Exhibit 10.6


 


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


 


AGREEMENT


 


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


 


WHEREAS, contemporaneous with the execution of
this 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 airline
services to Northwest; and


 


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


 


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


 


WHEREAS, in return for MAIR’s obligations
hereunder, Northwest has agreed to grant certain pass privileges to MAIR’s
employees in accordance with Exhibit F to the ASA, and to affirmatively
acknowledge MAIR’s right to undertake certain airline business opportunities
with certain of MAIR’s subsidiaries; and


 


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


 


NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, MAIR and Northwest do hereby agree as follows:


 


1.             Term of Agreement.  The rights and obligations created pursuant
to 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 of
the ASA.


 


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


 





















 


3.             Capital Contribution.  Within three (3) business days following the
execution of the ASA and this Agreement, MAIR shall make a one-time cash
contribution to Mesaba in the amount of $*** less the amount of Mesaba’s lowest
cash balance during the thirty (30) days immediately prior to the date of this
Agreement.  MAIR agrees that, from the
date of execution of this Agreement through March 31, 2006, Mesaba will not declare
any dividends or other distributions to MAIR, and Mesaba will not make any
loans to MAIR or to any of Mesaba’s Affiliates (as defined in the ASA).  With respect to the time period after March
31, 2006, so long as the ASA remains in effect, Mesaba shall only declare
dividends to MAIR or make loans to MAIR or to any of Mesaba’s Affiliates in an
amount which does not exceed Mesaba’s Excess Cash (as defined herein) at the
time 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’s
cash balance is $*** on April 30, 2006, Mesaba may declare a dividend to MAIR
on April 30, 2006 of up to $***, and if Mesaba’s cash balance on April 30, 2006
is $***, Mesaba may not declare a dividend to MAIR on April 30, 2006.


 


4.             Board Representation.  MAIR acknowledges that, so long as the ASA remains
effective, Northwest shall be allowed to nominate and recommend for election by
the shareholders of MAIR a sufficient number of nominees so that if such
nominees were elected, there would be three (3) directors designated by
Northwest then serving on the Board of Directors of MAIR (the “Nominees”), and
MAIR further agrees that any vacancy created by the death, resignation or
removal of a Nominee shall be filled by a person nominated by Northwest;
provided that, in exercising its rights pursuant to this Section 4, Northwest
agrees that (i) at least one of the Nominees shall be deemed independent
pursuant to then applicable rules and regulations of the Securities and
Exchange Commission and Nasdaq listing standards (the “Independence
Requirements”); (ii) each of such Nominees shall be approved by the Nominating
Committee of MAIR’s Board of Directors, which approval shall be limited to
determining whether at least one such nominee satisfies the Independence
Requirements.  For the avoidance of
doubt, Northwest acknowledges that MAIR shall not be obligated to, as a result
of 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 any
existing non-independent director with an independent director to ensure MAIR’s
ongoing compliance with the Independence Requirements.


 


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


 


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


 


2





















 


7.             Other Operations.  Northwest acknowledges that MAIR or one of
its subsidiaries (other than Mesaba) may operate flights to or from the Hub
Cities (as defined in the ASA) using its own airline code or the airline code, logo
or other identifying feature of a foreign or United States airlines other than
Northwest, provided that (i) with respect to any such flight the Hub City is a
spoke from a city that is not a Hub City and is not part of a hub operation
established by such foreign or United States airline at a Hub City and (ii) in
doing so, MAIR or its subsidiary does not cause Northwest to violate its pilot
scope clause.


 


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


 


9.             Miscellaneous.


 


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


 


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


 


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


 


3





















 


	
  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 party
may change its address for such communications by giving notice thereof to the
other party in conformity with this section.


 


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


 


(e)           Severability. Should any one or
more of the provisions of this Agreement, the ASA or of any agreement entered
into pursuant to this Agreement or the ASA be determined to be illegal or
unenforceable, all other provisions of this Agreement, the ASA and of each
other agreement entered into pursuant to this Agreement or the ASA, shall be
given effect separately from the provision or provisions determined to be
illegal or unenforceable and shall not be affected thereby. The parties further
agree to replace such void or unenforceable provision of this Agreement or the
ASA (as


 


4





















 


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


 


(f)            Successors and Assigns. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon and be enforceable by the respective heirs, successors and assigns of the
parties hereto; provided, however, that such assignee or transferee agrees in
writing to be bound by all of the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the 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 Agreement
shall 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 may
be executed concurrently in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


(i)            Captions.  Captions set forth herein are
for ease of reference only and shall not affect the meaning of the relevant
provisions.


 


 


IN WITNESS WHEREOF, the parties hereto have
executed 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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