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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
Continental Airlines, Inc.
(Name of Issuer)
Class A Common Stock
(Title of Class of Securities)
210795209
(CUSIP Number)
James J. O'Brien
201 Main Street, Suite 2420
Fort Worth, Texas 76102
(817) 871-4000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 24, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
**The total number of Class A shares reported herein is 8,532,166, which
constitutes approximately 74.7% of the total number of Class A shares
outstanding. The foregoing ownership percentages set forth herein assume that
there are 11,418,932 shares of the Class A Stock outstanding following the
exercise of warrants described herein. The number of outstanding shares of
Class A Common Stock as reported in the Issuer's most recent quarterly report
was 8,379,464.
1. Name of Reporting Person:
Air Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: OO-Partnership Contributions; Advance From
Non-Affiliate
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power:
Class A - 8,302,656 (1)
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 8,302,656 (1)
Person With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,302,656
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 72.7% (2)
14. Type of Reporting Person: PN
- ------------
(1) Power is exercised through its two general partners, 1992 Air GP and
Air II General, Inc. Additionally, the voting and dispositive power
may, under certain circumstances, be deemed to be shared with, or
may be exercised by, the limited partners of Air Partners, L.P. as
further described in Item 6 hereof.
(2) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
1. Name of Reporting Person:
1992 Air GP
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: -0-
Number of 8. Shared Voting Power:
Shares Class A - 8,302,656 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power: -0-
Reporting
Person With
10. Shared Dispositive Power:
Class A - 8,302,656 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,302,656(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 72.7% (3)
14. Type of Reporting Person: PN
- -------------
(1) Power is exercised through its majority general partner, 1992 Air,
Inc.
(2) Solely in its capacity as one of two general partners of Air
Partners, L.P. The voting and dispositive power may, under certain
circumstances, be deemed to be shared with, or may be exercised by,
the limited partners of Air Partners, L.P. as further described in
Item 6 hereof.
(3) Assumes that there are 11,413,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
1. Name of Reporting Person:
Air II General, Inc.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: -0-
Number of 8. Shared Voting Power:
Shares Class A - 8,302,656 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power: -0-
Reporting
Person With 10. Shared Dispositive Power:
Class A - 8,302,656 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,302,656 (2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 72.7% (3)
14. Type of Reporting Person: CO
- ------------
(1) Power is exercised through its controlling shareholder, David
Bonderman.
(2) Solely in its capacity as one of two general partners of Air
Partners, L.P. The voting and dispositive power may, under certain
circumstances, be deemed to be shared with, or may be exercised by,
the limited partners of Air Partners, L.P. as further described in
Item 6 hereof.
(3) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
1. Name of Reporting Person:
1992 Air, Inc.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power:
Class A - 213,110 (1)
Number of 8. Shared Voting Power:
Shares Class A - 8,302,656 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 213,110 (1)
Person With
10. Shared Dispositive Power:
Class A - 8,302,656 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,515,766 (2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 74.6% (3)
14. Type of Reporting Person: CO
- ------------
(1) Power is exercised through its controlling shareholder, David
Bonderman.
(2) Solely in its capacity as the majority general partner of 1992 Air
GP with respect to 8,302,656 shares. The voting and dispositive
power with respect to the shares of Class A Common Stock held by Air
Partners, L.P. may, under certain circumstances, be deemed to be
shared with, or may be exercised by, the limited partners of Air
Partners, L.P. as further described in Item 6 hereof.
(3) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
1. Name of Reporting Person:
David Bonderman
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: David Bonderman is a citizen
of the United States of America.
7. Sole Voting Power:
Class A - 229,510 (1)
Class B - 862,933 (2)
Number of 8. Shared Voting Power:
Shares Class A - 8,302,656 (3)
Beneficially
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 229,510 (1)
Person With Class B - 862,933 (2)
10. Shared Dispositive Power:
Class A - 8,302,656 (3)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,532,166 (1)(3)
Class B - 871,933 (2)(6)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 74.7% (4)
Class B - 1.7% (2)(5)
14. Type of Reporting Person: IN
- ------------
(1) Solely in his capacity as general partner of the Bonderman Family
Limited Partnership with respect to 16,400 shares and in his
capacity as controlling shareholder of 1992 Air, Inc. with respect
to 213,110 shares.
(2) Solely in his capacity as general partner of the Bonderman Family
Limited Partnership with respect to 682,448 shares of the Issuer's
Class B Common Stock.
(3) Solely in his capacities as the controlling shareholder of each of
Air II General, Inc. and 1992 Air, Inc. with respect to 8,302,656
shares Class A Common Stock held by Air Partners, L.P. The voting
and dispositive power with respect to the shares of Class A Common
Stock held by Air Partners, L.P. may, under certain circumstances,
be deemed to be shared with, or may be exercised by, the limited
partners of Air Partners, L.P. as further described in Item 6
hereof.
(4) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
(5) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 50,960,663 shares of Class B Common Stock outstanding which
includes the director options held by Mr. Bonderman.
(6) Includes 9,000 shares of Class B Common Stock that may be acquired
by Mr. Bonderman upon the exercise of outside director stock
options.
1. Name of Reporting Person:
Bonderman Family Limited Partnership
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: WC
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power:
Class A - 16,400 (1)
Class B - 682,448 (1)
Number of 8. Shared Voting Power:
Shares Class A - 140,364 (2)
Beneficially
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 16,400 (1)
Person With Class B - 682,448 (1)
10. Shared Dispositive Power:
Class A - 140,364 (2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 156,764 (2)
Class B - 682,448
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 1.4% (3)
Class B - 1.3% (4)
14. Type of Reporting Person: PN
- ------------
(1) Power is exercised through its general partner, David Bonderman.
(2) Bonderman Family Limited Partnership also holds a limited
partnership interest in Air Partners, L.P. On the basis of certain
provisions of the Partnership Agreement, Bonderman Family Limited
Partnership may be deemed to beneficially own the shares of Class A
Common Stock beneficially owned by Air Partners, L.P. that are
attributable to such limited partnership interest. Pursuant to Rule
13d-4 under the Act, Bonderman Family Limited Partnership disclaims
beneficial ownership of all such shares.
(3) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
(4) Percentage is based on 50,951,663 outstanding shares of Class B
Common Stock, as reported in the Issuer's most recent quarterly
report.
1. Name of Reporting Person:
Bondo Air Limited Partnership
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: -0-
Number of
Shares 8. Shared Voting Power:
Beneficially Class A - 1,403,664 (1)
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person With
10. Shared Dispositive Power:
Class A - 1,403,664 (1)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 1,403,664 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/X/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 12.3% (2)
14. Type of Reporting Person: PN
- -----------
(1) Solely in its capacity as a limited partner of Air Partners, L.P.
On the basis of certain provisions of the Partnership Agreement,
Bondo Air Limited Partnership ("Bondo Air") may be deemed to
beneficially own the shares of Class A Common Stock beneficially
owned by Air Partners, L.P. that are attributable to such limited
partnership interests. Pursuant to Rule 13d-4 under the Act, Bondo
Air disclaims beneficial ownership of all such shares.
(2) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported herein in Item 5(c).
1. Name of Reporting Person:
Alfredo Brener
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Alfredo Brener is a citizen of
Mexico.
7. Sole Voting Power: -0-
Number of
Shares 8. Shared Voting Power:
Beneficially Class A - 1,382,609 (1)
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person With
10. Shared Dispositive Power:
Class A - 1,382,609 (1)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 1,382,609 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/x/ See Item 2.
13. Percent of Class Represented by Amount in Row (11):
Class A - 12.1% (2)
14. Type of Reporting Person: IN
- ------------
(1) Because Alfredo Brener, through a limited partnership whose
corporate general partner he controls, owns warrants to purchase a
98.5% limited partnership interest in Bondo Air, and on the basis of
certain provisions of the limited partnership agreement of Bondo
Air, Alfredo Brener may be deemed to beneficially own 98.5% of the
shares of Class A Common Stock beneficially owned by Bondo Air or
that may be deemed to be beneficially owned by Bondo Air that are
attributable to Bondo Air's limited partnership interest in Air
Partners. Pursuant to Rule 13d-4 under the Act, Mr. Brener
disclaims beneficial ownership of all such shares.
(2) Assumes that there are 11,418,932 shares of Class A Common Stock
outstanding following the exercise of warrants by Air Partners,
L.P., as reported in Item 5(c) herein.
Pursuant to Rule 13d-2(a) of Regulation 13D-G of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Act"), the undersigned hereby amend their Schedule 13D Statement dated August
8, 1995, as amended by Amendment No. 1 dated August 11, 1995, Amendment No. 2
dated April 3, 1996, Amendment No. 3 dated April 26, 1996, Amendment No. 4
dated May 13, 1996, Amendment No. 5 dated December 6, 1996, Amendment No. 6
dated June 6, 1997 and Amendment No. 7 dated January 30, 1998 (the "Schedule
13D"), relating to the shares of Class A Common Stock, par value $.01 per
share ("Class A Stock"), of Continental Airlines, Inc. (the "Issuer"). Unless
otherwise indicated, all defined terms used herein shall have the same
meanings respectively ascribed to them in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is hereby amended by adding the following:
On April 24, 1998, Air Partners exercised warrants with an aggregate
exercise price of $28,356,015 to purchase 3,039,468 shares of Class A Stock,
as more fully described in Item 5(c) herein. The full exercise price of the
warrants was loaned to Air Partners by Northwest pursuant to the terms of the
Investment Agreement.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
Paragraphs (a)-(c) of Item 5 are hereby amended and restated in their
entireties as follows:
(a)
AIR PARTNERS
The aggregate number of shares of the Class A Stock that Air Partners
owns beneficially, pursuant to Rule 13d-3 under the Act, is 8,302,656, which
constitutes approximately 72.7% of the outstanding shares of such stock.
1992 AIR GP
Because of its position as one of two general partners of Air
Partners, 1992 Air GP may, pursuant to Rule 13d-3 of the Act, be deemed to be
the beneficial owner of 8,302,656 shares of the Class A Stock, which
constitutes approximately 72.7% of the outstanding shares of such stock.
AIR II
Because of its position as one of two general partners of Air
Partners, Air II may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of 8,302,656 shares of the Class A Stock, which constitutes
approximately 72.7% of the outstanding shares of such stock.
AIR, INC.
Because of its position as one of two general partners of 1992 Air
GP, and because of its direct ownership of 213,110 shares of the Class A
Stock, Air, Inc. may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of an aggregate of 8,515,766 shares of the Class A Stock,
which constitutes approximately 74.6% of the outstanding shares of such stock.
BONDERMAN
Because of his position as the controlling shareholder of each of Air
II and Air, Inc., and as the general partner of Bonderman Family, and because
he holds director stock options to acquire 9,000 shares of the Class B Stock,
and because of his direct ownership of 180,483 shares of the Class B Stock,
Bonderman may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of (i) 8,532,166 shares of the Class A Stock, which
constitutes approximately 74.5% of the outstanding shares of such stock, and
(ii) an aggregate 871,933 shares of the Class B Stock, which constitutes
approximately 1.7% of the 50,960,663 shares of such stock deemed outstanding
pursuant to Rule 13d-3(d)(1)(i) under the Act.
BONDERMAN FAMILY
The aggregate number of shares of the Class A Stock that Bonderman
Family owns, or may be deemed to own, beneficially, pursuant to Rule 13d-3
under the Act, is 156,764, 16,400 shares of which Bonderman Family owns
directly and 140,364 shares of which Bonderman Family may be deemed to own
beneficially because of its position as a limited partner of Air Partners, and
on the basis of certain provisions of the Partnership Agreement. In the
aggregate, such shares of Class A Stock constitute approximately 1.3% of the
outstanding shares of such stock. The aggregate number of shares of the Class
B Stock that Bonderman Family owns, beneficially, pursuant to Rule 13d-3 under
the Act, is 682,448 which constitutes approximately 1.4% of the 50,951,663
shares of such stock outstanding. Pursuant to Rule 13d-4 under the Act,
Bonderman Family disclaims beneficial ownership of all shares attributable to
Bonderman Family's limited partnership interest in Air Partners.
BONDO AIR
Because of its position as a limited partner of Air Partners, and on
the basis of certain provisions of the Partnership Agreement, Bondo Air may,
pursuant to Rule 13d-3 of the Act, be deemed to own beneficially 1,403,664
shares of the Class A Stock, which constitutes approximately 12.3% of the
outstanding shares of such stock. Pursuant to Rule 13d-4 under the Act, Bondo
Air disclaims beneficial ownership of all such shares.
BRENER
Because of his ownership, through a limited partnership whose
corporate general partner he controls, of warrants to purchase a 98.5% limited
partnership interest in Bondo Air, and on the basis of certain provisions of
the limited partnership agreement of Bondo Air and the Partnership Agreement,
Brener may, pursuant to Rule 13d-3 under the Act, be deemed to be the
beneficial owner of 1,382,609 shares of the Class A Stock, which constitutes
approximately 12.1% of the outstanding shares of such stock. Pursuant to Rule
13d-4 under the Act, Brener disclaims beneficial ownership of all such shares.
To the best knowledge of each of the Reporting Persons, other than
as set forth above, none of the persons named in response to Item 2(a) herein
is the beneficial owner of any shares of the Class A Stock or the Class B
Stock.
(b)
AIR PARTNERS
Acting through its two general partners, Air Partners has the sole
power to vote or to direct the vote and to dispose or to direct the
disposition of 8,302,656 shares of the Class A Stock. Additionally, the
voting and dispositive power with respect to such shares of Class A Common
Stock held by Air Partners may, under certain circumstances, be deemed to be
shared with, or may be exercised by, the limited partners of Air Partners as
further described in Item 6 hereof.
1992 AIR GP
In its capacity as one of two general partners of Air Partners, and
acting through its majority general partner, 1992 Air GP has the shared power
to vote or to direct the vote and to dispose or to direct the disposition of
8,302,656 shares of the Class A Stock.
AIR II
In its capacity as one of two general partners of Air Partners, and
acting through its controlling shareholder, Air II has the shared power to
vote or to direct the vote and to dispose or to direct the disposition of
8,302,656 shares of the Class A Stock.
AIR, INC.
In its capacity as the majority general partner of 1992 Air GP, and
acting through its controlling shareholder, Air, Inc. has the shared power to
vote or to direct the vote and to dispose or to direct the disposition of
8,302,656 shares of the Class A Stock. Air, Inc. has the sole power to vote
or to direct the vote and to dispose or to direct the disposition of 213,110
shares of the Class A Stock.
BONDERMAN
In his capacity as the controlling shareholder of each of Air II and
Air, Inc., Bonderman has the shared power to vote or to direct the vote and to
dispose or to direct the disposition of 8,302,656 shares of the Class A Stock.
In his capacity as the controlling shareholder of Air, Inc., Bonderman has the
sole power to vote or to direct the vote and to dispose or to direct the
disposition of an additional 213,110 shares of the Class A Stock. In his
capacity as sole general partner of Bonderman Family, Bonderman has the sole
power to vote or to direct the vote and to dispose or to direct the
disposition of 16,400 shares of the Class A Stock and 682,448 shares of the
Class B Stock. Bonderman also has the sole power to vote or to direct the
vote and to dispose or to direct the disposition of 180,483 shares of Class B
Stock owned directly by him. Additionally, because of Bonderman's ownership
of direct and indirect limited partnership interests in Air Partners, and on
the basis of certain provisions of the Partnership Agreement, Bonderman may be
deemed to have shared power to vote or to direct the vote and to dispose or to
direct the disposition of shares of Class A Stock beneficially owned by Air
Partners attributable to such limited partnership interests in Air Partners.
BONDERMAN FAMILY
Acting through its sole general partner, Bonderman Family has the
sole power to vote or to direct the vote and to dispose or to direct the
disposition of 16,400 shares of the Class A Stock and 682,448 shares of the
Class B Stock. Additionally, because of its ownership of a limited
partnership interest in Air Partners, and on the basis of certain provisions
of the Partnership Agreement, Bonderman Family may be deemed to have shared
power to vote or to direct the vote and to dispose or to direct the
disposition of 140,364 shares of Class A Stock.
BONDO AIR
In its capacity as a limited partner of Air Partners, and on the
basis of certain provisions of the Partnership Agreement, Bondo Air may be
deemed to have shared power to vote or to direct the vote and to dispose or to
direct the disposition of 1,403,664 shares of the Class A Stock attributable
to Bondo Air's limited partnership interest in Air Partners.
BRENER
Because of his ownership, through a limited partnership whose
corporate general partner he controls, of warrants to purchase a 98.5% limited
partnership interest in Bondo Air, and on the basis of certain provisions of
the limited partnership agreement of Bondo Air and the Partnership Agreement,
Brener may be deemed to have shared power to vote or to direct the vote and to
dispose or to direct the disposition of 1,382,609 shares of the Class A Stock
attributable to Bondo Air's limited partnership interest in Air Partners.
(c) Pursuant to the terms of the Investment Agreement, on April 24,
1998, Air Partners exercised all warrants held by it to purchase shares of the
Class A Stock. Air Partners purchased 2,298,134 shares of Class A Stock at
an exercise price of $7.50 per share, and 741,334 shares of Class A Stock at
an exercise price of $15.00 per share.
Except as set forth in this paragraph (c), to the best of the
knowledge of each of the Reporting Persons, none of the persons named in
response to paragraph (a) has effected any transactions in the shares of the
Class A Stock during the past sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended by adding the following:
In connection with the exercise of warrants described in Item 5(c)
above, on April 24, 1998, Air Partners received from Northwest, pursuant to
the Investment Agreement, funds in an amount equal to the aggregate exercise
price of the warrants. The obligation of Air Partners to repay such loan is
evidenced by a promissory note executed and delivered by Air Partners and
payable to Northwest, a copy of which is attached hereto as Exhibit 4.12. The
note is secured by a pledge of the shares of the Class A Stock issued upon
exercise of the warrants. A copy of the pledge agreement is attached hereto
as Exhibit 4.13.
Except as disclosed in this Schedule 13D (including the original
Schedule 13D filing, as amended), the Reporting Persons know of no contracts,
arrangements, understandings or relationships between or among themselves, or
between the Reporting Persons and any other person, with respect to any
securities of the Issuer.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 4.12 Promissory Note dated as of April 24, 1998 executed by Air
Partners, L.P. and payable to Northwest Airlines Corporation,
filed herewith.
Exhibit 4.13 Pledge Agreement dated as of April 24, 1998 between Air
Partners, L.P. and Northwest Airlines Corporation, filed
herewith.
Exhibit 99.1 Agreement pursuant to Rule 13d-1(l)(iii), filed herewith.
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: April 28, 1998
AIR PARTNERS, L.P.
By: 1992 AIR GP,
General Partner
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
1992 AIR GP
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
AIR II GENERAL, INC.
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
1992 AIR, INC.
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
/s/James J. O'Brien
James J. O'Brien,
Attorney-in-Fact for each of:
DAVID BONDERMAN (1)
ALFREDO BRENER (2)
BONDERMAN FAMILY LIMITED PARTNERSHIP
By: David Bonderman, general partner
By:/s/James J. O'Brien,
Attorney-in-Fact for DAVID BONDERMAN(1)
BONDO AIR LIMITED PARTNERSHIP
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
(1) A Power of Attorney authorizing James J. O'Brien to act on behalf of
David Bonderman was previously filed with the Commission.
(2) A Power of Attorney authorizing James J. O'Brien to act on behalf of
Alfredo Brener was previously filed with the Commission.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Subscription and Stockholders' Agreement, dated as of April
27, 1993, among Air Partners, Air Canada and the Issuer,
previously filed.
4.2 Warrant Agreement, dated as of April 27, 1993, by and
between the Issuer and the Warrant Agent as defined therein,
previously filed.
4.3 Registration Rights Agreement dated as of April 27, 1993, among
Air Partners, Air Canada and the Issuer, previously filed.
4.4 Form of Lock Up Agreement between Air Partners and Goldman
Sachs International, previously filed.
4.5 Form of Lock Up Agreement between each Partner of Air
Partners and the Issuer, previously filed.
4.6 Form of Assignment of Registration Rights by Air Partners in
favor of each Partner of Air Partners, previously filed.
4.7 Amendment to Subscription and Stockholders' Agreement, dated
as of April 19, 1996, among Air Partners, Air Canada and the
Issuer, previously filed.
4.8 Amended and Restated Registration Rights Agreement, dated as
of April 19, 1996 among the Issuer, Air Partners, and Air
Canada, previously filed.
4.9 Warrant Purchase Agreement, dated as of May 2, 1996, by and
between the Issuer and Air Partners, previously filed.
4.10 Warrant Purchase Agreement, dated as of May 27, 1997, by and
between the Issuer and Air Partners, previously filed.
4.11 Investment Agreement dated as of January 25, 1998, among
Northwest Airlines Corporation, Newbridge Parent Corporation,
Air Partners and the other parties named therein, previously
filed.
4.12 Promissory Note dated as of April 24, 1998 executed by Air
Partners, L.P. and payable to Northwest Airlines Corporation,
filed herewith.
4.13 Pledge Agreement dated as of April 24, 1998 between Air
Partners, L.P. and Northwest Airlines Corporation, filed
herewith.
24.1 Power of Attorney dated August 7, 1995, by Alfredo Brener,
previously filed.
99.1 Agreement pursuant to Rule 13d-1(f)(1)(iii), filed herewith.
99.2 Amended and Restated Limited Partnership Agreement of Air
Partners, L. P., together with the first amendment thereto,
previously filed.
99.3 Second and Third Amendments to the Amended and Restated Limited
Partnership Agreement of Air Partners, L.P., previously filed.
EXHIBIT 99.1
Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D-G of the General
Rules and Regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on behalf of them in the
capacities set forth hereinbelow.
AIR PARTNERS, L.P.
By: 1992 AIR GP,
General Partner
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
1992 AIR GP
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
AIR II GENERAL, INC.
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
1992 AIR, INC.
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
/s/James J. O'Brien
James J. O'Brien,
Attorney-in-Fact for each of:
DAVID BONDERMAN (1)
ALFREDO BRENER (2)
BONDERMAN FAMILY LIMITED PARTNERSHIP
By: David Bonderman, general partner
By:/s/James J. O'Brien,
Attorney-in-Fact for DAVID BONDERMAN(1)
BONDO AIR LIMITED PARTNERSHIP
By: 1992 AIR, INC.,
General Partner
By:/s/James J. O'Brien
James J. O'Brien,
Vice President
(1) A Power of Attorney authorizing James J. O'Brien to act on behalf of
David Bonderman was previously filed with the Commission.
(2) A Power of Attorney authorizing James J. O'Brien to act on behalf of
Alfredo Brener was previously filed with the Commission.
PROMISSORY NOTE
$28,356,015.00 New York, New York
April 14, 1998
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE REOFFERED OR SOLD UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
FOR VALUE RECEIVED, the undersigned, AIR PARTNERS, L.P., a Texas
limited partnership (the "Partnership"), promises to pay to NORTHWEST AIRLINES
CORPORATION, a Delaware corporation ("Parent"), at 2700 Lone Oak Parkway,
Eagan, Minnesota 55121 (or at such other place as Parent shall notify the
Partnership in writing), without setoff or counterclaim, the principal amount
of TWENTY-EIGHT MILLION THREE HUNDRED FIFTY-SIX THOUSAND FIFTEEN DOLLARS AND
NO CENTS ($28,356,015.00) at the earlier to occur of (i) the date the
Investment Agreement, dated as of January 25, 1998 (the "Agreement";
capitalized terms used and not specifically defined herein shall have the
meanings set forth in the Agreement), among Parent, Newbridge Parent
Corporation, the Partnership, the Partners of the Partnership named therein
and the Transferors named therein, is terminated in accordance with its terms
and (ii) the Closing and to pay interest on the unpaid principal balance
hereunder (such principal amount, the "Loan") (A) for any period ending on or
prior to July 25, 1998 at the Revolving Interest Rate and (B) for any period
from and including July 25, 1998, at a rate of 10% per annum. If the Closing
occurs, the aggregate Cash Election Share Price payable and/or the aggregate
number of Exchange Shares to be delivered by Parent and Holdco Sub at the
Closing shall be reduced by the amount of principal and interest payable by
the Partnership hereunder (the "Payoff Amount") in respect of each Partner in
proportion to each Partner's allocable share of the Payoff Amount, the
determination of the portion of the Payoff Amount allocable to the Cash
Electing Partners and the Share Electing Partners to be made by the
Partnership and notified to Parent in writing at least three Business Days in
advance of the Closing. Any reduction in the Exchange Shares to be issued
shall be based on the average closing price for the Parent Class A Common
Stock as of the close of business for each of the ten trading days ending on
and including the third Business Day preceding the Closing Date. In the event
the Agreement is terminated, this Note shall be repaid in full in cash. In
the event that any amount payable hereunder is not paid when due, such amount
shall bear interest at a rate per annum equal to the rate per annum applicable
to the unpaid principal balance hereof, as described above, plus 2% per annum.
Interest shall accrue from and including the date hereof to but
excluding the date of payment, and shall be calculated on the basis of a 365-
day year. All accrued but unpaid interest shall in any event be paid in full
in cash, shares of Holdco Sub Class A Common Stock or a combination thereof
(in accordance with the preceding paragraph), as the case may be, on the
earlier to occur of (i) the Closing, (ii) the date the Agreement is terminated
in accordance with its terms and (iii) the date on which the Loan becomes due
by acceleration or otherwise; provided, however, in the event the Agreement is
terminated, all accrued and unpaid interest shall be repaid in full in cash.
For purposes of this Note, if any day referenced herein shall not be a
Business Day, such reference shall be deemed to be the next succeeding
Business Day.
This Note may be prepaid in whole or in part at any time without
premium or penalty. Each payment under this Note shall first be credited to
accrued and unpaid interest, and the remainder shall be credited to principal.
All interest due hereunder shall be paid to the date of payment on principal
amount prepaid. All cash payments (including prepayments) to be made by the
Partnership hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made
prior to the close of business on the due date thereof to or for the account
of Parent at 2700 Lone Oak Parkway, Eagan, Minnesota 55121 (or at such other
place as Parent shall notify the Partnership in writing), in dollars in lawful
currency of the United States of America and in immediately available funds.
All payments of principal, interest and any other amounts hereunder by
the Partnership shall be made free and clear of, and without deduction or
withholding for, any and all present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings of any
nature whatsoever, now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority (the foregoing, "Taxes").
If any of the following events (each, an "Event of Default") shall
occur and be continuing:
(a) The Partnership shall fail to pay any principal hereunder
when due in accordance with the terms hereof, or the Partnership shall
fail to pay any interest in respect of the Loan, or any other amount
payable hereunder, when any such interest or other amounts becomes due
in accordance with the terms hereof; or
(b) (i) The Partnership shall commence any case, proceeding or
other action (A) under any existing or future law or 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 or 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,
custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or the Partnership shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Partnership any case, proceeding or
other action or a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the
Partnership any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, restraint or similar process against
any or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Partnership 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) the Partnership shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due.
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (b) above with respect to the
Partnership, automatically the Loan (with accrued interest thereon) and all
other amounts owing under this Note shall immediately become due and payable,
and (B) if such event is any other Event of Default, Parent may, in its sole
discretion by notice to the Partnership, declare the Loan (with accrued
interest thereon) and all other amounts owing under this Note to be due and
payable forthwith, whereupon the same shall immediately become due and
payable, and Parent may avail itself of all other remedies of a secured
creditor, including as set forth under the Pledge Agreement date as of the
date hereof among Parent, the Partnership and the Partners.
The Partnership agrees (a) to pay or reimburse Parent for all its costs
and expenses incurred in connection with the enforcement or preservation of
any rights under this Note and any other documents related hereto, including,
without limitation, the fees and disbursements of counsel and (b) to pay,
indemnify, and hold Parent harmless from, any and all recording and filing
fees, stamp or similar taxes or duties or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Note.
The agreements in this paragraph shall survive repayment of the Loan and all
other amounts payable hereunder.
The right to plead any and all statutes of limitation as a defense to
a demand hereunder is hereby waived to the full extent permitted by law. None
of the provisions hereof and none of Parent's rights or remedies hereunder on
account of any past or future defaults shall be deemed to have been waived by
Parent's acceptance of any past due installments or by any indulgence granted
by Parent to the Partnership. The Partnership, for itself and any guarantors
hereof, and their successors and assigns, waives presentment, demand, protest
and notice thereof or of dishonor, and waives any right to be released by
reason of any extension of time or change in the terms of payment or any
change, alteration or release of any security given for the payment hereof.
The Partnership hereby irrevocably and unconditionally (i) submits for
itself and its property in any legal action or proceeding relating to or
arising from this Note, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the United States of America sitting in the Southern District of New York or,
in the absence of Federal jurisdiction, the Commercial Part of the Supreme
Court of the State of New York for New York County, and appellate courts from
any thereof; (ii) 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; (iii) 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 Partnership at its address previously notified to Parent; and
(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue
in any other appropriate jurisdiction.
The terms of this Note may be amended, supplemented or modified only
with the written consent of Parent and the Partnership. Neither this Note nor
any of the rights, interests or obligations under this Note shall be assigned,
in whole or in part, by operation of law or otherwise by either of the parties
without the prior written consent of the other party. The Note will be
binding upon and, inure to the benefit of, and be enforceable by, the parties
and their respective successors, assigns and heirs.
The Partnership hereby represents and warrants to Parent that (i) the
execution, delivery and performance by the Partnership of the Note and its
obligations hereunder have been duly authorized by all necessary Partnership
action, and by all necessary action on the part of each Partner; (ii) no
consent or authorization of, filing with, notice to or other act by or in
respect of, any governmental authority or any other person is required in
connection with the borrowing hereunder or with the execution, delivery,
performance, validity or enforceability of this Note except consents,
authorizations, filings and notices that have been obtained or made and are in
full force and effect; (iii) this Note constitutes a valid and binding
obligation of the Partnership, enforceable against the Partnership in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding at equity or at law) and (iv) the execution, delivery and
performance by the Partnership of this Note, the borrowing hereunder, the use
of the proceeds thereof and the compliance by the Partnership with any of the
provisions hereof will not violate any material requirement of law or any
material contractual obligation of the Partnership or conflict with or result
in any breach of any applicable trust or other organizational documents
applicable to the Partnership.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the Partnership has caused this Note to be duly
executed the day and year first above written.
AIR PARTNERS, L.P.
By: 1992 Air GP, Managing General Partner
By: 1992 Air, Inc., Managing Partner
By: /s/ James J. O'Brien
Name: James J. O'Brien
Title: Vice President
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 24, 1998, by and between NORTHWEST
AIRLINES CORPORATION, a Delaware corporation ("Parent"), AIR PARTNERS, L.P.,
a Texas limited partnership ("Partnership").
W I T N E S S E T H:
WHEREAS, Parent, Newbridge Parent Corporation, a Delaware corporation,
the Partnership, the Partners of the Partnership named therein and the
Transferors named therein entered into an Investment Agreement, dated as of
January 25, 1998 (the "Investment Agreement");
WHEREAS, pursuant to Section 2.3(a) of the Investment Agreement, Parent
has agreed to extend a loan to the Partnership (the "Loan"), in the principal
amount of TWENTY-EIGHT MILLION THREE HUNDRED FIFTY-SIX THOUSAND FIFTEEN
DOLLARS AND NO CENTS ($28,356,015.00) (the "Loan Amount") to fund the purchase
of the Warrants, which loan is evidenced by a note (the "Note"); and
WHEREAS, the obligation of Parent to make the Loan is conditioned upon,
among other things, the execution and delivery by the Partnership of a Pledge
Agreement in the form hereof:
NOW, THEREFORE, in consideration of the premises and to induce Parent
to make the Loan to the Partnership, the parties agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Investment Agreement and used herein shall have the meanings given to them
in the Investment Agreement.
(b) The following terms shall have the following meanings:
"Agreement" means this Pledge Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Code" means the Uniform Commercial Code from time to time in effect in
the State of New York.
"Collateral" means the Pledged Stock and all Proceeds.
"Collateral Account" means any account established to hold money
Proceeds, maintained under the sole dominion and control of the Partnership.
"Obligations" means the collective reference to:
(a) the unpaid principal of and interest on the Loan and all other
obligations and liabilities of the Partnership to Parent (including, without
limitation, interest accruing at the then applicable rate provided in the Note
after the maturity of the Loan and interest accruing at the then applicable
rate provided in the Note after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Partnership, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding), whether direct or indirect,
absolute or contingent, due or become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Note, this
Agreement or any other document made, delivered or given in connection
therewith; and
(b) all obligations and liabilities of the Partnership which may arise
under or in connection with this Agreement;
in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to Parent that are
required to be paid by the Partnership pursuant to the terms of this
Agreement).
"Pledged Stock" means the shares of capital stock listed on Schedule 1
hereto, which shall be all shares of Company Class A Common Stock issued to
the Partnership upon exercise of the Warrants, together with all stock
certificates, securities, options or rights of any nature whatsoever that may
be issued or granted by the Company to the Partnership in respect of the
Pledged Stock while this Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
(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
not to any particular provision of this Agreement, and section and paragraph
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.
2. Loan. The Partnership hereby confirms its promise to pay the Loan
Amount to the order of Parent at the earlier to occur of (i) the Closing and
(ii) the date the Investment Agreement is terminated in accordance with its
terms, in cash in the event the Investment Agreement is terminated in
accordance with its terms or in cash and/or shares of Holdco Sub Class A
Common Stock, as the Partners so determine, in the event the Closing occurs.
3. Pledge; Grant of Security Interest. The Partnership hereby
delivers to Parent all the Pledged Stock and hereby grants to Parent a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
4. Stock Powers. Concurrently with the delivery to Parent of each
certificate representing one or more shares of Pledged Stock, the partnership
shall deliver an undated stock power covering such certificate, duly executed
in blank by the Partnership.
5. Representations and Warranties. The Partnership represents and
warrants that:
(a) The Partnership is the direct and record owner of the Pledged
Stock. The Partnership has, and at the Closing will have, good and valid
title to the Pledged Stock, free and clear of any Liens or Restrictions,
except the security interest arising under this Agreement. The Partnership
has the sole voting power, and sole power of disposition, with respect to the
Pledged Stock, and there are no restrictions on the Partnership's ability to
transfer the Pledged Stock.
(b) Upon delivery to Parent of the stock certificates evidencing the
Pledged Stock, the security interest created by this Agreement will constitute
a valid, perfected first priority security interest in the Collateral,
enforceable in accordance with its terms against all creditors of the
Partnership and any Persons purporting to purchase any Collateral from the
Partnership (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding at equity or at law).
(c) (i) The execution, delivery and performance by the Partnership of
this Agreement and its obligations hereunder have been duly authorized by all
necessary Partnership action, and by all necessary action on the part of each
Partner; (ii) no consent or authorization of, filing with, notice to or other
act by or in respect of, any governmental authority or any other person is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement except consents, authorizations, filings and
notices that have been obtained or made and are in full force and effect;
(iii) this Agreement constitutes a valid and binding obligation of the
Partnership, enforceable against the Partnership in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of equity,
including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding at equity or at law) and (iv)
the execution, delivery and performance by the Partnership of this Agreement
and the compliance by the Partnership with any of the provisions hereof will
not violate any material requirement of law or any material contractual
obligation of the Partnership or conflict with or result in any breach of any
applicable trust or other organizational documents applicable to the
Partnership.
6. Covenants. The Partnership covenants and agrees with Parent that,
from and after the date of this Agreement until this Agreement is terminated
and the security interests created hereby are released:
(a) Without in any way limiting Section 4.2(b) of the Investment
Agreement, which is incorporated herein in its entirety, without the prior
written consent of Parent, the Partnership will not (1) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Collateral, (2) create, incur or permit to exist any Lien or
Restriction in favor of, or any claim of any Person with respect to, any of
the Collateral, or any interest therein, except for the security interests
created by this Agreement or (3) enter into any agreement or undertaking
restricting the right or ability of the Partnership or Parent to sell, assign
or transfer any of the Collateral.
(b) The Partnership shall maintain the security interest created by
this Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At
any time and from time to time, upon the written request of Parent and at the
sole expense of the Partnership, the Partnership will promptly and duly
execute or cause to be executed and deliver such further instruments and
documents and take such further actions as Parent may reasonably request for
the purposes of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted.
(c) The Partnership shall pay, and save Parent harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any
of the transactions contemplated by this Agreement.
7. Cash Dividends; Voting Rights. Unless an Event of Default shall
have occurred and be continuing and Parent shall have given notice to the
Partnership of Parent's intent to exercise its corresponding rights pursuant
to Section 8 below, the Partnership shall be permitted to receive all cash
dividends paid in the normal course of business of the Company and consistent
with past practice in respect of the Pledged Stock and, subject to the
provisions of the Investment Agreement, to exercise all voting and corporate
rights with respect to the Pledged Stock; provided, however, that no vote
shall be cast or corporate right exercised or other action taken which, in
Parent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Note or
this Agreement.
8. Rights of Parent. If an Event of Default (as defined in the Note)
shall occur, (1) Parent shall have the right to receive any and all cash
dividends paid in respect of the Pledged Stock and make application thereof to
the Obligations in such order as Parent may determine, and (2) subject to
applicable law (including the HSR Act and any other governmental approvals
that may be required in connection therewith), all shares of the Pledged Stock
shall be registered in the name of Parent or its nominee, and Parent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders
of the Company or otherwise and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options pertaining
to such shares of the Pledged Stock as if it were the absolute owner thereof,
all without liability except to account for property actually received by it,
but Parent shall have no duty to the Partnership to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
9. Remedies. (a) If an Event of Default shall have occurred, at any
time at Parent's election, Parent may apply all or any part of Proceeds held
in any Collateral Account in payment of the Obligations in such order as
Parent may elect.
(b) If an Event of Default shall have occurred, Parent may exercise
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
and all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, Parent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Partnership or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of parent or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. Parent shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity
of redemption in the Partnership, which right or equity is hereby waived or
released. Parent shall apply any Proceeds from time to time held by it and
the next proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of Parent hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to Parent, to the payment in
whole or in part of the Obligations, in such order as Parent may elect, and
only after such application and after the payment by Parent of any other
amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need Parent account for the surplus, if any,
to the Partnership. To the extent permitted by applicable law, the Partnership
waives all claims, damages and demands it may acquire against Parent arising
out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. The Partnership waives and agrees no
to assert any rights or privileges which it may acquire under Section 9-112 of
the Code.
10. Registration Rights; Private Sales. (a) If Parent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 9 hereof, and if in the opinion of Parent it is necessary
or advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the securities Act, the Partnership will
use its reasonable best efforts to cause the Company to (1) execute and
deliver, and cause the directors and officers of the Company to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of Parent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (2) to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof to be sold, and (3) to make all
amendments thereto and/or to the related prospectus which, in the option of
Parent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Partnership agrees to use its
best efforts to cause the Company to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which Parent shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The partnership recognizes that Parent may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, by
reason of other rules and regulations of Governmental Authorities or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among
other things, to acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof. The Partnership
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonably manner. Parent shall be
under no obligation to delay a sale of any of the Pledged Stock for the period
of time necessary to permit the Company to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if the Company would agree to do so.
(c) The Partnership further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section
valid and binding and in compliance with any and all other applicable
requirements of law. The Partnership further agrees that a breach of any of
the covenants contained in this Section will cause irreparable injury to
Parent, that Parent has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against the Partnership, and the Partnership
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred under the Note.
11. Parent Appointment as Attorney-in-Fact. (a) The Partnership
hereby irrevocably constitutes and appoints, upon the occurrence of an Event
of Default, Parent and any officer or agent of Parent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in its place and stead, in its name or in Parent's own
name, from time to time in Parent's discretion, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including, without
limitation, any financing statements, endorsements, assignments or other
instruments of transfer.
(b) The Partnership hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
paragraph 11(a). All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are
released.
12. Execution of Financing Statements. Pursuant to Section 9-402 of
the Code, the Partnership authorizes Parent to file financing statements with
respect to the Collateral without the signature of the Partnership in such
form and in such filing offices as Parent reasonably determines appropriate to
perfect the security interests of Parent under this Agreement.
13. Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected
and shall remain in full force and effect.
14. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Partnership and the Parent.
(b) Parent shall not by any act (except by a written instrument
pursuant to paragraph 14(a) hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced
in any Event of Default or any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of
Parent, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by Parent of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Parent would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. Section Headings. The titles and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
16. Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either of the parties
without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York as applied to contracts
entered and to be performed in New York and without regard to the application
of principles of conflicts of laws.
18. Termination and Release. This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full in accordance with the Note in cash and/or shares of
Holdco Sub Class A Common Stock, as the case may be.
19. Submission to Jurisdiction. The Partnership hereby irrevocably
and unconditionally (i) subjects for itself and its property in any legal
action or proceeding relating to or arising from this Agreement, or for
recognition and enforcement of any judgment in respect thereof, to the non-
exclusive general jurisdiction of the courts of the United States of America
sitting in the Southern District of New York or, in the absence of Federal
jurisdiction, the Commercial Part of the Supreme Court of the State of New
York for New York County, and appellate courts from any thereof; (ii) 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;
(iii) 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 partnership at
its address previously notified to Parent; and (iv) agrees that nothing herein
shall affect the right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other appropriate
jurisdiction.
20. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
NORTHWEST AIRLINES CORPORATION
By:
Name:
Title:
AIR PARTNERS, L.P.
By: 1992 Air GP, Managing General Partner
By: 1992 Air, Inc., Managing Partner
By: /s/ James J. O'Brien
Name: James J. O'Brien
Title: Vice President
SCHEDULE 1 TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock Certificate
Issuer Class of Stock No. No. of Shares
Continental Class A
Airlines, Inc. Common Stock 3,039,468