in addition to any other remedies to which suchparty may be entitled at law or in equity. Executive further agrees that theprovisions of the covenant not to compete are reasonable.  Should a court determine, however, that anyprovision of the covenant not to compete is unreasonable, either in period oftime, geographical area, or otherwise, the parties hereto agree that thecovenant should be interpreted and enforced to the maximum extent which suchcourt deems reasonable.  The provisionsof this Section 6 shall survive any termination of this Agreement andExecutive’s term of employment.  Theexistence of any claim or cause of action or otherwise, shall not constitute adefense to the enforcement of the covenants and agreements of this Section 6.

 

7.     Successorsand Assigns.

 

### (a) This Agreementshall bind 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 this Agreement 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 this Agreement.

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

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8.     Term.

 

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

 

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9.     Notices.

 

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

 

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

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

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

 

10.   Withholding.

 

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

 

11.   CertainDefined Terms.

 

As used herein, the following terms have thefollowing meanings:

 

“Agreement” shall mean this ManagementCompensation Agreement, as the same may be amended, supplemented or otherwisemodified from time to time in accordance herewith.

 

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

 

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

 

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

 

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“Cause” shall mean with respect totermination by the Company of Executive’s employment hereunder (i) an actor acts of dishonesty by Executive resulting in, or intended to result in,directly or indirectly, any personal enrichment of Executive, (ii) an actor acts of dishonesty by Executive intended to cause substantial injury to theCompany, (iii) material breach (other than as a result of a Disability) byExecutive of Executive’s obligations under this Agreement which action was (a) undertakenwithout a reasonable belief that the action was in the best interests of theCompany and (b) not remedied within a reasonable period of time afterreceipt of written notice from the Company specifying the alleged breach, (iv) Executive’sconviction of, or plea of nolo contendere to, a crime constituting (a) afelony under the laws of any country, the United States or any state thereof or(b) a misdemeanor involving moral turpitude or (v) a material breachof (a) the Company’s Code of Business Conduct or (b) the provisionsof this Agreement.

 

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

 

#### (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”))(a “Person”) of beneficial ownership (within the mean of Rule 13d-3promulgated under the Exchange Act) of 25% or more of either (i) the thenoutstanding shares of Common Stock of Parent (the “Outstanding Parent CommonStock”) or (ii) the combined voting power of the then outstandingvoting securities of Parent entitled to vote generally in the election ofdirectors (the “Outstanding Parent Voting Securities”); provided,however, this subsection (a) shall not apply to the InvestorStockholders party to the Second Amended and Restated Stockholders’ Agreementdated as of December 23, 1993; or

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

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

 

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

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

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

 

“Compensation Committee” shall mean theCompensation Committee of the Board of Directors of the Company or anysubcommittee thereof.

 

“Date of Termination” shall mean, withrespect to Executive, the date of termination of Executive’s employmenthereunder after the notice period provided by Section 4.4.

 

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

 

“Effective Date” shall mean May 2, 2005.

 

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

 

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

 

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#### (a) areduction in Executive’s Base Salary or level of target incentive payment underthe KEACIP or any successor annual incentive plan (except as permittedhereunder);

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#### (b) anymaterial change in Executive’s job responsibilities, provided that aslong as Executive retains a substantial portion of his then current oversightresponsibilities, a transfer of a portion of such oversight responsibilitiesshall not in and of itself constitute a material change in Executive’s jobresponsibilities;

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

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#### (d) afailure by the Company to comply with any provision of this Agreement;

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provided, however, that the foregoing eventsshall constitute Good Reason only if the Company fails to cure such eventwithin thirty (30) days after receipt from Executive of written notice of theevent which constitutes Good Reason; provided, further, that “GoodReason” shall cease to exist for an event on the 60th day followingthe later of its occurrence or Executive’s knowledge thereof, unless Executivehas given the Company written notice thereof prior to such date.

 

In addition, in order for Executive’s termination ofhis employment to be considered for Good Reason, such termination must occur withinone (1) year after the event giving rise to such Good Reason.  Executive’s continued employment shall notconstitute consent to, or a waiver of rights with respect to, any circumstancesconstituting Good Reason hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

12.   ExecutiveRepresentation.

 

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

 

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13.   Amendment.

 

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

 

14.   GoverningLaw.

 

The validity, interpretation, construction andperformance of this Agreement shall be governed by the laws of the State ofMinnesota, without regard to principles of conflicts of laws.

 

15.   Validity.

 

#### The invalidity orunenforceability of any provision or provisions of this Agreement shall notaffect the validity or enforceability of any other provision of this Agreementwhich shall remain in full force and effect.

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16.   Arbitration.

 

Except as otherwise provided in Section 17 ofthis Agreement, all disputes and controversies arising from or in conjunctionwith Executive’s employment with, or any termination from, the Company and alldisputes and controversies arising under or in connection with this Agreement(except claims for vested benefits brought under ERISA) shall be settled bymandatory arbitration conducted before one arbitrator having knowledge ofemployment law in accordance with the rules for expedited resolution ofemployment disputes of the American Arbitration Association then ineffect.  In the event the parties cannotagree upon a single arbitrator, each party shall select an arbitrator and thetwo arbitrators so chosen shall then select a single arbitrator.  The arbitration shall be held in theMinneapolis/St. Paul metropolitan area at a location selected by theCompany.  The determination of thearbitrator shall be made within thirty (30) days following the close ofthe hearing on any dispute or controversy and shall be final and binding on theparties.  The parties hereby waive theirright to a trial of any and all claims arising out of this Agreement or breach ofthis Agreement.  All costs and expensesincurred in connection with any arbitration including, without limitation,arbitrator and attorney’s fees, shall be paid by the non-prevailing party inthe arbitration unless the arbitrator determines that such expenses must beotherwise allocated under applicable law to maintain the validity of this Section 16.

 

17.   SpecificPerformance.

 

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

 

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18.   Cooperation.  

 

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

 

19.   EntireAgreement.

 

This Agreement, together with the Release containthe entire understanding between the Company and Executive with respect toExecutive’s employment with the Company and supersedes in all respects anyprior or other agreement or understanding between the Company or any affiliateof the Company and Executive with respect to Executive’s employment.

 

20.   ParentUndertaking.

 

Northwest Airlines Corporation, as parentcorporation to the Company, hereby agrees to cause the Company to perform allof its obligations hereunder and Executive shall be deemed to have entered intothis Agreement in reliance upon the undertaking set forth herein.

 

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

 

 
|   | NORTHWEST AIRLINES CORPORATION |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            |        /c/ Douglas M. Steeenland |   |
|   |                           |     Douglas M. Steenland |   |
|   |                           |     Chief Executive Officer |   |
|   |                           |   |   |
|   |                           |   |   |
|   | NORTHWEST AIRLINES, INC.       |   |
|   |                           |   |   |
|   |                           |   |   |
|   | By:                            |        /c/ Douglas M. Steeenland |   |
|   |                           |     Douglas M. Steenland |   |
|   |                           |     Chief Executive Officer |   |
|   |                           |   |   |
|   |                           |   |   |
|   | EXECUTIVE:                     |   |
|   |                           |   |   |
|   |                           |   |   |
|   |                           |     /c/ Neal S. Cohen |   |
|   |                           |     Neal S. Cohen |   |
|   |                           |   |   |
|   |                           |     Executive’s Address: |   |   |
|   |                           |   |   |   |   |
|   |                           |   |   |   |   |

 

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Schedule A

 

Executive is entitled to receive a success fee incertain circumstances in connection with services rendered by him prior to theEffective Date to Wexford Capital, provided that all services to be rendered byExecutive in connection with such engagement shall be completed prior to theEffective Date except that at the request of Wexford Capital Executive may berequired to provide such services during the ten (10) business day periodfollowing Executive’s termination of such engagement, which shall occur nolater than the date of this Agreement. In addition, Executive remains subject to certain confidentialityprovisions related to his employment at US Airways and his engagement withWexford Capital.

 

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Attachment A

 

GENERAL RELEASE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.             Executive’s employment with Northwest shallbe terminated effective                             ,                            .

 

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

 

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benefitsto which Executive is entitled under the Agreement upon termination ofExecutive’s employment.

 

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

 

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

 

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

 

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

 

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

 

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7.             Executive agrees not to make any untruthfulor disparaging statements, written or oral, about Northwest, the ReleasedParties or Northwest’s personnel policies and practices to any of Northwest’scustomers, competitors, suppliers, employees, former employees, or the press orother media.  Except as hereincontemplated, Executive also agrees that he will not voluntarily participate inany proceeding of any kind brought against the Released Parties relating tothis Agreement or to matters occurring during Executive’s employment withNorthwest.

 

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

 

(b)           The parties agree that any and all furtherlegal proceedings between Executive and the Released Parties, whether arisingunder statute, constitutions, contract, common law or otherwise, including theissue of arbitrability, will be submitted for resolution exclusively pursuantto the arbitration provision contained in the Agreement.  The parties hereby waive their right to atrial of any and all claims arising out of this Release or breach of thisRelease.

 

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

 

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

 

10.           (a)           Executive acknowledges and agrees that, indeciding to execute this Release, he has had the opportunity to consult withlegal, financial and other personal advisors of his own choosing as he deemsappropriate, in assessing whether to execute this Release.  Executive represents and acknowledges that norepresentations, statement, promise, inducement, threat or suggestion has beenmade by Northwest or the Released Parties to influence Executive to sign thisRelease except such statements as are expressly set forth herein.  Executive agrees that he has been given aminimum of twenty-one (21) days within which to consider the terms and effectsof this Release insofar as it relates to settlement and release of potentialclaims under the ADEA, and to consult with, and to ask any questions that hemay have of anyone, including legal counsel and other personal advisors of hisown choosing, and that he has executed this Release voluntarily and with fullunderstanding of its terms and effects.

 

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

 

17

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revocationis delivered by mail, it must be:  (i) postmarkedwithin the 15 or 7 day period, respectively, (ii) properly addressed tothe Secretary of Northwest as set forth above, and (iii) sent by certifiedmail return receipt requested.  ThisRelease shall not become effective or enforceable until the 15 or 7 day periodsdescribed above have expired.  Nopayments shall be due, owing or paid by Northwest unless and until this Releasebecomes effective.

 

ThisRelease may not be changed or modified, except by a written instrument signedby Executive and Northwest.

 

 
| NORTHWEST  AIRLINES, INC. | EXECUTIVE: |
|---------------------------|------------|
|                      |       |
|                      |       |
| By:                       |       |   |   |   |
| Name:                     |       |   |   |
| Title:                    |       |   |   |
|                           |            |  |  |  |  |  |

 

18

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