Document:

Exhibit
10.1

 

February 24, 2005

 

Via Overnight Mail

 

Frank Lavelle

4 Iddings Lane

Newtown Square, PA 19073

 

Dear Frank:

 

On behalf of
MedQuist Inc. (the “Company”), this letter describes the terms of your
new employment as the Company’s President, which must commence on a date
mutually agreed to in writing by you and the Company (the “Employment
Commencement Date”).  For purposes of
this Agreement, you are referred to as the “Employee.”  Other capitalized terms used in this
Agreement have the meanings defined in Section 7, below.

 

1.                                       Term.  The Company shall employ Employee hereunder
for a three-year (3) year term commencing on the Employment Commencement Date
hereof (the “Term”), which Term will be automatically extended for
additional one (1) year periods beginning on the third anniversary of the
Employment Commencement Date and upon each subsequent anniversary thereof
unless:  (a) either party provides the
other party with at least ninety (90) days’ prior written notice of its
intention not to renew this Agreement; (b) Employee resigns prior to the
expiration of the Term upon at least thirty (30) days’ prior written notice;
(c) Company terminates Employee’s employment without Cause upon at least thirty
(30) days’ prior written notice; or (d) the Employee’s employment is terminated
by the Company for Cause.

 

2.                                       Responsibilities/Reporting.  Employee shall devote his full time and
attention to the duties and responsibilities of the Company’s President and
shall report to the Interim Chief Executive Officer.  Subject to the approval of the Company’s
Board of Directors (the “Board”), Employee shall become the Company’s
Chief Executive Officer.  If and when the
Board acts to appoint Employee as Chief Executive Officer, Employee shall,
thereafter, report to the Board.  In the
event of such appointment as Chief Executive Officer, Employee shall continue
to be subject to the terms of this Agreement. 
Notwithstanding the preceding provisions of this subsection, Employee
shall not be prohibited from serving on
corporate, industry, civic, or charitable boards or committees, so long as such
activities do not interfere with the performance of Employee’s responsibilities
as an employee of the Company in accordance with this Agreement or violate Section 4
of this Agreement; provided, however, that if Employee wishes to join any such
boards or committees after the Employment Commencement Date, Employee shall
provide the Board with advance written notice and Board approval, which shall
not be unreasonably withheld, shall be required prior to Employee joining any
such board or committee.

 

 

3.                                       Consideration.

 

a.                                       Compensation.  As consideration for all services rendered by
Employee to the Company and for the Covenants contained herein, Employee will
be entitled to:

 

(1)                                  base
salary at a minimum annual rate of $500,000, subject to review and adjustment
annually during the Term;

 

(2)                                  signing
bonus of $46,000 payable within thirty (30) days of the Employment Commencement
Date;

 

(3)                                  participate
in MedQuist’s Management Bonus Plan. 
Employee’s annual target bonus in this plan will be 50% of Employee’s
annual base salary.  The annual target
bonus is the amount that the Employee shall be eligible to receive if the
Company and Employee attain the pre-established bonus plan target objectives.  Each year, 75% of the annual target bonus
will be based upon achievement of financial objectives proposed by Company
management and approved by the Board (hereinafter “Annual Financial
Objectives”); and (b) 25% of the annual target bonus will be based upon
achievement of specific strategic and tactical initiatives proposed by Company
management and approved by the Board (hereinafter “Annual Strategic
Initiatives”).  The actual annual
bonus award may be higher or lower than the annual target bonus amount based
upon achievement of the objectives by Employee and the Company.  Management Bonus Plan target objectives shall
be developed on or before February 28th of each year of the
Management Bonus Plan.  For 2005, payment
of the annual target bonus in the amount of $250,000 is guaranteed;

 

(4)                                  receive
an annual discretionary bonus of up to 50% of base salary which shall be
payable at the discretion of the Compensation Committee of the Board;

 

(5)                                  participate
in the same employee benefit plans available generally to other full-time
employees of the Company, subject to the terms of those plans (as the same may
be modified, amended or terminated from time to time) (benefits information
package enclosed);

 

(6)                                  vacation
in accordance with the Company’s policies; provided that Employee shall be
entitled to a minimum of four (4) weeks of vacation annually;

 

(7)                                  a
car allowance of $1,500 per month;

 

(8)                                  reimbursement
of business expenses in accordance with Company policy;

 

(9)                                  reimbursement
of up to $7,500 in legal fees associated with the review and negotiation of
this Agreement; and

 

2

 

(10)                            if
Employee’s employment is terminated by the Company without Cause, Employee
terminates for Good Reason or due to Disability, or the Company does not renew
the Term in accordance with Section 1, the severance pay and
benefits described below in Section 5.

 

b.                                      Long
Term Incentives.

 

(1)                                  Annual
Option Grant.  Employee shall be
eligible for annual grants of non-qualified stock options (“Annual Option
Grant”) to purchase Company common stock, no par value (“Common Stock”)
pursuant to the Company’s Stock Option Plan adopted May 29, 2002 or any
successor option plan adopted by the Company and approved by shareholders (the “Option
Plan”).  The Annual Option Grant
shall have a target value, based on an accepted option pricing methodology
chosen by the Company, of 100% of Employee’s base salary for the year in which
such Annual Option Grant is made, subject to the following:

 

A.                                 Employee
shall be eligible for 75% of the Annual Option Grant upon achievement of the
Annual Financial Objectives and an additional 25% of the Annual Option Grant
upon achievement of Annual Strategic Initiatives.  The Annual Option Grant shall be made in
accordance with the terms of the Option Plan within thirty (30) days after the
Company has determined that the objectives and initiatives have been met;
provided that, with respect to any year, the Company shall make such
determination not later than the end of the first calendar quarter following
such year.

 

B.                                   Fifty
percent (50%) of the options subject to the Annual Option Grant shall have an
exercise price equal to fair market value of the Common Stock on the date of
grant; 25% of such options shall have an exercise price equal to 125% of fair
market value of the Common Stock on the date of grant; and 25% of such options
shall have an exercise price of 150% of fair market value of the Common Stock
on the date of grant.

 

C.                                   If
the Employee is not eligible for the entire target grant with respect to any
year, the preceding exercise prices shall be applied proportionally to that
portion of the Annual Option Grant that is made.

 

D.                                  Each
Annual Option Grant shall vest in equal 20% installments on each of the first
five (5) anniversaries of the applicable grant date, subject to Employee’s
continued employment with the Company.

 

E.                                    Each
Annual Option Grant shall be subject to the terms and conditions of the Option
Plan and the Stock Option Agreement that will be issued if and when the grant
becomes effective.

 

(2)                                  Restricted
Stock In Lieu of Annual Option Grant. 
In lieu of one or more of the Annual Option Grants provided for in the
preceding subsection (1), the Board may issue shares of Common Stock that
are subject to restrictions and a risk of forfeiture (“Restricted Stock
Grant”); provided that any such grant shall be pursuant to a

 

3

 

plan approved by the Company’s shareholders (a “Restricted Stock
Plan”).  If the Board determines to
grant a Restricted Stock Grant, the value of any such grant shall equal the
value of the Annual Option Grant, which shall based on an accepted option
pricing methodology chosen by the Company, to which Employee is otherwise
entitled.  Any Restricted Stock Grant
shall be subject to the vesting schedule specified in Section 3.b.(1)D.

 

(3)                                  Cash
in Lieu of Annual Option Grant or Restricted Stock Grant.  If Employee has earned all of part of the
Annual Option Grant pursuant to Section 3.b.(1)(A), but the Board
chooses not to grant the Annual Option Grant (or Restricted Stock Grant in lieu
thereof) in any year during the Term because: 
(A) the Company is not current in its reporting obligations under the
Securities and Exchange Act of 1934; (B) the Form S-8 Registration Statement
for the Option Plan or a Restricted Stock Plan does not comply with the
requirement of the Securities and Exchange Commission; and/or (C) there are not
a sufficient number of shares available under the Option Plan or a Restricted Stock
Plan, then within 30 days after the later of (x) the close of such year or (y)
the date on which the Board determines the degree to which the Annual Strategic
Initiatives and Annual Financial Objectives have been satisfied, the Employee
shall be entitled to a cash payment of $250,000, or portion thereof, based on
the achievement of the Annual Strategic Initiatives and Annual Financial
Objectives to which the Annual Option Grant is subject.

 

(4)                                  Restricted
Stock Signing Bonus.  Within a
reasonable period of time following the date that the Company again becomes
current in its reporting obligations under the Securities and Exchange Act of
1934, Employee will be granted 35,000 shares of restricted Common Stock (the “Restricted
Stock”).  The Restricted Stock shall
vest and thereafter not be subject to forfeiture as follows:  40% on the second anniversary of Employee’s
Employment Commencement Date; 20% on each anniversary thereafter.  The grant of Restricted Stock pursuant to
this subsection shall be pursuant to a Restricted Stock Plan.  If there is not a Restricted Stock Plan,
Employee will be granted non-qualified options to purchase 100,000 shares of
Common Stock pursuant to the Option Plan. 
Such stock options shall be subject to the same vesting schedule to
which the Restricted Stock would have been subject if granted.  The Restricted Stock shall be subject to an
award agreement with terms and conditions not inconsistent with the provisions
set forth herein, as well as such other terms and conditions to which grants of
restricted stock are customarily subject. 
Any grant of Restricted Stock will be made at fair market value on the
date of grant.  If such Restricted Stock
or stock option grant is not made by December 31, 2005, Employee shall
receive a cash payment of $250,000, less applicable withholding, in January 2006.

 

(5)                                  In
the event of a Change in Control, Employee shall be fully vested in any
restricted stock and stock options issued pursuant to this Section 3.

 

4.                                       Covenants

 

a.                                       Non-Solicitation.  While employed by the Company and for the
eighteen (18) month period following the cessation of that employment for any
reason

 

4

 

(and without regard to whether such cessation was initiated by Employee
or the Company), Employee will not do any of the following without the prior
written consent of the Company:

 

(1)                                  solicit,
entice or induce, either directly or indirectly, any person, firm or
corporation who or which is a client or customer of the Company or any of its
subsidiaries to become a client or customer of any other person, firm or
corporation that is in the same Business as the Company;

 

(2)                                  influence
or attempt to influence, either directly or indirectly, any customer of the
Company or its subsidiaries to terminate or modify any written or oral
agreement or course of dealing with the Company or its subsidiaries (except in
Employee’s capacity as an employee of the Company); or

 

(3)                                  influence
or attempt to influence, either directly or indirectly, any person to terminate
or modify any employment, consulting, agency, distributorship, licensing or
other similar relationship or arrangement with the Company or its subsidiaries
(except in Employee’s capacity as an employee of the Company).

 

b.                                      Non-Disclosure.  Employee shall not use for Employee’s
personal benefit, or disclose, communicate or divulge to, or use for the direct
or indirect benefit of any person, firm, association or company other than
Company, any “Confidential Information,” which term shall mean any information
regarding the business methods, business policies, policies, procedures,
techniques, research or development projects or results, historical or
projected financial information, budgets, trade secrets, or other knowledge or
processes of, or developed by, Company or any other confidential information
relating to or dealing with the business operations of Company, made known to
Employee or learned or acquired by Employee while in the employ of Company, but
Confidential Information shall not include information otherwise lawfully known
generally by or readily accessible to the general public.  The foregoing provisions of this subsection shall
apply during and after the period when the Employee is an employee of the
Company and shall be in addition to (and not a limitation of) any legally
applicable protections of Company interest in confidential information, trade
secrets, and the like.  At the
termination of Employee’s employment with Company, Employee shall return to the
Company all copies of Confidential Information in any medium, including
computer tapes and other forms of data storage.

 

c.                                       Non-Competition.  While employed by the Company and for the
eighteen (18) month period following the cessation of that employment for any
reason (and without regard to whether such cessation was initiated by Employee
or the Company), Employee shall not directly or indirectly engage in (as a
principal, shareholder, partner, director, officer, agent, employee, consultant
or otherwise) or be financially interested in any business which is involved in
business activities which are the same as or in direct competition with
business activities carried on by the Company, or being definitively planned by
the Company at the time of termination of Employee’s employment.  Nothing contained in this subsection shall
prevent Employee from holding for investment up to three percent (3%) of any
class of equity securities of a company

 

5

 

whose securities are publicly traded on a national securities exchange
or in a national market system.

 

d.                                      Intellectual
Property & Company Creations.

 

(1)                                  Ownership.  All right, title and interest in and to any
and all ideas, inventions, designs, technologies, formulas, methods, processes,
development techniques, discoveries, computer programs or instructions (whether
in source code, object code, or any other form), computer hardware, algorithms,
plans, customer lists, memoranda, tests, research, designs, specifications,
models, data, diagrams, flow charts, techniques (whether reduced to written
form or otherwise), patents, patent applications, formats, test results,
marketing and business ideas, trademarks, trade secrets, service marks, trade
dress, logos, trade names, fictitious names, brand names, corporate names,
original works of authorship, copyrights, copyrightable works, mask works,
computer software, all other similar intangible personal property, and all
improvements, derivative works, know-how, data, rights and claims related to
the foregoing that have been or are conceived, developed or created in whole or
in part by the Employee (a) at any time and at any place that relates directly
or indirectly to the business of the Company, as then operated, operated in the
past or under consideration or development or (b) as a result of tasks assigned
to Employee by the Company (collectively, “Company Creations”), shall be
and become and remain the sole and exclusive property of the Company and shall
be considered “works made for hire” as that term is defined pursuant to
applicable statutes and law.

 

(2)                                  Assignment. 
To the extent that any of the Company Creations may not by law be
considered a work made for hire, or to the extent that, notwithstanding the
foregoing, Employee retains any interest in or to the Company Creations,
Employee hereby irrevocably assigns and transfers to the Company any and all
right, title, or interest that Employee has or may have, either now or in the
future, in and to the Company Creations, and any derivatives thereof, without the
necessity of further consideration. 
Employee shall promptly and fully disclose all Company Creations to the
Company and shall have no claim for additional compensation for Company
Creations.  The Company shall be entitled
to obtain and hold in its own name all copyrights, patents, trade secrets,
trademarks, and service marks with respect to such Company Creations.

 

(3)                                  Disclosure
& Cooperation.  Employee shall
keep and maintain adequate and current written records of all Company Creations
and their development by Employee (solely or jointly with others), which
records shall be available at all times to and remain the sole property of the
Company.  Employee shall communicate
promptly and disclose to the Company, in such form as the Company may
reasonably request, all information, details and data pertaining to any Company
Creations.  Employee further agrees to
execute and deliver to the Company or its designee(s) any and all formal
transfers and assignments and other documents and to provide any further cooperation
or assistance reasonably required by the Company to perfect, maintain or
otherwise protect its rights in the Company Creations.  Employee hereby designates and appoints the
Company or its designee as Employee’s agent and attorney-in-fact to execute on
Employee’s behalf any assignments or other documents

 

6

 

deemed necessary by the Company to perfect, maintain or otherwise
protect the Company’s rights in any Company Creations.

 

e.                                       Acknowledgments.  Employee acknowledges that the Covenants are
reasonable and necessary to protect the Company’s legitimate business
interests, its relationships with its customers, its trade secrets and other
confidential or proprietary information. 
Employee further acknowledges that the duration and scope of the
Covenants are reasonable given the nature of this Agreement and the position
Employee holds or will hold within the Company. 
Employee further acknowledges that the Covenants are included herein to
induce the Company to enter into this Agreement and that the Company would not
have entered into this Agreement or otherwise employed or continued to employ
the Employee in the absence of the Covenants. 
Finally, Employee also acknowledges that any breach, willful or otherwise,
of the Covenants will cause continuing and irreparable injury to the Company
for which monetary damages, alone, will not be an adequate remedy.

 

f.                                         Enforcement.

 

(1)                                  If
any court determines that the Covenants, or any part thereof, is unenforceable
because of the duration or scope of such provision, that court will have the
power to modify such provision and, in its modified form, such provision will
then be enforceable.

 

A.                                     The
parties acknowledge that significant damages will be caused by a breach of any
of the Covenants, but that such damages will be difficult to quantify.  Therefore, the parties agree that the Company
shall have the right to enforce Section 4 by injunction, specific
performance or other equitable relief, without prejudice to any other rights
and remedies that the Company may have for a breach, or threatened breach, of
the Covenants.

 

(2)                                  In
addition to the remedies specified in Section 4.f.(1)A and any
other relief awarded by any court, if Employee breaches any of the Covenants:

 

A.                                 Employee
will be required to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
Employee as a result of any such breach; and

 

B.                                   the
Company will be entitled to injunctive or other equitable relief to prevent
further breaches of the Covenants by Employee.

 

(3)                                  If
Employee breaches Section 4, then the duration of the restriction
therein contained will be extended for a period equal to the period that
Employee was in breach of such restriction.

 

5.                                       Termination.  

 

a.                                       Except
as specified in Sections 5.b. and 5.c., upon termination of employment,
including termination due to Employee’s death, Employee will be entitled

 

7

 

to the payment of accrued and unpaid salary through the date of such
termination.  All salary, commissions and
benefits will cease at the time of such termination, subject to the terms of
any benefit plans then in force or enforceable under applicable law and applicable
to Employee, and the Company will have no further liability or obligation
hereunder by reason of such termination.

 

b.                                      If
Employee’s employment does not automatically renew, is terminated by the
Company without Cause, if Employee terminates for Good Reason in accordance
with Sections 7.f. or if Employee terminates due to Disability, Employee
will be entitled to the following:

 

(1)                                monthly
payments for a period of 18 months following the termination date in an amount
equal to the quotient obtained by dividing (x)
the sum of (A) 1.5 times the base salary paid in the 12-month period
preceding the termination date and (B) the total cash bonus paid pursuant to Sections
3.a.(3) and (4) in the 12-month period preceding the termination date by (y) 18; provided if Employee’s employment
is terminated by the Company without Cause prior to the first anniversary of
the Employment Commencement Date, such amount shall not be less than $1,000,000
payable over the 18-month period.

 

(2)                                reimbursement
for costs incurred in obtaining outplacement services, at a cost not to exceed
$100,000, subject to provision of documentation reasonably satisfactory to the
Company.

 

(3)                                medical
coverage following the date of termination until the earlier to occur of the
expiration of 18 months or the date on which Employee is eligible for coverage
under a plan maintained by a new employer or a plan maintained by his spouse’s
employer, at the level in effect at the date of his termination (or generally
comparable coverage) for himself and, where applicable, his spouse and
dependents, as the same may be changed by the Company from time to time for
employees generally, as if the Employee had continued in employment during such
period; provided, in any case, that the COBRA health care continuation coverage
period under section 4980B of the Internal Revenue Code of 1986, as
amended, shall run concurrently with the foregoing period.  

 

(4)                                immediate
vesting in any restricted stock and stock options issued pursuant to Section 3.

 

c.                                       In
the case of termination due to Employee’s Disability, any severance benefits
payable pursuant to this Section 5 will be offset by any long-term
disability benefits to which Employee is entitled under the Company’s long-term
disability plan.

 

d.                                      Notwithstanding
the preceding provisions of this Section 5, no amount will be paid
or benefit provided under this Section 5 unless and until (x)
Employee executes and delivers a general release of claims against the Company
and its subsidiaries in a form prescribed by the Company, and (y) such release
becomes

 

8

 

irrevocable.  Any severance pay
or benefits provided under this Section 5 will be in lieu of, not
in addition to, any other severance arrangement maintained by the Company.

 

6.                                       Miscellaneous.

 

a.                                       Arbitration.  Except a controversy or claim arising out or
relating to Section 4 of this Agreement, any controversy or claim
arising out of or relating to this Agreement or the breach of any covenant or
agreement contained herein, shall be commenced by filing a notice (the “Notice”)
for arbitration with the American Arbitration Association (“AAA.”), with a copy
to the other party hereto.  Such
controversy or claim shall be decided by arbitration in Philadelphia,
Pennsylvania, in accordance with the Employment Arbitration Rules of the AAA.
then obtaining.  The decision and the
award of damages rendered by the Arbitrator shall be final and binding and
judgment may be entered upon it in any court having jurisdiction thereof.

 

b.                                      Other
Agreements.  Employee represents and
warrants to the Company that there are no restrictions, agreements or
understandings whatsoever to which he is a party that would prevent or make
unlawful his execution of this Agreement, that would be inconsistent or in
conflict with this Agreement or Employee’s obligations hereunder, or that would
otherwise prevent, limit or impair the performance by Employee of his duties to
the Company.

 

c.                                       Entire
Agreement; Amendment.  This Agreement
contains the entire agreement and understanding of the parties hereto relating
to the subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature
relating to the employment of Employee by the Company.  This Agreement may not be changed or
modified, except by an agreement in writing signed by each of the parties
hereto.

 

d.                                      Waiver.  Any waiver of any term or condition hereof
will not operate as a waiver of any other term or condition of this
Agreement.  Any failure to enforce any
provision hereof will not operate as a waiver of such provision or of any other
provision of this Agreement.

 

e.                                       Indemnification.  Employee
shall be indemnified for acts performed in good faith as an officer, director
or employee of the Company in the manner provided in the Company’s charter and
by-laws, and shall be covered by director and officer liability insurance
coverage for such acts to the same extent that any such coverage is provided to
the Company’s executive officers.

 

f.                                         Governing
Law.  This Agreement shall be
governed by, and enforced in accordance with, the laws of the State of New
Jersey without regard to the application of the principles of conflicts of
laws.

 

g.                                      Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such

 

9

 

invalidity, illegality or unenforceability will not affect any other
provision or the effectiveness or validity of any provision in any other
jurisdiction, and this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been herein contained.

 

h.                                      Wage
Claims.  The parties intend that all
obligations to pay compensation to Employee be obligations solely of the
Company.  Therefore, intending to be
bound by this provision, Employee hereby waives any right to claim payment of
amounts owed to him, now or in the future, from directors or officers of the
Company in the event of the Company’s insolvency.

 

i.                                          Successors
and Assigns.  This Agreement is
binding on the Company’s successors and assigns.

 

j.                                          Section Headings.  The section headings in this Agreement
are for convenience only; they form no part of this Agreement and will not
affect its interpretation.

 

k.                                       Counterparts.  This Agreement may be executed in multiple
counterparts, each of which will be deemed to be an original and all of which
together will constitute but one and the same instrument.

 

7.                                       Definitions.  Capitalized terms used herein will have the
meanings below defined:

 

a.                                       “Business”
means electronic transcription services and other health information management
solutions services businesses in which the Company or its subsidiaries are
engaged anywhere within the United States.

 

b.                                      “Cause”
means the occurrence of any of the following: 
(1) Employee’s willful failure or refusal to perform (other than
due to illness or Disability) his employment duties or to follow the lawful
directives of his superiors or the Board, but only after written notice and a
period of time to correct or otherwise remedy such conduct or failure within a
time period specified by the Board, which shall not exceed 30 days; (2) willful
misconduct or gross negligence by Employee in the course of employment; (3)
conduct of Employee involving any type of fraud, embezzlement, or theft in the
course of employment; (4) a conviction of or the entry of a plea of guilty or nolo contendere to a felony or to a crime involving moral
turpitude or any other crime that otherwise could reasonably be expected to
have a material adverse effect on the operations, condition or reputation of
the Company, (5) a material breach by Employee of any agreement with or
fiduciary duty owed to the Company; or (6) alcohol abuse or use of controlled
drugs other than in accordance with a physician’s prescription.

 

c.                                       “Change
of Control” shall be deemed to have
occurred if any person, entity, or any group of persons or entities acting in
concert, other than Koninklijke Philips Electronics N.V., acquires more than
50% of the outstanding voting stock of the Company.

 

10

 

d.                                      “Covenants”
means the covenants set forth in Section 5 of this Agreement.

 

e.                                       “Disability”
means the Employee’s entitlement to benefits under the Company’s long-term
disability plan.

 

f.                                         “Good
Reason” means (1) a reduction in Employee’s annual base salary below
$500,000 without Employee’s consent, (2) requiring Employee to be based more
than twenty-five (25) miles from the Company’s current office location as of
the Employment Commencement Date, unless closer to the Employee’s residence,
(3) the Board’s failure to appoint Employee to Chief Executive Officer upon the
later of (x) thirty (30) days following the departure of the current Interim
Chief Executive Officer or (y) the second anniversary of the Employee
Commencement Date, or (4) substantial and material diminution of duties; provided that in each case written
notice of Employee’s termination for Good Reason must be delivered to the
Company within 30 days after the occurrence of any such event with such notice
specifying one or more specific reason(s) in this Section 7.f in
order for Employee’s termination with Good Reason to be effective hereunder.

 

To acknowledge
your agreement to and acceptance of the terms and conditions of this Agreement,
please sign below in the space provided within five (5) days of the date of
this Agreement and return a singed copy to my attention.  If the Agreement is not signed and returned
within (5) days, the terms and conditions of this Agreement will be deemed
withdrawn.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  MEDQUIST INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Howard Hoffmann, Chief Executive Officer

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Frank Lavelle

  	
   

  
					

 

11Exhibit 10.8

 

 

$975,000,000

AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT

 

Among

 

NORTHWEST AIRLINES
CORPORATION

 

NORTHWEST AIRLINES HOLDINGS
CORPORATION

 

NWA INC.,

as Guarantors,

 

NORTHWEST AIRLINES, INC.,

as Borrower,

 

The Several Lenders

from Time to Time Parties Hereto,

 

CITICORP USA, INC.,

as Documentation Agent,

 

U.S. BANK NATIONAL
ASSOCIATION,

as Co-Documentation Agent,

 

DEUTSCHE BANK SECURITIES
INC.,

as Syndication Agent,

 

CALYON NEW YORK BRANCH,

as Co-Syndication Agent

 

ABN AMRO BANK N.V.,

as Agent

 

and

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

Dated as of November 23,
2004

 

 

J.P. MORGAN
SECURITIES INC.

DEUTSCHE BANK SECURITIES INC.,

as Tranche A Joint Lead Arrangers and Joint Bookrunners

 

J.P. MORGAN
SECURITIES INC.

CITIGROUP GLOBAL MARKETS INC.,

as Tranche B Joint Lead Arrangers and Joint Bookrunners

 

 

TABLE OF CONTENTS

 

	
  SECTION 1  
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Defined Terms

  	
   

  
	
   

  	
  1.2

  	
  Other Definitional
  Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  2   AMOUNT AND TERMS OF COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Term Commitments

  	
   

  
	
   

  	
  2.2

  	
  Procedure for Term
  Loan Borrowing

  	
   

  
	
   

  	
  2.3

  	
  Repayment of Term Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  3   GENERAL PROVISIONS APPLICABLE TO LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Optional Prepayments

  	
   

  
	
   

  	
  3.2

  	
  Mandatory Prepayments

  	
   

  
	
   

  	
  3.3

  	
  Conversion and
  Continuation Options

  	
   

  
	
   

  	
  3.4

  	
  Limitations on
  Eurodollar Tranches

  	
   

  
	
   

  	
  3.5

  	
  Interest Rates and
  Payment Dates

  	
   

  
	
   

  	
  3.6

  	
  Computation of
  Interest and Fees

  	
   

  
	
   

  	
  3.7

  	
  Inability to
  Determine Interest Rate

  	
   

  
	
   

  	
  3.8

  	
  Pro Rata Treatment and
  Payments

  	
   

  
	
   

  	
  3.9

  	
  Requirements of Law

  	
   

  
	
   

  	
  3.10

  	
  Taxes

  	
   

  
	
   

  	
  3.11

  	
  Indemnity

  	
   

  
	
   

  	
  3.12

  	
  Change of Lending Office

  	
   

  
	
   

  	
  3.13

  	
  Replacement of Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  4   REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Financial
  Condition; Financial Outlook

  	
   

  
	
   

  	
  4.2

  	
  No Change

  	
   

  
	
   

  	
  4.3

  	
  Corporate
  Existence; Compliance with Law

  	
   

  
	
   

  	
  4.4

  	
  Corporate
  Power; Authorization; Enforceable Obligations

  	
   

  
	
   

  	
  4.5

  	
  No Legal Bar

  	
   

  
	
   

  	
  4.6

  	
  Litigation

  	
   

  
	
   

  	
  4.7

  	
  Ownership of the Pool
  Assets

  	
   

  
	
   

  	
  4.8

  	
  Federal Regulations

  	
   

  
	
   

  	
  4.9

  	
  ERISA

  	
   

  
	
   

  	
  4.10

  	
  Investment Company Act

  	
   

  
	
   

  	
  4.11

  	
  Subsidiaries

  	
   

  
	
   

  	
  4.12

  	
  Use of Proceeds

  	
   

  
	
   

  	
  4.13

  	
  True and Complete
  Disclosure

  	
   

  
	
   

  	
  4.14

  	
  Air Carrier

  	
   

  
	
   

  	
  4.15

  	
  Aircraft Collateral

  	
   

  
	
   

  	
  4.16

  	
  Pacific Routes

  	
   

  
	
   

  	
  4.17

  	
  Slot Utilization

  	
   

  
	
   

  	
  4.18

  	
  Foreign Slot Utilization

  	
   

  
	
   

  	
  4.19

  	
  Route Utilization

  	
   

  

 

 

	
   

  	
  4.20

  	
  Security Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  5   CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  6   AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Financial Statements

  	
   

  
	
   

  	
  6.2

  	
  Certificates; Other
  Information

  	
   

  
	
   

  	
  6.3

  	
  Payment of Taxes

  	
   

  
	
   

  	
  6.4

  	
  Maintenance of
  Existence; Compliance

  	
   

  
	
   

  	
  6.5

  	
  Maintenance of
  Property; Insurance

  	
   

  
	
   

  	
  6.6

  	
  Inspection
  of Property; Books and Records; Discussions

  	
   

  
	
   

  	
  6.7

  	
  Notices

  	
   

  
	
   

  	
  6.8

  	
  Performance of Obligations

  	
   

  
	
   

  	
  6.9

  	
  End of Fiscal
  Years; Fiscal Quarters

  	
   

  
	
   

  	
  6.10

  	
  Air Carrier

  	
   

  
	
   

  	
  6.11

  	
  ERISA

  	
   

  
	
   

  	
  6.12

  	
  Security
  Interests; Additional Collateral

  	
   

  
	
   

  	
  6.13

  	
  Gate Utilization

  	
   

  
	
   

  	
  6.14

  	
  Slot Utilization

  	
   

  
	
   

  	
  6.15

  	
  Foreign Slot Utilization.

  	
   

  
	
   

  	
  6.16

  	
  Route Utilization;
  Route Reporting.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  7   NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Financial Condition Covenants

  	
   

  
	
   

  	
  7.2

  	
  Indebtedness

  	
   

  
	
   

  	
  7.3

  	
  Liens

  	
   

  
	
   

  	
  7.4

  	
  Fundamental Changes

  	
   

  
	
   

  	
  7.5

  	
  Disposition of Pool Assets

  	
   

  
	
   

  	
  7.6

  	
  Restricted Payments

  	
   

  
	
   

  	
  7.7

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
  7.8

  	
  Lines of Business

  	
   

  
	
   

  	
  7.9

  	
  ERISA

  	
   

  
	
   

  	
  7.10

  	
  Investments

  	
   

  
	
   

  	
  7.11

  	
  Acquisitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  8   EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  9   GUARANTY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  The Guaranty

  	
   

  
	
   

  	
  9.2

  	
  Bankruptcy

  	
   

  
	
   

  	
  9.3

  	
  Nature of Liability

  	
   

  
	
   

  	
  9.4

  	
  Independent Obligation

  	
   

  
	
   

  	
  9.5

  	
  Authorization

  	
   

  
	
   

  	
  9.6

  	
  Reliance

  	
   

  
	
   

  	
  9.7

  	
  Subordination

  	
   

  
	
   

  	
  9.8

  	
  Waiver

  	
   

  
	
   

  	
  9.9

  	
  Limitation on Enforcement

  	
   

  

 

ii

 

	
  SECTION
  10   THE AGENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Appointment

  	
   

  
	
   

  	
  10.2

  	
  Delegation of Duties

  	
   

  
	
   

  	
  10.3

  	
  Exculpatory Provisions

  	
   

  
	
   

  	
  10.4

  	
  Reliance by Agents

  	
   

  
	
   

  	
  10.5

  	
  Notice of Default

  	
   

  
	
   

  	
  10.6

  	
  Non-Reliance
  on Agents and Other Lenders

  	
   

  
	
   

  	
  10.7

  	
  Indemnification

  	
   

  
	
   

  	
  10.8

  	
  Agent in Its
  Individual Capacity

  	
   

  
	
   

  	
  10.9

  	
  Successor Administrative
  Agent

  	
   

  
	
   

  	
  10.10

  	
  Other Agents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  11   MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  11.2

  	
  Notices

  	
   

  
	
   

  	
  11.3

  	
  No Waiver; Cumulative
  Remedies

  	
   

  
	
   

  	
  11.4

  	
  Survival of
  Representations and Warranties

  	
   

  
	
   

  	
  11.5

  	
  Payment of Expenses and
  Taxes

  	
   

  
	
   

  	
  11.6

  	
  Successors
  and Assigns; Participations and Assignments

  	
   

  
	
   

  	
  11.7

  	
  Adjustments; Set-off

  	
   

  
	
   

  	
  11.8

  	
  Counterparts

  	
   

  
	
   

  	
  11.9

  	
  Severability

  	
   

  
	
   

  	
  11.10

  	
  Integration

  	
   

  
	
   

  	
  11.11

  	
  GOVERNING
  LAW

  	
   

  
	
   

  	
  11.12

  	
  Submission To Jurisdiction;
  Waivers

  	
   

  
	
   

  	
  11.13

  	
  Acknowledgements

  	
   

  
	
   

  	
  11.14

  	
  Intercreditor Agreement

  	
   

  
	
   

  	
  11.15

  	
  Confidentiality

  	
   

  
	
   

  	
  11.16

  	
  WAIVERS OF JURY TRIAL

  	
   

  
	
   

  	
  11.17

  	
  Termination;
  Releases of Guarantees and Liens

  	
   

  
	
   

  	
  11.18

  	
  Effect of Amendment and
  Restatement of the Existing Credit Agreement.

  	
   

  

 

iii

 

	
  SCHEDULES:

  
	
   

  	
   

  
	
  1.1A

  	
  Commitments

  
	
  4.4

  	
  Consents, Authorizations,
  Filings and Notices

  
	
  4.12

  	
  Subsidiaries

  
	
  7.2(c)

  	
  Existing Indebtedness

  
	
  7.5

  	
  Pool Assets

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXHIBITS:

  
	
   

  	
   

  
	
  A

  	
  Form of Closing
  Certificate

  
	
  B

  	
  Form of Assignment and
  Acceptance

  
	
  C-1

  	
  Form of Legal Opinion of
  Thaddeus J. Marciniak, Esq.

  
	
  C-2

  	
  Form of Legal Opinion of
  Simpson Thacher & Bartlett LLP

  
	
  C-3

  	
  Form of Legal Opinion of Dorsey
  & Whitney LLP

  
	
  C-4

  	
  Form of Legal Opinion of
  Daugherty, Fowler, Peregrin & Haught

  
	
  D

  	
  Form of Exemption
  Certificate

  
	
  E

  	
  Form of Compliance
  Certificate

  
	
  F

  	
  Form of Prepayment Option
  Notice

  
	
  G

  	
  Form of Certificate of
  Chief Financial Officer

  

 

iv

 

AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT,
dated as of November 23, 2004, among NORTHWEST AIRLINES CORPORATION, a Delaware
corporation (“Holdings”), NORTHWEST AIRLINES HOLDINGS CORPORATION, a
Delaware corporation (“NWAC”), NWA INC., a Delaware corporation (“NWA”),
NORTHWEST AIRLINES, INC., a Minnesota corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the “Lenders”), DEUTSCHE BANK SECURITIES
INC., as Syndication Agent (in such capacity, the “Syndication Agent”),
CITICORP USA, INC., as Documentation Agent (in such capacity, the “Documentation
Agent”), CALYON NEW YORK BRANCH, as Co-Syndication Agent (in such capacity,
the “Co-Syndication Agent”), U.S. BANK NATIONAL ASSOCIATION, as
Co-Documentation Agent (in such capacity, the “Co-Documentation Agent”),
ABN AMRO BANK N.V., as Agent (in such capacity, the “Agent”), JPMORGAN
CHASE BANK, N.A. (formerly known as JPMorgan Chase Bank), as Administrative
Agent (in such capacity, the “Administrative Agent”), J.P. MORGAN
SECURITIES INC. and DEUTSCHE BANK SECURITIES INC., as Joint Lead Arrangers and
Joint Bookrunners for the Tranche A Term Facility (as defined herein)
(collectively, in such capacities, the “Tranche A Joint Lead Arrangers”),
and J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC., as Joint
Lead Arrangers and Joint Bookrunners for the Tranche B Term Facility (as
defined herein) (collectively, in such capacities, the “Tranche B Joint Lead
Arrangers”, and collectively with the Tranche A Joint Lead Arrangers, the “Joint
Lead Arrangers”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the Borrower, certain of the Lenders and the Administrative
Agent are parties to the Credit and Guarantee Agreement, dated as of October
24, 2000 (as amended prior to the date hereof, the “Existing Credit
Agreement”);

 

WHEREAS, pursuant to the Existing Credit Agreement, certain of the
Lenders have made loans to the Borrower (collectively, the “Existing Loans”)
which are secured pursuant to the Security Documents (as hereinafter defined);

 

WHEREAS, the Borrower has requested that the
Existing Credit Agreement be amended and restated in the manner provided for
herein; and

 

WHEREAS, the security interests granted and
guarantees issued pursuant to the Existing Credit Agreement and the Security
Documents will continue to provide collateral security for the obligations of
the Borrower under this Agreement:

 

NOW, THEREFORE, the parties hereto hereby agree
that, subject to the satisfaction or waiver of the conditions set forth in
Section 5, the Existing Credit Agreement is hereby amended and restated in its
entirety to read as follows:

 

SECTION 1  DEFINITIONS

 

1.1           Defined Terms.  As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.

 

“ABR”: 
for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of
1%.  For the purposes hereof:  “Prime Rate” shall

 

 

mean the rate of interest per annum publicly
announced from time to time by the Reference Lender as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended to
be the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors). 
Any change in the ABR due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.

 

“ABR Loans”: 
Loans the rate of interest applicable to which is based upon the ABR.

 

“Acquisition”:  an acquisition, the consideration for which
is paid (in whole or in part) in cash (it being understood that any deferred
purchase price or assumed Indebtedness due within one year after any such
acquisition shall be treated as paid in cash as of the date of such
acquisition), by any Person of (a) the Capital Stock of any other Person which,
upon consummation of such acquisition, becomes a Subsidiary of such Person, (b)
assets constituting all or substantially all of the assets of any other Person,
(c) assets constituting an operating unit or division of any other Person, (d)
one or more Routes in a single transaction or series of related transactions to
the extent that the cash consideration for the acquisition of such Routes
exceeds $50,000,000, (e) Intellectual Property used in connection with the
operation of an air passenger or cargo business by any other Person purchased
outside the ordinary course of business from any such Person in a single
transaction or series of related transactions to the extent that the cash
consideration for the acquisition of such Intellectual Property exceeds
$25,000,000 and (f) Flight Equipment from any other Person (other than a
manufacturer) in a single transaction or series of related transactions to the
extent the cash consideration for the acquisition of such Flight Equipment
exceeds $100,000,000, including any such acquisition in connection with the
establishment of a low cost air passenger business.

 

“Administrative Agent”:  as defined in the preamble to this Agreement.

 

“Affiliate”: 
as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
“control” of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the
election of directors (or persons performing similar functions) of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.

 

“Agent”: 
as defined in the preamble to this Agreement.

 

“Agents”: 
the collective reference to the Syndication Agent, the Documentation
Agent, the Co-Syndication Agent, the Co-Documentation Agent, the Agent, the
Joint Lead Arrangers and the Administrative Agent.

 

“Aggregate Exposure”:  with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s
Commitments at such time and (b) thereafter, the aggregate then unpaid
principal amount of such Lender’s Loans.

 

“Aggregate Exposure Percentage”:  with respect to any Lender at any time, the
ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such
time to the Aggregate Exposure of all Lenders at such time.

 

2

 

“Agreement”: 
this Amended and Restated Credit and Guarantee Agreement, as amended,
supplemented or otherwise modified from time to time.

 

“Aircraft Collateral”:  all “Collateral” as defined in the Aircraft
Mortgage Agreement.

 

“Aircraft Mortgage Agreement”:  the Aircraft Mortgage and Security Agreement
dated as of October 23, 2001, executed and delivered by the Borrower in favor
of the Collateral Agent, as amended, supplemented or otherwise modified from
time to time.

 

“Applicable Rate”:  (a) with respect to Tranche A Term
Loans, (i) 4.25%, in the case of ABR Loans, and (ii) 5.25%, in the case of
Eurodollar Loans, and (b) with respect to Tranche B Term Loans, (i) 5.75%, in
the case of ABR Loans, and (ii) 6.75%, in the case of Eurodollar Loans.

 

“Allocable Prepayment Percentage”:  at any time, the ratio (expressed as a
percentage) of (a) the aggregate outstanding principal amount of the Loans to
(b) the sum of the aggregate outstanding principal amount of the Loans plus
the aggregate outstanding principal amount of any Pari Passu Obligations at
such time.

 

“Applicable Appraisal Discount Rate”:  on the date of any valuation done in
connection with an Appraisal, 11.5% for purposes of determining compliance with
the Coverage Test; provided that, to the extent the Treasury Rate as
determined immediately prior to such Appraisal is greater than 8%, the
Applicable Appraisal Discount Rate will be increased by an amount equal to the
difference between such Treasury Rate and 8%; and provided  further
that, to the extent the Treasury Rate as determined immediately prior to such
Appraisal is less than 3%, the Applicable Appraisal Discount Rate will be
decreased by an amount equal to the difference between 3% and such Treasury
Rate.

 

“Appraisal”: 
an appraisal, dated the date of delivery thereof to the Lenders pursuant
to the terms of this Agreement, by BK Associates Inc. (as to any aircraft
included in the Pool Assets), Simat, Helliesen & Eichner, Inc. (as to the
Pacific Routes or any aircraft included in the Pool Assets), or another
independent appraisal firm satisfactory at the time of such Appraisal to the
Borrower and the Administrative Agent, setting forth (i) in the case of the
aircraft included in the Pool Assets, the fair market value thereof, as
determined in accordance with the definition of “fair market value” promulgated
by the International Society of Transport Aircraft Trading on a basis
consistent with the Appraisal delivered in accordance with Section 5(h), and
(ii) in the case of the Pacific Routes (as described in the Appraisal), the
current fair market value thereof utilizing the Applicable Appraisal Discount
Rate, in each case as of the date of such appraisal of each Pool Asset or
proposed Pool Asset, as the case may be.

 

“Appraised Value”:  as of any date of determination, the value as
of such date of each Pool Asset or proposed Pool Asset, as the case may be, as
set forth in the most recently delivered Appraisal.

 

“Assignee”: 
as defined in Section 11.6(c).

 

“Assignment and Acceptance”:  an Assignment and Acceptance, substantially
in the form of Exhibit B.

 

“Assignor”: 
as defined in Section 11.6(c).

 

3

 

“Authorized Officer”:  as to any Loan Party, the Chief Executive
Officer, the Chief Financial Officer or any Vice President and above who
reports directly or indirectly to the Chief Financial Officer of such Loan
Party.

 

“Base
Number of Japanese Foreign Slots”: at any time, the sum of (a) the total
number of Japanese Foreign Slots owned by the Borrower as of the Closing Date, plus
(b) any Japanese Foreign Slots acquired by the Borrower after the Closing Date.

 

“Benefited Lender”:  as defined in Section 11.7(a).

 

“Board”: 
the Board of Governors of the Federal Reserve System of the United
States (or any successor).

 

“Borrower”: 
as defined in the preamble to this Agreement.

 

“Business Day”:  a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Minneapolis, Minnesota are
authorized or required by law to close, provided, that with respect to
notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, such day is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.

 

“Capital Lease Obligations”:  as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP and, for the
purposes of this Agreement, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Capital Stock”:  any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of the
foregoing.

 

“Cash Liquidity”:  at any time, the sum of (a) unrestricted
cash and cash equivalents of Holdings and its Subsidiaries at such time and
(b) unrestricted short term investments of Holdings and its Subsidiaries
at such time.

 

“Certificated Air Carrier”:  a Citizen of the United States holding a
carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, for aircraft capable of carrying ten or
more individuals or 6,000 pounds or more of cargo.

 

“Citizen of the United States”:  shall have the meaning provided in
Section 40102(a)(15) of Title 49.

 

“Closing Date”:  the date on which the conditions precedent
set forth in Section 5 shall have been satisfied, which date is November
23, 2004.

 

“Code”: 
the Internal Revenue Code of 1986, as amended from time to time.

 

“Co-Documentation Agent”:  as defined in the preamble to this Agreement.

 

4

 

“Co-Syndication Agent”:  as defined in the preamble to this Agreement.

 

“Collateral”: 
any of the Pool Assets upon which a Lien is purported to be created by
any Security Document including, without limitation, all Aircraft Collateral
and all Route Collateral.

 

“Collateral Agent”:  JPMorgan Chase, in its capacity as Collateral
Agent.

 

“Commitment”: 
as to any Lender, the sum of the Tranche A Term Commitment and the
Tranche B Term Commitment of such Lender.

 

“Commonly Controlled Entity”:  an entity, whether or not incorporated, that
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

 

“Compliance Certificate”:  a certificate substantially in the form of
Exhibit E (with such changes as may be approved by the Administrative Agent).

 

“Confidential Information Memorandum”:  the Confidential Information Memorandum dated
November 2004 and furnished to the Lenders.

 

“Consolidated EBITDAR”:  for any period, without duplication, the
consolidated operating income of Holdings and its Subsidiaries for such period
(calculated on a consolidated basis in accordance with GAAP and in a manner
consistent with the consolidated financial statements of Holdings and its
Subsidiaries for the period ended September 30, 2004) plus (i)
consolidated aircraft operating rental expenses of Holdings and its
Subsidiaries that were deducted in arriving at the amount of such consolidated
operating income for such period plus (ii) amortization and depreciation
that were deducted in arriving at the amount of such consolidated operating
income for such period plus (iii) interest income of Holdings and its
Subsidiaries during such period plus (iv) all government reimbursements
in cash for losses incurred as a result of developments affecting the aviation
industry (including, without limitation, terrorist acts and epidemic diseases) plus
(v) any non-recurring non-cash charges of Holdings and its Subsidiaries
recorded during such period (excluding any such charge incurred in the ordinary
course of business that constitutes an accrual of or a reserve for cash charges
for any future period), all as determined on a consolidated basis in accordance
with GAAP, provided, however, that cash payments made in such
period or in any future period in respect of such noncash charges (excluding
any such charge incurred in the ordinary course of business that constitutes an
accrual of or a reserve for cash charges for any future period) shall be
subtracted in calculating Consolidated EBITDAR in the period when such payments
are made, and provided  further that Consolidated EBITDAR shall be
calculated without giving effect to any acceleration of flight equipment rental
expense after the Closing Date required as a result of the Borrower’s decision
to remove an aircraft or aircraft class from the operating fleet of the
Borrower.

 

“Consolidated Fixed Charges”:  for any period, the total consolidated
interest expense of Holdings and its Subsidiaries for such period (calculated
without regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capital Lease Obligations of Holdings and its
Subsidiaries representing the interest factor for such period, plus the
total consolidated aircraft operating rental expenses of Holdings and its
Subsidiaries for such period, all as determined on a consolidated basis in
accordance with GAAP, provided that Consolidated Fixed Charges shall be
calculated without giving effect to any acceleration of flight equipment rental

 

5

 

expense after the Closing Date required as a result
of the Borrower’s decision to remove an aircraft or aircraft class from the
operating fleet of the Borrower.

 

“Contingent Obligation”:  as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other
Person (other than Holdings or any of its Subsidiaries) (the “primary
obligor”), in any manner, whether directly or indirectly, including any
obligation of such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount
of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
person in good faith.

 

“Contractual Obligation”:  as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

 

“Coverage Test”:  at any time, the Total Appraised Value
Ratio shall not be less than 175% at such time, or, if Cash Liquidity is less
than $1,000,000,000 at such time, the Total Appraised Value Ratio shall not be
less than 200% at such time.

 

“Default”: 
any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

 

“Disposed
Japanese Foreign Slots”: at any time, the Japanese Foreign Slots sold,
transferred, leased (so long as such lease remains in effect and conveys to
another Person the right to utilize the relevant Japanese Foreign Slot) or
otherwise disposed of by the Borrower after the Closing Date.

 

“Disposition”:  with respect to any property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof (excluding, however, the creation or imposition of any
Lien).  The terms “Dispose” and “Disposed
of” shall have correlative meanings.

 

“Documentation Agent”:  as defined in the preamble to this Agreement.

 

“Dollars” and “$”:  dollars in lawful currency of the United
States.

 

“DOT”: 
the United States Department of Transportation.

 

6

 

“Eligible Transferee”:  a commercial bank, financial institution,
other “accredited investor” (as defined in Regulation D of the Securities Act
of 1933, as amended), any Person that is engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business, or any Lender Affiliate, other than an
airline, a commercial air carrier, an air freight forwarder, an entity engaged
in the business of parcel transport by air or other similar Person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, commercial air carrier, air freight forwarder, entity
engaged in the business of parcel transport by air or other similar Person.

 

“Environmental Laws”: any and all foreign,
Federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.

 

“ERISA”: 
the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

“ERISA Affiliate”:  each person (as defined in Section 3(9) of
ERISA) which together with Holdings or any of its Subsidiaries would be deemed
to be a “single employer” within the meaning of Section 414(b), (c) or (o) of
the Code.

 

“Eurocurrency Reserve Requirements”:  for any day as applied to a Eurodollar Loan,
the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board) dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board) maintained by a member bank of the Federal Reserve System.

 

“Eurodollar Base Rate”:  with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate Service screen as of 11:00 a.m., London time, two Business
Days prior to the beginning of such Interest Period.  In the event that such rate does not appear
on Page 3750 of the Telerate Service screen (or otherwise on such screen), the “Eurodollar
Base Rate” shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected
by the Administrative Agent with the consent of the Borrower, or in the absence
of such availability or consent, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 11:00 a.m., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where its eurodollar and foreign
currency and exchange operations are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised therein.

 

“Eurodollar Loans”:  Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

 

“Eurodollar Rate”:  with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such
day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):

 

7

 

	
  Eurodollar Base Rate

  
	
  1.00
  – Eurocurrency Reserve Requirements

  

 

“Eurodollar Tranche”:  the collective reference to Eurodollar Loans
under a particular Facility the then current Interest Periods with respect to
all of which begin on the same date and end on the same later date (whether or
not such Loans shall originally have been made on the same day).

 

“Event of Default”:  any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.

 

“Existing Credit Agreement”:  as defined in the recitals to this Agreement.

 

“Existing Route Security Agreement”:  the Route Security Agreement dated as of
October 23, 2001, executed and delivered by the Borrower in favor of the
Collateral Agent, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Existing Loans”:  as defined in the recitals to this Agreement.

 

“Facility”: 
each of (a) the Tranche A Term Facility and (b) the Tranche B Term
Facility.

 

“FAA”: 
the Federal Aviation Administration.

 

“Federal Funds Effective Rate”:  for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for the day of such transactions received by the Reference
Lender from three federal funds brokers of recognized standing selected by it.

 

“Fifth Freedom Rights”:  the operational right pursuant to a bilateral
treaty between the United States and a foreign country to enplane passenger
traffic and cargo in such foreign country and deplane it in another foreign
country.

 

“Financial Outlook”:  the multi-year financial outlook for Holdings
and its consolidated Subsidiaries dated November 3, 2004.

 

“Flight”: (a) the completion of a
non-stop passenger and/or cargo flight utilizing the Pacific Routes from a
point of origin in the United States of America to a destination in Japan or
China and from a point of origin in Japan or China to a destination in the
United States of America and (b) the completion of a non-stop passenger and/or
cargo flight utilizing the Pacific Routes (other than a flight described in
clause (a) of this definition).

 

“Flight Equipment”:  any aircraft, airframes or engines and all
parts incorporated or installed in or attached or made a part of the aircraft,
airframes or engines.

 

“Foreign Aviation Authorities”:
foreign or governmental, regulatory or other agency or agencies which exercise
jurisdiction over the issuance or authorization to serve any foreign point

 

8

 

on each of the Pacific Routes and/or
operations related to the Pacific Routes and Supporting Route Facilities.

 

“Foreign Slot”: all of the rights and
operational authority, now held or hereafter acquired, of the Borrower to
conduct one landing or takeoff operation during a specific hour or other period
at each non-U.S. airport necessary to operate a Pacific Route, whether or not
utilized by the Borrower.

 

“Funding Office”:  the office of the Administrative Agent
specified in Section 11.2 or such other office as may be specified from
time to time by the Administrative Agent as its funding office by written
notice to the Borrower and the Lenders.

 

“GAAP”: 
generally accepted accounting principles in the United States as in
effect from time to time.

 

“Gate Leaseholds”:  at any time, all of the right, title,
privilege, interest, and authority now or hereafter acquired or held by the
Borrower in connection with the right to use, operate or occupy space in an
airport terminal at which the Borrower conducts scheduled operations for direct
non-stop flights (or flights originating at a Northwest Hub) to and within Asia
using the Pacific Routes to the extent such Gate Leasehold is utilized in
connection with the Pacific Routes at such time.  To the extent that the Borrower ceases to use
any Gate Leasehold in connection with the Pacific Routes, such Gate Leasehold
shall automatically cease to be a Gate Leasehold hereunder, including, without
limitation, for purposes of Section 7.5.

 

“Governmental Authority”:  any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

 

“Guarantors”: 
the collective reference to Holdings, NWAC and NWA.

 

“Hedging Obligations”:  as to any Person, all obligations and
liabilities of such Person under any Interest Rate Protection Agreement, which
are payable upon the termination of such agreement.

 

“Holdings”: 
as defined in the preamble to this Agreement.

 

“Indebtedness”:  as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of
such Person for borrowed money or for the deferred purchase price of property
or services but excluding trade accounts payable and accrued expenses incurred
in the ordinary course of business, (ii) the maximum amount available to
be drawn under all letters of credit issued for the account of such Person and all
unpaid drawings in respect of such letters of credit, (iii) all
Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or
(vii) of this definition secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person (to
the extent of the value of the respective property), (iv) Capital Lease
Obligations, (v) all obligations of such person to pay a specified
purchase price for goods or services, whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vi) all Contingent Obligations of
such Person and (vii) all Hedging Obligations under any Interest Rate
Protection Agreement.

 

9

 

“Intellectual Property”:  the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or
in equity for infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

 

“Intercreditor Agreement”:  the Second Amended and Restated Intercreditor
Agreement dated as of July 31, 2003 among the Administrative Agent, U.S. Bank
National Association, the PBGC, the Borrower and the Guarantors, as the same
may be amended, supplemented or otherwise modified from time to time.

 

“Interest Payment Date”:  (a) as to any ABR Loan, the fifteenth day of
each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan, the date of any repayment or prepayment made in
respect thereof.

 

“Interest Period”:  as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three, six or (if
available to all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three, six or (if
available to all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that,
all of the foregoing provisions relating to Interest Periods are subject to the
following:

 

(A)          if
any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

 

(B)           the
Borrower may not select an Interest Period for a particular Facility that would
extend beyond the anticipated final maturity date of the relevant Loan;

 

(C)           any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of a
calendar month; and

 

(D)          the
Borrower shall select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period for such Loan.

 

10

 

“Interest Rate Protection Agreement”:  any interest rate swap agreement, interest
rate cap agreement, interest collar agreement, interest rate hedging agreement
or other similar agreement or arrangement.

 

“Investments”
as defined in Section 7.10.

 

“Japanese Foreign Slots”: any Foreign Slot in
Japan.

 

“JFK”: 
New York’s John F. Kennedy (JFK) International Airport.

 

“Joint Lead Arrangers”:  as defined in the preamble to this Agreement.

 

“JPMorgan Chase”:  JPMorgan Chase Bank, N.A., a New York banking
corporation.

 

“Lax Two”: 
LAX TWO CORP., a non-profit California mutual benefit corporation.

 

“Lease”: 
any operating lease entered into by any Loan Party or any of its
Subsidiaries as lessee thereunder.

 

“Lenders”: 
as defined in the preamble to this Agreement.

 

“Lender Affiliate”:  (a) any Affiliate of any Lender, (b) any
Person that is administered or managed by any Lender and that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business and (c)
with respect to any Lender which is a fund that invests in commercial loans and
similar extensions of credit, any other fund that invests in commercial loans
and similar extensions of credit and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.

 

“Lien”: 
any mortgage, pledge, hypothecation, assignment, security deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or security agreement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement and
any capital lease having substantially the same economic effect as any of the
foregoing).

 

“Loan”: 
any loan made by any Lender pursuant to this Agreement.

 

“Loan Documents”:  this Agreement, each Security Document and
any Notes.

 

“Loan Parties”:  the Borrower and the Guarantors.

 

“Majority Facility Lenders”:  with respect to any Facility, the holders of
more than 50% of (a) until the Closing Date, the Commitments then in effect for
such Facility and (b) thereafter, the aggregate unpaid principal amount of the
Loans then outstanding under such Facility.

 

“Material Adverse Effect”:  a material adverse effect on the financial
condition or results of operations of the Borrower and its Subsidiaries taken
as a whole.

 

“Moody’s”: 
Moody’s Investors Service, Inc.

 

11

 

“Multiemployer Plan”:  a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA with respect to which the Borrower or
any of its ERISA Affiliates is an “employer” as defined in Section 3(5) of
ERISA.

 

“Non-Excluded Taxes”:  as defined in Section 3.10(a).

 

“Non-U.S. Lender”:  as defined in Section 3.10(d).

 

“Northwest Hub”:  as of the Closing Date, the airports in
Detroit, Michigan, Minneapolis, Minnesota, Memphis, Tennessee and Narita
Airport in Japan, and any other airport which becomes a central connection
point through which the Borrower coordinates flights utilizing the Pacific
Routes.

 

“Notes”: 
the collective reference to any promissory note evidencing Loans.

 

“NWA”: 
as defined in the preamble to this Agreement.

 

“NWAC”: 
as defined in the preamble to this Agreement.

 

“Obligations”:  the unpaid principal of and interest on
(including interest, fees and costs accruing after the maturity of the Loans
and interest, fees and costs accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest, fees or cost is allowed in such proceeding) the Loans
and all other obligations and liabilities of the Borrower to any Agent or
Lender (or, in the case of Specified Interest Rate Protection Agreements, any
affiliate of any Lender), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which arise under,
out of, or in connection with, this Agreement, any other Loan Document, any
Specified Interest Rate Protection Agreement entered into with any Lender or
any affiliate of any Lender or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all
fees, charges and disbursements of counsel to any Agent or Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

 

“Other Taxes”:  any and all present or future stamp or
documentary taxes or any other property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, this Agreement or any other Loan Document.

 

“Pacific Countries”: (i) countries
bordering the Pacific Ocean in Asia, North America, Australia and New Zealand,
(ii) islands surrounded by the Pacific Ocean and (iii) Thailand, Myanmar
(Burma), Laos and Cambodia.

 

“Pacific Routes”: the Routes described on
Schedule 7.5 and any other Routes to the Pacific Countries that are
acquired by or granted to the Borrower.

 

“Pari Passu Commitments”:  at any time, the amount of unfunded lending
commitments under the Pari Passu Obligations at such time.

 

“Pari Passu Obligations”:  as defined in the Intercreditor Agreement.

 

12

 

“Participant”:  as defined in Section 11.6(b).

 

“PBGC”: 
the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

 

“Pension Plan”: any plan (other than a
Multiemployer Plan) described in Section 4021(a) of ERISA, and not
excluded pursuant to Section 4021(b) of ERISA, with respect to which any
Loan Party or any of its ERISA Affiliates is a “contributing sponsor” as
defined in Section 4001(a)(13) of ERISA and each such plan for the five
year period immediately following the last date on which the Borrower or any of
its ERISA Affiliates contributed or had an obligation to contribute to such
plan.

 

“Permitted Liens”:  as defined in Section 7.3.

 

“Person”: 
an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Pool Assets”:  the assets of the Borrower listed on Schedule
7.5 (as modified pursuant to Section 7.5) and together with all the engines
necessary to comply with Section 7.5(c) and any Pacific Routes and related
Slots and Gate Leaseholds acquired by the Borrower.

 

“Rating Agency”:  S&P or Moody’s, as the case may be.

 

“Reference Lender”:  JPMorgan Chase.

 

“Register”: 
as defined in Section 11.6(d).

 

“Regulation U”:  Regulation U of the Board as in effect from
time to time.

 

“Removed Pool Assets”: assets which are no
longer Pool Assets as a result of such assets either (a) having been
removed from the Pool Assets in accordance with Section 7.5(a)(ii) hereof or
(b) having been involuntarily disposed of (whether by loss of property due
to theft, destruction, confiscation, prohibition or use, any similar event or
otherwise).

 

“Reorganization”:  with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

 

“Replaced Lender”:  as defined in Section 3.13.

 

“Replacement Airframe”: an aircraft (except
Engines (as defined in the Aircraft Mortgage Agreement) or engines from time to
time installed thereon) which shall have been made subject to the Lien of the
Aircraft Mortgage Agreement pursuant to Section 3.4 or 3.5 thereof.

 

“Replacement Engine”: an aircraft engine
suitable for installation and use on the relevant Airframe (as defined in the
Aircraft Mortgage Agreement) and which has a value, utility and remaining
useful life (except for maintenance cycle condition) at least equal to the
Engine (as defined in the Aircraft Mortgage Agreement) which it is replacing,
assuming such Engine was of the value, utility and remaining useful life
(except for maintenance cycle condition) required by the

 

13

 

terms of the Aircraft Mortgage Agreement, and which
shall have been made subject to the Lien of the Aircraft Mortgage Agreement
pursuant to Section 3.4 or 3.5 thereof.

 

“Replacement Facility”:  a term loan facility or facilities in an
aggregate amount at any time outstanding not in excess of the aggregate
principal amount of the Loans theretofore or concurrently paid or prepaid.

 

“Replacement Lender”:  as defined in Section 3.13.

 

“Replacement Route”: a Route which has a
value at least equal to the Route which it is replacing and which shall have
been made subject to the pledge of the Route Security Agreement pursuant to
Section 1 thereof, subject to the satisfactory review and approval of the
Administrative Agent.

 

“Required Lenders”:  at any time, the holders of more than 50% of
(a) until the Closing Date, the Commitments then in effect and (b) thereafter,
the aggregate unpaid principal amount of the Loans then outstanding.

 

“Requirement of Law”:  as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

 

“Responsible Officer”:  as to any Loan Party, the chief executive
officer, president, chief financial officer, treasurer or chief accounting
officer of such Loan Party, but in any event, with respect to financial
matters, the chief financial officer, treasurer or chief accounting officer of
such Loan Party.

 

“Restricted Payments”:  as defined in Section 7.6.

 

“Route Collateral”: all of the “Collateral”
as defined in the Route Security Agreements.

 

“Route Security Agreement”:  the Route Security Agreement dated as of the
date hereof, executed and delivered by the Borrower in favor of the Collateral
Agent, as the same may be amended, supplemented or otherwise modified from time
to time, and collectively with the Existing Route Security Agreement, the “Route
Security Agreements”.

 

“Routes”: 
the route authorities which the Borrower holds or hereafter acquires the
requisite authority to operate pursuant to Title 49 including without
limitation, applicable frequencies, exemption and certificate authorities,
Fifth-Freedom Rights and “behind/beyond rights”, whether or not utilized by the
Borrower.

 

“S&P”: 
Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies, Inc.

 

“SEC”: 
the Securities and Exchange Commission.

 

“Secured Creditors”: the Lenders, the
Administrative Agent and the Collateral Agent.

 

14

 

“Security Documents”:  the collective reference to the Aircraft
Mortgage Agreement, the Route Security Agreements, the Intercreditor Agreement
and all other security documents hereafter delivered to the Administrative
Agent granting a Lien on any property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.

 

“Significant Subsidiary”:  any Subsidiary that would be a “significant
subsidiary” of any of the Loan Parties within the meaning of the SEC’s Regulation
S-X.

 

“Slot”:  at any time, all of the rights and
operational authority of the Borrower now held or hereafter acquired, to
conduct one Instrument Flight Rule (as defined under the FAA regulations)
landing or takeoff operation during a specific hour or half-hour period at JFK
(or at any other slot-constrained airport in the U.S.) pursuant to FAA
regulations, including Title 14, to the extent that any such slot is used to
operate direct non-stop flights to Asia using a Pacific Route and all take-off and
landing rights and operational authority of the Borrower at a Northwest Hub in
the U.S. or other airport in the U.S. which is an origination or destination
point for flights utilizing the Pacific Routes, in each case, at such time.  To the extent that the Borrower ceases to use
any Slot in connection with the Pacific Routes, such Slot shall automatically
cease to be a Slot hereunder, including, without limitation, for purposes of
Section 7.5.

 

“Specified Interest Rate Protection Agreement”:  any Interest Rate Protection Agreement
entered into by the Borrower and any Lender or Lender Affiliate designated by
the relevant Lender and the Borrower, by written notice to the Administrative
Agent, as a Specified Interest Rate Protection Agreement.

 

“Stage III Aircraft”: aircraft owned by the
Borrower certified as Stage III aircraft, as set forth in Federal Aviation
Regulation 36.1(f)(6), 14 C.F.R. § 36.1(f)(6) or any successor regulation, as
amended.

 

“Subsidiary”: 
(i) any corporation more than 50% of whose stock having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
limited liability company, association, joint venture or other entity in which
such Person and/or one or more Subsidiaries of such Person has more than a 50%
equity interest at the time; provided, however, that (a) LAX Two
and its Subsidiaries shall be deemed not to be Subsidiaries of Holdings or any
of its Subsidiaries for all purposes of this Agreement (including the
calculation of the financial covenants and the definitions relating thereto)
and the other Loan Documents.

 

“Supporting Route Facilities”: the
Borrower’s gates, ticket counters, office space and baggage claim areas at each
airport necessary to operate a Pacific Route.

 

“Syndication Agent”:  as defined in the preamble to this Agreement.

 

“Title 14”: 
Title 14 of the U.S. Code of Federal Regulations, Part 93, Subparts K
and S, as amended from time to time or any successor or recodified regulation.

 

“Title 49”:  Title 49 of
the United States Code, which, among other things, recodified and replaced the
U.S. Federal Aviation Act of 1958, and the regulations promulgated pursuant
thereto or any subsequent legislation that amends, supplements or supercedes such
provisions.

 

15

“Termination Event”:  means a “reportable event” described in Section 4043
of ERISA or in the regulations thereunder (excluding events for which the
requirement for notice of such reportable event has been waived under subsection .22,
..23, .25, .27, or .28 of PBGC Regulation Section 4043 and any event
described in subsection .33 of PBGC Regulation Section 4043).

 

“Total Appraised Value”:
as of any date of determination, the Appraised Value as of such date of all
Pool Assets other than the Removed Pool Assets.

 

“Total Appraised Value
Ratio”: at any time, the ratio of (a) Total Appraised Value (determined as
of the then most recent Appraisal of the Pool Assets) to (b) the sum of the
aggregate unpaid principal amount of the Loans then outstanding and any Pari Passu
Obligations (for purposes of this definition, Pari Passu Obligations shall
include any Pari Passu Commitments).

 

“Tranche A Term
Commitment”: as to any Lender, the obligation of such Lender, if any, to
make a Tranche A Term Loan in an aggregate principal amount not to exceed the
amount set forth under the heading “Tranche A Term Commitment” opposite such
Lender’s name on Schedule 1.1A or in the Assignment and Acceptance
pursuant to which such Lender become a party hereto, as the same may be changed
from time to time pursuant to the terms hereof. 
The original aggregate amount of the Tranche A Term Commitments is
$575,000,000.

 

“Tranche A Term Facility”:  the Tranche A Term Commitments and the
Tranche A Term Loans made thereunder.

 

“Tranche A Term Lender”:  each Lender that has a Tranche A Term
Commitment or that holds a Tranche A Term Loan.

 

“Tranche A Term Loan”:  as defined in Section 2.1.

 

“Tranche A Term
Percentage”:  as to any Tranche A
Term Lender at any time, the percentage which such Lender’s Tranche A Term
Commitment then constitutes of the total Tranche A Term Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender’s Tranche A Term Loans then outstanding constitutes of
the aggregate principal amount of the Tranche A Term Loans then outstanding).

 

“Tranche A Termination
Date”:  November 23, 2009.

 

“Tranche B Term
Commitment”:  as to any Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan in an
aggregate principal amount not to exceed the amount set forth under the heading
“Tranche B Term Commitment” opposite such Lender’s name on Schedule 1.1A
or in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the
terms hereof.  The original aggregate
amount of the Tranche B Term Commitments is $400,000,000.

 

“Tranche B Term Facility”:  the Tranche B Term Commitments and the
Tranche B Term Loans made thereunder.

 

“Tranche B Term Lender”:  each Lender that has a Tranche B Term
Commitment or that holds Tranche B Term Loans.

 

“Tranche B Term Loans”:  as defined in Section 2.1.

 

16

 

“Tranche B Term
Percentage”:  as to any Tranche B
Term Lender at any time, the percentage which such Lender’s Tranche B Term
Commitment then constitutes of the total Tranche B Term Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender’s Tranche B Term Loans then outstanding constitutes of
the aggregate principal amount of the Tranche B Term Loans then outstanding).

 

“Tranche B Termination
Date”:  November 23, 2010.

 

“Treasury
Rate”: as of the date which is 10 Business Days prior to the date on which
an Appraisal is to be delivered in accordance with Section 6.2(f), the
effective yield of (x) direct obligations of the United States maturing on
the tenth anniversary of such date or (y) if there are no such
obligations, the effective yield determined by linear interpolation between the
effective yield borne by the two direct obligations of the United States
maturing closest to, but straddling, the tenth anniversary of such date, in
each case as appearing on the relevant Telerate service screen on such date.  In the event that such screen is not
available, the “Treasury Rate” shall be determined by reference to such
other comparable publicly available service selected by the Administrative
Agent for displaying such effective yield.

 

“Transferee”:  any Assignee or Participant.

 

“Type”:  as to any Loan, its nature as an ABR Loan or
a Eurodollar Loan.

 

“Unavailable
Japanese Foreign Slots”: at any time, any Japanese Foreign Slot with
respect to which the Borrower has lost its rights (including as a result of any
action of an applicable Governmental Authority revoking or suspending (whether
temporarily or permanently) such rights but excluding any failure to utilize
the relevant Japanese Foreign Slot which has been approved by all applicable
Governmental Authorities and as to which no revocation or suspension has
occurred).

 

“United States”:  the United States of America.

 

“Use or Lose Rule”:  with respect to the Slots, the terms of 14
C.F.R. Section 93.227.

 

1.2                                 Other Definitional Provisions.  (a)  Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the
other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.

 

(b)  As used herein and in the other Loan Documents,
and any certificate or other document made or delivered pursuant hereto or
thereto, (i) accounting terms relating to Holdings and its Subsidiaries not
defined in Section 1.1 shall have the respective meanings given to them
under GAAP, (ii) the words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation,” and (iii) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, Capital Stock, securities, revenues, accounts, leasehold interests and
contract rights.

 

(c)  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.

 

17

 

(d)  The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such
terms.

 

(e) 
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

 

SECTION 2  AMOUNT AND TERMS OF COMMITMENTS

 

2.1                                 Term Commitments.  Subject to the terms and conditions hereof,
(a) each Tranche A Term Lender severally agrees to make a term loan (a “Tranche
A Term Loan”) to the Borrower on the Closing Date in an amount equal to the
amount of the Tranche A Term Commitment of such Lender and (b) each Tranche B
Term Lender severally agrees to make a term loan (a “Tranche B Term Loan”)
to the Borrower on the Closing Date in an amount equal to the amount of the
Tranche B Term Commitment of such Lender. 
The Loans may from time to time be Eurodollar Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 3.3.

 

2.2                                 Procedure for Term Loan
Borrowing.  The Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent prior to 10:00 A.M., New York City time, (a) three Business Days prior to
the anticipated Closing Date in the case of Eurodollar Loans and (b) one Business
Day prior to the anticipated Closing Date in the case of ABR Loans) requesting
that the Lenders make the Loans on the Closing Date and specifying the amount
to be borrowed.  Upon receipt of such
notice the Administrative Agent shall promptly notify each Lender thereof.  Not later than 12:00 Noon, New York City
time, on the Closing Date each Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Loan or Loans to be made by such Lender; provided, however,
that, at the option of any Lender that is a lender under the Existing Credit
Agreement immediately prior to the satisfaction of the conditions in Section 5,
all or a portion of the aggregate amount of the Existing Loans of such Lender
may be deemed to satisfy the foregoing funding requirement by written notice to
the Administrative Agent to such effect given prior to the Closing Date.  Subject to the immediately preceding
sentence, the Administrative Agent shall use the amounts made available to the
Administrative Agent by the Lenders to repay the principal amounts outstanding
under the Existing Credit Agreement.

 

2.3                                 Repayment of Term Loans.  (a)  The Borrower hereby agrees to repay the
Tranche A Term Loan of each Tranche A Term Lender in five consecutive annual
installments on each anniversary of the Closing Date, each of which shall be in
an amount equal to such Lender’s Tranche A Term Percentage multiplied by the
amount set forth below opposite such installment:

 

18

 

	
  Installment

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1

  	
   

  	
  $

  	
  143,750,000

  	
   

  
	
   

  	
  2

  	
   

  	
  $

  	
  71,875,000

  	
   

  
	
   

  	
  3

  	
   

  	
  $

  	
  71,875,000

  	
   

  
	
   

  	
  4

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
  5

  	
   

  	
  $

  	
  287,500,000

  	
   

  

 

(b) 
The Borrower hereby agrees to repay the Tranche B Term Loan of each
Tranche B Term Lender in six consecutive annual installments on each
anniversary of the Closing Date, each of which shall be in an amount equal to
such Lender’s Tranche B Term Percentage multiplied by the amount set forth
below opposite such installment:

 

	
  Installment

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
  2

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
  3

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
  4

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
  5

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
  6

  	
   

  	
  $

  	
  380,000,000

  	
   

  

 

Once repaid, the Loans may
not be reborrowed.

 

SECTION 3  GENERAL PROVISIONS APPLICABLE TO LOANS

 

3.1                                 Optional Prepayments.  (a)  The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty (except
as provided for in Section 3.8(e)), upon irrevocable notice (which may be
given by telephone if confirmed promptly in writing) delivered to the
Administrative Agent at least one Business Day prior thereto, which notice
shall specify the date and amount of prepayment and whether the prepayment is
of Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 3.11.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid.  Partial prepayments of Loans shall be in an
aggregate principal amount of $1,000,000 or a whole multiple thereof.  Once prepaid, Loans may not be reborrowed.

 

(b)                                 Notwithstanding anything to the contrary in Section 3.1(a)
or 3.8, with respect to the amount of any optional prepayment described in Section 3.1(a)
that is allocated to Tranche B Term Loans (such amount, the “Tranche B
Prepayment Amount”), at any time when Tranche A Term Loans remain
outstanding, the Borrower will, in lieu of applying such amount to the
prepayment of Tranche B Term Loans as provided in paragraph (a) above, on the
date specified in Section 3.1(a) for such prepayment, give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Tranche B
Term Lender a notice (each, a “Prepayment Option Notice”) as described
below.  As promptly as

 

19

 

practicable after receiving
such notice from the Borrower, the Administrative Agent will send to each
Tranche B Term Lender a Prepayment Option Notice, which shall be in the form of
Exhibit F, and shall include an offer by the Borrower to prepay on the date
(each a “Prepayment Date”) that is 10 Business Days after the date of
the Prepayment Option Notice, the relevant Loans of such Lender by an amount
equal to the portion of the Prepayment Amount indicated in such Lender’s
Prepayment Option Notice as being applicable to such Lender’s Tranche B Term
Loans.  On the Prepayment Date, (i) the
Borrower shall pay to the relevant Tranche B Term Lenders the aggregate amount
necessary to prepay that portion of the outstanding relevant Loans in respect
of which such Lenders have accepted prepayment as described above in accordance
with the terms of the Prepayment Option Notice, and (ii) the Borrower shall be
entitled to retain the portion of the Tranche B Prepayment Amount not accepted
by the relevant Lenders.

 

3.2                                 Mandatory Prepayments.  The Borrower shall prepay the Loans as set
forth in this Section 3.2 to the extent necessary to maintain compliance
with Section 7.5(a).  Amounts to be
applied in connection with prepayments made pursuant to this Section shall
be applied to prepay any outstanding Tranche A Term Loans and Tranche B Term
Loans, ratably to the remaining scheduled installments thereof.

 

3.3                                 Conversion and Continuation
Options.  (a)  The Borrower may elect from
time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days’ prior irrevocable notice
(which may be given by telephone if promptly confirmed by writing) of such
election, provided that any such conversion of Eurodollar Loans may only
be made on the last day of an Interest Period with respect thereto.  The Borrower may elect from time to time to
convert ABR Loans to Eurodollar Loans by giving the Administrative Agent at
least three Business Days’ prior irrevocable notice (which may be by telephone
if promptly confirmed by writing) of such election (which notice shall specify
the length of the initial Interest Period therefor), provided that no
ABR Loan under a particular Facility may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.

 

(b)  Any Eurodollar Loan may be continued as such
upon the expiration of the then current Interest Period with respect thereto by
the Borrower giving irrevocable notice (which may be given by telephone if
promptly confirmed in writing) to the Administrative Agent, in accordance with
the applicable provisions of the term “Interest Period” set forth in Section 1.1,
of the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations,
and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans
shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period.  Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

 

3.4                                 Limitations on Eurodollar
Tranches.  Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made

 

20

 

pursuant to such elections
so that, (a) after giving effect thereto, the aggregate principal amount
of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to at
least $10,000,000 and (b) no more than fifteen Eurodollar Tranches under all
Facilities shall be outstanding at any one time.

 

3.5                                 Interest Rates and Payment Dates.  (a)  Each Eurodollar Loan shall bear interest for
each day during each Interest Period with respect thereto at a rate per annum
equal to the Eurodollar Rate determined for such day plus the Applicable Rate.

 

(b)  Each ABR Loan shall bear interest at a rate
per annum equal to the ABR plus the Applicable Rate.

 

(c)  (i) If all or a portion of the principal
amount of any Loan shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or other amount
payable hereunder shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to the rate then applicable to ABR Loans plus 2%,
in each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).

 

(d)  Interest shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to
paragraph (c) of this Section shall be payable from time to time on
demand.

 

3.6                                 Computation of Interest and Fees.  (a)  Interest and fees payable pursuant hereto
shall be calculated on the basis of a 360-day year for the actual days elapsed,
except that, with respect to ABR Loans the rate of interest on which is calculated
on the basis of the Prime Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed.  The Administrative Agent shall
as soon as practicable notify the Borrower and the relevant Lenders of each
determination of a Eurodollar Rate.  Any
change in the interest rate on a Loan resulting from a change in the ABR or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective.  The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.

 

(b)  Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error.  The Administrative Agent
shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any
interest rate pursuant to Section 3.5(a).

 

3.7                                 Inability to Determine
Interest Rate.  If prior to the first day of any Interest
Period:

 

(a)  the Administrative Agent shall have
determined that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, or

 

21

 

(b)  the Administrative Agent shall have
determined that the making or continuation of any Eurodollar Loan has become
(x) unlawful by any law or governmental rule, regulation or order, (y)
impossible by compliance by any Lender in good faith with any governmental
request (whether or not having force of law) or (z) impracticable as a result
of a contingency occurring after the date of this Agreement which materially
and adversely affects the interbank eurodollar market,

 

the Administrative Agent
shall give telecopy or telephonic notice thereof to the Borrower and the
relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurodollar
Loans under the relevant Facility requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as ABR Loans and (z) any
outstanding Eurodollar Loans under the relevant Facility shall be converted, on
the last day of the then-current Interest Period, to ABR Loans.  Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans under the relevant Facility to Eurodollar Loans.  Upon the cessation of the circumstances
giving rise to the delivery of such notice, the Administrative Agent or the
Majority Facility Lenders, as the case may be, shall promptly withdraw such
notice.

 

3.8                                 Pro Rata Treatment and Payments.  (a) 
Except as provided in Section 11.1, each borrowing by the Borrower
from the Lenders hereunder and each payment, including each prepayment, by the
Borrower on account of principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal amounts of the Tranche A
Term Loans or the Tranche B Term Loans, as the case may be, held by the
Lenders.  Except as otherwise provided in
Section 3.1(b) and Section 3.2, the amount of each principal
prepayment of the Loans shall be applied to reduce the then remaining
installments of the Tranche A Term Loans and the Tranche B Term Loans, as the
case may be, (i) in the chronological order of maturity with respect to
scheduled repayments which mature within twelve months following the date of
such prepayment and (ii) pro  rata with respect to scheduled
repayments which mature thereafter.

 

(b)  All payments (including prepayments) to be
made by the Borrower hereunder, whether on account of principal, interest, fees
or otherwise, shall be made without setoff or counterclaim and shall be made
prior to 2:00 p.m., New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Funding Office, in
Dollars and in immediately available funds. 
The Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received.  If any payment hereunder (other than payments
on the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment
of principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.

 

(c)  Unless the Administrative Agent shall have
been notified in writing by any Lender prior to the Closing Date that such
Lender will not make the amount
that would constitute its Commitment (or any portion thereof) available to the
Administrative Agent, the

 

22

 

Administrative
Agent may assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the
Administrative Agent by the required time on the Closing Date, such Lender
shall pay to the Administrative Agent, on demand, such amount with interest
thereon at a rate equal to the daily average Federal Funds Effective Rate for
the period until such Lender makes such amount immediately available to the
Administrative Agent.  A certificate of
the Administrative Agent submitted to any Lender with respect to any amounts
owing under this paragraph shall be conclusive in the absence of manifest
error.  If such Lender’s Commitment (or
any portion thereof) is not made available to the Administrative Agent by such
Lender within three Business Days of the Closing Date, the
Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans under the
relevant Facility, on demand, from the Borrower.

 

(d)  Unless the Administrative Agent shall have
been notified in writing by the Borrower prior to the date of any payment
required to be made hereunder that the Borrower will not make such payment to
the Administrative Agent, the Administrative Agent may assume that the Borrower
is making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the Lenders
their respective pro  rata shares of a corresponding amount.  If such payment is not made to the
Administrative Agent by the Borrower within three Business Days of such
required date, the Administrative Agent shall be entitled to recover, on demand,
from each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the
rights of the Administrative Agent or any Lender against the Borrower.

 

(e) 
All voluntary prepayments of the Loans made pursuant to Section 3.1
shall be accompanied by a prepayment fee equal to: (i) if such prepayment is
effected on any date that is on or prior to the first anniversary of the
Closing Date, 3.00% of the aggregate amount of such prepayment, (ii) if such
prepayment is effected on any date after the first anniversary of the Closing
Date through and including the second anniversary thereof, 2.00% of the
aggregate amount of such prepayment, and (iii) if such prepayment is effected
on any date after the second anniversary of the Closing Date through and
including the third anniversary thereof, 1% of the aggregate amount of such
prepayment.

 

3.9                                 Requirements of Law.  (a)  If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof after the
date hereof or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

 

(i)                                     shall subject any Lender to any tax of any
kind whatsoever with respect to any Eurodollar Loan made by it, or change the
basis of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 3.10 and changes in the rate of tax
on the overall net income or profits of such Lender);

 

(ii)                                  shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other

 

23

 

acquisition
of funds by, any office of such Lender that is not otherwise included in the
determination of the Eurodollar Rate hereunder; or

 

(iii)                               shall impose any other condition affecting
the interbank eurodollar market;

 

and the result of any of the
foregoing is to increase the cost to such Lender, by an amount that such Lender
deems to be material, of making, converting into, continuing or maintaining
Eurodollar Loans, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it
has become so entitled.

 

(b)  If any Lender shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof after the date hereof or
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Lender’s or
such corporation’s capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender’s
or such corporation’s policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.  In determining such additional amounts, such
Lender will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable.

 

(c)  A certificate as to any additional amounts
payable pursuant to this Section submitted by any Lender to the Borrower
(with a copy to the Administrative Agent) shall be conclusive in the absence of
manifest error.  The obligations of the
Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder,
provided that the Borrower shall not be required to compensate a Lender
pursuant to this Section for any amounts incurred more than six months
prior to the date that such Lender notifies the Borrower of such Lender’s
intention to claim compensation therefor; and provided  further
that, if the circumstances giving rise to such claim have a retroactive effect,
then such 180 days period shall be extended to include the period of such
retroactive effect.

 

3.10                           Taxes.  (a) 
Except as otherwise provided herein all payments made by the Borrower
under this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income or
profits taxes and franchise taxes (based on the net income or profits of an
Agent or Lender or imposed in lieu of net income taxes) imposed on any Agent or
any Lender as a result of a present or former connection between such Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from

 

24

 

such Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document).  If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
Taxes”) or Other Taxes are required to be withheld from any amounts payable
to any Agent or any Lender hereunder, the amounts so payable to such Agent or
such Lender shall be increased to the extent necessary to yield to such Agent
or such Lender (after payment of all Non-Excluded Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender’s failure to comply with the requirements of paragraph (d) or (e) of
this Section or (ii) that are United States withholding taxes unless such
withholding results from a change in applicable law or treaty after such Lender
becomes a party to this Agreement.

 

(b)  In addition, the Borrower shall pay any
properly imposed Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c)  Whenever any Non-Excluded Taxes or Other
Taxes are payable by the Borrower, the Borrower shall promptly send to the
Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof or, if not available,
other documentation evidencing such payment. 
If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when
due to the appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Agents and the Lenders for any incremental taxes,
interest or penalties that may become payable by any Agent or any Lender as a
result of any such failure.

 

(d)  Each Lender (or Transferee) that is not a “U.S.
Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S.
Lender”) shall deliver to the Borrower and the Administrative Agent (or, in
the case of a Participant, to the Lender from which the related participation
shall have been purchased who shall in turn deliver to the Borrower and the
Administrative Agent ) two copies of either U.S. Internal Revenue Service Form
W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of “portfolio interest,” a statement
substantially in the form of Exhibit D and a Form W-8BEN, or any subsequent
versions thereof or successors thereto, properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. 
Such forms shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of any Participant,
on or before the date such Participant purchases the related
participation).  In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.

 

(e)  A Lender that is entitled to an exemption
from or reduction of non-U.S. withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to

 

25

 

which
such jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate, provided that such Lender is legally entitled to complete, execute
and deliver such documentation and in such Lender’s reasonable judgment such
completion, execution or submission would not materially prejudice the legal
position of such Lender.

 

(f)  The agreements in this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

 

(g)  The Borrower shall be entitled to contest,
or, upon written request of the Borrower, to require a Lender to take
reasonable measures to contest, at the Borrower’s cost and expense, the
imposition of any Non-Excluded Tax or Other Tax.  Notwithstanding this paragraph (g), the
Borrower still must satisfy its obligations to pay additional amounts or
indemnify the Lender if such tax has already been withheld, paid, or deducted.

 

3.11                           Indemnity. 
The Borrower agrees to indemnify
each Lender and to hold each Lender harmless from any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower
in making any prepayment of or conversion from Eurodollar Loans after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a payment or prepayment of Eurodollar Loans on a
day that is not the last day of an Interest Period with respect thereto.  Such indemnification may include (but shall
in no event exceed) an amount equal to the excess, if any, of (i) the amount of
interest that would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Rate included therein, if any) over (ii)
the amount of interest (as reasonably determined by such Lender) that would
have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.  A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. 
No Lender shall be deemed to have any loss, expense or liability
incurred by the reason of the liquidation or reemployment of deposits as a
result of the repayment of Eurodollar Loans prior to the end of an Interest
Period unless the Eurodollar Rate which would be applicable to the Eurodollar
Loan being repaid if such Eurodollar Rate were being determined on the date of
repayment (assuming for purposes of this determination that the Interest Period
or the maturity utilized in making such determination is the Interest Period
originally applicable to such Eurodollar Loan) is less than the Eurodollar Rate
actually applicable to the Eurodollar Loan being repaid.  This covenant shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.

 

3.12                           Change of Lending Office.  Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 3.9 or 3.10(a) with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any
Loans affected by such event with the object of

 

26

 

avoiding the consequences of
such event, provided that such designation is made on terms that, in the
reasonable judgment of such Lender, cause such Lender and its lending office(s)
to suffer no material economic, legal or regulatory disadvantage.

 

3.13                           Replacement of Lenders.  If
(x) any Lender defaults in its obligations to make Loans, (y) any Lender
refuses to give timely consents to proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Lenders as provided in Section 11.1 but which requires the
approval of one or more additional Lenders to become effective in accordance
with such Section or (z) any Lender is owed increased costs under Sections
3.9 or 3.10 which in the judgment of the Borrower are material in amount and
which are not otherwise requested by Lenders constituting at least the Required
Lenders (assuming for this purpose that the percentage in such definition was
80%), the Borrower shall have the right, if no Event of Default then exists
and, in the case of a Lender described in clause (z) above, such Lender has not
withdrawn its request for such compensation or changed its applicable lending
office with the effect of eliminating or substantially decreasing (to a level
which in the judgment of the Borrower is not material) such increased cost, to
replace such Lender (the “Replaced Lender”) with one or more other
Eligible Transferee or Transferees (collectively, the “Replacement Lender”)
with the consent of the Administrative Agent, which consent shall not be
unreasonably withheld or delayed, provided that (i) at the time of any
replacement pursuant to this Section, the Replacement Lender shall enter into
an Assignment and Acceptance pursuant to which the Replacement Lender shall
acquire all of the Commitments and outstanding Loans of, the Replaced Lender
and, in connection therewith, shall pay to the Replaced Lender in respect
thereof an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Lender and the Borrower or Replacement Lender
shall pay any fees payable in connection with such assignment pursuant to Section 11.6,
(ii) all obligations of the Borrower owing to the Replaced Lender (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Lender concurrently with such replacement and
(iii) and in the case of any replacement pursuant to clause (y) above, the
Replacement Lender shall approve the proposed changes, waivers, discharges or
terminations at the time of such replacement. Upon the execution of the respective
assignment documentation, the payment of amounts referred to in clauses (i) and
(ii) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Notes executed by the Borrower, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender
shall cease to constitute a Lender hereunder, except with respect to
indemnification provisions under this Agreement, which shall survive as to such
Replaced Lender.

 

SECTION 4  REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the
Lenders to enter into this Agreement and to make the Loans, each of Holdings,
NWAC, NWA and the Borrower hereby jointly and severally represent and warrant
to each Agent and Lender that:

 

4.1                                 Financial Condition;
Financial Outlook.  (a) 
The audited consolidated balance sheets of Holdings and its Subsidiaries
and the Borrower and its Subsidiaries as at December 31, 2003, and the
related consolidated statements of operations, of common stockholders’ equity
(deficit, in the case of Holdings and its Subsidiaries) and of cash flows for
the fiscal year ended on such date, reported on by and accompanied by an
unqualified report from Ernst & Young LLP, present fairly in all material
respects the consolidated financial condition of such entities as at such date,
and the consolidated results of their operations and their consolidated cash
flows for the

 

27

 

respective fiscal years then
ended.  The unaudited condensed
consolidated balance sheets of Holdings and its Subsidiaries and the Borrower
and its Subsidiaries as at September 30, 2004, and the related unaudited
condensed consolidated statements of income and cash flows for the nine-month
period ended on such date, present fairly in all material respects the
consolidated financial condition of such entities as at such date and the
consolidated results of their operations and their consolidated cash flows for
the nine-month period then ended (subject to normal year-end audit adjustments).  All such financial statements, including the
related schedules and notes thereto (in the case of such annual statements),
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as disclosed therein).

 

(b)  On and as of the Closing Date, the Financial
Outlook, previously delivered to the Agents and the Lenders, was prepared on a
basis consistent in all material respects with the financial statements
referred to in Section 4.1(a) (other than as set forth or presented in
such Financial Outlook), and there are no statements or conclusions in the
Financial Outlook which are based upon or include information known to any Loan
Party to be misleading in any material respect or which fail to take into
account material information regarding the matters reported therein.  The Financial Outlook is based on good faith
estimates and assumptions believed by the Loan Parties to be reasonable at the
time made, it being recognized by the Lenders that the Financial Outlook as to
future events is not to be viewed as facts and that actual results during the
period or periods covered by the Financial Outlook may differ from the results
set forth in the Financial Outlook.

 

4.2                                 No Change. 
Since December 31, 2003,
there has been no material adverse change in the financial condition or results
of operations of any Loan Party.

 

4.3                                 Corporate Existence;
Compliance with Law.  Holdings and each of its Subsidiaries
(a) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) has the power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and presently proposes to engage in, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where it
is required to be so qualified and where the failure to be so qualified would
have a Material Adverse Effect, and (d) is in compliance with all Requirements
of Law (including, without limitation, Environmental Laws) except to the extent
that the failure to comply therewith would not, in the aggregate, have a
Material Adverse Effect.

 

4.4                                 Corporate Power;
Authorization; Enforceable Obligations. 
Each Loan Party has the
corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and, in the case of the
Borrower, to obtain extensions of credit hereunder.  Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this Agreement.  No material consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person, including, without limitation, U.S. Bank and the
PBGC under the Intercreditor Agreement, is required in connection with the
extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan Documents,
except consents, authorizations, filings and notices described in Schedule 4.4,
which consents, authorizations, filings and notices have been obtained or made
and are in full force and effect and any such other consent, authorization,
filing, notice or other act required to be made or obtained after the Closing
Date in the ordinary course of business. 
Each Loan Document has been

 

28

 

duly executed and delivered
on behalf of each Loan Party party thereto. 
This Agreement constitutes, and each other Loan Document upon execution
will constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

4.5                                 No Legal Bar.  The
execution, delivery and performance of this Agreement and the other Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will
not violate in any material respect any material Requirement of Law or any
material Contractual Obligation of Holdings and its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.

 

4.6                                 Litigation. 
There are no actions, suits or
proceedings pending or threatened with respect to any Loan Party or any of its
Subsidiaries (i) that have had a material adverse affect on the financial
condition or results of operations of any Loan Party or (ii) that affect the
legality, validity, binding effect or enforceability of any Loan Document.

 

4.7                                 Ownership of the Pool Assets.  The
Pool Assets are owned by the Borrower and are not subject to any Lien except as
permitted by Section 7.3.

 

4.8                                 Federal Regulations.  Not
more than 25% of the value of the assets of the Borrower, or of Holdings and
its Subsidiaries on a consolidated basis, constitutes “margin stock” within the
meaning of such term under Regulation U. 
Neither the making of any Loan nor the use of the proceeds of any
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X of the Board.

 

4.9                                 ERISA.  Each
Pension Plan has been operated and administered in compliance with all
applicable requirements of ERISA and, if intended to qualify under Section 401(a)
or 403(a) of the Code, in compliance with all applicable requirements of such
provision except where the failure to so comply would not result in, taking all
instances in the aggregate, liability in excess of $2,000,000.  Full payment has been made by each Loan Party
or any of its ERISA Affiliates of all amounts which such Persons are required
under the terms of each Pension Plan and Multiemployer Plan to have paid as
contributions to such Pension Plan and Multiemployer Plan except where the
failure to so comply, taking all instances in the aggregate, would not result
in liability in excess of $2,000,000. 
None of the Pension Plans had an accumulated funding deficiency as
(defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent plan year of such
Pension Plan.  No Termination Event has
occurred or, to the best knowledge of any Loan Party, is expected by such Loan
Party to occur with respect to any Pension Plan or Multiemployer Plan such that
any Loan Party or any of its ERISA Affiliates would incur, taking all instances
in the aggregate, liabilities in excess of $10,000,000 (such liability to
include, without limitation, any liability to the PBGC or to any other party
under Section 4062, 4063 and 4064 of ERISA or to any Multiemployer Plan
determined under Section 4201 et  seq. of ERISA) resulting from or associated
with all such Termination Events.  No
Loan Party nor any of its ERISA Affiliates has engaged in any transaction in
connection with which any such entity has been or could be subjected to either
a tax imposed by Section 4975 of the Code or the corresponding civil
penalty assessed pursuant to Sections 502(i) and 502(l) of ERISA, which
penalties and taxes for all such

 

29

 

transactions are in an aggregate amount in excess of
$2,500,000.  Using actuarial assumptions
and computation methods consistent with Part 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of Holdings and its Subsidiaries, the Borrower
and its Subsidiaries and their ERISA Affiliates to all Multiemployer Plans in
the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Multiemployer Plan ended prior to the Closing
Date, would not have a material adverse effect upon the results of operation or
financial condition of any Loan Party. 
No Loan Party nor any of its Subsidiaries maintains or contributes to
any employee welfare benefit plan (as defined in Section 3(1) of ERISA)
which provides benefits to retired employees or other former employees (other
than as required by Section 601 of ERISA or any employee pension benefit
plan (as defined in Section 3(2) of ERISA) the obligations with respect to
which would have a material adverse effect on the ability of any Loan Party to perform
its respective obligations under this Agreement.

 

4.10                           Investment Company Act.  No
Loan Party is an “investment company,” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.

 

4.11                           Subsidiaries.  As of
the Closing Date, Schedule 4.12 correctly sets forth the percentage
ownership (direct and indirect) of Holdings, NWAC, NWA and the Borrower in each
of their respective Subsidiaries.

 

4.12                           Use of Proceeds.  The
proceeds of the Loans shall be used to refinance the Indebtedness of the
Borrower under the Existing Credit Agreement.

 

4.13                           True and Complete Disclosure.  All factual information (taken as a whole)
furnished by or on behalf of any Loan Party in writing to any Agent or any Lender
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Persons in writing to any Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided.

 

4.14                           Air Carrier.  The
Borrower is a Certificated Air Carrier.

 

4.15                           Aircraft Collateral.  All
aircraft included in the Collateral are Stage III Aircraft.

 

4.16                           Pacific Routes.  As of the Closing Date, Schedule 7.5
identifies all of the Routes held by the Borrower in connection with its route
system in the Pacific Countries.

 

4.17                           Slot Utilization. The Borrower is
utilizing the Slots in a manner consistent in all material respects with
applicable regulations and contracts in order to preserve both its right to
hold and operate the Slots, taking into account any waivers or other relief
granted to the Borrower by the FAA. The Borrower has not received any notice
from the FAA, and is not aware of any other event or circumstance, that would
be reasonably likely to impair its right to hold and operate the Slots in any
material respect.

 

30

 

4.18                           Foreign Slot Utilization. The
Borrower is utilizing the Foreign Slots in a manner consistent in all material
respects with applicable regulations, foreign laws, and contracts in order to
preserve both its right to hold and operate the Foreign Slots. The Borrower has
not received any notice from any applicable Foreign Aviation Authorities, nor
is the Borrower aware of any other event or circumstance, that would be
reasonably likely to impair its right to hold and operate the Foreign Slots in
any material respect.

 

4.19                           Route Utilization. The Borrower holds
the requisite authority to operate over each of the Pacific Routes pursuant to
Title 49, all rules and regulations promulgated thereunder, applicable foreign
law, and the applicable rules and regulations of the FAA, the DOT and any
applicable Foreign Aviation Authorities, and has, at all times after being
awarded each such Pacific Route, complied in all material respects with all of
the terms, conditions and limitations of each such certificate or order issued
by the DOT and the applicable Foreign Aviation Authorities regarding such
Pacific Route and with all applicable provisions of Title 49 or applicable
foreign law. There exists no violation of such terms, conditions or limitations
that gives the FAA, DOT or any applicable Foreign Aviation Authorities the
right to terminate, cancel, withdraw or modify in any material adverse respect
the rights of the Borrower in any such Pacific Route.

 

4.20                           Security Documents.  (a) 
The Security Documents remain in full force and effect, are effective to
secure the Obligations under this Agreement, and are enforceable in accordance
with their terms except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).

 

(b)  Except as
expressly stated therein, each security interest that is purported to be
granted under the Security Documents constitutes a perfected first priority
security interest in favor of the Collateral Agent for the benefit of the
Lenders in the Collateral subject thereto (to the extent such perfection and
priority can be obtained by, in the case of Collateral subject to the Route
Security Agreements, filing a Uniform Commercial Code financing statement and
any requisite filings with the FAA and, in the case of Collateral subject to
the Aircraft Mortgage Agreement, recording the Aircraft Mortgage Agreement with
the FAA), and such security interests (i) are continuing, valid and
enforceable, (ii) are not subject to any defense, counterclaim or setoff and
(iii) are entitled to the benefits, rights and protections afforded under the
Intercreditor Agreement to the security interests granted in connection with
the Existing Credit Agreement.

 

SECTION 5  CONDITIONS
PRECEDENT

 

The effectiveness of this
Agreement and the agreement of each Lender to make the Loan requested to
be made by it hereunder is subject to the satisfaction on the Closing Date of
the following conditions precedent:

 

(a)  Credit Agreement; Security Documents.  The Administrative Agent shall have received
(i) this Agreement, executed and delivered by the Administrative Agent,
Holdings, NWAC, NWA, the Borrower, the Required Lenders (as defined in the
Existing Credit Agreement) and each Person listed on Schedule 1.1A and
(ii) the Route Security Agreement, executed and delivered by the Borrower.

 

31

 

(b)  Approvals.  All governmental and third party approvals
deemed reasonably necessary by the Joint Lead Arrangers shall have been
obtained and be in full force and effect.

 

(c)  Fees; Expenses; Accrued Interest.  The Lenders and the Agents shall have received
all fees required to be paid and then due, all expenses payable by the Borrower
as set forth herein for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Closing Date,
and all accrued interest and fees and other obligations owing which are due and
payable under the Existing Credit Agreement through the Closing Date.

 

(d)  Closing Certificates.  The Administrative Agent shall have received,
with a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit A, with appropriate
insertions and attachments.

 

(e)  Legal Opinions.  The Administrative Agent shall have received
the following legal opinions:

 

(i)                                     the legal opinion of Thaddeus J. Marciniak,
Esq., counsel to the Borrower and the Guarantors, substantially in the form of
Exhibit C-1;

 

(ii)                                  the legal opinion of Simpson Thacher &
Bartlett LLP, counsel to the Administrative Agent, substantially in the form of
Exhibit C-2;

 

(iii)                               the legal opinion of Dorsey & Whitney,
special counsel to the Borrower and the Guarantors, substantially in the form
of Exhibit C-3; and

 

(iv)                              the legal opinion of Daugherty, Fowler,
Peregrin & Haught,  special aviation
counsel for the Administrative Agent, substantially in the form of Exhibit C-4.

 

(f)  Ratification of Air Line Pilots Tentative
Agreement.  The Administrative Agent
shall have received satisfactory evidence that the Borrower’s pilots have
ratified the tentative agreement between the Borrower and the Northwest
Airlines, Inc. Unit of the Air Line Pilots Association International announced
on October 14, 2004.

 

(g)  Financial Outlook.  The Lenders shall have received the Financial
Outlook which shall be in form and substance reasonably satisfactory to the
Joint Lead Arrangers and the Required Lenders.

 

(h)  Appraisal of Pool Assets.  The Administrative Agent shall have received
Appraisals with respect to the Pool Assets as of a date not earlier than October 25,
2004.  After giving effect to the extensions of credit on the Closing
Date, such Appraisals shall demonstrate compliance with the Coverage Test as of
the Closing Date.

 

(i)  Lien Searches.  The Administrative Agent shall have received
the results of a recent lien search as to financings statements on file with
the Secretary of State of Minnesota, and such search shall reveal no liens on
the Pool Assets except for Liens permitted under Section 7.3.

 

(j)  Filings, Registrations and Recordings.  The Administrative Agent shall have received
each document (including any Uniform Commercial Code financing statement)
required by the Security Documents or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a

 

32

 

perfected
Lien on the Collateral described therein, prior and superior in right to any
other Person (other than with respect to Permitted Liens), which shall be in
proper form for filing, registration or recordation.

 

(k)  Letters
of Credit.  There shall be no letters
of credit outstanding under the Existing Credit Agreement.

 

(l)  Representations and Warranties.  Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on such date (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).

 

(m)  No Default.  No Default or Event of Default shall have
occurred and be continuing on such date.

 

Upon the satisfaction (in the good faith judgment of
the Administrative Agent) of the foregoing conditions, the Administrative Agent
shall notify the Borrower and the Lenders of the satisfaction thereof, and such
notice shall be conclusive and binding. 
Upon the receipt of such notice, the Lenders shall make available to the
Administrative Agent an amount equal to the Loan or Loans to be made by such
Lender as contemplated in Section 2.2 and the Administrative Agent shall
use such funds to repay in full the outstanding principal amount of the
Existing Loans under the Existing Credit Agreement (other than the Existing
Loans of any Lender who has requested that all or a portion of the aggregate
amount of the Existing Loans of such Lender be deemed to satisfy the funding
requirement as contemplated by the proviso in Section 2.2) and the Closing
Date shall be deemed to occur when such transfer has been made.

 

SECTION 6  AFFIRMATIVE
COVENANTS

 

Each of Holdings, NWAC, NWA
and the Borrower hereby agrees that, so long as the Commitments remain in
effect or any Loan or other amount is owing to any Lender or Agent hereunder,
each of Holdings, NWAC, NWA and the Borrower shall and shall cause each of its
Subsidiaries to:

 

6.1                                 Financial Statements.  Furnish
to the Administrative Agent (and the Administrative Agent shall promptly
following receipt thereof furnish to the Lenders):

 

(a)  as soon as available, but in any event within
90 days after the end of each fiscal year of Holdings, a copy of the SEC
Form 10-K filed by Holdings with the SEC for such fiscal year, or, if no such
Form 10-K was so filed by Holdings for such fiscal year, the audited
consolidated balance sheet of Holdings and its Subsidiaries and whether or not
such Form 10-K was filed, of the Borrower and its Subsidiaries, as at the end
of such fiscal year and the related audited consolidated statements of
operations, of common stockholders’ equity and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, reported on without a “going concern” or like qualification or exception,
or qualification arising out of the scope of the audit, by Ernst & Young or
other independent certified public accountants of nationally recognized
standing; and

 

33

 

(b)  as soon as available, but in any event not
later than 45 days after the end of each of the first three quarterly periods
of each fiscal year of Holdings, a copy of the SEC Form 10-Q filed by Holdings
with the SEC for such quarterly period, or, if no such Form 10-Q was so filed
by Holdings with respect to any such quarterly period, the unaudited
consolidated balance sheet of Holdings and its Subsidiaries, and whether or not
such Form 10-Q was filed, of the Borrower and its Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of operations
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer of Holdings, as the case may
be, as being fairly stated in all material respects (subject to normal year-end
audit adjustments).

 

All
such financial statements shall be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).  Subject to
the next succeeding sentence, information delivered pursuant to this Section 6.1
to the Administrative Agent may be made available by the Administrative Agent
to the Lenders by posting such information on the Intralinks website on the
Internet at http://www.intralinks.com. 
Information delivered pursuant to this Section 6.1 may also be
delivered by electronic communication pursuant to procedures approved by the
Administrative Agent pursuant to Section 11.2(b) hereto.  Information required to be delivered pursuant
to this Section 6.1 (to the extent not made available as set forth above)
shall be deemed to have been delivered to the Administrative Agent on the date
on which the Borrower provides written notice to the Administrative Agent that
such information has been posted on the Borrower’s website on the Internet at
http://www.nwa.com (to the extent such information has been posted or is
available as described in such notice). 
Information required to be delivered pursuant to this Section 6.1
shall be in a format which is suitable for transmission.

 

6.2                                 Certificates; Other Information.  Furnish
to the Administrative Agent (and the Administrative Agent shall promptly
following receipt thereof furnish to the Lenders):

 

(a)  concurrently with the delivery of the
financial statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;

 

(b)  concurrently with the delivery of any
financial statements pursuant to Section 6.1, (i) a certificate of a
Responsible Officer of Holdings and the Borrower stating that such Responsible
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) a Compliance Certificate of the last day
of the fiscal quarter or fiscal year of the Borrower, as the case may be;

 

(c)  not more than 75 days following the
commencement of each fiscal year of the Borrower, a budget of the Borrower and
its Subsidiaries in reasonable detail for each fiscal month of such fiscal year
as is customarily prepared by management for its internal use setting forth,
with appropriate discussion, the principal assumptions upon which such budget
is based;

 

(d)  promptly after any senior financial or legal
officer of any Loan Party obtains knowledge thereof, notice of any change in
the rating assigned by either Rating Agency to the Facilities;

 

34

 

(e)  within five days after the same are sent,
copies of all financial statements and reports that Holdings sends to the
holders of any class of its debt securities or public equity securities and,
within five days after the same are filed, copies of all financial statements
and reports that Holdings may make to, or file with, the SEC (including,
without limitation, any Form 10-K or Form 10-Q);

 

(f)  on the twelve month anniversary of the
Closing Date and on each one year anniversary thereafter, an Appraisal of the
Pool Assets;

 

(g)  within 45 days after the close of each
calendar quarter, notice of (i) any acquisition of any Route, Slot, or Foreign
Slot and (ii) any sale or transfer of any Route, Slot or Foreign Slot, in each
case during such calendar quarter and confirming the Routes, Slots and Foreign
Slots then in existence;

 

(h)  within ten days after the end of
each fiscal quarter, a certificate of the Chief Financial Officer of the
Borrower (i) stating that the Borrower is utilizing the Pacific Routes, the
Slots and the Foreign Slots, in each case, in a manner consistent in all
material respects with applicable regulations and contracts and whether the
Borrower has satisfied all applicable utilization requirements set forth in any
such regulations and contracts, (ii) showing the number of Flights by the
Borrower during such quarterly period using the Pacific Routes, setting forth
in each case in comparative form the number of Flights by the Borrower using
such Routes during the corresponding quarterly period in fiscal year 2004, and
(iii) showing the aggregate number of Disposed Japanese Foreign Slots plus
Unavailable Japanese Foreign Slots, which certificate shall be substantially in
the form of Exhibit G;

 

(i)  promptly, such information as to the Slots,
Foreign Slots, the Pacific Routes and Gate Leaseholds as the Administrative
Agent may from time to time reasonably request; and

 

(j)  promptly, such additional financial and other
information as the Required Lenders may (through the Administrative Agent) from
time to time reasonably request.

 

Subject to the next succeeding sentence, information
delivered pursuant to this Section 6.2 to the Administrative Agent may be
made available by the Administrative Agent to the Lenders by posting such
information on the Intralinks website on the Internet at
http://www.intralinks.com.  Information
delivered pursuant to this Section 6.2 may also be delivered by electronic
communication pursuant to procedures approved by the Administrative Agent
pursuant to Section 11.2(b) hereto. 
Information required to be delivered pursuant to this Section 6.2
(to the extent not made available as set forth above) shall be deemed to have
been delivered to the Administrative Agent on the date on which the Borrower
provides written notice to the Administrative Agent that such information has
been posted on the Borrower’s website on the Internet at http://www.nwa.com (to
the extent such information has been posted or is available as described in
such notice).  Information required to be
delivered pursuant to this Section 6.2 shall be in a format which is
suitable for transmission.

 

If any notice or other communication delivered
pursuant to this Section 6.2, or otherwise pursuant to this Agreement,
contains any material non-public information, the Borrower, or other Loan Party
if applicable, shall, at the time of such delivery, notify the Administrative
Agent that such communication or notice contains material non-public
information.  If a Lender has notified
the Administrative Agent that it does not want to receive material non-public
information, the Administrative Agent will not forward to such Lender any
notice or communication which is

 

35

 

identified by the Borrower as including such information
until such Lender notifies the Administrative Agent otherwise.

 

6.3                                 Payment of Taxes.  Pay,
discharge or otherwise satisfy, all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all material lawful claims which, if unpaid,
might become a Lien or charge upon any properties of any Loan Party or any of
its Subsidiaries, provided that no Loan Party nor any of its
Subsidiaries shall required to pay any such tax, assessment, charge, levy or
claim (i) which is being contested in good faith and by proper proceedings if
it has maintained adequate reserves (in the good faith judgment of management)
with respect thereto in accordance with GAAP or (ii) the nonpayment of which
would not have a Material Adverse Effect.

 

6.4                                 Maintenance of Existence;
Compliance.  (a) 
Except as permitted by Section 7.4, do all things necessary to
preserve and keep in full force and effect its existence and material rights,
authority and franchises, unless the failure to keep in full force and effect
any such right, authority or franchise would not have a Material Adverse
Effect; and (b) comply in all material respects with all applicable statutes,
regulations and orders of, and all applicable restrictions impose by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including Environmental Laws) other
than those the non-compliance with which would not have a Material Adverse
Effect.

 

6.5                                 Maintenance of Property;
Insurance.  (a) 
Keep all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted and from time to time make
in such properties and equipment all needed and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner customary for companies in similar businesses, except
where the failure to keep such properties and equipment in good repair, working
order and condition or to make such repairs, renewals, replacements,
extensions, additions, betterments or improvements would not have a Material
Adverse Effect and (b) maintain in full force and effect insurance in such
amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice and
as is required by law.

 

6.6                                 Inspection of Property;
Books and Records; Discussions.  (a) 
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities and
(b) permit, upon reasonable notice given by the Administrative Agent to the
Borrower on behalf of any Lender, officers and designated representatives of
any Lender (including without limitation, appraisers) to visit and inspect the
properties or assets of Holdings and any of its Subsidiaries and to examine the
books of account of Holdings and any of its Subsidiaries and discuss the
affairs, finances and accounts of Holdings and of any of its Subsidiaries with
its and their officers and independent accountants, all at such reasonable
times and intervals and to such reasonable extent as such Lender may desire.

 

6.7                                 Notices. 
Promptly give notice to the
Administrative Agent and each Lender of:

 

(a)  (i) the occurrence of any Default or Event of
Default and (ii) any litigation or governmental proceeding pending against or
affecting Holdings or any of its Subsidiaries which is likely to have a
Material Adverse Effect;

 

36

(b)  the following events, as soon as possible and
in any event within 30 days after the Borrower knows or has reason to know
thereof, if such events, individually or in the aggregate have had or would
have a Material Adverse Effect:  (i) the
occurrence of any Termination Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Plan; and (c)
copies of (i) any proposal for a waiver of any “reportable event” sent to the
PBGC contemporaneous therewith and (ii) any waiver granted by PBGC promptly
after the Borrower receives notice that such waiver has been granted by PBGC.

 

Each notice pursuant to this
Section shall be accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to therein and stating what
action Holdings or the relevant Subsidiary proposes to take with respect
thereto.

 

6.8                                 Performance of Obligations.  Perform
all of its obligations under the terms of each mortgage, indenture, security
agreement and other debt instrument by which it is bound, except where the
failure to perform would not have a Material Adverse Effect.

 

6.9                                 End of Fiscal Years; Fiscal
Quarters.  For financial
reporting purposes, end Holdings’ and each of its Subsidiaries’ (i) fiscal
years on December 31 of each year and (ii) fiscal quarters on March 31,
June 30, September 30 and December 31 of each year.

 

6.10                           Air Carrier.  The
Borrower will at all times be a Certificated Air Carrier.

 

6.11                           ERISA.  (a)  As
soon as practicable and in any event within fifteen days after any Loan Party
or any of its ERISA Affiliates knows or has reason to know of the occurrence of
any (i) Termination Event in connection with any Pension Plan or
Multiemployer Plan, (ii) non-exempt “prohibited transaction” as described
in Section 406 of ERISA or Section 4975 of the Code,
(iii) accumulated funding deficiency or application to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code, (iv) institution
pursuant to Section 515 of ERISA to collect a delinquent contribution, or
(v) material liability by any Loan Party or any Subsidiary of any Loan
Party pursuant to any employee welfare benefit plan (as defined in Section 3(1)
of ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension
benefit plan (as defined in Section 3(2) of ERISA) in addition to the
liability existing on the Closing Date pursuant to any such welfare or pension
plan or plans in connection with any Pension Plan or Multiemployer Plan or any
trust created thereunder, if as a result of such event or transaction,
considered together with other such events and transactions occurring within
the prior two years, the Loan Parties and their ERISA Affiliates incur or could
reasonably expect to incur liabilities from all such events and transactions in
excess of $5,000,000, such Loan Party shall deliver to each of the Lenders a
certificate, signed by an Authorized Officer of such Loan Party, specifying the
nature thereof, what action such Loan Party or such ERISA Affiliate has taken,
is taking or proposes to take with respect thereto, and any action taken or
threatened by the Internal Revenue Service, Department of Labor, PBGC, Pension
Plan or Multiemployer Plan, as applicable, to be taken with respect thereto
(together with copies of all relevant notices or other communications received
from such entity).  For the purposes of
this

 

37

 

Section 6.11, a Loan
Party shall be deemed to have knowledge of all facts known by the plan “administrator”(as
defined in Section 3(16)(A) of ERISA) of any Pension Plan of which such
Loan Party or any of its ERISA Affiliates is the “plan sponsor” (as defined in Section 3(16)(B)
of ERISA).

 

(b)  To the extent reasonably requested by any
Lender, as soon as practicable and in any event within 30 days after the filing
of a Form 5500 series annual report by a Loan Party or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Pension Plan,
such Loan Party shall furnish to such Lender a copy of such Form 5500 series
annual report and the Schedule B (Actuarial Information) thereto (and
shall make available for inspection by such Lender at reasonable times copies
of the full annual report with respect to each Pension Plan).

 

6.12                           Security Interests;
Additional Collateral.  (a)  Perform any and all acts and execute any and
all documents (including, without limitation, the execution, amendment or supplementation
of any financing statement or continuation statement) for filing under the
provisions of the UCC or the Federal Aviation Act and the rules and regulations
thereunder, which are necessary in order to maintain in favor of the Collateral
Agent for the benefit of the Secured Creditors a valid and perfected Lien on
the Collateral, subject to no other Liens except for Permitted Liens.

 

(b)  With
respect to any Route to the Pacific or any related Slot or Foreign Slot
acquired after the Closing Date by the Borrower as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly
(i) execute and deliver to the Administrative Agent such security agreements
(which shall contain substantially the same terms and conditions as the Route
Security Agreements) and other documents as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a security interest in such property and (ii) take all actions reasonably
requested by the Administrative Agent to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in
such property, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the security agreement
or by law or as may be requested by the Administrative Agent.

 

6.13                           Gate Utilization. Utilize all of its
Gate Leaseholds in a manner sufficient to comply in all material respects with
applicable lease provisions governing such Gate Leaseholds.

 

6.14                           Slot Utilization. (a)  Utilize the Slots in a manner consistent in
all material respects with applicable regulations and contracts, taking into
account any waivers or other relief granted to the Borrower by the FAA.

 

(b) 
Cause to be done all things reasonably necessary to preserve and keep in
full force and effect its rights in and use of its Slots, including, without
limitation, satisfying the Use or Lose Rule. Without in any way limiting the
foregoing, the Borrower shall promptly take all such steps as may be reasonably
necessary now or in the future to maintain, renew and obtain the rights,
licenses, authorizations or certifications as are necessary to the continued
and future holding and use by the Borrower of its Slots. It is understood and
agreed that the Borrower may cease using any Slot in connection with the
Pacific Routes in the event that the Borrower determines in good faith that the
preservation of its rights in and/or use of such Slot is no longer advantageous
to the Borrower in connection with the conduct of its operations utilizing the
Pacific Routes.

 

38

 

6.15                           Foreign Slot Utilization.  (a) Utilize the Foreign Slots in a manner
consistent in all material respects with applicable regulations and contracts,
taking into account any waivers or other relief granted to the Borrower by any
applicable Foreign Aviation Authorities.

 

(b)                                 Cause
to be done all things reasonably necessary to preserve and keep in full force
and effect its rights in and use of its Foreign Slots. Without in any way
limiting the foregoing, the Borrower shall promptly take all such steps as may
be reasonably necessary now or in the future to maintain, renew and obtain the
rights, licenses, authorizations or certifications as are necessary to the
continued and future holding and operation by the Borrower of its Foreign
Slots. Notwithstanding the foregoing, the Borrower may cease using any Foreign
Slot in the event the Borrower determines in good faith that the preservation
of its rights in and/or use of such Foreign Slot is no longer advantageous to
the Borrower in connection with the conduct of its operations utilizing the
Pacific Routes.  If, at any time, the
aggregate number of Disposed Japanese Foreign Slots plus Unavailable
Japanese Foreign Slots exceeds 10% of the Base Number of Japanese Foreign Slots
at such time, the Borrower shall immediately notify the Administrative Agent,
and, following receipt of such notice, the Administrative Agent may, or at the
request of the Required Lenders, the Administrative Agent shall, require that
the Borrower deliver to the Administrative Agent an Appraisal of the Pool
Assets within 30 days of such request (except that an additional Appraisal
shall not be requested, if, within 30 days of the delivery of such certificate,
the Borrower is required to deliver an Appraisal pursuant to Section 6.2(f)).

 

6.16                           Route Utilization; Route
Reporting.  (a) Utilize the
Pacific Routes in a manner consistent in all material respects with Title 49,
rules and regulations promulgated thereunder, and applicable foreign law, and
the applicable rules and regulations of the FAA, DOT and any applicable Foreign
Aviation Authorities, including, without limitation, any operating
authorizations, certificates, bilateral authorizations and bilateral agreements
with any applicable Foreign Aviation Authorities and contracts with respect to
such Pacific Routes.

 

(b)  Cause to be done all things reasonably
necessary to preserve and keep in full force and effect its material rights in
and to use its Pacific Routes. Without in any way limiting the foregoing, the
Borrower shall promptly take (i) all such steps as may be reasonably necessary
to obtain renewal of each such Pacific Route authority from the DOT and any
applicable Foreign Aviation Authorities, within a reasonable time prior to the
expiration of such authority (as prescribed by law or regulation, if any), and
notify the Administrative Agent of the status of such renewal and (ii) all such
other steps as may be necessary to maintain, renew and obtain Supporting Route
Facilities as needed for the continued and future operations of the Borrower
over the Pacific Routes which are now allocated or possessed, or as may
hereafter be allocated or acquired. The Borrower shall further take all actions
reasonably necessary or, in the reasonable judgment of Administrative Agent,
advisable in order to maintain its material rights to use its Pacific Routes
(including, without limitation, protecting the Pacific Routes from dormancy or
withdrawal by the DOT) and Supporting Route Facilities for the Pacific Routes.
The Borrower and any applicable Loan Party shall pay any applicable filing fees
and other expenses related to the submission of applications, renewal requests,
and other filings as may be reasonably necessary to maintain or obtain such
entity’s rights in the Pacific Routes and Supporting Route Facilities for the
Pacific Routes.  It is understood and
agreed that the Borrower may cease using its rights in and/or use of any
Supporting Route Facilities in connection with the Pacific Routes in the event
that the Borrower determines in good faith that the preservation of its rights
in and/or use of such Supporting Route Facilities is no longer advantageous to
the Borrower in connection with the conduct of its operations utilizing the
Pacific Routes.

 

39

 

(c)  Subject to any governmental requirement of
confidentiality, promptly upon receipt thereof, deliver to the Administrative
Agent copies of (i) each certificate or order issued by the DOT and the
applicable Foreign Aviation Authorities with respect to Pacific Routes, (ii)
all material filings made by the Borrower with any Governmental Authority or
any Foreign Aviation Authorities related to preserving and maintaining the
Pacific Routes and (iii) any notices received from any Person notifying the
Borrower or any applicable Loan Party of an event which would have a material
adverse effect upon the Pacific Routes, or the failure to preserve such Pacific
Routes as required pursuant to this Section 6.16.

 

(d)  If the number of Flights by the Borrower
during any fiscal quarter using the Pacific Routes has declined by more than
15% from the number of Flights by the Borrower using the Pacific Routes during
the corresponding quarterly period in the fiscal year ending December 31,
2004 (and calculated in the same manner), the Borrower shall immediately notify
the Administrative Agent and, following receipt of such notice, the
Administrative Agent may, or, at the request of the Required Lenders, the
Administrative Agent shall, require that the Borrower deliver to the
Administrative Agent an Appraisal of the Pool Assets within 30 days of such
request (except that an additional Appraisal shall not be requested, if, within
30 days of the delivery of such certificate, the Borrower is required to
deliver an Appraisal pursuant to Section 6.2(f)).

 

SECTION 7  NEGATIVE COVENANTS

 

Each of Holdings, NWAC, NWA
and the Borrower hereby jointly and severally agree that, so long as the
Commitments remain in effect, or any Loan or other amount is owing to any
Lender or Agent hereunder, each of Holdings, NWAC, NWA and the Borrower shall
not, and (other than for purposes of Section 7.4) shall not permit any of
its Subsidiaries to, directly or indirectly:

 

7.1                                 Financial Condition Covenants.  (a)  Cash Liquidity.  Permit Cash Liquidity to be less than
$900,000,000 at any time.

 

(b)  Consolidated EBITDAR to Consolidated Fixed
Charges.  (i)  Permit the
ratio of Consolidated EBITDAR to Consolidated Fixed Charges for (A) the
nine-month period ended December 31, 2004 or (B) the twelve-month period
ended March 31, 2005, in each case to be less than 0.50 to 1.0.

 

(ii) Permit the ratio of Consolidated EBITDAR to Consolidated Fixed
Charges for any period of four consecutive fiscal quarters (or, if less, the
number of full fiscal quarters subsequent to March 31, 2005) ending with
any fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:

 

	
  Fiscal Quarter(s) Ended

  	
   

  	
  Consolidated EBITDAR to

  Consolidated Fixed Charges

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6/30/05-6/30/06

  	
   

  	
  1.00 to 1.0

  	
   

  
	
  9/30/06

  	
   

  	
  1.05 to 1.0

  	
   

  
	
  12/31/06

  	
   

  	
  1.15 to 1.0

  	
   

  
	
  3/31/07

  	
   

  	
  1.30 to 1.0

  	
   

  
	
  6/30/07

  	
   

  	
  1.45 to 1.0

  	
   

  
	
  9/30/07 and
  thereafter

  	
   

  	
  1.50 to 1.0

  	
   

  

 

40

 

7.2                                 Indebtedness.  Create,
issue, incur, assume, become liable in respect of or suffer to exist any
Indebtedness secured by a Lien in excess in the aggregate for Holdings and its
Subsidiaries of $1,500,000,000 at any time outstanding except:

 

(a)  Indebtedness of any Loan Party pursuant to
any Loan Document;

 

(b)  intercompany Indebtedness among Holdings and
its Subsidiaries;

 

(c)  Indebtedness outstanding on the date hereof
and listed on Schedule 7.2(c) and any refinancings, refundings, renewals
or extensions thereof but only to the extent that such refinancing, refunding,
renewal or extension does not increase the principal amount of such
Indebtedness outstanding immediately prior to such refinancing, refinancings,
renewal or extensions (except to the extent that such increase is permitted
under the $1,500,000,000 limitation set forth above in this Section) and that
the Lien securing such Indebtedness is not spread to cover any additional
properties;

 

(d)  Indebtedness (including industrial revenue
bonds) in respect of tax-exempt government sponsored financings relating to the
acquisition, leasing or improvement of property in connection with its business
and any refinancing, refunding, renewal or extension thereof but only to the
extent that such refinancing, refunding, renewal or extension does not increase
the principal amount of such Indebtedness outstanding immediately prior to such
refinancing, refunding, renewal or extension (except to the extent such
increase is permitted under the $1,500,000,000 limitation set forth above in
this Section) and that the Lien securing any such Indebtedness shall only cover
the property financed thereby;

 

(e)  Indebtedness of Holdings or any
of its Subsidiaries incurred in connection with (i) the acquisition of aircraft
(including Indebtedness secured by aircraft purchase agreements) so long as
such Indebtedness is incurred not later than 18 months after the acquisition
thereof and (ii) the acquisition of other assets so long as such Indebtedness
is incurred not later than 120 days after the acquisition thereof and any
refinancing, refunding, renewal or extension thereof but only to the extent
that such refinancing, refunding, renewal or extension does not increase the
principal amount of such Indebtedness outstanding immediately prior to such
refinancing, refunding, renewal or extension (except to the extent such
increase is permitted under the $1,500,000,000 limitation set forth above in
this Section), and that the Lien securing any such Indebtedness shall only
cover the property financed thereby;

 

(f)  Indebtedness in respect of margin
requirements under fuel hedging contracts, provided that the Liens
securing such Indebtedness shall be limited to such fuel hedging contracts;

 

(g)  the Pari Passu Obligations; and

 

(h)  Indebtedness outstanding under any Replacement Facility, provided
that the maturity of such Replacement Facility (the “Replacement Facility
Maturity Date”) shall be on a date that is after the Tranche B Termination
Date and such Replacement Facility Maturity Date shall not be amended to any
date other than a date that is after the Tranche B Termination Date.

 

41

 

7.3                                 Liens.  Create, incur, assume or suffer to exist any
Lien upon or in respect of any Pool Assets or any Supporting Route Facilities
or any proceeds or income in respect thereof, whether now owned or hereafter
acquired, except for (Liens described below are herein referred to as “Permitted
Liens”):

 

(a)  inchoate Liens for taxes not yet due or Liens
for taxes being contested in good faith and by appropriate proceedings for
which adequate reserves (in the good faith judgment of the management of the
Borrower) have been established in accordance with GAAP;

 

(b)  Liens (other than any Lien imposed by ERISA)
in respect of the Pool Assets or any Supporting Route Facilities imposed by law
which were incurred in the ordinary course of business and which have not
arisen to secure Indebtedness for borrowed money, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlord’s Liens, and other
similar Liens and governmental charges arising in the ordinary course of
business, and which either (x) do not in the aggregate materially detract from
the value of any of the Pool Assets or any material portion of the Supporting
Route Facilities, as the case may be, or materially impair the use thereof in
the operation of the business of the Borrower or any of its Subsidiaries or (y)
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or asset
subject to such Lien;

 

(c)  Liens (where there has been no execution or
levy and no pledge or delivery of Pool Assets or any material portion of the
Supporting Route Facilities as security therefor) arising out of judgments or
awards against the Borrower or any of its Subsidiaries with respect to which an
appeal or proceeding for review is being prosecuted in good faith and which
judgment or award shall be vacated, discharged, satisfied or stayed or bonded
pending appeal within 60 days from the entry thereof;

 

(d)  Liens created pursuant to the Security
Documents;

 

(e)  Liens securing the Pari Passu Obligations;

 

(f)  other Liens on the Collateral, including
Liens securing any Replacement Facility permitted pursuant to Section 7.2(h);
provided that
prior to the creation of any such Liens, the Intercreditor Agreement shall be
amended in a manner reasonably satisfactory to the Administrative Agent and
shall provide that such Liens shall be junior and subordinate to the Liens in
favor of the Administrative Agent created pursuant to the Security Documents
and shall be subject to the terms and conditions in the Intercreditor Agreement
applicable to the Junior Lien and the PBGC Lien (as such terms are defined in
the Intercreditor Agreement); and

 

(g)  (i) any Liens or other interests of any airport or airport
authority on any Supporting Route Facilities arising out of the Borrower’s use
of such Supporting Route Facilities and (ii) any Liens on any Supporting Route
Facilities outside the United States imposed by any Governmental Authority
outside the United States so long as the Borrower is contesting the imposition
of such Lien in good faith by appropriate proceedings to the extent that such a
contest is permitted and the Borrower is disputing the imposition of such Lien.

 

7.4                                 Fundamental Changes.  Enter
into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or

 

42

 

Dispose of all or
substantially all of its property or business, except that, so long as (x) no
Default or Event of Default exists, or would result therefrom, and (y) after
giving pro forma effect to any such transaction, the Loan Parties would be in
compliance with Section 7.1 of this Agreement as of the most recently
ended fiscal quarter and the Borrower shall have delivered a certificate of a
Responsible Officer to the Administrative Agent setting forth in reasonable
detail the calculations required to determine such compliance, any Loan Party
may merge or consolidate with, or sell or Dispose of all or substantially all
of its assets to, any Person, provided that (i) in the case of any
merger or consolidation, the surviving corporation shall be such Loan Party or
(ii) the surviving corporation, if not such Loan Party (or the successor
corporation, in the case of a Disposition of all or substantially all of a Loan
Party’s assets), (A) is a corporation organized and existing under the laws of
the United States of America or any State thereof, (B) executes and delivers
agreements assuming the obligations of such Loan Party under this Agreement and
the other Loan Documents, which assumption agreements and all related actions
and documentation shall be in form and substance reasonably satisfactory to the
Administrative Agent, and (C) delivers to the Administrative Agent a certificate
signed by a Responsible Officer of such Loan Party and an opinion of counsel to
such Person satisfactory to the Administrative Agent, each stating that such
transaction and such assumption agreement comply with this Section and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

 

7.5                                 Disposition of Pool Assets.  (a)  Convey, sell, lease, transfer or otherwise
dispose of (whether voluntarily or involuntarily (it being understood that loss
of property due to theft, destruction, confiscation, prohibition on use or
similar event shall constitute a disposal for purposes of this covenant)), or
remove or substitute, any Pool Assets or take any action that could materially
diminish the fair market value of the Pool Assets taken as a whole, or agree to
do any of the foregoing at any future time, except that:

 

(i)                                     so long as no Default or Event of Default
exists, the Borrower may replace an aircraft included in the Collateral with
another aircraft of the Borrower (and Schedule 7.5 shall be modified to
reflect such replacement), provided that (A) such replacement shall be
made on a dollar-for-dollar basis based upon (x) in the case of the aircraft
being removed, the Appraised Value of such aircraft (as determined by the most
recently delivered Appraisal with respect to such aircraft), and (y) in the
case of the aircraft being added to the Collateral, the Appraised Value of such
aircraft (as determined by an Appraisal performed at the time of such
replacement) and (B) prior to effecting the replacement, the Borrower shall
have delivered a certificate of a Responsible Officer of the Borrower
certifying compliance with this Section and attaching to such certificate
all Appraisals not previously delivered to the Lenders;

 

(ii)                                  so long as no Default or Event of Default
exists, or would result therefrom, the Borrower may remove any Airframe or
Engine (as such terms are defined in the Aircraft Mortgage Agreement) from the
Collateral (and Schedule 7.5 shall be modified to reflect such removal), provided
that (A) either (I) after giving effect to such removal, the Appraised
Value of the remaining Pool Assets (as determined by the most recently
delivered Appraisal of all Pool Assets) shall satisfy the Coverage Test or (II)
the Borrower shall prepay Loans in accordance with Section 3.2 and the
Pari Passu Obligations to the extent necessary to comply with the Coverage Test
(with any such prepayment of Loans being in an aggregate amount at least equal
to the Allocable Prepayment Percentage of the aggregate amount of such
prepayments so required) and (B) prior to effecting the removal, the Borrower
shall have delivered a certificate of an Authorized Officer of the Borrower
certifying that, and

 

43

 

providing
calculations demonstrating that, after giving effect to such removal, the
Appraised Value of the Pool Assets shall satisfy the Coverage Test, and
otherwise certifying compliance with this Section 7.5;

 

(iii)                               in the event of an involuntary disposal of
any Pool Assets (including, without limitation, in the case of an Airframe or
Engine (as such terms are defined in the Aircraft Mortgage Agreement), an Event
of Loss (as defined in the Aircraft Mortgage Agreement) for such Airframe or
Engine) (whether by loss of property due to theft, destruction, confiscation,
prohibition or use, any similar event or otherwise), the Borrower shall, unless
the Borrower is entitled to exercise and exercises its right to remove any
Airframe or Engine which is the subject of such involuntary disposal pursuant
to Section 7.5(a)(ii), within 30 days after the date of such involuntary
disposal (A) either (I) in the event that such Pool Assets subject to such
involuntary disposal is an Airframe or Engine, cause to be subjected to the
Lien of the Aircraft Mortgage Agreement a Replacement Airframe (together with
the same number of Replacement Engines as the number of Engines, if any,
installed on such Airframe at the time such involuntary disposal occurred) or Replacement
Engine, all in accordance with the requirements of the Aircraft Mortgage
Agreement, or (II) in the event that such Pool Asset subject to such
involuntary disposal is Route Collateral, then cause to be subjected to the
Lien of the Route Security Agreement a Replacement Route, such Replacement
Route to be free and clear of all Liens except Permitted Liens and to have a
value, utility and remaining useful life at least equal to such Route
Collateral so replaced as of the date of such involuntary disposal or (B)
reduce the aggregate outstanding principal amount of the Loans to an amount
which shall equal or exceed the Allocable Prepayment Percentage of the
Appraised Value of the Pool Asset subject to such involuntary disposal, in
accordance with Section 3.2; and

 

(iv)                              in the event that an Appraisal furnished
pursuant to Section 6.2(f), Section 6.15(b) or Section 6.16(d)
discloses that the Coverage Test is not satisfied, the Borrower shall within 30
days after the date of such Appraisal (A) designate additional assets as Pool
Assets to the extent that, after giving effect to such designation, the Total
Appraised Value based on the most recently delivered Appraisals with respect to
assets already constituting Pool Assets and based on an Appraisal performed at
the time of such addition with respect to assets being added to Pool Assets
(and Schedule 7.5 shall be modified to reflect such addition), shall
satisfy the Coverage Test, provided that (1) at the time of such
addition, the Lenders shall have received a certificate of a Responsible
Officer of the Borrower certifying that the conditions set forth in this Section shall
have been satisfied after giving effect to such addition and attaching thereto
any Appraisals not previously delivered to the Lenders and (2) the asset being
added shall constitute a Pacific Route or a Stage III Aircraft or (B) reduce
the aggregate outstanding principal amount of the Loans in accordance with Section 3.2
and reduce Pari Passu Commitments and/or prepay Pari Passu Obligations to the
extent necessary to satisfy the Coverage Test.

 

(b)  Directly or indirectly create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of the Borrower to create, incur, assume or suffer to exist any Lien
on any Pool Assets or any Supporting Route Facilities (other than (i) any
encumbrances or restrictions imposed by any airport or airport authority on any
Supporting Route Facilities arising out of the Borrower’s use of such
Supporting Route Facilities and (ii) any encumbrances or restrictions on any
Supporting Route Facilities outside the United States imposed by a Governmental
Authority outside the United States so long as the Borrower is contesting the

 

44

 

imposition of such encumbrances and restrictions in good faith by
appropriate proceedings to the extent that such a contest is permitted and the
Borrower is disputing the imposition of such encumbrances and restrictions).

 

(c)  Fail to cause the Collateral to include, with respect to
each airframe included therein, a sufficient number of appropriate aircraft
engines to operate such airframe as an aircraft.

 

7.6                                 Restricted Payments.  Declare
or pay any dividend (other than stock dividends on its capital stock with the
same or a junior class of stock with respect to which such stock dividend is
being paid) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of Holdings, the Borrower
or any Subsidiary, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Holdings or any Subsidiary (collectively, “Restricted
Payments”), except that:

 

(a)  any Subsidiary of Holdings may make
Restricted Payments to Holdings or any Subsidiary of Holdings;

 

(b)  Holdings or any of its Subsidiaries may
repurchase or redeem its Capital Stock solely through the issuance of
additional shares of its Capital Stock which is of the same or a junior class
of such Capital Stock being repurchased or redeemed; and

 

(c)  so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom,
Holdings may make required dividend and redemption payments in respect of its
outstanding Series C Preferred Stock pursuant to the Certificate of
Designations for the Series C Preferred Stock as in effect on the date hereof.

 

7.7                                 Transactions with Affiliates.  Enter
into any transaction or series of related transactions with any Affiliate of
any Loan Party or any of their respective Subsidiaries, other than on terms and
conditions substantially as favorable to such Loan Party or such Subsidiary as
would reasonably be obtained by such Loan Party or such subsidiary at that time
in a comparable arm’s-length transaction with a Person other than an Affiliate,
provided that the foregoing restrictions shall not apply to (a) customary
fees paid to members of the Board of Directors (in their capacity as such) of
Holdings and its Subsidiaries and (b) Restricted Payments permitted by Section 7.6.

 

7.8                                 Lines of Business.  Make
any material change in the lines of business in which it is engaged as of the
date hereof.

 

7.9                                 ERISA.  None
of the Loan Parties will, or will permit any of their respective Subsidiaries
or its ERISA Affiliates to:

 

(a)  engage in any transaction in connection with
which Holdings or any of its ERISA Affiliates could be subject to either a tax
imposed by Section 4975(a) of the Code or the corresponding civil penalty
assessed pursuant to Section 502(i) of ERISA, which penalties and taxes
for all such transactions could be in an aggregate amount in excess of $2,500,000;

 

(b)  permit to exist any accumulated funding
deficiency, for which a waiver has not been obtained from the Internal Revenue
Service, with respect to any Pension Plan in an aggregate amount greater than
$5,000,000; or

 

45

 

(c)  permit to exist any failure to make
contributions or any unfunded benefits liability which creates, or with the
passage of time would create, a statutory lien or requirement to provide
security under ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity in an aggregate amount in excess of
$5,000,000.

 

7.10                           Investments.  Make any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
Person (all of the foregoing, “Investments”), except:

 

(a)  non-cash consideration received in connection
with sales and dispositions of assets;

 

(b)  investments in cash, cash equivalents and
short term investments; and

 

(c)  other Investments in an aggregate principal
amount not exceeding $250,000,000 at any time, provided that after
giving effect to any such Investment, no Default or Event of Default shall have
occurred and be continuing.

 

7.11                           Acquisitions.  Make any Acquisition (excluding any
Acquisition permitted as an Investment under Section 7.10) unless, after
giving effect to any such Acquisition, Cash Liquidity is at least
$1,500,000,000 and no Default or Event of Default shall have occurred and be
continuing.

 

SECTION 8  EVENTS OF DEFAULT

 

If any of the following
events shall occur and be continuing:

 

(a)  the Borrower shall fail to pay any principal
of any Loan when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan, or any other amount payable hereunder or
under any other Loan Document, within five Business Days after any such
interest or other amount becomes due in accordance with the terms hereof, provided
that the Administrative Agent shall have informed the Borrower of the amount
owing; or

 

(b)  any representation or warranty made or deemed
made by any Loan Party herein or in any other Loan Document or that is
contained in any certificate furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made,
and such default shall continue unremedied for a period of 30 days after
written notice to the Borrower by the Administrative Agent or the Required
Lenders; or

 

(c)  any Loan Party shall default in the
observance or performance of any agreement contained in Sections 6.15(b),
6.16(d), 7.3 (other than any Default resulting from a nonconsensual Lien), 7.4,
7.5 or 7.6; or

 

(d)  any Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section), and such default shall continue unremedied for a period of 30
days (or 15 days in the case of Section 7.1) after notice to the Borrower
from the Administrative Agent or the Required Lenders; or

 

46

 

(e)  (i) Holdings or any of its Subsidiaries shall
(x) default in making any payment of any Indebtedness (excluding the
Obligations) which default is in excess of $10,000,000 beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness
was created; or (y) default in the observance or performance of any other
agreement or condition relating to any Indebtedness (excluding the Obligations)
if such Indebtedness is in excess of $25,000,000 in the case of any one issue
of Indebtedness or in excess of $50,000,000 in the case of all such
Indebtedness when aggregated with all Lease claims described in clause (iii)(y)
or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, any such Indebtedness to become due prior to its stated
maturity; or (ii) any Indebtedness (other than the Obligations), individually
in excess of $25,000,000, or in the aggregate in excess of $50,000,000 (when
aggregated with all Lease claims described in clause (iii)(y)), of any Loan
Party or any of its Subsidiaries shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or (iii) any Loan Party or any of its
Subsidiaries shall default in the observance or performance of any agreement or
condition relating to any Lease if (x) the default is with respect to any
payment in excess of $10,000,000 beyond the period of grace (not to exceed 10
days), if any, provided in the Lease or (y) the effect of such default is to
give the lessor pursuant to such Lease a claim against any Loan Party (after
deducting from such claim the value of the property subject to such Lease) in
excess of $25,000,000 in the case of any one Lease or in excess of $50,000,000
in the case of all Leases and all Indebtedness described in clause (i)(y) or
(ii) of this Section, or

 

(f)  (i) 
any Loan Party or any of its Significant Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, conservator,
custodian or other similar official for all or substantially all of its assets,
or any Loan Party or any of its Significant Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against any Loan Party or any of its Significant Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged and unbonded for a period
of 60 days; or (iii) there shall be commenced against any Loan Party or any of
its Significant Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or substantially all of its assets that results in the entry of an
order for any such relief that shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv) any
Loan Party or any of its Significant Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Loan
Party or any of its Significant Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

 

(g)  ERISA. 
(i)  any “reportable event” as
described in Section 4043 of ERISA or the regulations thereunder
(excluding those events for which the requirement for notice has been waived by
the PBGC), or any other event or condition, which the Required Lenders
determine constitutes reasonable grounds under Section 4042 of ERISA for
the termination of any Pension Plan by the

 

47

 

PBGC
or for the appointment by the appropriate United States District Court of a
trustee to administer or liquidate any Pension Plan shall have occurred; or

 

(ii) a trustee shall be
appointed by a United States District Court to administer any Pension Plan; or

 

(iii) the PBGC shall
institute proceedings to terminate any Pension Plan or to appoint a trustee to
administer any Pension Plan; or

 

(iv) Holdings or any of its
ERISA Affiliates shall become liable to the PBGC or any other party under Section 4062,
4063 or 4064 of ERISA with respect to any Pension Plan; or

 

(v) Holdings or any of its
ERISA Affiliates shall become liable to any Multiemployer Plan under Section 4201
et  seq. of ERISA; or

 

(vi) any Pension Plan shall
fail to satisfy the minimum funding standard required for any plan year or part
thereof unless a waiver of such standard or extension of any amortization
period is granted under Section 412 of the Code; or

 

(vii) a contribution
required to be made to a Pension Plan or a Multiemployer Plan has not been
timely made; or

 

(vii) any Loan Party or any
Subsidiary of Holdings or any ERISA Affiliate has incurred or is likely to
incur a liability to or on account of a Plan under Section 502(i), or
502(l) of ERISA or Section 4975 of the Code; or

 

(ix) any Loan Party or any
Subsidiary of any Loan Party has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section 3(1)
of ERISA) that provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or employee pension
benefit plans (as defined in Section 3(2) of ERISA) other than Pension
Plans;

 

if as of the date thereof or
any subsequent date, the sum of each Loan Party’s and its ERISA Affiliates’
various liabilities (such liabilities to include, without limitation, any
liability to the PBGC or to any other party under Section 4062, 4063 or
4064 of ERISA with respect to any Pension Plan, or to any Multiemployer Plan
under Section 4201 et  seq. of ERISA, and to be calculated
after giving effect to the tax consequences thereof) as a result of such events
listed in subclauses (i) through (ix) above exceeds $100,000,000; or

 

(h)  one or more judgments or decrees shall be
entered against any Loan Party or any of its Subsidiaries involving a liability
of $25,000,000 or more in the case of any one such judgment or decree or
$50,000,000 or more in the aggregate for all such judgments and decrees (in
each case to the extent not paid or fully covered by insurance provided by a
carrier that has acknowledged coverage) and any such judgments or decrees shall
not have been vacated, discharged, satisfied or stayed or bonded pending appeal
within 60 days from the entry thereof; or

 

(i)  the guarantee contained in Section 9
shall cease, for any reason, to be in full force and effect or any Loan Party
or any Affiliate of any Loan Party shall so assert; or

 

48

 

(j) 
any of the Security Documents shall cease, for any reason, to be in full
force and effect, or any Loan Party, any Affiliate of any Loan Party or any
party to the Intercreditor Agreement shall so assert, or any Lien created by
any of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby or any Loan Party shall
assert in writing the invalidity, unenforceability or lack of priority of such
Liens; or

 

(k) 
the number of Flights by the Borrower during any fiscal quarter using
the Pacific Routes declines by more than 25% from the number of Flights by the
Borrower using the Pacific Routes during the corresponding quarterly period in
the fiscal year ending December 31, 2004 (and calculated in the same
manner); or

 

(l) 
the aggregate number of Disposed Japanese Foreign Slots plus
Unavailable Japanese Foreign Slots shall exceed 15% of the Base Number of
Japanese Foreign Slots;

 

then, and in any such event,
(A) if such event is an Event of Default specified in clause (i) or (ii) of
paragraph (f) above with respect to the Borrower, automatically the Commitments
shall immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents shall immediately become due and payable, as the case may be, and (B)
if such event is any other Event of Default, with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement or any other
Loan Document to be due and payable forthwith, whereupon the same shall
immediately terminate and become due and payable, as the case may be.  Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.

 

SECTION 9  GUARANTY

 

9.1                                 The Guaranty.  In
order to induce the Lenders to enter into this Agreement and to extend credit
hereunder and in recognition of the direct benefits to be received by the
Guarantors from the proceeds of the Loans, each Guarantor hereby jointly and
severally agrees with the Agents and the Lenders as follows:  each Guarantor hereby jointly and severally,
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment and performance when due, whether upon
maturity, by acceleration or otherwise, of the Obligations to each of the
Lenders and each of the Agents.  If any
or all of the Obligations of the Borrower to the Lenders or the Agents becomes
due and payable hereunder, each Guarantor unconditionally promises on a joint
and several basis to pay such Obligations to the Lenders or the Agents, as the
case may be, or order, on demand, together with any and all expenses which may
be incurred by the Agents or the Lenders in collecting any of the Obligations.

 

9.2                                 Bankruptcy. 
Additionally, each Guarantor
jointly and severally, unconditionally and irrevocably guarantees the payment
of any and all Obligations of the Borrower to each of the Lenders and each of
the Agents whether or not due or payable by the Borrower upon the occurrence in
respect to the Borrower of any of the events specified in Section 8(f),
and unconditionally promises to pay such Obligations to each of the Lenders and
each of the Agents, or order, on demand, in lawful money of the United States.

 

49

9.3                                 Nature
of Liability.  The
liability of each Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the Obligations of the Borrower whether
executed by each Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by (a)
any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Obligations of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or
change in personnel by the Borrower, or (e) any payment made to the Agents or
the Lenders on the Obligations which such Agents or such Lenders repay the
Borrower or Guarantor (including by depositing the Proceeds with a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
Guarantor) pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each Guarantor
waives any right to the deferral or modification of its obligations hereunder
by reason of any such proceeding.

 

9.4                                 Independent Obligation.  The
obligations of each Guarantor hereunder are independent of the obligations of
any other Guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor or the Borrower and whether or not any other
guarantor or the Borrower be joined in any such action or actions.  Each Guarantor waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. 
Any payment by the Borrower or other circumstances which operate to toll
any statute of limitations as to the Borrower shall operate to toll the statute
of limitations as to each Guarantor.

 

9.5                                 Authorization.  Each
Guarantor authorizes the Agents and the Lenders without notice or demand
(except as shall be required by applicable statute and which cannot be waived),
and without affecting or impairing its liability hereunder, from time to time
to (a) renew, compromise, extend, increase, accelerate or otherwise change the
time for payment of, or otherwise change the terms of, the Obligations or any
part thereof in accordance with this Agreement, including any increase or
decrease of the rate of interest thereon, (b) take and hold security from any
Guarantor or any other party for the payment of this guaranty or the
Obligations and exchange, enforce, waive and release any such security, (c)
apply such security and direct the order or manner of sale thereof as the
Agents and the Lenders in their discretion may determine and (d) release or
substitute any one or more endorsers, Guarantors, the Borrower or other
obligors.

 

9.6                                 Reliance. 
It is not necessary for the
Agents or the Lenders to inquire into the capacity or powers of the Borrower or
its Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Obligations made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

 

9.7                                 Subordination.  Any
indebtedness of the Borrower now or hereafter held by any Guarantor is hereby
subordinated to the Obligations of the Borrower to the Agents and the Lenders;
and such indebtedness of the Borrower to such Guarantor, if any Agent, after an
Event of Default has occurred and is continuing, so requests, shall be
collected, enforced and received by such Guarantor as trustee for the Lenders
and be paid over to the Lenders and the Agents on account of the Obligations of
the Borrower to the Lenders and the Agents, but without affecting or impairing
in any manner the liability of such Guarantor under the other provisions of
this Guaranty.  Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any indebtedness
of the

 

50

 

Borrower to such Guarantor,
such Guarantor shall mark such note or negotiable instrument with a legend that
the same is subject to this subordination.

 

9.8                                 Waiver.  (a)  Each
Guarantor waives any right (except as shall required by applicable statute and
which cannot be waived) to require the Agents or the Lenders to (a) proceed
against the Borrower, any other Guarantor or any other party, (b) proceed
against or exhaust any security held from the Borrower, any other Guarantor or
any other party or (c) pursue any other remedy in the Agents’ or the Lenders’
power whatsoever. Each Guarantor waives any defense based on or arising out of
any defense of the Borrower, any other Guarantor or any other party other than
payment in full of the Obligations, including, without limitation, any defense
based on or arising out of the disability of the Borrower, any other Guarantor
or any other party, or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower other than payment in full of the Obligations. The Agents and the
Lenders may, at their election, foreclose on any security held by the Agents or
the Lenders by one or more judicial or nonjudicial sales (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Agents and the Lenders may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of each
Guarantor hereunder except to the extent the Obligations have been paid. Each
Guarantor waives any defense arising out of any such election by the Agents and
the Lenders, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other party or any security. Until all
Obligations of the Borrower to the Lenders and to the Agents shall have been
paid in full, each Guarantor agrees that it will not exercise any right of
subrogation, and waives any right to enforce any remedy which the Agents and
the Lenders  now have or may hereafter
have against the Borrower, and waives any benefit of, and any right to participate
in, any security now or hereafter held by the Agents and the Lenders.

 

(b)  Each Guarantor waives all presentments,
demands for performance, protests and notices, including, without limitation,
notices of nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this guaranty, and notices of the existence, creation or
incurring of new or additional Obligations. 
Each Guarantor assumes all responsibility for being and keeping itself informed
of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks which each Guarantor assumes and incurs
hereunder, and agrees that the Agents and the Lenders shall have no duty to
advise either Guarantor of information known to them regarding such
circumstances or risks.

 

9.9                                 Limitation on Enforcement.  The
Lenders agree that no Lender shall have any right individually to seek to
enforce or to enforce this guaranty, it being understood and agreed that such
rights and remedies may be exercised only by the Administrative Agent for the
benefit of the Lenders upon the terms of this Agreement.

 

SECTION 10  THE AGENTS

 

10.1                           Appointment.  Each
Lender hereby irrevocably designates and appoints each Agent as the agent of
such Lender under this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes each Agent, in such capacity, to take such action
on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to such Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto.

 

51

 

Notwithstanding
any provision to the contrary elsewhere in this Agreement, no Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.

 

10.2                           Delegation of Duties.  Each
Agent may execute any of its duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

 

10.3                           Exculpatory Provisions.  Neither
any Agent nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from its or such Person’s own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
any Loan Party or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Loan Party a party thereto to
perform its obligations hereunder or thereunder.  No Agent shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

 

10.4                           Reliance by Agents.  Each
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Loan Parties),
independent accountants and other experts selected by the Administrative
Agent.  Each Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent.  Each Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence as it deems appropriate of the requisite Lenders or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.  Each
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the requisite Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

 

10.5                           Notice of Default.  No
Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless such Agent has received notice
from a Lender or a Loan Party referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders.  The

 

52

 

Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the requisite Lenders, provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

 

10.6                           Non-Reliance on Agents and
Other Lenders.  Each Lender expressly acknowledges that
neither the Agents nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of a Loan Party or any affiliate of a Loan Party, shall
be deemed to constitute any representation or warranty by any Agent to any
Lender.  Each Lender represents to the
Agents that it has, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. 
Each Lender also represents that it will, independently and without
reliance upon any Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their Affiliates.  Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by an Agent hereunder, no Agent shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of any Loan Party or any Affiliate of a Loan Party that may
come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.

 

10.7                           Indemnification.  The
Lenders agree to indemnify each Agent in its capacity as such (to the extent
not reimbursed by the Loan Parties and without limiting the obligation of the
Loan Parties to do so), ratably according to their respective Aggregate
Exposure Percentages in effect on the date on which indemnification is sought
under this Section (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Aggregate Exposure Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time (whether
before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent’s gross
negligence or willful misconduct.  The
agreements in this Section shall survive the payment of the Loans and all
other amounts payable hereunder.

 

10.8                           Agent in Its Individual Capacity.  Each
Agent and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Loan Party as

 

53

 

though such Agent were not
an Agent.  With respect to its Loans made
or renewed by it, each Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include each Agent in its individual capacity.

 

10.9                           Successor Administrative Agent.  The
Administrative Agent may resign as Administrative Agent upon 15 Business Days’
notice to the Lenders and the Borrower. 
If the Administrative Agent shall resign as Administrative Agent, then
the Required Lenders shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall (unless an Event of Default under Section 8(a)
or 8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term “Administrative
Agent” shall mean such successor agent effective upon such appointment and
approval, and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
If no successor agent has accepted appointment as Administrative Agent
by the date that is 10 days following a retiring Administrative Agent’s notice
of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall assume and
perform all of the duties of the Administrative Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above.  After any retiring Administrative
Agent’s resignation as Administrative Agent, the provisions of this Section shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.

 

10.10                     Other
Agents.  No Agent other than the Administrative Agent and Syndication Agent
shall have any duties or responsibilities hereunder in its capacity as such.

 

SECTION 11  MISCELLANEOUS

 

11.1                           Amendments and Waivers.  Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of
this Section.  The Required Lenders and
each Loan Party party to the relevant Loan Document may, or, with the written
consent of the Required Lenders, the Administrative Agent and each Loan Party
party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents or (b) waive, on such terms and conditions as the Required Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however,
that no such waiver and no such amendment, supplement or modification shall (i)
forgive or reduce the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date or reduce the amount of any
required amortization payment in respect of any Loan, reduce the stated rate of
any interest or fee payable hereunder (except (x) in connection with the waiver
of applicability of any post-default increase in interest rates, which waiver
shall be effective with the consent of the Majority Facility Lenders of each
adversely affected Facility and (y) that any amendment or modification of
defined terms used in the financial covenants in this Agreement shall not
constitute a reduction in the rate of interest or fees for purposes of this
clause (i)) or extend the scheduled date of any payment thereof, or increase
the amount or extend the expiration date of any Lender’s Commitment, in each
case without the written

 

54

 

consent of each Lender
directly affected thereby;  (ii)
eliminate or reduce the voting rights of any Lender under this Section without
the written consent of such Lender; (iii) reduce any percentage specified in
the definition of Required Lenders, consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents, release all or substantially all of the Guarantors from
their obligations under Section 9, or release (A) either of the US to
Japan or the US to China Routes listed on Schedule 7.5, (B) any
substantial portion of the Route Collateral, or (C) all or substantially all of
the Collateral, in each case without the written consent of all Lenders;
(iv) amend, modify or waive any provision of Section 3.8 without the
written consent of the Majority Facility Lenders in respect of each Facility
adversely affected thereby; (v) reduce the percentage specified in the
definition of Majority Facility Lenders with respect to any Facility without
the written consent of all Lenders under such Facility; or (vi) amend, modify or
waive any provision of Section 10 without the written consent of the
Administrative Agent.  Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Loan Parties, the Lenders, the
Agents and all future holders of the Loans. 
In the case of any waiver, the Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.

 

For the avoidance of doubt, this Agreement may be
amended (or amended and restated) with the written consent of the Required
Lenders, the Administrative Agent and the Borrower (a) to add one or more
additional credit facilities to this Agreement and to permit the extensions of
credit from time to time outstanding thereunder and the accrued interest and
fees in respect thereof (collectively, the “Additional Extensions of Credit”)
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Loans and the accrued interest and fees in respect thereof and (b) to
include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders and Majority Facility Lenders.  If, in connection with any proposed waiver,
amendment, supplement or modification to any of the provisions of this
Agreement as contemplated by this Section, the consent of the Required Lenders
is obtained but the consent of one or more of such other Lenders whose consent
is required is not obtained, then the Borrower shall have the right, so long as
each non-consenting Lender whose individual consent is required is treated as
described in either clause (A) or (B) below, to either (A) replace such
non-consenting Lender with one or more Replacement Lenders pursuant to Section 3.13
so long as at the time of such replacement, each such Replacement Lender
consents to the proposed waiver, amendment, supplement or modification or (B)
repay in full all of such non-consenting Lender’s outstanding Loans and all
other Obligations owing to such Lender, and at such time such Lender shall no
longer constitute a “Lender” for purposes of this Agreement.

 

11.2                           Notices. 
(a) Except as otherwise provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and all
such notices, requests and demands shall be effective when received, addressed
as follows in the case of the Loan Parties and the Administrative Agent, and as
set forth in an administrative questionnaire delivered to the Administrative
Agent in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:

 

55

 

	
   

  	
  Loan Parties:

  	
  2700 Lone Oak Parkway

  
	
   

  	
   

  	
  Eagan, MN 55121

  
	
   

  	
   

  	
  Tel: (612) 726-2274

  
	
   

  	
   

  	
  Fax: (612) 726-0665

  
	
   

  	
   

  	
  Attn:

  	
  Daniel B. Matthews

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  The Administrative Agent:

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  1111 Fannin 10th Floor

  
	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
  Attention: Khuyen Ta

  
	
   

  	
   

  	
  Telecopy: 713-750-2938

  
	
   

  	
   

  	
  Telephone: 713-750-3780

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  277 Park Avenue

  
	
   

  	
   

  	
  New York, NY 10017

  
	
   

  	
   

  	
  Attention: Donald Shokrian

  
	
   

  	
   

  	
  Telecopy:646-534-0574

  
	
   

  	
   

  	
  Telephone: 212-622-2166

  

 

(b) Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided
that approval of such procedures may be limited to particular notices or
communications.

 

11.3                           No Waiver; Cumulative Remedies.  No
failure to exercise and no delay in exercising, on the part of any Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

11.4                           Survival of Representations
and Warranties.  All representations and warranties made
hereunder, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the Loans and other
extensions of credit hereunder.

 

11.5                           Payment of Expenses and Taxes.  The
Borrower agrees (a) to pay or reimburse each of the Administrative Agent, and
the Joint Lead Arrangers for all their reasonable and adequately documented out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and of any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, including the reasonable and adequately
documented fees and disbursements of Simpson Thacher & Bartlett LLP,
outside counsel to the Administrative Agent and filing and recording fees and
expenses, with statements with respect to the foregoing to be submitted to the
Borrower prior to the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly basis (b) to pay
or reimburse each Lender and Agent for all its

 

56

 

reasonable and adequately
documented costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and any
such other documents, including the reasonable and adequately documented fees
and disbursements of counsel (including the reasonable allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and Agent
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, that may be payable or determined to be payable
in connection with the execution and delivery of, or any amendment, supplement
or modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents, and (d) to
indemnify each Agent, each Lender and each of their respective affiliates, and
each of their respective officers, directors, employees, representatives,
trustees, advisors and agents from and hold each of them harmless against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses and disbursements (including reasonable and
adequately documented attorney’s and consultant’s fees and disbursements)
incurred by, imposed on or assessed against any of them as a result of, or
arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not any Agent or any Lender is a
party thereto) related to the entering into and/or performance of this
Agreement or any other Loan Document or the actual or proposed use of the
proceeds of any Loans hereunder or the consummation of any transactions
contemplated therein or in any other Loan document or the exercise of any of
their rights or remedies provided herein or in any other Loan Document,
including the reasonable and adequately documented fees and disbursements of
counsel and other consultants incurred in connection with any such
investigation, litigation, or other proceeding (but excluding any liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses and disbursements to the extent arising or incurred by reason
of (x) a violation of laws or governmental regulations pertaining to lending by
the Person to be indemnified (or the Agent or Bank of which such Person is an
officer, director, employee, representative or agent); provided that the
Person to be indemnified shall, in all events, be entitled to the
indemnification set forth in Sections 3.9, 3.10 and 3.11) or (y) the gross negligence
or willful misconduct of the Person to be indemnified).  To the extent that the undertaking to
indemnify, pay or hold harmless any Person set forth in the preceding sentence
may be unenforceable because it is violative of any law or public policy, the
Borrower shall make the maximum contribution to the payment and satisfaction of
each of the indemnified liabilities which is permissible under applicable
law.  The agreements in this Section 11.5
shall survive repayment of the Loans and all other amounts payable hereunder.

 

11.6                           Successors and Assigns;
Participations and Assignments.  (a) 
This Agreement shall be binding upon and inure to the benefit of the
Loan Parties, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.

 

(b)  Any Lender may, in accordance with applicable
law, at any time sell to one or more banks, financial institutions or other
entities (each, a “Participant”) participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents.  In the event of any such sale by a Lender of
a participating interest to a Participant, such Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative

 

57

 

Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other Loan
Documents.  In no event shall any
Participant under any such participation have any right to approve any amendment
or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Loans or any fees payable hereunder, or postpone the date of the final maturity
of the Loans, in each case to the extent subject to such participation.  The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 11.7(a)
as fully as if it were a Lender hereunder. 
The Borrower also agrees that each Participant shall be entitled to the
benefits of Sections 3.9, 3.10 and 3.11 with respect to its participation in
the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 3.10, such
Participant shall have complied with the requirements of said Section and provided,
further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.

 

(c)  Any Lender (an “Assignor”) may, in
accordance with applicable law, at any time and from time to time upon notice
to the Borrower and the Administrative Agent assign to any Lender, any
affiliate of any Lender or to an Eligible Transferee (an “Assignee”) all
or any part of its rights and obligations under this Agreement and the other
Loan Documents pursuant to an Assignment and Acceptance, executed by such
Assignee, such Assignor and any other Person whose consent is required pursuant
to this paragraph, and delivered to the Administrative Agent for its acceptance
and recording in the Register; provided that no such assignment to an
Assignee (other than any Lender or any affiliate of a Lender) shall be in an
aggregate principal amount of less than $2,000,000 (or an integral multiple of
$1,000,000 in excess thereof) (other than in the case of an assignment of all
of a Lender’s interests under this Agreement), unless otherwise agreed by the
Borrower and the Administrative Agent. 
For purposes of the proviso contained in the preceding sentence, the
amount described therein shall be aggregated in respect of each Lender and each
Lender’s Affiliates, if any.  Any such
assignment need not be ratable as among the Facilities.  Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Loans as set forth therein, and (y)
the Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor’s rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto).

 

(d)  The Administrative Agent shall, on behalf of
the Borrower, maintain at its address referred to in Section 11.2 a copy
of each Assignment and Acceptance delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitment of, and the principal amount of the Loans owing to, each Lender from
time to time.  The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, each other Loan Party, the Administrative Agent and the Lenders shall
treat each Person whose name

 

58

 

is
recorded in the Register as the owner of the Loans and any Notes evidencing the
Loans recorded therein for all purposes of this Agreement.  Any assignment of any Loan, whether or not
evidenced by a Note, shall be effective only upon appropriate entries with respect
thereto being made in the Register (and each Note shall expressly so
provide).  Any assignment or transfer of
all or part of a Loan evidenced by a Note shall be registered on the Register
only upon surrender for registration of assignment or transfer of the Note
evidencing such Loan, accompanied by a duly executed Assignment and Acceptance,
and thereupon one or more new Notes shall be issued to the designated Assignee.

 

(e)  Upon its receipt of an Assignment and
Acceptance executed by an Assignor, an Assignee and any other Person whose
consent is required by Section 11.6(c), together with payment to the
Administrative Agent of a registration and processing fee of $4,000, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) record the information contained therein in the Register on the
effective date determined pursuant thereto.

 

(f)  For avoidance of doubt, the parties to this
Agreement acknowledge that the provisions of this Section 11.6 concerning
assignments of Loans and Notes relate only to the absolute assignments and that
such provisions do not prohibit assignments creating security interests,
including any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank (it being understood that any foreclosure of any such
security interest and any assignment of rights (including voting rights) in
connection therewith shall be subject to the requirements of this Section).

 

(g)  The Borrower, upon receipt of written notice
from the relevant Lender, agrees to issue Notes (in a form to be reasonably
agreed with the Borrower) to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.

 

11.7                           Adjustments; Set-off.  (a)  Except to the extent that this Agreement expressly
provides for payments to be allocated to a particular Lender or to the Lenders
under a particular Facility, if any Lender (a “Benefitted Lender”)
shall, receive any payment of all or part of the Obligations owing to it, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of the Obligations owing to such other Lender, such Benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery, but
without interest.

 

(b)  In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right, without prior notice
to any Loan Party, any such notice being expressly waived by the Loan Parties
to the extent permitted by applicable law, upon the commencement and during the
continuance of an Event of Default, to set off and appropriate and apply
against any amount then due and payable by any Loan Party hereunder any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the

 

59

 

credit
or the account of the relevant Loan Party, as the case may be.  Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

 

11.8                           Counterparts.  This
Agreement may be executed by one or more of the parties to this Agreement on
any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.  A
set of the copies of this Agreement signed by all the parties shall be lodged
with the Borrower and the Administrative Agent.

 

11.9                           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

11.10                     Integration.  This
Agreement and the other Loan Documents represent the entire agreement of the
Loan Parties, the Agents and the Lenders with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or
warranties by any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

 

11.11                     GOVERNING LAW.  THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

 

11.12                     Submission To Jurisdiction;
Waivers.  Each Loan Party hereby irrevocably and unconditionally:

 

(a)  submits for itself and its property in any
legal action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;

 

(b)  consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;

 

(c)  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the relevant Loan Party at its address set forth in Section 11.2 or at
such other address of which the Administrative Agent shall have been notified
pursuant thereto;

 

(d)  agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and

 

60

 

(e)  waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any indirect or consequential
damages.

 

11.13                     Acknowledgements.  Each
Loan Party hereby acknowledges that:

 

(a)  it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents;

 

(b)  neither the Administrative Agent nor any
Lender has any fiduciary relationship with or duty to any Loan Party arising
out of or in connection with this Agreement or any of the other Loan Documents,
and the relationship between the Agent, and the Lenders, on one hand, and the
Loan Parties, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and

 

(c)  no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Loan Parties and the
Lenders.

 

11.14                     Intercreditor Agreement.  Each Lender acknowledges that it has received
and reviewed a copy of the Intercreditor Agreement and has agreed to the terms
thereof.

 

11.15                     Confidentiality.  (a)  Subject to the provisions of clause
(b) of this Section, each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement which has been
identified as such by any Loan Party in accordance with its customary procedure
for handling confidential information of this nature and in accordance with
safe and sound banking practices and in any event may make disclosure
reasonably to any bona fide prospective transferee or participant in connection
with the contemplated transfer of any Loan or Commitment or participation
therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process or to such Lender’s
attorney’s, affiliates or independent auditors, provided that, unless
specifically prohibited by applicable law or court order, each Lender shall notify
Holdings of any request by any governmental agency or representative thereof
(other than any such requests in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided  further, that in no event shall any Lender be obligated
or required to return any materials furnished by Holdings or any of its
Subsidiaries, provided that, in the case of disclosure to any prospective
transferee or participant, such Person executes an agreement with such Lender
containing provisions substantially the same as to those contained in this Section 11.15.

 

(b)  Each Loan Party hereby acknowledges and
agrees that each Lender may share with any of its affiliates any information
related to Holdings or any of its Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of Holdings
or any of its Subsidiaries), provided such Persons shall be subject to
the provisions of this Section to the same extent as such Lender.

 

11.16                     WAIVERS OF JURY TRIAL.  EACH
LOAN PARTY, EACH AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

61

 

11.17                     Termination; Releases of
Guarantees and Liens.  (a) After
the date upon which the principal of and all accrued interest on the Loans, and
the other Obligations under the Loan Documents, shall have been indefeasibly
paid in full (other than contingent Obligations which are not then due and
payable) and the Commitments have been terminated, this Agreement shall terminate
(provided that all indemnities set forth herein shall survive) and the
Collateral Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 11.1) to take any action requested by the Borrower having the
effect of releasing any Collateral or guarantee obligations (including, at the
request and expense of the Borrower, the execution and delivery of a proper
instrument or instruments acknowledging the satisfaction and termination of
this Agreement), and the Collateral Agent will duly assign, transfer and
deliver to the Borrower (without recourse and without any representation or
warranty) such of its Collateral as may be in the possession of the Collateral
Agent that has not theretofore been sold or otherwise applied or released
pursuant to this Agreement or any other Loan Document.

 

(b)  In the
event that any part of the Collateral is sold in connection with a sale
permitted under this Agreement or any other Loan Document or is otherwise
released at the direction of the Required Lenders (or all the Lenders if
required by Section 11.1 of this Agreement) and the proceeds of such sale
or sales or from such release are applied in accordance with the terms of this
Agreement, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Collateral Agent, at the request and expense of the
Borrower, will duly assign, transfer and deliver to the Borrower (without
recourse and without any representation or warranty) such of the Collateral of
the Borrower as is then being (or has been) so sold or released and as may be
in the possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.

 

(c)  At any time
that the Borrower desires that Collateral be released as provided in the
foregoing Section 11.17(a) or (b) it shall deliver to the Collateral Agent
a certificate signed by its chief financial officer or another authorized
senior officer stating that the release of the respective Collateral is
permitted pursuant to Section 11.17(a) or (b).  If requested by the Collateral Agent
(although the Collateral Agent shall have no obligation to make any such
request), the Borrower shall furnish appropriate legal opinions (from counsel,
which may be in-house counsel, acceptable to the Collateral Agent) to the
effect set forth in the immediately preceding sentence. The Collateral Agent
shall have no liability whatsoever to any Lender as the result of any release
of Collateral by it as permitted by this Section 11.17.

 

(d) Notwithstanding anything to the contrary contained
herein or in any other Loan Document, no such Collateral shall be released in
connection with clause (b) of this Section 11.17 unless the corresponding
liens (if any) of U.S. Bank and the PBGC (as defined in the Intercreditor
Agreement) and any other lien on such Collateral permitted under Section 7.3(f)
of this Agreement are released prior to or concurrently with any such release
hereunder.

 

11.18                     Effect of Amendment and
Restatement of the Existing Credit Agreement.

 

On the Closing Date, the Existing Credit Agreement
shall be amended, restated and superseded in its entirety.  The parties hereto acknowledge and agree that
(a) this Agreement and the other Loan Documents, whether executed and delivered
in connection herewith or otherwise, do not constitute a novation, payment and
reborrowing, or termination of the “Obligations” (as defined in the Existing
Credit Agreement) under the Existing Credit Agreement as in effect prior to the
Closing

 

62

 

Date and (b) such “Obligations” are in all respects
continuing (as amended and restated hereby) with only the terms thereof being
modified as provided in this Agreement.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above
written.

 

	
   

  	
  NORTHWEST AIRLINES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B. Matthews

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Daniel B. Matthews

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTHWEST AIRLINES
  HOLDINGS

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B. Matthews

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Daniel B. Matthews

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NWA INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B. Matthews

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Daniel B. Matthews

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTHWEST AIRLINES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B. Matthews

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Daniel B. Matthews

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Administrative Agent and Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald S. Shokrian

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Donald S. Shokrian

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

63

 

	
   

  	
  J.P. MORGAN SECURITIES INC., as Tranche A

  Joint Lead Arranger and Joint Bookrunner and as

  Tranche B Joint Lead Arrangers and Joint

  Bookrunner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer S. Sheer

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Jennifer S. Sheer

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK SECURITIES INC., as Tranche

  A Joint Lead Arranger and Joint Bookrunner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martha Fitzpatrick

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Martha Fitzpatrick

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert A. Dazley

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Robert A. Dazley

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CITIGROUP GLOBAL MARKETS INC., as Tranche

  B Joint Lead Arranger and Joint Bookrunner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Whitner Marshall

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Whitner Marshall

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ABN AMRO Bank N.V.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas K. Peterson

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Thomas K. Peterson

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Pastore

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  John Pastore

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
								

 

64

 

	
   

  	
  CALYON NEW YORK BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Bolotin

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Brian Bolotin

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Angel Naranjo

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Angel Naranjo

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CITICORP USA, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gaylord C. Holmes

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Gaylord C. Holmes

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marguerite Sutton

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Marguerite Sutton

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GOLDMAN SACHS CREDIT PARTNERS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Archer

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  William Archer

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KZH CYPRESSTREE-1 LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hi Hua

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Hi Hua

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
										

 

65

 

	
   

  	
  KZH SOLEIL LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hi Hua

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Hi Hua

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KZH SOLEIL-2LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hi Hua

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Hi Hua

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KZH STERLING LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hi Hua

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Hi Hua

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Laurel Ridge Capital LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Van Nguyen

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Van Nguyen

  
	
   

  	
   

  	
  Title:

  	
  Managing Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  State Street Bank and Trust Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary H. Carey

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Mary H. Carey

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
  [NAME OF LENDER]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Olmon

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Mark R. Olmon

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
								

 

66

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]