Document:

Exhibit
10.2

2007
DIRECTOR PLAN OF

EXCO
RESOURCES, INC.

1.             Purpose.  The purpose of this 2007 Director Plan of EXCO Resources, Inc.
(the “Director Plan”) is (i) to attract to and retain at EXCO Resources, Inc.,
a Texas corporation (the “Company”), qualified and competent directors, upon
whose efforts and judgment the success of the Company is largely dependent, and
(ii) to stimulate the active interest of these persons in the development and
financial success of the Company by providing for stock ownership in the
Company by such persons.

2.             Definitions.  Except as otherwise stated, all capitalized
terms herein shall have the meanings assigned to such terms in the EXCO
Resources, Inc. 2005 Long-Term Incentive Plan (the “Incentive Plan”).  In addition, the following terms shall have
the meanings indicated:

(a)                                  “Director”
shall mean a member of the Company’s Board of Directors.

(b)                                 “Director
Fees” shall mean all fees payable to Directors (including their annual retainer
for Board services and all fees paid for service on Board committees), as set
from time to time by the Board, payable in four (4) equal quarterly amounts
(each of such four (4) amounts being the “Quarterly Director Fees”) to each
Director on the first business day following the end of each fiscal quarter
beginning with the fiscal quarter ended December 31, 2006 (collectively, such
payment dates being the “Quarterly Payment Dates”), which may be paid in cash
or in Shares.

(c)                                  “Option”
(when capitalized) shall mean any stock option described in Section 5 of
this Director Plan.

(d)                                 “Quarterly
Payment Dates” shall have the meaning set forth in Section 2(b).

(e)                                  “Share(s)”
shall mean a share or shares of the Common Stock.

3.             Options.  Options described in Section 5 of this
Director Plan shall be issued as Nonqualified Stock Options pursuant to the
Incentive Plan and shall be subject to all of the terms and provisions
thereof.  With respect to such Options,
if there is a conflict between the terms of this Director Plan and the
Incentive Plan, the terms of the Incentive Plan shall be given effect and the
conflicting provisions hereof shall be disregarded.  If any Option granted hereunder shall
terminate, expire, or be canceled or surrendered as to any Shares, such Shares
shall thereafter be available for Awards under Article V of the Incentive Plan.

4.             Director Fees.  On each of the Quarterly Payment Dates, each
Director shall, at the option of such Director (to be made once per year),
receive either (a)  his or her Director Fees for such quarter in cash; (b) Shares
with a fair market value equal to his or her Quarterly Director Fees; or
(c) fifty percent (50%) of his or her Quarterly Director Fees in cash, and
Shares with a fair market value equal to fifty percent (50%) of his or her
Quarterly Director Fees.  For purposes of
payment of the

 1
 

 

Shares component
of the Director Fees, (i) such Shares shall be issued as Other Awards pursuant
to the Incentive Plan and shall be subject to all of the terms and provisions
thereof, and (ii) the value of such Shares will be the Fair Market Value of the
Shares on the first business day following the end of each fiscal quarter.  With respect to the Shares component of the
Director Fees, if there is a conflict between the terms of this Director Plan
and the Incentive Plan, the terms of the Incentive Plan shall be given effect
and the conflicting provisions hereof shall be disregarded.

5.             Automatic Grant of
Options.

(a)           An Option to purchase
50,000 Shares shall automatically be granted to each new Director (but not
current Directors serving as of the date of adoption of this Director Plan) on
a nondiscriminatory basis on the date such Director is initially elected or
appointed a Director of the Company.

(b)           Options automatically
granted to Directors pursuant to this Section 5 shall be in addition to
the Director Fees or any other benefits with respect to the Director’s position
with the Company or its Subsidiaries.

(c)           An Option shall vest in
four (4) equal amounts of 12,500 Shares
per year over four (4) years with the first 12,500 shares vesting
upon grant.  The foregoing
notwithstanding, no Shares subject to a Director’s Option shall vest in any
fiscal year in which the Director attends less than seventy-five percent (75%)
of the Board meetings held for that fiscal year; failure to attend the
requisite number of meetings during a given fiscal year shall result in a
forfeiture of the 12,500 Shares subject to the Option that were eligible to
vest in that year.  In the event a
Director ceases to serve as such for any reason, the unvested Shares subject to
the Option shall be forfeited, and the Option shall only be exercisable for the
number of Shares that vested prior to the Director ceasing to serve as a
Director.

(d)           Except for the
automatic grants of Options under subparagraph (a) of this Section 5 and
the issuance of Shares to Directors under Section 4 above, no Options or
Shares shall otherwise be granted hereunder, and the Board shall not have any
discretion with respect to the grant of Options or issuance of Shares within
the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the “1934 Act”), or any successor rule.

6.             Administration.

(a)           General Administration; Establishment of Committee.  Subject to the terms of this Section 6,
the Director Plan shall be administered by the Board or such committee of the
Board as is designated by the Board to administer this Director Plan (the “Committee”).
The Committee shall consist of not fewer than two persons.  Any member of the Committee may be removed at
any time, with or without cause, by resolution of the Board. Any vacancy
occurring in the membership of the Committee may be filled by appointment by
the Board.  At any time there is no
Committee to administer this Director Plan, any references in this Director
Plan to the Committee shall be deemed to refer to the Board.

 2
 

 

Membership
on the Committee shall be limited to those members of the Board who are “outside
directors” under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”) and “non-employee directors” as defined in Rule 16b-3
promulgated under the 1934 Act.  The
Committee shall select one of its members to act as its Chairman.  A majority of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee present at
a meeting at which a quorum is present shall be the act of the Committee.

(b)           Authority of the Committee.  The Committee, in its discretion, shall (i)
interpret this Director Plan, (ii) prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of this Director
Plan, and (iii) make such other determinations or certifications and take such
other action as it deems necessary or advisable in the administration of this
Director Plan.  Any interpretation,
determination, or other action made or taken by the Committee shall be final,
binding, and conclusive on all interested parties.  The Committee’s discretion set forth herein
shall not be limited by any provision of this Director Plan, including any
provision which by its terms is applicable notwithstanding any other provision
of this Director Plan to the contrary.

The
Committee may delegate to officers of the Company, pursuant to a written
delegation, the authority to perform specified functions under this Director
Plan.  Any actions taken by any officers
of the Company pursuant to such written delegation of authority shall be deemed
to have been taken by the Committee.

(c)           Prohibition on Acceleration of Benefits.  Any
Options, Shares or other compensation which constitutes deferred compensation
under Section 409A of the Code shall not have the time or schedule of any
payment thereunder accelerated, except as permitted under the guidance issued
under Section 409A of the Code.

7.                                       Duration,
Amendment and Termination.

(a)           Duration. 
This Director Plan shall continue in effect until terminated in
accordance with Section 7(b) or until such time as the Incentive Plan is
terminated.

(b)           Amendment and Termination.  The Director Plan may be terminated or
amended in any respect by resolution adopted by two-thirds of the Board.  Notwithstanding anything contained in this
Director Plan to the contrary, unless required by law, no action contemplated
or permitted by this Section 7(b) shall adversely affect any rights of
Directors or obligations of the Company to Directors with respect to any
Options, Shares or other compensation theretofore granted under this Director
Plan without the consent of the affected Director.

(c)           Form of Amendment.  The form of any amendment or termination of
the Director Plan shall be a written instrument signed by a duly authorized
officer or officers of the Company, certifying that the amendment or
termination has been approved by the Board.

 3
 

 

8.             Successors.  Except as otherwise provided in the Incentive
Plan with respect to Options and Shares, the terms and provisions of this
Director Plan shall not be binding on any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company.

9.             Miscellaneous
Provisions.

(a)           No Right to Continued Employment.  Neither this Director Plan, the Incentive
Plan, nor any Options, Shares or other compensation granted thereunder shall
confer upon any Director the right to continue to serve as a Director.

(b)           Indemnification of Board and Committee.  No member of the Board or the Committee, nor
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to this Director Plan,
and all members of the Board and the Committee, each officer of the Company,
and each employee of the Company acting on behalf of the Board or the Committee
shall, to the extent permitted by law, be fully indemnified and protected by
the Company in respect of any such action, determination, or interpretation.

(c)           Effect of the Plan.  Neither the adoption of this Director Plan
nor any action of the Board or the Committee shall be deemed to give any person
any right to be granted Options, Shares or other compensation or any other
rights except as may be evidenced by this Director Plan, or any amendment
thereto, duly authorized by the Committee and executed on behalf of the
Company, and then only to the extent and upon the terms and conditions
expressly set forth therein.

(d)           Compliance With Other Laws and Regulations.  Notwithstanding anything contained herein to
the contrary, the Company shall not be required to sell or issue Shares under
any Options, Shares or other compensation if the issuance thereof would
constitute a violation by the Director or the Company of any provisions of any
law or regulation of any governmental authority or any national securities
exchange or inter-dealer quotation system or other forum in which Shares are
quoted or traded (including without limitation Section 16 of the 1934 Act in
the event the Shares should ever be registered under the 1934 Act and Section
162(m) of the Code); and, as a condition of any sale or issuance of Shares
hereunder, the Committee may require such agreements or undertakings, if any,
as the Committee may deem necessary or advisable to assure compliance with any
such law or regulation.  The Director
Plan, the Options, Shares or other compensation provided hereunder, and the
obligation of the Company to sell and deliver Shares, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required.

(e)           Governing Law.  The validity, interpretation, construction
and performance of this Director Plan shall in all respects be governed by the
laws of the State of Texas.

(f)            Tax Requirements.  The Company shall have the right to deduct
from all amounts paid in cash or other form in connection with this Director
Plan, any Federal, state, local, or other taxes

 4
 

 

required by law to
be withheld in connection with the Options, Shares or other compensation
provided hereunder.  The Company may, in
its sole discretion, also require the Director receiving Shares issued
hereunder to pay the Company the amount of any taxes that the Company is
required to withhold in connection with the Director’s income arising with
respect to such Shares.  Such payments
shall be required to be made when requested by Company and may be required to
be made prior to the delivery of any certificate representing Shares.  Such payment may be made (i) by the delivery
of cash to the Company in an amount that equals or exceeds (to avoid the
issuance of fractional shares under (iii) below) the required tax withholding
obligations of the Company; (ii) if the Company, in its sole discretion, so
consents in writing, the actual delivery by the exercising Director to the Company
of Shares that the Director has not acquired from the Company within six (6)
months prior to the date of exercise, which shares so delivered have an
aggregate Fair Market Value that equals or exceeds (to avoid the issuance of
fractional shares under (iii) below) the required tax withholding payment;
(iii) if the Company, in its sole discretion, so consents in writing, the
Company’s withholding of a number of shares to be delivered upon the exercise
of the Option, which shares so withheld have an aggregate fair market value
that equals (but does not exceed) the required tax withholding payment; or (iv)
any combination of (i), (ii), or (iii). 
The Company may, in its sole discretion, withhold any such taxes from any
other cash remuneration otherwise paid by the Company to the Director.

(g)           Assignability.  Except as otherwise provided in the Incentive
Plan solely with respect to Options, no Options or rights to receive Shares or
other compensation provided hereunder may be transferred, assigned, pledged, hypothecated
or otherwise conveyed or encumbered other than by will or the laws of descent
and distribution

A
copy of this Plan shall be kept on file in the office of the Company at 12377
Merit Drive, Suite 1700, Dallas, Texas, United States, or any successor
location of the Company’s principal executive offices.

***************

 5
 

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be executed as of November 8, 2006, by its Chairman and Chief
Executive Officer and Secretary pursuant to prior action taken by the Board.

 

	
   

  	
  EXCO RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas H. Miller

  	
   

  
	
   

  	
  Name: Douglas H.
  Miller

  
	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ William L. Boeing

  	
   

  
	
  William L.
  Boeing

  	
   

  
	
  Vice President,
  General Counsel and Secretary

  	
   

  

 

 6Exhibit 10.1

 

 

$1,225,000,000

SUPER PRIORITY DEBTOR IN
POSSESSION AND EXIT CREDIT AND GUARANTEE AGREEMENT

 

Among

CITICORP
USA, INC.

Administrative Agent

	
  JPMORGAN CHASE BANK, N.A.

  	
   

  	
  DEUTSCHE
  BANK SECURITIES INC

  
	
  Syndication Agent

  	
   

  	
  Documentation Agent

  

 

	
  MORGAN STANLEY SENIOR FUNDING, INC.

  	
   

  	
  CALYON
  NEW YORK BRANCH

  
	
  Co-Syndication
  Agent

  	
   

  	
  Co-Documentation
  Agent

  

 

U.S.
BANK NATIONAL ASSOCIATION

Agent

	
  CITIGROUP GLOBAL MARKETS INC.

  	
   

  	
  CITIGROUP
  GLOBAL MARKETS INC.

  
	
  J.P.
  MORGAN SECURITIES INC.

  	
   

  	
  DEUTSCHE
  BANK SECURITIES INC.

  
	
  Joint Lead
  Arrangers and Joint Book Runners

  	
   

  	
  Joint Lead
  Arrangers and Joint Book Runners

  
	
  for the DIP
  Facilities

  	
   

  	
  for the Exit
  Facilities

  

 

	
  MORGAN STANLEY SENIOR FUNDING, INC.

  	
   

  	
  CALYON
  NEW YORK BRANCH

  
	
  Co-Arranger

  	
   

  	
  Co-Arranger

  

 

NORTHWEST AIRLINES, INC.,

as Borrower

NORTHWEST AIRLINES CORPORATION,
NORTHWEST AIRLINES HOLDINGS  CORPORATION
and NWA INC., 

as Guarantors,

and

The Several Lenders

from Time to Time
Parties Hereto

Dated as of August
21, 2006

 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1 DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
  1.2

  	
   

  	
  Other Definitional Provisions

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2 AMOUNT AND TERMS OF COMMITMENTS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Term Commitments

  	
   

  	
  21

  
	
  2.2

  	
   

  	
  Procedure for Term Loan Borrowing

  	
   

  	
  22

  
	
  2.3

  	
   

  	
  Repayment of Term Loans

  	
   

  	
  22

  
	
  2.4

  	
   

  	
  Revolving Commitments

  	
   

  	
  22

  
	
  2.5

  	
   

  	
  Procedure for Revolving Loan Borrowing

  	
   

  	
  22

  
	
  2.6

  	
   

  	
  Letter of Credit Subcommitment

  	
   

  	
  23

  
	
  2.7

  	
   

  	
  Procedure for Issuance of Letter of Credit

  	
   

  	
  24

  
	
  2.8

  	
   

  	
  L/C Fees and Other Charges

  	
   

  	
  24

  
	
  2.9

  	
   

  	
  L/C Participations

  	
   

  	
  24

  
	
  2.10

  	
   

  	
  Reimbursement Obligation of the Borrower

  	
   

  	
  25

  
	
  2.11

  	
   

  	
  Obligations Absolute

  	
   

  	
  25

  
	
  2.12

  	
   

  	
  Letter of Credit Payments

  	
   

  	
  26

  
	
  2.13

  	
   

  	
  Applications

  	
   

  	
  26

  
	
  2.14

  	
   

  	
  Commitment and Administrative Fees

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Optional Prepayments

  	
   

  	
  26

  
	
  3.2

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  27

  
	
  3.3

  	
   

  	
  Conversion and Continuation Options

  	
   

  	
  28

  
	
  3.4

  	
   

  	
  Limitations on Eurodollar Tranches

  	
   

  	
  28

  
	
  3.5

  	
   

  	
  Interest Rates and Payment Dates

  	
   

  	
  28

  
	
  3.6

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  29

  
	
  3.7

  	
   

  	
  Inability to Determine Interest Rate

  	
   

  	
  29

  
	
  3.8

  	
   

  	
  Pro Rata Treatment and Payments

  	
   

  	
  30

  
	
  3.9

  	
   

  	
  Requirements of Law

  	
   

  	
  31

  
	
  3.10

  	
   

  	
  Taxes

  	
   

  	
  32

  
	
  3.11

  	
   

  	
  Indemnity

  	
   

  	
  34

  
	
  3.12

  	
   

  	
  Change of Lending Office

  	
   

  	
  34

  
	
  3.13

  	
   

  	
  Replacement of Lenders

  	
   

  	
  34

  
	
  3.14

  	
   

  	
  Super Priority Nature of Obligations and Lenders’
  Liens

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4 REPRESENTATIONS AND WARRANTIES

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Financial Condition; Financial Outlook

  	
   

  	
  36

  
	
  4.2

  	
   

  	
  No Change

  	
   

  	
  37

  
	
  4.3

  	
   

  	
  Corporate Existence; Compliance with Law

  	
   

  	
  37

  
	
  4.4

  	
   

  	
  Corporate Power; Authorization; Enforceable
  Obligations

  	
   

  	
  37

  
	
  4.5

  	
   

  	
  No Legal Bar

  	
   

  	
  38

  
	
  4.6

  	
   

  	
  Litigation

  	
   

  	
  38

  
	
  4.7

  	
   

  	
  Ownership of the Pool Assets

  	
   

  	
  38

  

 

 i
 

 

 

	
  4.8

  	
   

  	
  Federal Regulation

  	
   

  	
  38

  
	
  4.9

  	
   

  	
  ERISA

  	
   

  	
  38

  
	
  4.10

  	
   

  	
  Investment Company Act

  	
   

  	
  39

  
	
  4.11

  	
   

  	
  Subsidiaries

  	
   

  	
  39

  
	
  4.12

  	
   

  	
  Use of Proceeds

  	
   

  	
  39

  
	
  4.13

  	
   

  	
  True and Complete Disclosure

  	
   

  	
  39

  
	
  4.14

  	
   

  	
  Air Carrier

  	
   

  	
  39

  
	
  4.15

  	
   

  	
  Pacific Routes

  	
   

  	
  39

  
	
  4.16

  	
   

  	
  Slot Utilization

  	
   

  	
  39

  
	
  4.17

  	
   

  	
  Foreign Slot Utilization

  	
   

  	
  39

  
	
  4.18

  	
   

  	
  Route Utilization

  	
   

  	
  40

  
	
  4.19

  	
   

  	
  Security Documents

  	
   

  	
  40

  
	
  4.20

  	
   

  	
  Secured, Super-Priority Obligations

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5 CONDITIONS PRECEDENT

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Conditions to Initial Extension of Credit

  	
   

  	
  41

  
	
  5.2

  	
   

  	
  Conditions to Each Extension of Credit

  	
   

  	
  43

  
	
  5.3

  	
   

  	
  Exit Facilities Option

  	
   

  	
  43

  
	
  5.4

  	
   

  	
  Conditions to Exit Facilities Option

  	
   

  	
  43

  
	
  5.5

  	
   

  	
  Conversion to Exit Facilities

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6 AFFIRMATIVE COVENANTS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Financial Statements

  	
   

  	
  46

  
	
  6.2

  	
   

  	
  Certificates; Other Information

  	
   

  	
  46

  
	
  6.3

  	
   

  	
  Payment of Taxes

  	
   

  	
  48

  
	
  6.4

  	
   

  	
  Maintenance of Existence; Compliance

  	
   

  	
  48

  
	
  6.5

  	
   

  	
  Maintenance of Property; Insurance

  	
   

  	
  48

  
	
  6.6

  	
   

  	
  Inspection of Property; Books and Records;
  Discussions

  	
   

  	
  48

  
	
  6.7

  	
   

  	
  Notices

  	
   

  	
  49

  
	
  6.8

  	
   

  	
  Performance of Obligations

  	
   

  	
  49

  
	
  6.9

  	
   

  	
  End of Fiscal Years; Fiscal Quarters

  	
   

  	
  49

  
	
  6.10

  	
   

  	
  Air Carrier

  	
   

  	
  49

  
	
  6.11

  	
   

  	
  ERISA

  	
   

  	
  49

  
	
  6.12

  	
   

  	
  Security Interests; Additional Collateral

  	
   

  	
  50

  
	
  6.13

  	
   

  	
  Gate Utilization

  	
   

  	
  50

  
	
  6.14

  	
   

  	
  Slot Utilization

  	
   

  	
  51

  
	
  6.15

  	
   

  	
  Foreign Slot Utilization

  	
   

  	
  51

  
	
  6.16

  	
   

  	
  Route Utilization; Route Reporting

  	
   

  	
  51

  
	
  6.17

  	
   

  	
  Chapter 11 Cases

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7 NEGATIVE COVENANTS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Financial Condition Covenants

  	
   

  	
  53

  
	
  7.2

  	
   

  	
  Indebtedness

  	
   

  	
  53

  
	
  7.3

  	
   

  	
  Liens

  	
   

  	
  54

  
	
  7.4

  	
   

  	
  Fundamental Changes

  	
   

  	
  55

  
	
  7.5

  	
   

  	
  Disposition of Pool Assets

  	
   

  	
  55

  
	
  7.6

  	
   

  	
  Restricted Payments

  	
   

  	
  56

  
	
  7.7

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  56

  

 

 ii
 

 

 

	
  7.8

  	
   

  	
  Lines of Business

  	
   

  	
  57

  
	
  7.9

  	
   

  	
  ERISA

  	
   

  	
  57

  
	
  7.10

  	
   

  	
  Investments

  	
   

  	
  57

  
	
  7.11

  	
   

  	
  Acquisitions.

  	
   

  	
  57

  
	
  7.12

  	
   

  	
  Chapter 11 Claims; Adequate Protection.

  	
   

  	
  58

  
	
  7.13

  	
   

  	
  The DIP Order.

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8 EVENTS OF DEFAULT

  	
   

  	
  58

  
	
   

  	
   

  	
   

  
	
  SECTION 9 GUARANTY

  	
   

  	
  63

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  The Guaranty

  	
   

  	
  63

  
	
  9.2

  	
   

  	
  Bankruptcy

  	
   

  	
  63

  
	
  9.3

  	
   

  	
  Nature of Liability

  	
   

  	
  63

  
	
  9.4

  	
   

  	
  Independent Obligation

  	
   

  	
  63

  
	
  9.5

  	
   

  	
  Authorization

  	
   

  	
  63

  
	
  9.6

  	
   

  	
  Reliance

  	
   

  	
  64

  
	
  9.7

  	
   

  	
  Subordination

  	
   

  	
  64

  
	
  9.8

  	
   

  	
  Waiver

  	
   

  	
  64

  
	
  9.9

  	
   

  	
  Limitation on Enforcement

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10 THE AGENTS

  	
   

  	
  65

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Appointment

  	
   

  	
  65

  
	
  10.2

  	
   

  	
  Delegation of Duties

  	
   

  	
  65

  
	
  10.3

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  65

  
	
  10.4

  	
   

  	
  Reliance by Agents

  	
   

  	
  66

  
	
  10.5

  	
   

  	
  Notice of Default

  	
   

  	
  66

  
	
  10.6

  	
   

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  	
  66

  
	
  10.7

  	
   

  	
  Indemnification

  	
   

  	
  67

  
	
  10.8

  	
   

  	
  Agent in Its Individual Capacity

  	
   

  	
  67

  
	
  10.9

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  67

  
	
  10.10

  	
   

  	
  Other Agents

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11 MISCELLANEOUS

  	
   

  	
  68

  
	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Amendments and Waivers

  	
   

  	
  68

  
	
  11.2

  	
   

  	
  Notices

  	
   

  	
  69

  
	
  11.3

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  70

  
	
  11.4

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  70

  
	
  11.5

  	
   

  	
  Payment of Expenses and Taxes

  	
   

  	
  70

  
	
  11.6

  	
   

  	
  Successors and Assign; Participations and
  Assignments

  	
   

  	
  71

  
	
  11.7

  	
   

  	
  Adjustments; Set-off

  	
   

  	
  73

  
	
  11.8

  	
   

  	
  Counterparts

  	
   

  	
  73

  
	
  11.9

  	
   

  	
  Severability

  	
   

  	
  73

  
	
  11.10

  	
   

  	
  Integration

  	
   

  	
  73

  
	
  11.11

  	
   

  	
  GOVERNING LAW

  	
   

  	
  74

  
	
  11.12

  	
   

  	
  Submission To Jurisdiction; Waivers

  	
   

  	
  74

  
	
  11.13

  	
   

  	
  Acknowledgements

  	
   

  	
  74

  
	
  11.14

  	
   

  	
  Intercreditor Agreement

  	
   

  	
  75

  
	
  11.15

  	
   

  	
  Confidentiality

  	
   

  	
  75

  
	
  11.16

  	
   

  	
  WAIVERS OF JURY TRIAL

  	
   

  	
  75

  
	
  11.17

  	
   

  	
  Termination, Releases of Guarantees and Liens

  	
   

  	
  75

  

 

 iii
 

 

 

	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1(a)

  	
   

  	
  Term Commitments

  	
   

  	
   

  
	
  1.1(b)

  	
   

  	
  Revolving Commitments

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Consents, Authorizations, Filings and Notices

  	
   

  	
   

  
	
  4.11

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  7.2(c)

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Pool Assets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Closing Certificate

  	
   

  	
   

  
	
  B

  	
   

  	
  Form of Assignment and Acceptance

  	
   

  	
   

  
	
  C

  	
   

  	
  Form of Exemption Certificate

  	
   

  	
   

  
	
  D

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  E

  	
   

  	
  Form of Certificate of Chief Financial Officer

  	
   

  	
   

  
	
  F

  	
   

  	
  Form of DIP Order

  	
   

  	
   

  
	
  G

  	
   

  	
  Form of Accession and Novation Agreement

  	
   

  	
   

  
	
  H

  	
   

  	
  Form of Intercreditor Agreement

  	
   

  	
   

  
	
  I

  	
   

  	
  Form of Notice of Borrowing

  	
   

  	
   

  

 

 

 iv

SUPER PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT
AND GUARANTEE AGREEMENT, dated as of August 21, 2006, among NORTHWEST AIRLINES
CORPORATION, a Delaware corporation, a debtor and debtor in possession under
Chapter 11 of the Bankruptcy Code (as defined below) or such entity that
becomes a guarantor and a loan party hereunder pursuant to Section 5.5 herein,
as applicable (“Holdings”), NORTHWEST AIRLINES HOLDINGS CORPORATION, a
Delaware corporation, a debtor and debtor in possession under Chapter 11 of the
Bankruptcy Code or such entity that becomes a guarantor and a loan party
hereunder pursuant to Section 5.5 herein, as applicable (“NWAC”), NWA
INC., a Delaware corporation, a debtor and debtor in possession under Chapter
11 of the Bankruptcy Code or such entity that becomes a guarantor and a loan
party hereunder pursuant to Section 5.5 herein, as applicable (“NWA”),
NORTHWEST AIRLINES, INC., a Minnesota corporation, a debtor and debtor in
possession under Chapter 11 of the Bankruptcy Code or such entity that becomes
the borrower and loan party hereunder pursuant to Section 5.5 herein, as
applicable (the “Borrower”), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the “Lenders”),
CITICORP USA, INC.,
as Administrative Agent for both the DIP Facilities and the Exit Facilities (in
such capacity, the “Administrative Agent”), JPMORGAN CHASE BANK, N.A., as Syndication Agent
for both the DIP Facilities and the Exit Facilities (in such capacity, the “Syndication
Agent”), DEUTSCHE BANK SECURITIES
INC., as Documentation Agent for both the DIP Facilities and the Exit
Facilities (in such capacity, the “Documentation Agent”), MORGAN STANLEY
SENIOR FUNDING, INC., as Co-Syndication Agent for both the DIP Facilities and
the Exit Facilities (in such capacity, the “Co-Syndication Agent”),
CALYON NEW YORK BRANCH, as
Co-Documentation Agent for both the DIP Facilities and the Exit Facilities (in such capacity, the “Co-Documentation Agent”), U.S. BANK NATIONAL ASSOCIATION, as
Agent for both the DIP Facilities and the Exit Facilities (in
such capacity, the “Agent”), CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES INC., as Joint Lead Arrangers and
Joint Bookrunners for the DIP Facilities (in such
capacities, the “DIP Joint Lead Arrangers”), CITIGROUP GLOBAL MARKETS
INC. and DEUTSCHE BANK SECURITIES INC., as Joint Lead Arrangers and Joint
Bookrunners for the Exit Facilities (in such capacity, the “Exit Joint Lead
Arrangers”, and collectively with the DIP Joint Lead Arrangers, the “Joint
Lead Arrangers”), MORGAN STANLEY
SENIOR FUNDING, INC. and CALYON NEW YORK BRANCH, as Co-Arrangers for
both the DIP Facilities and the Exit Facilities (in such capacities, the “Co-Arrangers”).

W
I  T  N  E  S  S  E  T  H:

WHEREAS, capitalized terms used in these recitals
shall have the respective meanings set forth for such terms in Section 1.1 of
this Agreement;

WHEREAS, on September 14, 2005 (“Petition Date”),
Holdings, NWAC, NWA, the Borrower and certain of the Borrower’s domestic
Subsidiaries filed voluntary petitions for relief (collectively, the “Cases”)
under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court
for the Southern District of New York (the “Bankruptcy Court”);

WHEREAS, from and
after the Petition Date, Holdings, NWAC, NWA, the Borrower and such
Subsidiaries are continuing to operate their respective businesses and manage
their respective properties as debtors in possession under Sections 1107 and
1108 of the Bankruptcy Code;

WHEREAS, Lenders have agreed to extend certain credit
facilities to the Borrower, in an aggregate amount not to exceed
$1,225,000,000, consisting of $1,050,000,000 in
aggregate principal amount of Term Loans and up to $175,000,000 in aggregate principal amount of Revolving

 

Commitments, the proceeds of which will be used (i) to
repay in full all, but not less than all, amounts outstanding under the
Borrower’s existing pre-petition Second Amended and Restated Credit and
Guarantee Agreement, dated as of April 15, 2005 (as amended to the date hereof,
the “Pre-Petition Credit Agreement”), among Borrower, as borrower
thereunder, Guarantors, as guarantors thereunder, the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent thereunder, (ii) to pay
related transaction costs, fees and expenses, (iii) to provide working capital
from time to time for the Borrower and its Subsidiaries, and (iv) for other
general corporate purposes;

WHEREAS, Borrower has agreed to secure all of its
Obligations by granting security interests in the Route Collateral pursuant to
the Route Security Agreement; and

WHEREAS, the Lenders have agreed to grant an option to
Northwest Airlines, Inc. to cause the DIP Facilities to be converted to the
Exit Facilities subject to terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto hereby agree 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
0.5%.  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.

“Accession and Novation Agreement”:  as
defined in Section 5.5(a).

“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

 2
 

 

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
Co-Arrangers, the Joint Lead Arrangers, the Administrative Agent, the
Collateral Agent and, for purposes of Section 9 only, the Issuing Lender.

“Aggregate Exposure”:  with respect to any Lender at any time, an
amount equal to the sum of (i) the aggregate then unpaid principal amount
of such Lender’s Term Loans plus (ii) the amount of such Lender’s
Revolving Commitment then in effect or, if the Revolving Commitments have been
terminated, the amount of such Lender’s Revolving Extensions of Credit then
outstanding.

“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.

“Agreement”: 
this Super Priority Debtor in Possession and Exit Credit and Guarantee
Agreement, as amended, supplemented or otherwise modified from time to time.

“Applicable Rate”:

(a) with respect to Loans outstanding prior to the
Exit Facilities Conversion Date, (i)  1.50%, in
the case of ABR Loans, and (ii) 2.50%, in the case of Eurodollar Loans, and

(b) with respect to Loans outstanding on and after the
Exit Facilities Conversion Date, (i) at all times when the Total Appraised
Value Ratio is equal to or less than 1.75 to 1.00, (x) 2.00%, in the case of ABR Loans and (y) 3.00% in the case of
Eurodollar Loans, and (ii) at all times when the Total Appraised Value
Ratio is greater than 1.75 to 1.00, (x) 1.50%, in the case of ABR Loans and (Y) 2.50% in the case of
Eurodollar Loans, provided that each of the Applicable Rates set forth
in this clause (b) shall be increased by 0.50% during such time as the Exit
Facilities are assigned a credit rating of less than Ba3 by Moody’s or less
than BB- by S&P.

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

 3
 

 

“Applicable Appraisal Discount Rate”:  on the date of any valuation done in
connection with an Appraisal, 11.5%; 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.

“Application”:  an application, in
such form as the Issuing Lender may reasonably specify from time to time,
requesting the Issuing Lender to open a Letter of Credit.

“Appraisal”: 
an appraisal, dated the date of delivery thereof to the Lenders pursuant
to the terms of this Agreement, by Morton, Beyer and Agnew or another
independent appraisal firm satisfactory at the time of such Appraisal to the
Borrower and the Administrative Agent, setting forth the current fair market value
of the Pacific Routes (as described in the Appraisal) utilizing the Applicable
Appraisal Discount Rate 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).

“Available Revolving Commitment”:  as
to any Lender at any time, an amount equal to the excess, if any, of (a) such
Lender’s Revolving Commitment then in effect over (b) such Lender’s
Revolving Extensions of Credit then outstanding.

“Avoidance Actions”:  rights, claims
or causes of action arising under Sections 544, 547, 548 or 550 of the
Bankruptcy Code and the proceeds thereof, excluding Avoidance Actions relating
to obligations paid with the proceeds of Loans and the Liens securing such
obligations.

“Authorized Officer”:  as to any Loan Party, the Chief Executive
Officer, the President, 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 at Narita Airport owned by the Borrower as of the
Closing Date, plus (b) any Japanese Foreign Slots at Narita Airport acquired by
the Borrower after the Closing Date.

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

“Bankruptcy Code”:  Title 11 of the United States Code
entitled “Bankruptcy,” as applicable to the Cases, as now and hereafter in
effect, or any applicable successor statute.

 4
 

 

“Bankruptcy Court”:  as defined in the recitals to this Agreement.

“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.

“Borrowing Date”:  (a) with respect to the Term Loans, the
Closing Date, and (b) with respect to the Revolving Loans, the Closing Date
and, at all times on or after the Exit Facilities Conversion Date, any Business
Day specified by the Borrower as a date on which the Borrower requests the
Lenders to make Revolving Loans hereunder in accordance with Section 2.5.

“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.

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

“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.

“Carve-Out”:  means the
following claims:  (a) quarterly fees
pursuant to 28 U.S.C. § 1930(a)(6), (b) fees payable to the clerk of the
Bankruptcy Court and any agent thereof, (c) fees and disbursements incurred
after a Carve-Out Event by the Loan Parties’ professionals (other than the Loan
Parties’ ordinary course professionals) and the professionals of the Committee
retained prior to the Exit Facilities Conversion Date (collectively, the “Professionals”)
and, together with any expenses of members of the Committee, allowed by order
of the Bankruptcy Court in the aggregate amount not to exceed $30,000,000, and
(d) all fees and expenses of the kind described in the preceding clauses (a),
(b) and (c) of this definition incurred prior to a Carve-Out Event but not yet
paid to the extent such fees and expenses are approved by the Bankruptcy Court,
subject to the right of the Administrative Agent, the Lenders and any other
party in interest to object to the award of such fees and expenses; provided,
however, that the Carve-Out shall not include, apply to, or be available
for any fees or expenses incurred by any party, including the Loan Parties, any
Committee or any Professional in connection with the investigation, initiation
or prosecution of any Claims or Defenses (as defined in the DIP Order) against

 5
 

 

the Agents or the Lenders in their respective
capacities as such; provided, further, that as long as no Event
of Default shall occur and be continuing which entitles the Lenders or any
Agent to exercise remedies against the Collateral and prior to the Exit
Facilities Conversion Date, the Loan Parties shall be permitted to pay compensation
and reimbursement of expenses allowed and payable under Sections 328, 330 and
331 of the Bankruptcy Code or otherwise pursuant to an order of the Bankruptcy
Court, as the same may be due and payable, and the same shall not reduce the
Carve-Out, subject to the right of the Administrative Agent, the Lenders and
any other party in interest to object to such payments; provided, further,
that in the event of any inconsistency in the definition of “Carve-Out” between
the provisions of this Agreement and the DIP Order, the provisions of the DIP
Order shall govern.

“Carve-Out Event” as defined in Section 8.

“Carve-Out Event Notice” as defined in Section 8.

“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.

“Citicorp”: 
Citicorp USA, Inc.

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

“Claim”:  as defined in
Section 101(5) of the Bankruptcy Code.

“Closing Date”: 
the date on which the conditions precedent set forth in Sections 5.1 and
5.2 shall have been satisfied, which date is August 21, 2006.

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

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

“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 Route Collateral.

“Collateral Agent”:  Citicorp, in its capacity as Collateral
Agent.

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

“Committee”:  the official
committee of unsecured creditors appointed in the Cases pursuant to Section
1102 of the Bankruptcy Code on September 30, 2005.

“Commitment Fee Rate”:  0.50% per
annum.

 6
 

 

“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 D (with such changes as may be approved by the Administrative Agent).

“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 December 31, 2005) 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 plus (vi) cash or non-cash non-recurring
charges resulting from the Borrower’s fleet restructuring during the Cases and
professional fees and other direct bankruptcy costs related to the Cases, 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 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

 7
 

 

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 150% at such time.

“Currency Exchange Rate Protection Agreement”:  any foreign currency exchange agreement,
currency swap agreement or other similar agreement or arrangement entered into
for the purpose of hedging foreign currency risk.

“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.

“DIP Facilities”:  Facilities prior to the Exit Facilities
Conversion Date.

“DIP Order”:  an order (in substantially the form of Exhibit
F and otherwise in form and substance reasonably satisfactory to the
Administrative Agent) of the Bankruptcy Court pursuant to Section 364 of the
Bankruptcy Code (i) approving this Agreement and the other Loan Documents,
including the granting of the super-priority claims and first priority lien
status, the waiver of rights under Section 506(c) of the Bankruptcy Code and
the payment of all fees constituting Obligations hereunder,
(ii) authorizing the indefeasible payment in full of all (but not less
than all) obligations under the Pre-Petition Credit Agreement and related
documents, including all principal, interest, fees, prepayment premiums and
expenses, and the termination of all commitments thereunder and the termination
of all Liens securing the obligations thereunder, (iii) modifying the
automatic stay to permit the Loan Parties to perform their obligations
hereunder and the Lenders and the Collateral Agent to exercise their rights and
remedies in accordance with Section 8 of this
Agreement, and (iv) authorizing the incurrence by the Loan Parties of
permanent post-petition secured and super-priority Indebtedness in accordance
with this Agreement, and as to which order no stay has been entered and which
has not been reversed, vacated or overturned, and which order has not been
amended, supplemented or otherwise modified in any respect adverse to the
Lenders without the prior written consent of the Administrative Agent and from
which no appeal or motion to reconsider has been timely filed, or if timely
filed, such appeal or motion to reconsider has been dismissed or denied unless
the Administrative Agent waives such requirement.

“Discharged Rights and Obligations”:  as defined in Section 5.5(a).

“Disposed Japanese Foreign Slots”:  at
any time, the Japanese Foreign Slots at Narita Airport sold, transferred,
leased (so long as such lease remains in effect and conveys to another Person

 8
 

 

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.

“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 trade or business (whether or not
incorporated) that 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 BBAM on the Bloomberg Terminal screen
(successor to 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 BBAM on the Bloomberg Terminal screen (or otherwise on such
screen), the “Eurodollar Base Rate” shall be determined by reference to
such other comparable

 9
 

 

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%):

	
  

  	
  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 Loan Parties”:  as defined in Section 5.5(a).

“Exit Facilities” means the Facilities after the Exit Facilities Conversion
Date.

“Exit Facilities Conversion
Date”:  the first date on which
the Exit Facilities Option has been exercised and the conditions to exercising
the Exit Facilities Option set forth in Section 5.4 are satisfied.

“Exit Facilities Option”:  as
defined in Section 5.3.

“Facility”: 
each of (a) the Term Facility and (b) the Revolving Facility, and “Facilities”
shall mean the collective reference to the Term Facility and the Revolving
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.

 10
 

 

“Financial Outlook”:  the multi-year financial outlook for Holdings
and its consolidated Subsidiaries dated August 7, 2006.

“First Day Orders” means all orders entered by the Bankruptcy Court on the
Petition Date or within five Business Days of the Petition Date or based on
motions filed on the Petition Date.

“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 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.

 11
 

 

“Hedging Obligations”:  as to any Person, all obligations and
liabilities of such Person under any Interest Rate Protection Agreement or
Currency Exchange Rate Protection Agreement, which are payable upon the
termination of such agreement. Hedging Obligations under Specified Hedging
Agreements shall be valued on a mark-to-market basis from time to time pursuant
to a methodology agreed to among the Borrower, the applicable counterparty, and
the Administrative Agent.

“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 or any Currency Exchange Rate
Protection Agreement.

“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 Intercreditor Agreement, dated as of the
Closing Date, among the Administrative Agent, U.S. Bank National Association,
the PBGC, the Borrower and the Guarantors, substantially in the form of Exhibit
H, 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 or six 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 or six 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

 12
 

 

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.

“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.

“Issuing Lender”:  Citicorp or any of its Affiliates or any Lender appointed as Issuing
Lender by the Borrower with the consent of the Administrative Agent and such
Lender, in its capacity as an issuer of Letters of Credit.

“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.

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

“L/C Fee Payment Date”:  the last day
of each March, June, September and December and the last day of the Revolving
Commitment Period.

“L/C Obligations”:  at any time, an
amount equal to the sum of (a) the aggregate then undrawn and unexpired amount
of the then outstanding Letters of Credit and (b) the aggregate amount of
drawings under Letters of Credit that have not then been reimbursed pursuant to
Section 2.10.

“L/C Participants”:  the collective
reference to all the Revolving Lenders other than the Issuing Lender.

“L/C Subcommitment Amount”:  $75,000,000.

 13
 

 

“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.

“Letters of Credit”:  as defined in
Section 2.6(a)

“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, any
Specified Hedging Agreement 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 the aggregate unpaid principal amount of the Loans then
outstanding or committed, as the case may be, 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.

“Maturity Date”:  the earlier of
(a) the second anniversary of the Closing Date, if the Exit Facilities
Conversion Date does not occur on or before the second anniversary of the
Closing Date and (b) the seventh anniversary of the Closing Date, if the
Exit Facilities Conversion Date occurs on or before the second anniversary of
the Closing Date.

“Maximum Amount”:  $1,225,000,000.

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

“Multiemployer Plan”:  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).

 14
 

 

“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 Reimbursement Obligations
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 Hedging Agreements, any Lender Affiliate),
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 Letters of Credit, any
Specified Hedging Agreement entered into with any Lender or any Lender
Affiliate 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, including all such
Obligations as may be novated in accordance with Section 5.5; provided, however,
that the aggregate amount of all
Hedging Obligations under all Specified Hedging Agreements at any time outstanding that shall be
included as “Obligations” shall not
exceed the lesser of (i) $150,000,000
and (ii) the amount, if any, by which (x) the Maximum Amount exceeds (y) the sum of
(1) the aggregate unpaid principal amount of the Term Loans then
outstanding plus (2) the aggregate amount of Revolving Extensions of
Credit of all Revolving Lenders then outstanding.

“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.

 15
 

 

“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)(l3) 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.

“Permitted Petition Date Liens”:  any non-avoidable, valid and perfected
Permitted Liens in existence on the Petition Date and any non-avoidable valid
Permitted Liens in existence on the Petition Date that were perfected
subsequent to the Petition Date as permitted by Section 546(b) of the
Bankruptcy Code, in each case, other than the Specified Primed Liens.

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.

“Petition Date”:  as defined in the recitals to this Agreement.

“Plan of Reorganization” means a joint chapter 11 plan of reorganization in the
Cases.

“Pool Assets”: 
the assets of the Borrower listed on Schedule 7.5 (as modified pursuant
to Section 7.5) and any other Pacific Routes and related Slots and Gate
Leaseholds acquired by the Borrower.

“Pre-Petition Credit Agreement”:  as defined in the recitals to this Agreement.

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

“Reference Lender”:  Citibank, N.A.

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

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

“Reimbursement Obligation”:  the
obligation of the Borrower to reimburse a Issuing Lender pursuant to Section
2.10 for amounts drawn under Letters of Credit.

“Removed Pool Assets”:  assets which are no longer Pool Assets as a
result of 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.

 16
 

 

“Reorganized Loan Parties”:  as
defined in Section 5.5(a).

“Replaced Lender”:  as defined in Section 3.13.

“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
the sum of (i) the aggregate unpaid principal amount of the Term Loans
then outstanding and (ii) the Revolving Commitments then in effect or, if
the Revolving Commitments have been terminated, the Revolving Extensions of
Credit 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.

“Revolving Commitment”:  as to any
Lender, the obligation of such Lender, if any, to make Revolving Loans and
participate in Letters of Credit in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading “Revolving Commitment”
opposite such Lender’s name on Schedule 1.1(b) to this Agreement or in the
Assignment and Assumption 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 amount of the aggregate
Revolving Commitments of all Lenders is $175,000,000.

“Revolving Commitment Period”:  the
period, if any, from and including the Exit Facilities Conversion Date to the
Termination Date.

“Revolving Extensions of Credit”:  as
to any Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Loans held by such Lender then outstanding,
and (b) such Lender’s Revolving Percentage of the L/C Obligations then
outstanding.

“Revolving Facility”:  the Revolving
Commitments and the extensions of credit made thereunder.

“Revolving Lender”:  each Lender that
has a Revolving Commitment or that holds a Revolving Loan.

“Revolving Loans”:  as defined in
Section 2.4.

 17
 

 

“Revolving Percentage”:  as to any
Lender at any time, the percentage which such Lender’s Revolving Commitment
then constitutes of the aggregate Revolving Commitments of all Lenders (or, at
any time after the Revolving Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender’s Revolving
Extensions of Credit then outstanding constitutes of the aggregate outstanding
Revolving Extensions of Credit of all Lenders).

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

“Route Security Agreement”:  the Route Security Agreement, dated as of the
Closing Date, 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.

“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 Agents, the Lenders, the Issuing Lender
and the holders of Obligations under Specified Hedging Agreements.

“Security Documents”:  the collective reference to the Route
Security Agreement, 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 Currency Exchange Rate Protection
Agreement”:  any Currency Exchange
Rate Protection Agreement entered into by the Borrower and any Person that, at
the time such Person entered into such Currency Exchange Protection Agreement,
was a Lender or Lender Affiliate designated by the relevant Lender and the
Borrower, by written notice to the Administrative Agent, as a Specified
Currency Exchange Rate Protection Agreement, which notice shall include a copy
of an agreement

 18
 

 

providing for a methodology agreed to by the Borrower,
such Lender or Lender Affiliate and the Administrative Agent of valuing on a
mark-to-market basis the amount of Hedging Obligations under such Specified
Currency Exchange Rate Protection Agreement from time to time.

“Specified Hedging Agreement”;  any Specified Currency Exchange Rate Protection
Agreement or any Specified Interest Rate Protection Agreement.

“Specified Interest Rate Protection Agreement”:  any Interest Rate Protection Agreement
entered into by the Borrower and any Person that, at the time such Person
entered into such Interest Rate Protection Agreement, was a 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,
which notice shall include a copy of an agreement providing for a methodology
agreed to by the Borrower, such Lender or Lender Affiliate and the
Administrative Agent of valuing on a mark-to-market basis the amount of Hedging
Obligations under such Specified Interest Rate Protection Agreement from time
to time.

“Specified Primed Liens”:  as defined in Section 3.14(a).

“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.

“Term Commitment”:  as to any Lender,
the obligation of such Lender, if any, to make a Term Loan in an aggregate
principal amount not to exceed the amount set forth under the heading “Term
Commitment” opposite such Lender’s name on Schedule 1.1(a) to this Agreement 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 Term Commitments is $1,050,000,000.

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

“Term Loan”:  as defined in Section
2.1.

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

 19
 

 

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

“Termination Date”:  the earliest of
(a) the Maturity Date, (b) the date on which the Revolving Commitments are
terminated pursuant to any provision of this Agreement and (c) the date on
which Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement or any other Loan Document become due and payable as
a result of an Event of Default in accordance with this Agreement.

“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 by
the PBGC).

“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.

“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 (i) the aggregate unpaid principal amount of all Term Loans
then outstanding, plus (ii) the aggregate Revolving Commitments of all
Revolving Lenders then in effect or, if the Revolving Commitments have been
terminated, the amount of aggregate Revolving Extensions of Credit of all
Revolving Lenders then outstanding, plus (iii) the amount of all Hedging
Obligations under all Specified Hedging Agreements then outstanding not to exceed
the lesser of (A) $150,000,000
and (B) the amount, if any, by which (x) the Maximum Amount exceeds (y) the sum of
(1) the aggregate unpaid principal amount of the Term Loans then
outstanding plus (2) the aggregate amount of Revolving Extensions of
Credit of all Revolving Lenders then outstanding, and plus (iv) any Pari
Passu Obligations (for purposes of this definition, Pari Passu Obligations
shall include any Pari Passu Commitments).

“Transferee”:  any Assignee or Participant.

“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.

“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 at
Narita Airport with respect to which the Borrower has lost its rights
(including as a result of any action of an

 20

 

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.

“U.S. Bank”: 
U.S. Bank National Association.

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.

(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 Closing Date in GAAP or in the
application thereof, including as a result of fresh start accounting
principles, 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,
including as a result of fresh start accounting principles, 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,
each Term Lender severally agrees to make a term loan (a “Term Loan”) to
the Borrower on the Closing Date in an amount equal to the amount of the Term
Commitment of such Lender.  The Term
Loans may from time to time

 21
 

 

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 Term Lenders make the Term Loans on the Borrowing Date and
specifying the amount to be borrowed. 
Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Lender thereof.  Not
later than 12:00 Noon, New York City time, on the Borrowing Date each Term
Lender shall make available to the Administrative Agent at the Funding Office
an amount in immediately available funds equal to the Term Loan to be made by
such Term Lender.

2.3           Repayment of Term Loans. The
Borrower hereby agrees to repay the Term Loan of each Term Lender in
consecutive annual installments payable on each anniversary of the Closing Date
(commencing with the first anniversary of the Closing Date), with the final
installment due on the Maturity Date. 
Each payment shall be in an amount equal to such Lender’s Term
Percentage multiplied by the aggregate amount of the applicable
installment.  Each installment due prior
to the Maturity Date shall be in an amount equal to $10,500,000, and the final
installment due on the Maturity Date shall be in an amount equal to the
remaining principal balance of the Term 
Loans.  Once repaid, the Term
Loans may not be reborrowed.

2.4           Revolving Commitments. Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make revolving
credit loans (“Revolving Loans”) to the Borrower on the Closing Date in
an amount equal to the amount of the Revolving Commitment of such Lender and
from time to time during the Revolving Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such Lender’s
Revolving Extensions of Credit then outstanding, (i) does not exceed the
amount of such Lender’s Revolving Commitment and (ii) does not result in
(A) the sum of (1)  the aggregate amount of all Hedging Obligations
under all Specified Hedging Agreements then outstanding plus (2) the
aggregate unpaid principal amount of the Term Loans then outstanding plus
(3) the aggregate amount of Revolving Extensions of Credit of all
Revolving Lenders then outstanding exceeding (B) the Maximum Amount.

Prior to the Exit Facilities Conversion Date,
Revolving Loans that are repaid may not be reborrowed.  On and after the Exit Facilities Conversion
Date, Revolving Loans that are repaid may be reborrowed during the Revolving
Commitment Period, subject to the terms and conditions hereof.  The Revolving 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 2.5 and 3.3.  The Borrower shall repay all outstanding
Revolving Loans on the Termination Date.

2.5           Procedure for Revolving Loan Borrowing. 

(a)           With respect to the Revolving Loans to be made on the
Closing Date, the Borrower shall give the Administrative Agent irrevocable
notice substantially in the form of Exhibit I (which notice must be
received by the Administrative Agent prior to 10:00 A.M., New York City time,
(i) three Business Days prior to the anticipated Closing Date in the case of
Eurodollar Loans and (ii) one Business Day prior to the anticipated Closing
Date in the case of ABR Loans) requesting that the Revolving Lenders make the
Revolving Loans on the Borrowing Date and specifying the amount to be

 22
 

 

borrowed. 
Upon receipt of such notice the Administrative Agent shall promptly
notify each Revolving Lender thereof.  Not
later than 12:00 Noon, New York City time, on the Borrowing Date each Revolving
Lender shall make available to the Administrative Agent at the Funding Office
an amount in immediately available funds equal to the Revolving Loan to be made
by such Revolving Lender.

(b)           During the Revolving Commitment Period on any Business
Day, the Borrower may borrow under the Revolving Commitments, provided
that the Borrower shall give the Administrative Agent irrevocable notice, which
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the
case of Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, in the case of ABR Loans and which shall specify (i) the
amount and Type of Revolving Loans to be borrowed, (ii) the requested
Borrowing Date, and (iii) in the case of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Period therefor.  Each borrowing
under the Revolving Commitments during the Revolving Commitment Period shall be
in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole
multiple thereof and (y) in the case of Eurodollar Loans, $10,000,000 or a
whole multiple of $5,000,000 in excess thereof. 
Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Revolving Lender thereof.  Each Revolving Lender will make the amount of
its pro rata share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Funding Office prior to 12:00 Noon, New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. 
Such amounts will then be made available to the Borrower by the
Administrative Agent crediting an account of the Borrower maintained by the
Administrative Agent, in like amounts and funds as received by the
Administrative Agent.

2.6           Letter of Credit Subcommitment.

(a)           Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section
2.9(a), agrees to issue letters of credit (“Letters of Credit”) for the
account of the Borrower on any Business Day during the Revolving Commitment
Period in such form as may be customarily used from time to time by the Issuing
Lender or in such other form as may be reasonably satisfactory to the Issuing
Lender; provided, that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (x) the
L/C Obligations would exceed the L/C Subcommitment Amount, (y) the
aggregate amount of the Available Revolving Commitments would be less than zero
or (z) the sum of (1)  the aggregate amount of all Hedging
Obligations under all Specified Hedging Agreements then outstanding plus
(2) the aggregate unpaid principal amount of the Term Loans then
outstanding plus (3) the aggregate amount of Revolving Extensions of
Credit of all Revolving Lenders then outstanding would exceed the Maximum
Amount.  Each Letter of Credit shall be
denominated in Dollars and expire no later than the earlier of (i) the first
anniversary of its date of issuance and (ii) the date that is five Business
Days prior to the Maturity Date, provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional periods of up
to one year (which shall in no event extend beyond the date referred to in
clause (ii) above).

(b)           The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed
by, any applicable Requirement of Law.

 23
 

 

2.7           Procedure for Issuance of Letter of Credit.

(a)           The Borrower may from time to time request that the
Issuing Lender issue a Letter of Credit during the Revolving Commitment Period
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the reasonable satisfaction of the
Issuing Lender, and such other certificates, documents and other papers and
information as the Issuing Lender may reasonably request.  Upon receipt of any Application, the Issuing
Lender will notify the Administrative Agent of the amount, the beneficiary and
the requested expiration of the requested Letter of Credit, and upon receipt of
confirmation from the Administrative Agent that after giving effect to the
requested issuance, the Available Revolving Commitments would not be less than
zero, the Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing
Lender be required to issue any Letter of Credit earlier than two Business Days
after its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise
may be agreed to by the Issuing Lender and the Borrower.  The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower (with a copy to the Administrative Agent)
promptly following the issuance thereof. 
The Issuing Lender shall promptly furnish to the Administrative Agent,
which shall in turn promptly furnish to the Lenders, notice of the issuance of
each Letter of Credit (including the amount thereof).

(b)           The making of each request for a Letter of Credit by the
Borrower shall be deemed to be a representation and warranty by the Borrower
that such Letter of Credit may be issued in accordance with, and will not
violate the requirements of, Section 2.6(a) or any Requirement of Law.  Unless the Issuing Lender has received notice
from the Administrative Agent before it issues a Letter of Credit that one or
more of the applicable conditions specified in Section 5.2 are not satisfied,
or that the issuance of such Letter of Credit would violate Section 2.6, then
the Issuing Lender may issue the requested Letter of Credit for the account of
the Borrower in accordance with the Issuing Lender’s usual and customary
practices.

2.8           L/C Fees and Other Charges.

(a)           The Borrower will pay a fee on all outstanding Letters of
Credit at a per annum rate equal to the Applicable Margin then in effect with
respect to Eurodollar Loans, shared ratably among the Revolving Lenders and
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date.  In addition, the Borrower shall
pay to the Issuing Lender for its own account a fronting fee on the undrawn and
unexpired amount of each Letter of Credit computed at the rate of 0.125% per
annum and payable quarterly in arrears on each L/C Fee Payment Date.

(b)           In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.

2.9           L/C Participations.

(a)           The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from the Issuing Lender, on the
terms and conditions set forth below, for such L/C Participant’s own account
and risk an undivided interest equal to such L/C Participant’s Revolving
Percentage in the Issuing Lender’s obligations and

 24
 

 

rights under and in respect of each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder.  Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent upon
demand of the Issuing Lender an amount equal to such L/C Participant’s
Revolving Percentage of the amount of such draft, or any part thereof, that is
not so reimbursed.  The Administrative
Agent shall promptly forward such amounts to the Issuing Lender.

(b)           If any amount required to be paid by any L/C Participant
to the Administrative Agent for the account of the Issuing Lender pursuant to
Section 2.9(a) in respect of any unreimbursed portion of any payment made by
the Issuing Lender under any Letter of Credit is paid to the Administrative
Agent for the account of the Issuing Lender within three Business Days after
the date such payment is due, such L/C Participant shall pay to the
Administrative Agent for the account of the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360.  If any such amount required to be
paid by any L/C Participant pursuant to Section 2.9(a) is not made available to
the Administrative Agent for the account of the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans. 
A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.

(c)           Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro  rata share of such payment in accordance with Section
2.9(a), the Administrative Agent or the Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing Lender),
or any payment of interest on account thereof, the Administrative Agent or the
Issuing Lender, as the case may be, will distribute to such L/C Participant its
pro  rata share thereof; provided, that if any such payment
received by Administrative Agent or the Issuing Lender, as the case may be,
shall be required to be returned by the Administrative Agent or the Issuing
Lender, such L/C Participant shall return to the Administrative Agent for the
account of the Issuing Lender the portion thereof previously distributed to
such L/C Participant.

2.10         Reimbursement
Obligation of the Borrower.  The
Borrower agrees to reimburse the Issuing Lender on the same Business Day on
which the Issuing Lender notifies the Borrower of the date and amount of a
draft presented under any Letter of Credit and paid by the Issuing Lender or on
the next Business Day, if such notice is received any time after 11:00 a.m.,
New York time on such same Business Day, for the amount of such draft so
paid.  Each such payment shall be made to
the Issuing Lender at its address for notices referred to herein in Dollars and
in immediately available funds.  Interest
shall be payable on any such amounts from the date on which the relevant draft
is paid until payment in full at the rate set forth in (i) until the Business
Day next succeeding the date of the relevant notice, Section 3.5(b) and (ii)
thereafter, Section 3.5(c).

2.11         Obligations
Absolute.  The Borrower’s obligations
under Section 2.10 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim

 25
 

 

or defense to payment that the Borrower may have or
have had against the Issuing Lender, any beneficiary of a Letter of Credit or
any other Person.  The Borrower also
agrees with the Issuing Lender that the Issuing Lender shall not be responsible
for, and the Borrower’s Reimbursement Obligations under Section 2.10 shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in fact prove to
be invalid, fraudulent or forged, or any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of the Borrower
against any beneficiary of such Letter of Credit or any such transferee.  The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Issuing Lender.  The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.

2.12         Letter
of Credit Payments.  If any draft
shall be presented for payment under any Letter of Credit, the Issuing Lender
shall promptly notify the Borrower of the date and amount thereof.  The responsibility of the Issuing Lender to
the Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.

2.13         Applications.  To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 2, the provisions of this Section 2 shall apply.

2.14         Commitment and Administrative Fees.

(a)           The Borrower agrees to pay to the Administrative Agent for
the account of each Revolving Lender a commitment fee for the period from and
including the Closing Date to the Termination Date, computed at the Commitment
Fee Rate on the average daily amount of the Available Revolving Commitment of
such Revolving Lender during the period for which payment is made, payable
monthly in arrears on the first Business Day of the succeeding month and on the
Termination Date, commencing on the first of such dates to occur after the date
hereof.

(b)           The Borrower agrees to pay to the Administrative Agent and
Citigroup Global Markets Inc. (“CGMI”) the fees in the amounts, on the
dates and for the account of Persons agreed to in writing by the Borrower and
the Administrative Agent or CGMI.

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, upon irrevocable notice
(which may be given by telephone if

 26
 

 

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 $10,000,000
or a whole multiple of $1,000,000 in excess thereof.  Prepayments made pursuant to this Section
shall be applied to prepay any outstanding Term Loans (ratably to the remaining
scheduled installments thereof) and any outstanding Revolving Loans (and to
cash collateralize outstanding L/C Obligations following the repayment of all
outstanding Revolving Loans) with a corresponding reduction in the Revolving
Commitments, on a pro rata basis, based upon the respective principal balance
of the Term Loans and the aggregate Revolving Extensions of Credit then
outstanding.

(b)           After the Exit Facilities Conversion Date (if any), the
Borrower may, by giving the Administrative Agent at least three Business Days’
prior irrevocable notice (which may be given by telephone if promptly confirmed
by writing, which notice the Administrative Agent will promptly transmit to
each applicable Revolving Lender), at any time and from time to time terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Commitments in an amount up to the amount by which the Revolving
Commitments exceed the aggregate amount of the Revolving Extensions of Credit
outstanding at the time of such proposed termination or reduction; provided,
any such partial reduction of the Revolving Commitments shall be in an
aggregate minimum amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.   The Borrower’s notice
to the Administrative Agent shall designate the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial reduction,
and such termination or reduction of the Revolving Commitments shall be
effective on the date specified in Borrower’s notice and shall reduce the
Revolving Commitments of the Revolving Lenders pro rata in accordance to the
respective Revolving Percentages of the Revolving Lenders.

3.2           Mandatory Prepayments

(a)           The Borrower shall prepay the Loans as set forth in this
Section 3.2(a) to the extent necessary to maintain compliance with Section
7.5(a).  Prepayments made pursuant to
this clause (a)  shall be used to prepay any outstanding Term Loans
(ratably to the remaining scheduled installments thereof) and any outstanding
Revolving Loans (and to cash collateralize outstanding L/C Obligations
following the repayment of all outstanding Revolving Loans) with a
corresponding reduction in the Revolving Commitments, on a pro rata basis,
based upon the respective principal balance of the Term Loans then outstanding
and the aggregate Revolving Commitments then in effect.

(b)           In addition, if at any time the sum of (i) the aggregate amount of all Hedging
Obligations under all Specified Hedging Agreements then outstanding, plus (ii) the aggregate unpaid principal
amount of the Term Loans then outstanding plus (iii) the aggregate amount
of Revolving Extensions of Credit of all Revolving Lenders then outstanding
exceeds the Maximum Amount, the Borrower shall immediately prepay the Loans in
an amount equal to such excess. 
Prepayments made pursuant to this clause (b) shall be used to prepay any
outstanding Revolving Loans (and to cash collateralize outstanding L/C
Obligations following the repayment of all outstanding Revolving Loans)

 27
 

 

without a corresponding reduction in the
Revolving Commitments, on a pro rata basis, based upon the aggregate Revolving
Commitments then in effect.

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 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

 28
 

 

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 fast 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

(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

 29
 

 

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,

(i)            each
borrowing by the Borrower from the Term Lenders hereunder and each payment,
including each prepayment, by the Borrower on account of principal of and
interest on the Term Loans shall be made pro rata according to the respective
outstanding principal amounts of the Term Loans held by the Term Lenders;

(ii)           each
borrowing by the Borrower from the Revolving Lenders hereunder, each payment by
the Borrower on account of any commitment fee and any reduction of the
Revolving Commitments shall be made pro rata 
according to the respective Revolving Percentages of the Revolving
Lenders; and

(iii)          each
payment (including each prepayment) by the Borrower on account of principal of
and interest on the Revolving Loans shall be made pro  rata
according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.

(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 applicable Borrowing Date that such
Lender will not make the amount that would constitute its Commitment (or any
portion thereof) available to the Administrative Agent, the 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 applicable Borrowing 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

 30
 

 

Agent by such Lender within three Business
Days of the applicable Borrowing 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.

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 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

 31
 

 

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 or under or
in respect of any Letter of Credit 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 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.

 32
 

 

(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-8130, 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 C 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 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.

 33
 

 

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 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

 34
 

 

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.

3.14         Super Priority Nature of Obligations and Lenders’ Liens.
At all times prior to the Exit Facilities Conversion Date:

(a)           All Obligations shall constitute administrative expenses
of the Loan Parties in the Cases, with super-priority status under section
364(c)(1) of the Bankruptcy Code. 
Subject to the Carve-Out and Avoidance Actions, such super-priority
administrative claims shall have priority over all other costs and expenses of
the kinds specified in, or ordered pursuant to, Sections 105, 326, 328, 330,
331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provision
of the Bankruptcy Code or otherwise, and shall at all times be senior to the
rights of the Loan Parties, the estates of the Loan Parties, and any successor
trustee or estate representative in the Cases or any subsequent proceeding or
case under the Bankruptcy Code.  Pursuant
to Section 364(d)(1) of the Bankruptcy Code and the DIP Order, the Liens
granted to the Collateral Agent for the benefit of the Secured Creditors on the
Collateral owned by the Loan Parties shall have priority pari passu
with the Liens securing the Pari Passu Obligations and priority over the Junior
Lien (as defined in the Intercreditor Agreement), the PBGC Lien (as defined in
the Intercreditor Agreement) and any Liens on the Collateral that secure the
obligations under Pre-Petition Credit Agreement to the extent such Liens are
not satisfied, released and discharged (collectively, the Junior Lien, the PBGC
Lien, the
Liens securing the Pari-Passu Obligations and the Liens securing the
obligations under the Pre-Petition Credit Agreement are referred to herein as
the “Specified Primed Liens”).  In
addition, pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code and the DIP Order, the Liens granted to the Collateral Agent
for the benefit of the Secured Creditors on the Collateral owned by the Loan
Parties shall have priority pari passu with
the Liens securing the Pari Passu Obligations and priority over all other Liens
on the Collateral, subject only to (i) Permitted Petition Date Liens and (ii)
the Carve-Out.

(b)           Without limiting the foregoing, the Collateral Agent’s
Liens on the Collateral owned by the Loan Parties and the Agents’ and Lenders’
super-priority administrative claims under Section 364(c)(1) of the Bankruptcy
Code shall have priority over any claims arising under Section 506(c) of the
Bankruptcy Code subject and subordinate only to the Carve-Out.  Except as set forth herein or in the DIP
Order, no other claim having a priority superior or pari passu
to that granted to the Agents  and
Lenders by the DIP Order shall be granted or approved while any Obligations or
Commitments under

 35
 

 

this Agreement remain outstanding.  Except for the Carve Out, no costs or
expenses of administration shall be imposed against the Agents, the Lenders or
any of the Collateral under Sections 105 or 506(c) of the Bankruptcy Code, or
otherwise, and each of the Loan Parties hereby waives for itself and on behalf
of its estate in bankruptcy, any and all rights under Sections 105 or 506(c),
or otherwise, to assert or impose or seek to assert or impose, any such costs
or expenses of administration against any Agent or the Lenders.

(c)           Subject to the DIP Order and Section 8 hereof, upon the
maturity (whether by acceleration or otherwise) of any of the Obligations under
this Agreement or any of the other Loan Documents, Lenders shall be entitled to
immediate payment of such Obligations without further application to or order
of the Bankruptcy Court.

(d)           The Loan Parties agree that (i) the Obligations hereunder
shall not be discharged by the entry of an order confirming a Plan of
Reorganization in any Case (and the Loan Parties, pursuant to Section
1141(d)(4) of the Bankruptcy Code, hereby waive any such discharge) and (ii)
the super-priority administrative claim granted to the Collateral Agent and
Lenders pursuant to the DIP Order and the Liens granted to the Collateral Agent
pursuant to the DIP Order shall not be affected in any manner by the entry of
an order confirming a Plan of Reorganization in any Case.

(e)           Upon the Closing Date, and on behalf of themselves and
their estates, and for so long as any Obligations or Commitments shall be
outstanding, the Loan Parties hereby irrevocably waive any right, pursuant to
Sections 364(c) or 364(d) of the Bankruptcy Code or otherwise, to grant any
Lien of equal or greater priority than the Liens securing the Obligations, or
to approve a claim of equal or greater priority than the Obligations, except as
expressly permitted under the DIP Order.

Notwithstanding the foregoing, so long as no Default
or Event of Default shall have occurred and be continuing, the Borrower and the
Guarantors shall be permitted to pay fees and expenses allowed and payable
under Sections 330 and 331 of the Bankruptcy Code, as the same may be due and
payable, and the same shall not reduce the Carve-Out.

SECTION 4 
REPRESENTATIONS AND WARRANTIES

To induce the Agents and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, 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 as at December 31, 2005, and the related consolidated
statements of operations, of common stockholders’ deficit and of cash flows for
the fiscal year ended on such date, reported on by 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 respective fiscal years then
ended.  The unaudited condensed
consolidated balance sheets of Holdings and its Subsidiaries as at March 31,
2006, and the related unaudited condensed consolidated statements of income and
cash flows for the three-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 three-month period then ended (subject to
normal year-end audit adjustments).  All
such financial statements, including the related schedules and notes

 36
 

 

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, 2005, 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.  Except for the DIP Order, 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
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).

 37
 

 

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 Regulation.  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

(a)           As of each Borrowing Date following the Exit Facilities
Conversion Date and excluding any act or omission prior to the Exit Facilities
Conversion Date and any consequences thereof that are provided for in the Plan
of Reorganization: (i) 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; (ii) 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;  (iii) 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; (iv) 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.

(b)           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 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

 38
 

 

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 Borrowing 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 4.11
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 (i)
to repay in full all, but not less than all, amounts outstanding under
Pre-Petition Credit Agreement (ii) to pay related transaction costs, fees
and expenses, (iii) to provide working capital from time to time for the
Borrower and its Subsidiaries, and (iv) for other general corporate
purposes.

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         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.

4.16         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.

4.17         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.

 39
 

 

4.18         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.

4.19         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 Secured Creditors in the Collateral subject thereto (to the
extent such perfection and priority can be obtained by filing a Uniform
Commercial Code financing statement and any requisite filings 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.

4.20         Secured, Super-Priority Obligations. On and after the
Closing Date and until the Exit Facilities Conversion Date:

(a)           The provisions of the Loan Documents and the DIP Order are
effective to create in favor of the Collateral Agent, for the benefit of the
Secured Creditors, legal, valid and perfected Liens on and security interests
in all right, title and interest of the Loan Parties in the Collateral, having
the priority provided for herein and in the DIP Order and enforceable against
the Loan Parties.

(b)           Pursuant to subclauses (2) and (3) of clause (c) and
subclause (1) of clause (d) of section 364 of the Bankruptcy Code and the DIP
Order, all Obligations are secured by a first priority perfected Lien on the
Collateral, subject only to (i) Permitted Petition Date Liens, (ii) the
Carve-Out and (iii) subject to the terms and conditions of the
Intercreditor Agreement, Liens securing the Pari Passu Obligations.

(c)           Pursuant to clause (c)(1) of Section 364 of the Bankruptcy
Code and the DIP Order, all Obligations and all other obligations of the Loan
Parties under the Loan Documents at all times shall constitute allowed
super-priority administrative expense claims in the Cases having priority over
all administrative expenses of the kind specified in clause (b) of Section 503
or clause (b) of Section 507 of the Bankruptcy Code, in each case subject only
to the Carve-Out.

 40

 

(d)           The
DIP Order and the transactions contemplated hereby and thereby are in full
force and effect and have not been vacated, reversed, modified, amended or
stayed without the prior written consent of the Required Lenders.

SECTION 5  CONDITIONS PRECEDENT

5.1           Conditions
to Initial Extension of Credit.  The
effectiveness of this Agreement and the agreement of each Lender to make the
initial 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.  The Administrative Agent
shall have received (i) this Agreement, executed and delivered by the
Administrative Agent, Holdings, NWAC, NWA, the Borrower, and each Lender,
(ii)  the Route Security Agreement executed and delivered by the Borrower
and the Collateral Agent and (iii) the Intercreditor Agreement, executed
and delivered by the Administrative Agent, U.S. Bank, the PBGC, the Borrower
and the Guarantors.

(b)           Security
Interest.  The Collateral Agent shall
have received evidence satisfactory to it of the perfection of its security
interest in the Collateral under applicable foreign, federal and state law.

(c)           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.

(d)           Debtors
in Possession.  The Borrower and the
Guarantors shall each be a debtor and a debtor-in-possession under Chapter 11
of the Bankruptcy Code. 

(e)           DIP
Order and Other Bankruptcy Court Filings. 
The Bankruptcy Court shall have entered the DIP Order, which shall be
certified by the Clerk of the Bankruptcy Court as having been duly entered, and
the DIP Order shall be in full force and effect and shall not have been
vacated, reversed, modified, amended or stayed without the written consent of
the Required Lenders and, if the DIP Order is the subject of a pending appeal
in any respect, neither the making of the Loans nor the performance by the Loan
Parties of their respective obligations under the Loan Documents shall be the
subject of a presently effective stay pending appeal. 

(f)            Fees;
Expenses; Accrued Interest.  The
Lenders and the Agents shall have received: 

(i)              all fees due and payable in
connection with this Agreement on or before the Closing Date; and 

(ii)             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. 

(g)           Financial
Information and Appraisal.  The Lenders
shall have received and be satisfied with such financial information as may be
reasonably requested by the Administrative Agent, including a copy of the
January 2006 Appraisal of the Pool Assets.

 41
 

 

(h)           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.

(i)            Legal
Opinions.  The Administrative Agent
shall have received the executed legal opinions of counsel to the Borrower and
the Guarantors (including aviation counsel), addressing such matters as the
Administrative Agent shall reasonably request, including, without limitation,
the enforceability of all Loan Documents, compliance with all laws and
regulations (including Regulation U of the Board of Governors of the Federal
Reserve System), the perfection of all security interests purported to be
granted and no conflicts with material agreements, each in form and substance
satisfactory to the Administrative Agent.

(j)            Lien
Search Results.  The Administrative
Agent shall have received Uniform Commercial Code and other lien searches
(including PBGC, tax liens and judgments) conducted in the jurisdictions in
which the Borrower and the Guarantors are incorporated (dated as of a date
reasonably satisfactory to the Administrative Agent), reflecting the absence of
liens and encumbrances on the Collateral other than Liens securing the Pari
Passu Obligations and the Junior Lien and the PBGC Lien (as such terms are
defined in the Intercreditor Agreement).

(k)           Labor
Savings.  The Administrative Agent
shall have received evidence reasonably satisfactory to it that the annual
labor savings of the Borrower and the Guarantors is at least $1.3 billion, as
measured on a steady-state annual basis from wages, productivity, outsourcing
and benefits (excluding pensions other than approximately $70 million of
pension-related savings included in the 2004 Pilot Bridge Agreement) measured at
approximately 93 billion annual available seat miles and against initial base
costs of approximately $3.5 billion through one or more of the following: (i)
new collectively bargained agreements (including the 2004 Pilot Bridge
Agreement) and any corresponding salaried employee savings, (ii) securing
relief under Section 1113(c) of the Bankruptcy Code, and (iii) imposition
of new contract terms.

(l)            Rating.  The Facilities, after giving effect to the
transactions to be consummated on the Closing Date, including the making of the
initial Loans, shall have been assigned credit ratings by Moody’s and S&P.

(m)          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).

(n)           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, such
notice shall be conclusive and binding and the Closing Date shall be deemed to
have occurred.

 42
 

 

5.2           Conditions
to Each Extension of Credit.  The
agreement of each Lender to make any extension of credit (including any
issuance of a Letter of Credit or any extension thereof) requested to be made
by it on any date (including its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:

(a)           No
Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.

(b)           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 on and as of
such date as if made on and as of such date, except to the extent that such
representations and warranties refer to an earlier date, in which case they
shall be true and correct in all material respects as of such earlier date.

Each borrowing by and
issuance (or extension) of a Letter of Credit on behalf of the Borrower hereunder
shall constitute a representation and warranty by the Borrower as of the date
of such extension of credit that the conditions contained in this Section 5.2
have been satisfied.

5.3           Exit
Facilities Option.  The Lenders
hereby grant Northwest Airlines, Inc. the option (the “Exit
Facilities Option”) to cause the
DIP Facilities to be converted to Exit Facilities in accordance with Section
5.5 upon the effective date of a Plan of Reorganization, such option being
irrevocable, subject only to the satisfaction (or waiver in accordance with
Section 11.1) of the conditions of Section 5.4.

5.4           Conditions
to Exit Facilities Option.  The
agreement of each Lender to extend the maturity of the Facilities beyond the
second anniversary of the Closing Date is subject to the satisfaction, or
waiver in accordance with Section 11.1, of the following conditions on or
before the second anniversary of the Closing Date:

(a)           The
Borrower shall have given and the Lenders shall have received not less than ten
Business Days’ prior written irrevocable notice of the exercise of the Exit
Facilities Option.

(b)           (A) The
Bankruptcy Court shall have entered an order confirming the Plan of
Reorganization and approving and authorizing the transactions contemplated
thereby and the granting of liens under the Exit Facilities and containing a
release in favor of the Administrative Agent and the Lenders and their
respective affiliates; (B) the Plan of Reorganization shall not have been
modified, altered, amended or otherwise changed or supplemented in any manner
adverse in any material respect to the Lenders or the Administrative Agent
without the prior written consent of the Administrative Agent; and (C) all
conditions precedent to the effectiveness of the Plan of Reorganization (other
than the extension of credit hereunder) shall have been satisfied (or waived in
accordance with the Plan of Reorganization), the effective date (as defined in
the Plan of Reorganization) shall have occurred and the Plan of Reorganization
shall have been substantially consummated (as defined in Section 1101 of the
Bankruptcy Code and which for purposes hereof shall be no later than the
effective date (as defined in the Plan of Reorganization)).

(c)           The
Administrative Agent shall have received the Accession and Novation Agreement,
executed and delivered in accordance with Section 5.5(a).

 43
 

 

(d)           After
satisfaction of the conditions precedent set forth in paragraphs (a), (b) and
(c) of this Section, the Collateral Agent, for the benefit of the Secured
Creditors, shall have a perfected first priority security interest in the
Collateral, and the Loan Parties shall have taken all actions reasonably
requested by the Collateral Agent to grant to the Collateral Agent, for the
benefit of the Secured Creditors, a perfected first priority security interest
in the Collateral, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Security Documents
or by law or as may be reasonably requested by the Collateral Agent.

(e)           The
projections set forth in the Disclosure Statement related to the confirmed Plan
of Reorganization shall reflect that the Borrower is in pro-forma compliance
with the financial covenants set forth in Sections 7.1(a) and 7.1(b) for the
term of this Agreement.

(f)            The
Administrative Agent shall have received evidence reasonably satisfactory to it
that the annual labor savings of the Borrower and the Guarantors is at least
$1.3 billion, as determined in accordance with Section 5.1(k).

(g)           The
Administrative Agent shall have received evidence reasonably satisfactory to it
that the Borrower and the Guarantors have received legislative pension relief
consistent with the business plan previously furnished to the Administrative
Agent or have terminated their pension plans without incurring changes in cash
flow in excess of those contemplated in the business plan previously furnished
to the Administrative Agent after giving effect to all forms of cash payments
made to employees in lieu of cash pension benefits.

(h)           The
Administrative Agent shall have received a Compliance Certificate of the
Borrower certifying that, as of the Exit Facilities Conversion Date, and after
giving effect to the transactions to be consummated on the Exit Facilities
Conversion Date, the sum of Cash Liquidity and the aggregate unused
availability under committed credit facilities available to Holdings and its
Subsidiaries is not less than $2,000,000,000.

(i)            The
Exit Facilities, after giving effect to the transactions to be consummated on
the Exit Facilities Conversion Date, shall have been assigned credit ratings by
Moody’s and S&P.

(j)            As
of the Exit Facilities Conversion Date, no event shall have occurred and be
continuing or would result from the exercise by the Borrower of the Exit
Facilities Option that would constitute an Event of Default or a Default.

(k)           The
Administrative Agent shall have received an Appraisal of the Pool Assets dated
no earlier than 90 days prior to the Exit Facilities Conversion Date and a
Compliance Certificate of the Borrower certifying that, as of the Exit
Facilities Conversion Date, after giving effect to the transactions to be
consummated on the Exit Facilities Conversion Date and based on such updated
Appraisal, the Total Appraised Value Ratio is not less than 1.50 to 1.00.

(l)            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 on and as
of the Exit Facilities Conversion Date as if made on and as of such date, except
to the extent that such representations and warranties refer to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date.

 44
 

 

5.5           Conversion
to Exit Facilities.

(a)           Pursuant
to the Plan of Reorganization and upon the effective date thereof, all of the
assets of the Loan Parties (the “Existing Loan Parties”) shall have
vested in the reorganized Loan Parties (the “Reorganized Loan Parties”)
in a manner reasonably acceptable to the Administrative Agent.  In the event that the Borrower exercises the
Exit Facilities Option and upon (x) the execution and delivery to the
Administrative Agent by the Reorganized Loan Parties, the Existing Loan
Parties, the Administrative Agent and the Collateral Agent of an accession,
assumption and novation agreement substantially in the form of Exhibit G (the “Accession
and Novation Agreement”) and (y) the satisfaction (or waiver in accordance
with Section 11.1) of the other conditions precedent set forth in Section 5.4:

(i)            each of (x) the Existing Loan
Parties and (y) the Administrative Agent, the Collateral Agent, the Lenders and
the Issuing Lender shall be released from further obligations towards one
another under this Agreement and the other Loan Documents and their respective
rights against one another shall be cancelled (being the “Discharged Rights
and Obligations”);

(ii)           (A) each of (x) the Reorganized
Loan Parties and (y) the Administrative Agent, the Collateral Agent, the
Lenders and the Issuing Lender shall, by novation, assume obligations towards
one another and/or acquire rights against one another which differ from the
Discharged Rights and Obligations only insofar as each Reorganized Loan Party,
the Administrative Agent, the Collateral Agent, the Lenders and the Issuing
Lender shall have assumed and/or acquired the same respective obligations and
rights in place of each Existing Loan Party (in each case as either Borrower or
Guarantor, as specified in the Accession and Novation Agreement), the
Administrative Agent, the Collateral Agent, the Lenders and Issuing Lender and
(B) each Reorganized Loan Party shall become a party hereto as the “Borrower”
or as a “Guarantor”, as applicable;

(iii)          The Administrative Agent, the
Collateral Agent, the Lenders and the Issuing Lender shall retain the same
rights and obligations among themselves as they would have had the Reorganized
Loan Parties at all times been Existing Loan Parties; and

(iv)          on and following the Exit Facilities
Conversion Date the defined terms “Borrower”, “Guarantor” and “Loan Parties” shall be
construed to refer to each applicable Reorganized Loan Party, in accordance
with the provisions of this Section 5.5(a).

(b)           Each
of the Existing Loan Parties, the Reorganized Loan Parties, the Administrative
Agent, the Collateral Agent, the Lenders and the Issuing Lender shall take such
actions and execute and deliver such agreements, instruments or other documents
(at the sole cost and expense of the Existing Loan Parties and the Reorganized
Loan Parties) as the Administrative Agent may reasonably request and solely as
are necessary to give effect to the provisions of this Section 5.5 including
amending this Agreement to remove those provisions that apply solely to the
period prior to the Exit Facilities Conversion Date; provided, however
that the consent of, or other action by, any of the Lenders or the Issuing
Lender is not a condition precedent to the effectiveness of the Accession and
Novation Agreement and the provisions of Section 5.5(a).

SECTION 6  AFFIRMATIVE COVENANTS

Each of Holdings, NWAC, NWA and the Borrower hereby
agrees that, so long as the Commitments remain in effect, any Letter of Credit
remains outstanding 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:

 45
 

 

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 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 by
Ernst & Young or other independent certified public accountants of
nationally recognized standing, which report, in respect of any fiscal year
ending after the Exit Facilities Conversion Date, shall be without a “going
concern” or like qualification or exception, or, in respect of any fiscal year,
without qualification arising out of the scope of the audit; and

(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 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; 

 46
 

 

(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 90 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;

(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 E;

(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.  

 47
 

 

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 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.  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.  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 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.  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, 

 48
 

 

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; and

(b)           the following events, as soon as
possible and in any event within 15 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 Pension Plan, a failure to make any required
contribution to a Pension Plan, the creation of any Lien in favor of the PBGC
or a Pension Plan or any withdrawal from, or the termination, reorganization or
insolvency of, any Multiemployer Plan or Pension 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
Pension Plan.

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, (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 

 49
 

 

benefit plan (as defined in Section 3(2) of ERISA) in addition to the liability
for benefits 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 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
Uniform Commercial Code 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 Collateral
Agent, for the benefit of the Secured Creditors, does not have a perfected
Lien, promptly (i) execute and deliver to the Collateral Agent such security
agreements (which shall contain substantially the same terms and conditions as
the Route Security Agreement) and other documents as the Collateral Agent deems
necessary or advisable to grant to the Collateral Agent, for the benefit of the
Secured Creditors, a security interest in such property and (ii) take all
actions reasonably requested by the Collateral Agent to grant to the Collateral
Agent, for the benefit of the Secured Creditors, 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 Collateral 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.

 50
 

 

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.

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 

 51
 

 

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.

(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)).

6.17         Chapter
11 Cases.  The Loan Parties will use
commercially reasonable efforts to obtain the approval of the Bankruptcy Court
of this Agreement and the other Loan Documents.

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,
any Letter of Credit remains outstanding 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:

 52
 

 

7.1           Financial
Condition Covenants.

(a)           Cash
Liquidity.  Permit Cash Liquidity to
be less than $750,000,000 at any time.

(b)           Consolidated
EBITDAR to Consolidated Fixed Charges. 
Permit the ratio of Consolidated EBITDAR to Consolidated Fixed Charges
for any period of four consecutive fiscal quarters 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

  
	
  12/31/06

  	
   

  	
  1.15 to 1.00

  
	
  3/31/07

  	
   

  	
  1.20 to 1.00

  
	
  6/30/07

  	
   

  	
  1.30 to 1.00

  
	
  9/30/07

  	
   

  	
  1.40 to 1.00

  
	
  12/31/07 and
  thereafter

  	
   

  	
  1.50 to 1.00

  

 

(c)           Total
Appraised Value Ratio.  Permit the
Total Appraised Value Ratio to be less than 1.50 to 1.00 at any time.

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
Closing Date 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 

 53
 

 

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
incurred in connection with financing the Borrower’s aircraft which were either
(i) previously leased by the Borrower and acquired by the Borrower during
the Cases or (ii)  released from pre-petition Liens during the Cases.

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, subject to the terms and conditions of the Intercreditor
Agreement;

 54
 

 

(f)            the Junior Lien and the PBGC Lien
(as such terms are defined in the Intercreditor Agreement), subject to the
terms and conditions of the Intercreditor Agreement, and other Liens on the
Collateral; provided that prior to the creation of any such other 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 Collateral 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; 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 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 acquiring Person, 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)            in the event of an involuntary
disposal of any Pool Assets, the Borrower shall, within 30 days after the date
of such involuntary disposal, either (A)  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 

 55
 

 

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 by 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(a); and

(ii)           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 (B) reduce the aggregate outstanding
principal amount of the Loans in accordance with Section 3.2(a) 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 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).

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; and

(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.

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 

 56
 

 

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 Closing Date.

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)           after
the Exit Facilities Conversion Date and excluding any act or omission prior
to the Exit Facilities Conversion Date and any consequences thereof that are
provided for in the Plan of Reorganization, 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

(c)           after
the Exit Facilities Conversion Date and excluding any act or omission prior
to the Exit Facilities Conversion Date and any consequences thereof that are
provided for in the Plan of Reorganization, 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, the sum of Cash Liquidity and the aggregate
unused availability under committed credit facilities available to Holdings and
its Subsidiaries is at least $1,500,000,000 and no Default or Event of Default
shall have occurred and be continuing, provided, however, that
any Acquisition of Flight Equipment from any other Person (other than a
manufacturer) in a single transaction or series of related transactions may be
made even if after 

 57
 

 

giving effect to any such Acquisition, the sum of Cash
Liquidity and the aggregate unused availability under committed credit
facilities available to Holdings and its Subsidiaries is less than
$1,500,000,000 as long as (i) no Event of Default shall have occurred and be
continuing immediately prior or after giving affect to such Acquisition, (ii)
the cash consideration for such Acquisition does not exceed $250,000,000 and
(iii) if the cash consideration for such Acquisition exceeds $100,000,000,
such excess is financed by a Person that is not an Affiliate of a Loan Party
within 180 days of such Acquisition.

7.12         Chapter 11 Claims; Adequate
Protection.  Prior to the Exit
Facilities Conversion Date, incur, create, assume, suffer to exist or permit
(other than those existing, and disclosed to the Administrative Agent, on the
date hereof) any administrative expense, unsecured claim, or other
super-priority claim or Lien (except the Liens securing the Pari Passu
Obligations and Permitted Petition Date Liens that are pari passu
with or senior to the claims of the Secured Creditors against the Loan Parties
hereunder, or apply to the Bankruptcy Court for authority to do so, except for
the Carve-Out.

7.13         The DIP Order.  Prior to the Exit Facilities Conversion Date,
make or permit to be made any change, amendment or modification, or any
application or motion for any change, amendment or modification, to the DIP
Order, other than as approved by the Required Lenders.

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

(e)           at
any time prior to the Exit Facilities Conversion Date if any of the following
would give rise to an administrative claim under the Bankruptcy Code,
including, but not limited to, those administrative claims arising under
sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c) or 726
of the Bankruptcy Code and at any time subsequent to the Exit Facilities 

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Conversion Date, (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)            At
any time subsequent to the Exit Facilities Conversion Date, (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,  After the Exit Facilities Conversion Date,

(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 

 59
 

 

constitutes
reasonable grounds under Section 4042 of ERISA for the termination of any
Pension Plan by the 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

(viii)        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

 60

 

 (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

(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; or

(m)          prior
to the Exit Facilities Conversion Date, the Cases shall be dismissed (or the
Bankruptcy Court shall make a ruling requiring the dismissal of the Cases),
suspended or converted to a case under chapter 7 of the Bankruptcy Code, or any
Loan Party shall file any pleading requesting any such relief; or a motion
shall be filed by any Loan Party for the approval of, or there shall arise, (i)
any other Claim having priority senior to or pari passu
with the claims of the Lenders under the Loan Documents or any other claim
having priority over any or all administrative expenses of the kind specified
in clause (b) of Section 503 or clause (b) of Section 507 of the Bankruptcy
Code (other than the Carve-Out) or (ii) any Lien on the Collateral having a
priority senior to or pari passu with
the Liens and security interests granted herein, except as expressly provided
herein and in the DIP Order; or

(n)            (i) prior to the Exit Facilities
Conversion Date, the DIP Order shall cease to be in full force and effect, (ii)
the Loan Parties shall fail to comply with the terms of the DIP Order in any
material respect or (iii) the DIP Order shall be amended, supplemented, stayed,
reversed, vacated or otherwise modified (or any Loan Party shall apply for
authority to do so) in any respect materially adverse to the Lenders without
the written consent of the Required Lenders (or any Loan Party shall file, or
otherwise support, any pleading seeking such relief described in this
subparagraph); or

(o)           prior
to the Exit Facilities Conversion Date, the Bankruptcy Court shall enter an
order appointing a trustee under chapter 7 or chapter 11 of the Bankruptcy
Code, or a responsible officer or an examiner with enlarged powers relating to
the operation of the business (powers beyond those set forth in subclauses (3)
and (4) of clause (a) of Section 1106 of the Bankruptcy Code) under clause (b)
of Section 1106 of the Bankruptcy Code in any of the Cases (or any Loan Party
shall file, or otherwise support, any pleading seeking such relief described in
this subparagraph); or

(p)           prior
to the Exit Facilities Conversion Date, the exclusive period that the Loan
Parties have to file a Plan of Reorganization under the Cases shall terminate
or be otherwise lifted without the Loan Parties having filed such a plan, or a
Plan of Reorganization is filed which, except as contemplated by Section 5.5,
does not provide for the payment in full in cash of the Obligations on or prior
to the date of consummation thereof; or

(q)           prior
to the Exit Facilities Conversion Date, the Loan Parties or any of their
Subsidiaries shall support (in any such case by way of any motion or other
pleading filed with the 

 61
 

 

Bankruptcy Court or any other writing to another party-in-interest
executed by or on behalf of the Loan Parties or any of their Subsidiaries) any
other Person’s opposition of any motion made in the Bankruptcy Court by the
Lenders seeking confirmation of the amount of the Lenders’ claim (exclusive of
any bona fide dispute regarding the amount of such claim) or the validity and
enforceability of the Liens in favor of the Collateral Agent; or

(r)            prior
to the Exit Facilities Conversion Date, the Loan Parties or any of their
Subsidiaries shall seek to, or shall support (in any such case by way of any
motion or other pleading filed with the Bankruptcy Court or any other writing
to another party-in-interest executed by or on behalf of the Loan Parties or
any of their Subsidiaries) any other Person’s motion to, disallow in whole or
in part the Lenders’ claim in respect of the Obligations (exclusive of any bona
fide dispute regarding the amount of such claim) or to challenge the validity
and enforceability of the Liens in favor of the Collateral Agent, (ii) such
Liens and/or super-priority claims shall otherwise cease to be valid and
perfected in all respects or (iii) such Liens and/or super-priority claims
shall otherwise cease to be enforceable in any material respect;

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 in each case
notwithstanding the provisions of Section 362 of the Bankruptcy Code and
without any application, motion or notice to, hearing before, or order from,
the Bankruptcy Court, or (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 and in each case notwithstanding the provisions of Section 362
of the Bankruptcy Code and without any application, motion or notice to,
hearing before, or order from, the Bankruptcy Court.  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. 
In addition, prior to the Exit Facilities Conversion Date, subject only
to any limitations set forth in the DIP Order, the automatic stay provided in
Section 362 of the Bankruptcy Code shall be deemed automatically vacated
without further action or order of the Bankruptcy Court and the Agents and the
Lenders shall be entitled to exercise all of their respective rights and
remedies under the Security Documents, including, without limitation, all
rights and remedies with respect to the Collateral and the Guarantors.  In addition to the remedies set forth above,
the Agents may exercise any other remedies provided for by this Agreement and
the Security Documents in accordance with the terms hereof and thereof or any
other remedies provided by applicable law.

Upon the first date on which the Agents and/or the
Lenders are entitled to exercise remedies as provided in the foregoing
provisions of this Section and notice thereof by the Administrative Agent to
the Loan Parties (the “Carve-Out
Event Notice”), the right of the Loan Parties
to pay professional fees outside the Carve-Out shall terminate (a “Carve-Out Event”), and, upon
such occurrence, the Loan Parties, after receipt of the Carve-Out Event Notice
from the Administrative Agent, shall provide immediate notice by facsimile to
all professionals informing them that a Carve-Out Event has occurred and
further advising them that the Loan Parties’ ability to pay professionals is
subject to the Carve-Out.

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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.

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 

 63
 

 

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 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.

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(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. 
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.

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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 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.

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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 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
shall have any duties or responsibilities hereunder in its capacity as such.

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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 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; (vi) amend, modify or waive any provision of Section 10 without
the written consent of the Administrative Agent; or (viii) amend, modify or
waive any provision of Sections 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12 or 2.13
without the written consent of the Issuing Lender.  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 

 68
 

 

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:

	
  

  	
  Loan Parties:

  	
   

  	
  2700 Lone Oak Parkway

  Eagan, MN 55121

  Telephone:(612) 726-2274

  
	
   

  	
   

  	
   

  	
  Fax:

  Attn:

   

  	
  (612) 726-0665

  Daniel B. Matthews

  Senior Vice President and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The
  Administrative Agent:

  	
   

  	
  Citicorp USA, Inc.

  388 Greenwich Street, 20th Floor

  New York, New York, 10013

  Telephone:            (212)
  816-2374
  

  Fax:         (212)
  816-2613
  

  Attn:       James McCarthy

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Latham & Watkins LLP

  Sears Tower, Suite 5800

  233 South Wacker Drive

  Chicago, IL 60606

  Telephone: (312) 876-7700

  Fax: (312) 993-9767

  Attn:  James W. Doran and
  David S. 

  Heller

  

 

(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.

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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,
Indemnity.  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, syndication 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 Latham &
Watkins LLP, outside counsel to the Administrative Agent and search, 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 the costs and charges of obtaining Appraisals of the
Pool Assets pursuant to this Agreement, (c) to pay or reimburse each Lender and
Agent for all its 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, (d) 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 (e) 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 

 70
 

 

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 Assign; Participations and Assignments.

(a)           This
Agreement shall be binding upon and inure to the benefit of the Loan Parties,
the Lenders, the Administrative Agent, Issuing Lender (including any affiliate
of the Issuing Lender that issues any Letter of Credit), 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, the Administrative Agent, the Issuing Lender and other Lenders 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.

 71
 

 

(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 $5,000,000
(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 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).

 72
 

 

(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 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 

 73
 

 

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
manner permitted by law or shall limit the right to sue in any other
jurisdiction; and

(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.

 74
 

 

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.

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.

 75
 

 

(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.

[Remainder of Page Intentionally Left Blank]

[Signature Pages Follow]

 76

 

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 and Treasurer

  
	
   

  	
   

  
	
   

  	
  NORTHWEST
  AIRLINES HOLDINGS

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B.
  Matthews

  	
   

  
	
   

  	
   

  	
  Name:  Daniel B. Matthews

  
	
   

  	
   

  	
  Title: Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  NWA INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B.
  Matthews

  	
   

  
	
   

  	
   

  	
  Name:  Daniel B. Matthews

  
	
   

  	
   

  	
  Title: Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  NORTHWEST AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel B.
  Matthews

  	
   

  
	
   

  	
   

  	
  Name:  Daniel B. Matthews

  
	
   

  	
   

  	
  Title: Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  CITICORP USA,
  INC., as

  
	
   

  	
  Administrative
  Agent and Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J.
  McCarthy

  	
   

  
	
   

  	
   

  	
  Name:  James J. McCarthy

  
	
   

  	
   

  	
  Title: Director/Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  ,

  	
   

  	
   

  
								

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS, 

  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank Fazio

  	
   

  
	
   

  	
   

  	
  Name:  Frank Fazio

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marguerite
  Sutton

  	
   

  
	
   

  	
   

  	
  Name:  Marguerite Sutton

  
	
   

  	
   

  	
  Title: Director

  
						

 

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

 

 

 

	
  

  	
  CALYON NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Bolotin

  	
   

  
	
   

  	
   

  	
  Name:  Brian Bolotin

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  Moran

  	
   

  
	
   

  	
   

  	
  Name:  Charles Moran

  
	
   

  	
   

  	
  Title: Director

  
						

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

 

 

 

	
  

  	
  U.S. BANK NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Kopolow

  	
   

  
	
   

  	
   

  	
  Name:  David Kopolow

  
	
   

  	
   

  	
  Title: Senior Vice President

  
					

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

 

 

 

	
  

  	
  JPMORGAN CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald
  Shokrian

  	
   

  
	
   

  	
   

  	
  Name:  Donald Shokrian

  
	
   

  	
   

  	
  Title: Managing Director

  
					

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

 

 

 

	
  

  	
  MORGAN STANLEY SENIOR FUNDING, INC., as a 

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce
  Buchanan

  	
   

  
	
   

  	
   

  	
  Name:  Bruce Buchanan

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
					

 

 

SIGNATURE PAGE TO

THE SUPER PRIORITY DEBTOR IN
POSSESSION AND

 EXIT CREDIT AND GUARANTY AGREEMENT

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