Document:

Exhibit 10.13

 

EXECUTION VERSION

 

RETENTION AGREEMENT AND AMENDMENT TO MANAGEMENT COMPENSATION AGREEMENT
(“Agreement”) made as of April 14, 2008 between NORTHWEST AIRLINES,
INC., a Minnesota corporation (the “Company”) and Douglas M. Steenland
(the “Executive”).

 

WHEREAS, the Company and Executive have previously entered into a
Management Compensation Agreement dated as of September 14, 2005 (the “Management
Compensation Agreement”) pursuant to Section 5.3 of which Executive
would be entitled to resign for any reason during the 30 day period commencing
on the first anniversary of the effective date of the confirmed plan or
reorganization of the Company under the Bankruptcy Code and receive certain
severance payments as set forth in the Management Compensation Agreement (the “Emergence
Resignation Right”);

 

WHEREAS, Northwest Airlines Corporation has entered into an Agreement
and Plan of Merger by and among Delta Air Lines Corporation, Delta Air Lines
Merger Sub and Northwest Airlines Corporation dated as of April 14, 2008
(the “Merger Agreement”) pursuant to which, subject to certain
conditions described therein, it is anticipated that Delta Air Lines Merger
Corporation will merge with and into Northwest Airlines Corporation with
Northwest Airlines Corporation continuing as the surviving corporation (as
described more fully in the Merger Agreement, the “Merger”);

 

WHEREAS, the Company recognizes that the period between the signing of
the Merger Agreement and its consummation, or termination of the Merger Agreement,
could be as long as 18 months during which Executive’s continued leadership as
Chief Executive Officer of the Company through the consummation of the Merger
is important to the ongoing success of the Company;

 

WHEREAS, the Company appreciates that, notwithstanding its best efforts
and expectation that the Merger will be consummated, it is possible that for
regulatory or other reasons the Merger Agreement could be terminated without
the Merger having occurred and that Executive’s continued leadership following
the termination of the Merger Agreement would be critical;

 

WHEREAS, the Company recognizes Executive’s exercise of his Emergence
Resignation Right and departure from the Company would be detrimental to the
best interests of the Company and could jeopardize the successful completion of
the Merger and diminish the enterprise value of the Company;

 

WHEREAS, the Company desires that Executive waive his right to exercise
the Emergence Resignation Right and agree to non-competition and
non-solicitation restrictive covenants in consideration for the grant of the restricted
retention units pursuant to this Agreement as a form of retention compensation
designed to encourage Executive to remain employed with the Company through the
consummation of the Merger and, if the Merger Agreement is terminated, to
continue to serve as Chief Executive Officer over the four year

 

 

period following the termination of the Merger Agreement, as more fully
described herein; and

 

WHEREAS, the Company and Executive desire to make certain other
clarifying and other modifications to the Management Compensation Agreement, as
described more fully herein.

 

Accordingly, as of the date hereof, the Company and Executive hereby
agree as follows:

 

(Capitalized terms used herein without definition
have the meanings specified in Section 17 below).

 

1.     Grant of Restricted Retention Units.  As of the date hereof, the Company hereby
grants Executive 375,000 restricted retention units (“RRUs”), on the
terms and conditions hereinafter set forth. 
Each RRU represents the unfunded, unsecured right of Executive to
receive a cash payment in the amount, and on the date(s) specified herein.

 

2.     Vesting.

 

(a)   Subject to Executive’s continued
employment with the Company, the RRUs shall vest as follows:

 

(i)  If the Merger Agreement is terminated without the Merger
having occurred, then 25% of the RRUs shall vest on each of the first four
anniversaries of the date of the termination of the Merger Agreement (each a “Scheduled
Vesting Date”); and

 

(ii)  If (x) Executive’s employment with the Company is
terminated by Executive for Good Reason or by the Company without Cause, or due
to Executive’s death or Disability (each a “Qualifying Termination”) or (y) the
Merger contemplated by the Merger Agreement is consummated, then the unvested
portion of the RRUs, to the extent not previously forfeited, shall become
immediately vested on the date of such termination or consummation, as the case
may be (an “Accelerated Vesting Date”). 
Upon Executive’s termination of employment for any reason other than a
Qualifying Termination, any unvested RRUs shall immediately be forfeited and
terminate and be of no further force and effect.

 

3.     Payment In Respect of RRUs.  Upon each Vesting Date, the Company shall pay
Executive an amount, in cash, equal to the product of (x) the number of RRUs
which vested as of such Vesting Date times (y) the Fair Market
Value per Share on the Vesting Date; provided that for this purpose, in
no event shall the Fair Market Value per Share be deemed to exceed $22.00 per
Share.

 

4.     Adjustments Upon Certain Events.  In the event of any change in the outstanding
Shares after the date hereof by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or 

 

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transaction or exchange of Shares or other
corporate exchange, or any distribution to shareholders of Shares other than
regular cash dividends or any transaction similar to the forgoing, the Committee
shall, without any liability to any person and in a manner determined in its
reasonable discretion, make an equitable substitution or adjustment (to the
extent necessary to prevent dilution or enlargement of the benefits or
potential benefits intended to provided to Executive hereunder) as to (i) the
number or kind of Shares to which the RRUs relate, (ii) the number of RRUs
granted hereunder, and/or (iii) any other affected term of the RRU award.

 

5.     No Right to Continued Employment.  The granting of RRUs evidenced by this
Agreement shall impose no obligation on the Company or any Affiliate to
continue the employment of Executive and shall not lessen or affect the Company’s
or its Affiliate’s right to terminate the employment of Executive.

 

6.     No Rights of a Shareholder.  Executive shall not have any rights as a
shareholder of the Corporation as a result of the grant of the RRUs and all
payments in respect of RRUs will be made in cash.

 

7.     Transferability.  The RRUs may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by Executive otherwise
than by will or by the laws of descent and distribution, and any purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance not
permitted by this Section 7 shall be void and unenforceable against the
Company or any Affiliate.

 

8.     Restrictive Covenants.

 

(a)   Forfeiture Upon
Competing Employment.  Upon a termination of employment for any
reason, if Executive shall, during the one year period following Executive’s
termination of employment with the Company (the “Restricted Period”)  become an employee, officer, or director of
any Competitive Airline (as defined below) or acquire a 10% or greater equity
interest in any such Competitive Airline, then if such activity is not ceased
within 5 business days of Executive’s receipt of written notice from the
Company of such activity (a “Compete Notice”), Executive shall be
obligated, as liquidated damages, to promptly repay to the Company a portion of
the aggregate amounts paid to Executive pursuant to Section 3 above (the “Aggregate
RRU Payment”) equal to the product of (x) the Aggregate RRU
Payment times (y) the percentage of the Restricted Period which had
not elapsed as of the date of the Compete Notice (the “Liquidated Damages
Amount”).  For the avoidance of
doubt, the Company’s remedy in the event of the Executive’s breach of this Section 8(a) shall
be limited to its claim for the payment of the Liquidated Damages Amount from
Executive.  “Competitive Airline”
shall mean any of American Airlines, Continental Airlines, United Airlines or
US Airways (or any successor entities of any of them); provided that for
this purpose, Competitive Airline shall not include any non-continental United
States affiliate of any such entity.

 

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(b)   No Solicitation
of Employees.  During the Restricted Period, Executive will
not, directly or indirectly: (A) solicit or encourage any employee of the
Company or its Affiliates to leave employment with the Company or its
Affiliates, (B) hire such employee who was employed by the Company or its
Affiliates on the date of Executive’s termination of employment with the
Company or who left the employment of the Company or its Affiliates coincident
with, or within one year prior to or after, the termination of Executive’s
employment with the Company; provided the restriction in this clause (B) shall
not apply with respect to any employee from and after the six month anniversary
of such employee’s termination of employment with the Company or (C) encourage
to cease to work for the Company or its Affiliates any consultant then under
contract with the Company or its Affiliates. 
The foregoing shall not be violated by general advertising not targeted
at Company employees nor by serving as a reference upon request with regard to
an opportunity at an entity with which Executive is not affiliated.

 

9.     Amendments to Management Compensation
Agreement.

 

(a)   Emergence Resignation Right.  As of the date hereof, Executive hereby
waives his right to exercise the Emergence Resignation Right and Section 5.3
of the Management Compensation Agreement is hereby amended to delete the
phrase:

 

 “. . . or during the 30-day period commencing on the
first anniversary of the effective date of a confirmed plan of reorganization
for the Company under the Bankruptcy Code,”.

 

(b)   IRC Section 409A Compliance. Section 17 of the
Management Compensation Agreement (relating to compliance with the provisions
of Internal Revenue Code Section 409A), is hereby amended and restated to
read as follows:

 

“17. Compliance
with the Provisions of Code Section 409A.  Notwithstanding anything herein to the
contrary:

 

(i)            if at the time of
Executive’s termination of employment with the Company Executive is a “specified
employee” as defined in Section 409A of the Code and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a
result of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then:

 

(x) the
Company will defer the commencement of the payment of any such payments or
benefits hereunder (without any reduction in such payments or benefits
ultimately paid or provided to Executive) until the date that is six months
following Executive’s termination of employment with the Company (or the
earliest date as is permitted under Section 409A of the Code), or

 

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(y)           (A) with respect
to the provision of in-kind benefits hereunder which are otherwise not exempt
from the six-month delay requirements, during the period beginning on the
employment termination date, and ending on the six-month anniversary of such
date, Executive may be permitted to commence use of such benefits so long as
Executive reimburses the Company, on the last business day of each month, all
or part of which occurs during such period, for the amount of any income
imputed to Executive under applicable tax rules as a result of any
benefits provided to Executive during such month, and

 

(B) in
such event, on the first business day of the first month following the month in
which occurs the six-month anniversary of the termination date, the Company
shall make a one-time, lump sum cash payment to Executive in an amount equal to
the payments made by Executive in accordance with Section 17 (i)(y)(A) above,
together with interest thereon accruing at the applicable federal rate for
instruments of less than one year,  and

 

(ii)          if any other payments of
money or other benefits due to Executive hereunder could cause the application
of an accelerated or additional tax under Section 409A of the Code, such
payments or other benefits shall be deferred if deferral will make such payment
or other benefits compliant under Section 409A of the Code, or otherwise
such payment or other benefits shall be restructured, to the extent possible,
in a manner, determined by the Board, that does not cause such an accelerated
or additional tax.

 

The
Company shall consult with Executive in good faith regarding the implementation
of the provisions of this Section 17; provided that, notwithstanding
anything in this Agreement to the contrary, neither the Company nor any of its
Affiliates, employees or representatives shall have any liability to Executive
with respect to any tax liabilities imposed on Executive under Section 409A
of the Code.”

 

(c)   Airline Pass.  Sections 3.1 and Section 7(b) of
the Management Compensation Agreement, which currently provide Executive and his
Eligible Individuals with lifetime Airline Pass privileges with respect to the
Company and any successor entity, are hereby amended to clarify and provide
that, without prejudice to the benefits currently provided to Executive
thereunder, in the event of a Change of Control (as defined in Section 17
below), Airline Pass (as defined in the Management Compensation Agreement)
privileges provided to Executive (including access to airline lounges under the
WorldClub Pass or any similar program) will be provided to Executive and
Eligible Individuals (as defined in the Management Compensation Agreement) on
terms and conditions no less favorable than those applicable to Executive and
Eligible Individuals immediately prior to such Change of Control, and the Company
shall provide (or shall cause any successor to the Company, whether by
purchase, merger, consolidation or otherwise, to provide) Executive and
Eligible Individuals with Airline Pass privileges equivalent to those provided
under the Airline Pass privileges described 

 

5

 

in the Management Compensation Agreement (as
amended hereby) with respect to the Company (or its successor) and its
Affiliates.

 

(d)   Medical
Coverage.  Section 3.2 of
the Management Compensation Agreement is hereby amended to clarify that,
consistent with the Company’s current practices, Executive’s current
entitlement to medical and dental coverage (including, but not limited to that
described in Section 2.5 thereof) as described therein “without cost” to
Executive, is intended to mean “without cost, on an after tax basis” (other
than Executive’s payment, until age 65, of the same percentage of the premium
cost of the Company’s current medical plan as is generally charged to other
actively employed officers of the Company; but in any event not to exceed 25%
of the premium cost for such coverage).

 

10.   Notices. 
Any notice under this Agreement shall be addressed to the Company in
care of its General Counsel at the principal executive office of the Company
and to Executive at the address appearing in the personnel records of the
Company for Executive or to either party at such other address as either party
hereto may hereafter designate in writing to the other.  Any such notice shall be deemed effective
upon receipt thereof by the addressee.

 

11.   Withholding.  Executive may be required to pay to the
Company or any Affiliate and the Company or any Affiliate shall have the right
and is hereby authorized to withhold from any payment due under this Agreement
or from any compensation or other amount owing to Executive, applicable
withholding taxes with respect to any issuance or transfer under this Agreement
and to take such action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such withholding taxes.

 

12.   Entire Agreement/Choice of Law/Disputes. This Agreement, together with
the Management Compensation Agreement (as amended hereby) contains the entire
understanding between the Company and Executive with respect to the matters
described herein.    THE INTERPRETATION, PERFORMANCE
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
MINNESOTA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  Any disputes under this
Agreement shall be subject to Section 10 of the Management Compensation
Agreement.

 

13.   Compensation Not Taken Into Account.  Unless otherwise determined by the Committee
for this purpose in writing, any amounts payable, or paid, to Executive
hereunder shall not be taken into account in computing Executive’s salary,
wages, base pay or compensation for the purposes of determining any benefits or
compensation under (i) any pension, retirement, life insurance, severance,
welfare or other benefit plans, programs or arrangements of the Company or its
Affiliates and/or (ii) any agreement between Executive and the Company or
its Affiliates.

 

6

 

14.   Signature in Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

15.   Compliance with the Provisions of Code Section 409A. Notwithstanding anything
herein to the contrary:

 

(a)   if at the time of Executives’ termination
of employment with the Company Executive is a “specified employee” as defined
in Section 409A of the Code and the deferral of the commencement of any
payment payable hereunder, or otherwise, as a result of such termination of
employment is necessary in order to prevent any accelerated or additional tax
under Section 409A of the Code, then the Company will defer the
commencement of the payment (without any reduction in such payment ultimately
paid or provided to Executive) until the date that is six months following
Executive’s termination of employment with the Company (or the earliest date as
is permitted under Section 409A of the Code) or (ii) if any other
payments of money or other benefits due to Executive hereunder, or otherwise,
could cause the application of an accelerated or additional tax under Section 409A
of the Code, such payments or other benefits shall be deferred if deferral will
make such payment or other benefits compliant under Section 409A of the
Code, or otherwise such payment or other benefits shall be restructured, to the
extent possible, in a manner, determined by the Board of Directors of the
Corporation, that does not cause such an accelerated or additional tax.  The Company shall consult with Executive in
good faith regarding the implementation of the provisions of this Section 15;
provided that, notwithstanding anything in this Agreement to the
contrary, neither the Company nor any of its Affiliates, employees or
representatives shall have any liability to Executive with respect to any tax
liabilities imposed on Executive under Section 409A of the Code.

 

16.   Successors and Assigns.

 

(a)   This Agreement shall bind any
successor to the Company, whether by purchase, merger, consolidation or
otherwise, in the same manner and to the same extent that the Company would be
obligated under this Agreement if no such succession had taken place.

 

(b)   This Agreement shall not be
assignable by Executive.  This Agreement
and all rights of Executive hereunder shall inure to the benefit of and be
enforceable by, Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.

 

17.   Definitions: For purposes of this
Agreement, the following terms shall have the meanings set forth below:

 

(i)  “Affiliate” means any entity which,
directly or indirectly, controls, is controlled by, or is under common control
with, the Company.  For purposes of the
preceding sentence, “control” (including, with correlative meanings, the terms “controlled

 

7

 

by” and “under common control with”), as used with respect to any
entity or organization, shall mean the possession, directly or indirectly, of
the power (A) to vote more than 50% of the securities having ordinary
voting power for the election of directors of the controlled entity or
organization or (B) to direct or cause the direction of management and
policies of the controlled entity or organization, whether through the
ownership voting securities or by contract or otherwise.

 

(ii)  “Cause” shall mean (a) an act
or acts of personal dishonesty by Executive intended to result in substantial
personal enrichment of Executive at the expense of the Company, (b) an act
or acts of personal dishonesty by Executive intended to cause substantial
injury to the Company, (c) material breach (other than as a result of
Disability) by Executive of Executive’s obligations under the Management
Compensation Agreement which action was (x) undertaken without a
reasonable belief that the action was in the best interest of the Company and (y) not
remedied within after receipt of written notice from the Company specifying the
alleged breach, or (d) conviction of Executive of a felony.

 

(iii)  “Change of Control” shall have
the meaning specified in the Corporation’s 2007 Stock Incentive Plan, as in
effect as of the date hereof.

 

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

 

(v)  “Committee” shall mean the
Compensation Committee of the Board of Directors of the Corporation.

 

(vi)  “Corporation” shall mean Northwest
Airlines Corporation, a Delaware corporation.

 

(vii)  “Disability” shall mean Executive’s
physical and mental condition which prevents continued performance of his
duties under his Management Compensation Agreement (as amended), if Executive
establishes by medical evidence that such condition will be permanent and
continuous during the remainder of Executive’s life or is likely to be at least
three years duration.

 

(viii)  “Effective Time” means “Effective
Time” as defined in the Merger Agreement.

 

(ix)  “Fair Market Value” shall mean, with respect to any
particular date, the closing price of a Share as reported on the consolidated
tape of the principal national securities exchange or reporting system on which
such Shares are listed or admitted to trading.

 

(x)  “Good Reason” shall mean (a) a material reduction in
Executive’s base compensation (within the meaning of Treas. Reg
1.409A-1(n)(2)(A)(1)) except as permitted under the Management Compensation Agreement,
(b) any material diminution in Executive’s authority or responsibilities, (c) Executive
being required to report to anyone other than the ultimate parent Board of
Directors, (d) the relocation of Executive’s principal place of employment
to a location other than at the Company’s principal executive offices in the
Minneapolis-St. Paul Metropolitan Area (excluding travel requirements relating
to Executive’s duties), without Executive’s consent, or (e) a material 

 

8

 

breach by the
Company of the Management Compensation Agreement or any other material
agreement with Executive;

 

provided, however, that the
foregoing events shall constitute Good Reason only if the Company fails to cure
such event within thirty (30) days after receipt from Executive of written
notice of the event which constitutes Good Reason; provided further,
that “Good Reason” shall cease to exist for an event on the 60th day
following the later of its occurrence or Executive’s knowledge thereof, unless
Executive has given the Company written notice thereof prior to such date.  Any termination as a result of Good Reason
must occur within 120 days of the later of the occurrence of an event or
Executive’s knowledge thereof.

 

  (xi)   “Merger” means the “Merger” as defined in the Merger
Agreement.

 

 (xii)  “Merger Agreement”
means the Agreement and Plan of Merger By and Among Delta Air Lines, Inc.,
Nautilus Merger Corporation and Northwest Airlines Corporation.

 

(xiii)   “Share” shall mean an issued or unissued share
of common stock, par value $.01 per share, of the Corporation.

 

(xiv)  “Vesting Date” shall mean
each of a Scheduled Vesting Date and Accelerated Vesting Date Date.

 

9

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.

 

 

	
   

  	
  NORTHWEST AIRLINES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
        /s/
  Roy J. Bostock

  
	
   

  	
   

  
	
   

  	
  Roy J. Bostock,
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Douglas M. Steenland

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
        /s/
  Douglas M. Steenland

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGREED AND ACKNOWLEDGED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NORTHWEST AIRLINES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
        /s/
  Roy J. Bostock

  
	
   

  	
   

  
	
   

  	
  Roy J. Bostock,
  Chairman

  

 

10Exhibit 10.14

 

FINAL

 

[Northwest Airlines, Inc. Letterhead]

 

[Date]

 

[Name]

[Title]

[Department]

 

Re:          Management Compensation Agreement dated as
of [        ]

 

Dear                                   :

 

Northwest Airlines, Inc. (the “Company”)
previously entered into a Management Compensation Agreement dated as of [      ]
([as amended,] the “Agreement”) with you, pursuant to which the Company agreed
to provide you with certain airline pass travel privileges for the personal use
of you, your spouse or registered domestic partner and dependent children as
well as other benefits, upon the terms and conditions set forth in your
Agreement.  This letter agreement sets
forth certain proposed changes to the Agreement that will become effective if
you choose to execute this letter agreement in the space provided below and
return it to the Company.  None of these
changes, however, will become effective unless an executed copy of the original
of this letter agreement is returned to [Timothy J. Meginnes, Vice President –
Compensation and Benefits, [Northwest Airlines, Inc.], Department A1445,
2700 Lone Oak Parkway, Eagan, Minnesota, 55121, telephone 612-727-9444.]

 

1.             Section 3 of the
Agreement is amended by adding thereto the following:

 

“Notwithstanding the continuing
employment requirement set forth above (if applicable), in the event that
Executive’s employment is terminated by the Company without Cause or Executive
resigns for Good Reason within two years after a Change of Control, (x) if,
at the time of such termination, Executive has been employed by the Company or
an Affiliate for at least five (5) years, all Airline Pass privileges
under this Section 3, to the extent not previously vested, shall be deemed
vested, or (y) if, at the time of such termination, Executive has not been
employed by the Company or an Affiliate for at least five (5) years, all
Airline Pass privileges as set forth above that are not then vested shall be
forfeited, and, in lieu thereof, Executive shall be entitled to vested Airline
Pass privileges pursuant to the 

 

 

Company’s pass policies for the personal use
of Executive and the Eligible Individuals for ten (10) years after such
termination of employment at a boarding priority of F3 B3.  In addition, in the event of a Change of
Control, Airline Pass privileges pursuant to the Company’s pass policies
(including access to airline lounges under the WorldClub Pass or any similar
program) (as applicable to Executive under the foregoing clause (x) or (y) above)
will be provided to Executive and Eligible Individuals, to the extent vested
hereunder, on terms and conditions no less favorable than those applicable to
Executive and Eligible Individuals immediately prior to such Change of Control,
and the Company shall provide (or shall cause any successor to the Company,
whether by purchase, merger, consolidation or otherwise, to provide) Executive
and Eligible Individuals with Airline Pass privileges equivalent to those
provided under the Airline Pass privileges described in this Section 3
with respect to the Company (or its successor) and its Affiliates.

 

In addition, if at the time of
Executive’s termination of employment with the Company Executive is eligible
for “retiree pass travel” under the Company’s Airline Pass policies, as then in
effect, the Company shall provide Executive with a gross-up payment for any
personal income tax liability (based on an assumed marginal income tax rate of
the highest Federal and State income tax rate in which State such individual
resides) arising from the Airline Pass (and travel thereon) described in Section 3
(the “Airline Pass Gross-Up”), such that after the payment of all personal
income tax liability associated with the Airline Pass (including any personal
income taxes on the Airline Pass Gross-Up) Executive retains an amount of the
gross-up payment equal to the personal income tax liability arising from such
Airline Pass and travel. The Company shall pay the Airline Pass Gross-Up to
Executive no later than thirty (30) days after the end of the year in which
such taxes are incurred.”

 

2.             The following Section [5.4]
is hereby added to the Agreement:

 

“[5.4]      Gross-Up Payment

 

(a) Excise Tax.

 

(i) If any payment or distribution by
the Company to or for the benefit of Executive (whether paid or payable
pursuant to this Agreement or otherwise (a “Payment”)) is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”) or any interest or penalties thereon (together, the “Excise
Tax”), then Executive shall be entitled to an additional payment (a “Gross-Up
Payment”) in an amount such that, after payment by Executive of all taxes
including, without limitation, any income taxes (together with any interest or
penalties thereon, the “Additional Income Tax”) or any Excise Tax, imposed upon
the Gross-Up Payment Executive retains an amount of the 

 

 

Gross-Up Payment equal to the Excise Tax
imposed upon the Payments; provided, however, the amount of any Gross-Up
Payment shall in no events exceed $1 million ($1,000,000).  Notwithstanding the foregoing, if it shall be
determined that the Executive would be entitled to a Gross-Up Payment, but that
the Payment would not be subject to the Excise Tax if the total, aggregate
Payments were reduced by an amount that is less than ten percent (10%) of the
Payment that would be treated as “parachute payments” under Section 280G
of the Code, then the amounts payable to Executive shall be reduced (but not
below zero) to the maximum amount that could be paid to Executive without
giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment
shall be made to Executive.  Such
reduction of the amounts payable to the Safe Harbor Cap, if applicable, shall
be made by reducing the payments comprising the Payments in such order as elected
by the Executive.

 

(ii) Subject to [Section 5.4(a)(iii)],
all determinations required to be made under this [Section 5.4], including
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the firm of independent public accountants selected by the
Company to audit its financial statements (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days after the receipt of notice from Executive
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this [Section 5.4],
shall be paid to Executive within five (5) business days after the receipt
of the Accounting Firm’s determination. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
additional Gross-Up Payments should have been made by the Company (an “Underpayment”).
If the Company exhausts its remedies pursuant to Section [5.4(a)(iii)] and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Executive.

 

(iii) Executive shall notify the Company
in writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up Payment. Such notice
shall be given as soon as practicable but no later than ten (10) business
days after Executive knows of such Claim and shall apprise the Company of the
nature and date of requested payment of such claim. Executive shall not pay
such claim before the earlier of (x) the date thirty (30) days after
Executive’s notice to the Company or (y) the date on which payment of
taxes with respect to 

 

 

such claim is due. If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:

 

(A) give the Company any
reasonably requested information relating to such claim;

 

(B) take such action in
connection with contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company;

 

(C) cooperate with the
Company in good faith in order to effectively contest such claim; and

 

(D) permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold such Executive harmless, on an after-tax basis, for
any Excise Tax or additional Income Tax imposed as a result of such
representation and payment of costs and expenses. Without limiting this Section [5.4(iii)],
the Company shall control all proceedings taken in connection with such
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and (2) either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner.
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the Company directs such Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or Income Tax imposed with respect to such
advance; and further provided that any extension of the statute of limitations
for the taxable year of Executive with respect to which such contested amount
is claimed to be due is limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Executive shall be entitled to settle or
contest any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(iv) If, after the receipt by Executive
of any amount advanced by the Company pursuant to Section [5.4(a)(iii)],
Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Section [5.4(a)(iii)])
promptly pay to the Company the amount of such refund (together with 

 

 

any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by Executive of
an amount advanced by the Company pursuant to Section [5.4(a)(iii)], a
determination is made that such Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify Executive in writing
of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of any Gross-Up Payment required to
be paid.

 

3.             [The following Section [5.5]
is hereby added to the Agreement] [Section [5.3] of the Agreements is
hereby deleted and replaced in its entirety with the following]:

 

“[5.5]      Compliance with the
Provisions of Code Section 409A.

 

Notwithstanding
anything herein to the contrary:

 

(i)            if at the time of
Executive’s termination of employment with the Company Executive is a “specified
employee” as defined in Section 409A of the Code and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a
result of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then

 

(x)            the Company will defer the
commencement of the payment of any such payments or benefits hereunder (without
any reduction in such payments or benefits ultimately paid or provided to
Executive) until the date that is six months following Executive’s termination
of employment with the Company (or the earliest date as is permitted under Section 409A
of the Code), or

 

(y)           (A) with respect
to the provision of in-kind benefits hereunder which are otherwise not exempt
from the six-month delay requirements, during the period beginning on the
employment termination date, and ending on the six-month anniversary of such
date, Executive may be permitted to commence use of such benefits so long as
Executive reimburses the Company, on the last business day of each month, all
or part of which occurs during such period, for the amount of 

 

 

any income imputed to Executive
under applicable tax rules as a result of any benefits provided to
Executive during such month, and

 

(B) in
such event, on the first business day of the first month following the month in
which occurs the six-month anniversary of the termination date, the Company
shall make a one-time, lump sum cash payment to Executive in an amount equal to
the payments made by Executive in accordance with Section [5.5](i)(y)(A) above,
together with interest thereon accruing at the applicable federal rate for
instruments of less than one year,  and

 

(ii)           if any other payments
of money or other benefits due to Executive hereunder could cause the
application of an accelerated or additional tax under Section 409A of the
Code, such payments or other benefits shall be deferred if deferral will make
such payment or other benefits compliant under Section 409A of the Code,
or otherwise such payment or other benefits shall be restructured, to the
extent possible, in a manner, determined by the Board, that does not cause such
an accelerated or additional tax.

 

The Company shall consult with
Executive in good faith regarding the implementation of the provisions of this Section [5.5];
provided that, notwithstanding anything in this Agreement to the contrary,
neither the Company nor any of its Affiliates, employees or representatives
shall have any liability to Executive with respect to any tax liabilities imposed
on Executive under Section 409A of the Code.”

 

4.             The definition of “Cause”
under the Agreement is hereby deleted in its entirety and replaced with the
following:

 

““Cause” shall mean with
respect to termination of Executive’s employment hereunder (i) an act or
acts of dishonesty by Executive resulting in, or intended to result in,
directly or indirectly, any personal enrichment of Executive (ii) an act
or acts of  dishonesty by Executive
intended to cause substantial injury to the Company, (iii) material breach
(other than as a result of a Disability) by Executive of Executive’s
obligations under this Agreement, which action was (a) undertaken without
a reasonable belief that the action was in the best interests of the Company or
an Affiliate and (b) not remedied within fifteen (15) days after receipt
of written notice from the Company or an Affiliate specifying the alleged
breach, (iv) Executive’s conviction of, or plea of nolo contendere to, a
crime constituting (a) a felony under the laws of any country, the United
States or any state thereof or (b) a misdemeanor involving moral turpitude
or (v) a material breach of (a) the Company’s Code of Business
Conduct or (b) the provisions of this Agreement.”

 

 

5.             The Section entitled
“Certain Defined Terms” is hereby amended by adding thereto the following
definitions:

 

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

 

“Change of Control”
means “Change of Control” as defined in the Northwest Airlines Corporation 2007
Stock Incentive Plan, as of the date hereof.”

 

6.             Clause (c) of
the definition of “Good Reason” under the Agreement is hereby deleted in its
entirety and replaced with the following:

 

“(c) if Executive’s principal
place of employment is at the Company’s principal executive offices in the
Minneapolis-St. Paul Metropolitan Area, the relocation of Executive’s principal
place of employment to a location other than at the Company’s principal
executive offices in the Minneapolis-St. Paul Metropolitan Area (excluding
travel requirements relating to Executive’s duties), without Executive’s
consent, and, in addition, without prejudice to
the preceding clause, following a Change of Control, if Executive’s principal place
of employment is other than at the Company’s principal executive offices in the
Minneapolis-St. Paul Metropolitan Area, the relocation of Executive’s principal
place of employment by more than 50 miles (excluding travel requirements
relating to Executive’s duties), without Executive’s consent;”

 

7.             The definition of “Good
Reason” under the Agreement is hereby further amended by adding thereto the
following:

 

“(e) following a Change of
Control, a material reduction in Executive’s short-term or long-term cash
incentive compensation opportunities, or

 

(f) following a Change of
Control, the Company does not keep in effect compensation, incentive,
retirement, health and welfare benefits, or perquisite programs under which the
Executive receives benefits 

 

 

substantially comparable, in the aggregate,
to those in effect prior to a Change of Control (other than a reduction
pursuant to an equivalent reduction in such benefits for all full time domestic
employees who are not subject to a collective bargaining agreement).”

 

8.             [Section 16] under
the Agreement is hereby amended by thereto adding the following:

 

“Notwithstanding the above, following a
Change of Control, all costs and expenses incurred in connection with any
arbitration including, without limitation, arbitrator and attorney’s fees,
shall be paid by the Company, or the Company shall promptly reimburse Executive
on an as-incurred basis for such costs and expenses; provided, however, that if
Executive institutes any arbitration to enforce this Agreement and the
arbitrator presiding over the arbitration affirmatively finds that Executive
instituted the arbitration in bad faith, Executive shall pay all costs and
expenses, including attorney’s fees, of Executive and the Company.”

 

9.             All terms not
otherwise defined herein shall have the same meaning as specified in the
Agreement.

 

10.           This letter agreement
shall be binding upon and inure to the benefit of the parties hereto, their
respective representatives, successor and assigns.

 

11.           This letter agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota.

 

12.           Except as herein
provided, the Agreement shall remain unchanged and in full force and
effect.  This letter agreement may be
executed in multiple counterparts, each of which, when so executed, shall be
deemed to be an original copy hereof, and all such counterparts together shall
constitute but one single agreement.

 

If the provisions of this
letter agreement are acceptable to you, please indicate your agreement to the
above by signing in the space provided below.

 

Sincerely,

 

Northwest Airlines, Inc.

[Michael J. Becker]

[Senior Vice President – Human Resources &
Labor Relations

 

ACCEPTED AND AGREED:

 

	
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