**Exhibit 10.6**

 

**[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEENSEPARATELY FILED WITH THE COMMISSION]**

 

**AGREEMENT**

 

**THIS AGREEMENT** is entered into as of August 29,2005, between MAIR Holdings, Inc., a Minnesota corporation (“MAIR”), andNorthwest Airlines, Inc., a Minnesota corporation (“Northwest”).

 

**WHEREAS**, contemporaneous with the execution ofthis Agreement, Mesaba Aviation, Inc., a wholly-owned subsidiary of MAIR (“Mesaba”),and Northwest have entered into an Airline Services Agreement (the “ASA”)pursuant to which Mesaba has agreed to provide certain regional airlineservices to Northwest; and

 

**WHEREAS**, Northwest is the beneficial owner ofwarrants (the “Original Warrants”) to purchase an aggregate of 4,151,922 sharesof common stock, par value $0.01 per share, of MAIR (the “Common Stock”); and

 

**WHEREAS**, as partial inducement for Northwestto enter into the ASA, MAIR has agreed to (i) issue to Northwest an amended andrestated warrant (the “New Warrant”) that amends the terms of the OriginalWarrants by reducing the number of shares of Common Stock issuable to Northwestupon exercise of the New Warrant, adjusts the exercise price of such NewWarrant, modifies the vesting schedule and extends the term of the OriginalWarrants; (ii) provide an initial capital contribution to Mesaba Aviation,Inc.; (iii) grant certain rights to Northwest concerning MAIR’s Board ofDirectors and management; and (iv) certain other related matters, all on theterms and subject to the conditions set forth herein; and

 

**WHEREAS**, in return for MAIR’s obligationshereunder, Northwest has agreed to grant certain pass privileges to MAIR’semployees in accordance with Exhibit F to the ASA, and to affirmativelyacknowledge MAIR’s right to undertake certain airline business opportunitieswith certain of MAIR’s subsidiaries; and

 

**WHEREAS**, the execution and delivery of thisAgreement is a condition to MAIR and Northwest entering into the ASA.

 

**NOW, THEREFORE**, in consideration of the premisesand other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, MAIR and Northwest do hereby agree as follows:

 

1.             **Term of Agreement**.  The rights and obligations created pursuantto this Agreement shall become effective as of the Effective Date of the ASA(as such date is defined in the ASA) and shall terminate upon termination ofthe ASA.

 

2.             **Delivery of New Warrant**.  Contemporaneous with the execution of the ASAand this Agreement, MAIR shall execute and deliver to Northwest the New Warrantin the form attached hereto as Exhibit A.

 

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3.             **Capital Contribution**.  Within three (3) business days following theexecution of the ASA and this Agreement, MAIR shall make a one-time cashcontribution to Mesaba in the amount of $*** less the amount of Mesaba’s lowestcash balance during the thirty (30) days immediately prior to the date of thisAgreement.  MAIR agrees that, from thedate of execution of this Agreement through March 31, 2006, Mesaba will not declareany dividends or other distributions to MAIR, and Mesaba will not make anyloans to MAIR or to any of Mesaba’s Affiliates (as defined in the ASA).  With respect to the time period after March31, 2006, so long as the ASA remains in effect, Mesaba shall only declaredividends to MAIR or make loans to MAIR or to any of Mesaba’s Affiliates in anamount which does not exceed Mesaba’s Excess Cash (as defined herein) at thetime of the declaration of the dividend or the making of the loan.  Excess Cash means, as of a specified date,the amount of cash greater than the amount of Mesaba’s *** for the three (3)months prior to such date.  For example,if Mesaba’s *** for the first calendar quarter of 2006 is $***, and if Mesaba’scash balance is $*** on April 30, 2006, Mesaba may declare a dividend to MAIRon April 30, 2006 of up to $***, and if Mesaba’s cash balance on April 30, 2006is $***, Mesaba may not declare a dividend to MAIR on April 30, 2006.

 

4.             **Board Representation**.  MAIR acknowledges that, so long as the ASA remainseffective, Northwest shall be allowed to nominate and recommend for election bythe shareholders of MAIR a sufficient number of nominees so that if suchnominees were elected, there would be three (3) directors designated byNorthwest then serving on the Board of Directors of MAIR (the “Nominees”), andMAIR further agrees that any vacancy created by the death, resignation orremoval of a Nominee shall be filled by a person nominated by Northwest;provided that, in exercising its rights pursuant to this Section 4, Northwestagrees that (i) at least one of the Nominees shall be deemed independentpursuant to then applicable rules and regulations of the Securities andExchange Commission and Nasdaq listing standards (the “IndependenceRequirements”); (ii) each of such Nominees shall be approved by the NominatingCommittee of MAIR’s Board of Directors, which approval shall be limited todetermining whether at least one such nominee satisfies the IndependenceRequirements.  For the avoidance ofdoubt, Northwest acknowledges that MAIR shall not be obligated to, as a resultof the failure of at least one of the Nominees to be deemed independent,increase the number of directors on its Board of Directors or replace anyexisting non-independent director with an independent director to ensure MAIR’songoing compliance with the Independence Requirements.

 

5.             **Pass Privileges**.  Northwest agrees that all MAIR employeesshall be eligible to participate in Northwest’s pass program, as outlined inExhibit F to the ASA.

 

6.             **Big Sky Turboprop Rights**.  Northwest acknowledges and agrees that Mesaba’srights set forth in Section 2.14 of the ASA with respect to operation ofScheduled Flights utilizing turboprop aircraft with nineteen (19) or fewerseats may be exercised by MAIR’S subsidiary, Big Sky Transportation Co. (“BigSky”), subject to Big Sky’s satisfactory completion of a Northwest operationalquality and safety audit and submission of an economically equivalent bid tooperate such Scheduled Flights.

 

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7.             **Other Operations**.  Northwest acknowledges that MAIR or one ofits subsidiaries (other than Mesaba) may operate flights to or from the HubCities (as defined in the ASA) using its own airline code or the airline code, logoor other identifying feature of a foreign or United States airlines other thanNorthwest, provided that (i) with respect to any such flight the Hub City is aspoke from a city that is not a Hub City and is not part of a hub operationestablished by such foreign or United States airline at a Hub City and (ii) indoing so, MAIR or its subsidiary does not cause Northwest to violate its pilotscope clause.

 

8.             **Audit Rights**.  MAIR acknowledges that Section 6.02 of theASA grants Northwest the right to audit the books and records of Mesaba.  MAIR further acknowledges that, to the extentMAIR allocates holding company expenses to its subsidiaries, including Mesaba,or the amount of any payments made by Northwest to Mesaba pursuant to the ASAreflect any costs or expenses incurred by MAIR, MAIR will allow Northwest toaudit such expenses and the allocation thereof. Any such audit of MAIR shall be subject to the same terms and timelimits as are set forth in the ASA.

 

9.             **Miscellaneous**.

 

(a)           Waivers. Amendments and Approvals.  Any term or provision of this Agreementrequiring performance by or binding upon the parties hereto may be amended, andthe observance of any term of this Agreement may be waived (either generally orin a particular instance and either retroactively or prospectively), only by awriting signed by the parties hereto. The waiver by a party of any breachhereof or default in the performance hereof shall not be deemed to constitute awaiver of any other default or succeeding breach or default.

 

(b)           Written Changes, Waivers, Etc. Neither this Agreement nor anyprovision hereof may be changed, waived, discharged or terminated orally, but only by a statement inwriting signed by the party against which enforcement of the change, waiver,discharge or termination is sought.

 

(c)           Notices.  All notices, consents or other communicationsrequired or permitted to be given under this Agreement shall be in writing andshall be deemed to have been duly given and received when delivered personally,delivery charges prepaid, or three business days after being sent by registeredor certified mail (return receipt requested), postage prepaid, or one businessday after being sent by a nationally recognized express courier service,postage or delivery charges prepaid, to the parties at their respectiveaddresses stated below.  Notices may alsobe given by facsimile and will be deemed to have been duly given and receivedon the date transmitted if confirmed answerback is received at the end of thetransmission.  All such notices, consentsor other communications shall be delivered as follows:

 

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| if to  Northwest: |   | Northwest  Airlines, Inc.                   |
|-------------------|--------|---------------------------------------------|
|              |   | 2700 Lone  Oak Parkway                      |
|              |   | Dept. A6110                                 |
|              |   | Eagan, MN  55121                            |
|              |   | Attention:  Vice President Network Planning |
|              |   | Fax No.:  (612) 726-7994                    |
|              |   |                                        |
| with a copy  to:  |   | Northwest  Airlines, Inc.                   |
|              |   | 2700 Lone  Oak Parkway                      |
|              |   | Dept. A1180                                 |
|              |   | Eagan, MN  55121                            |
|              |   | Attention:  General Counsel                 |
|              |   | Fax No.:  (612) 726-7123                    |
|              |   |                                        |
| if to MAIR:       |   | MAIR Holdings, Inc.                         |
|              |   | 150 South 5th Street, Suite 1360            |
|              |   | Minneapolis, MN 55402                       |
|              |   | Attention:  Chief Executive  Officer   |
|              |   | Fax No.: (612) 333-0590                     |
|              |   |                                        |
| with a copy to:   |   | MAIR Holdings, Inc.                         |
|              |   | 150 South 5th Street, Suite 1360            |
|              |   | Minneapolis, MN 55402                       |
|              |   | Attention: General Counsel                  |
|              |   | Fax No.: (612) 333-0590                     |

 

Either partymay change its address for such communications by giving notice thereof to theother party in conformity with this section.

 

(d)           Entire Agreement. This Agreement,the ASA and the respective exhibits and attachments hereto and theretoconstitute the entire understanding and agreement of the parties hereto withrespect to the subject matter hereof and supersede all prior andcontemporaneous agreements or understandings, inducements or conditions,express or implied, written or oral, between the parties with respect hereto.

 

(e)           Severability. Should any one ormore of the provisions of this Agreement, the ASA or of any agreement enteredinto pursuant to this Agreement or the ASA be determined to be illegal orunenforceable, all other provisions of this Agreement, the ASA and of eachother agreement entered into pursuant to this Agreement or the ASA, shall begiven effect separately from the provision or provisions determined to beillegal or unenforceable and shall not be affected thereby. The parties furtheragree to replace such void or unenforceable provision of this Agreement or theASA (as

 

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applicable) with a valid and enforceable provision which will achieve,to the extent possible, the economic, business and other purposes of the voidor unenforceable provision.

 

(f)            Successors and Assigns. The termsand conditions of this Agreement shall inure to the benefit of and be bindingupon and be enforceable by the respective heirs, successors and assigns of theparties hereto; provided, however, that such assignee or transferee agrees inwriting to be bound by all of the provisions of this Agreement. Nothing in thisAgreement, express or implied, is intended to confer upon any party, other thanthe parties hereto or their respective successors and assigns, any rights,remedies, obligations or liabilities under or by reason of this Agreement,except as expressly provided in this Agreement.

 

(g)           Governing Law. This Agreementshall be governed by and construed under the laws of the State of Minnesota,without regard to its conflicts of laws provisions.

 

(h)           Counterparts. This Agreement maybe executed concurrently in two or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameinstrument.

 

(i)            Captions.  Captions set forth herein arefor ease of reference only and shall not affect the meaning of the relevantprovisions.

 

 

**IN WITNESS WHEREOF**, the parties hereto haveexecuted this Agreement as of the day and year first stated above.

 

 
| **NORTHWEST  AIRLINES, INC.** | **MAIR  HOLDINGS, INC.**   |
|-------------------------------|----------------------------|
|                          |                       |
|                          |                       |
| By:                           | /s/ J.  Timothy Griffin    |   | By: | /s/ Paul F.  Foley |   |
|                          | J. Timothy Griffin         |   | Paul F. Foley |
|                          | Executive Vice President   |   | President and Chief |
|                          | Marketing and Distribution |   | Executive Officer |
|                               |                            |  |  |  |  |

 

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