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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
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)
January 25, 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 74.5% of the total number of Class A shares
outstanding. The foregoing ownership percentages set forth herein assume that
there are 11,445,532 shares of the Class A Stock outstanding pursuant to Rule
13d-3(d)(1)(i) under the Act. The number of outstanding shares of Class A
Common Stock as reported in the Issuer's most recent quarterly report was
8,406,064.
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
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 - 5,263,188 (1)
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 5,263,188 (1)
Person With
10. Shared Dispositive Power: -0-
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 - 72.5% (2)(3)
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) Includes 3,039,468 shares of Class A Common Stock that may be
acquired upon the exercise of warrants.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 11,445,532 shares of Class A Common Stock outstanding which
includes the warrants to purchase shares of Class A Common Stock
held by Air Partners, L.P. but does not include warrants held by any
other persons.
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 - 5,263,188 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power: -0-
Reporting
Person With
10. Shared Dispositive Power:
Class A - 5,263,188 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,302,656(2)(3)
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 - 72.5% (3)(4)
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) Includes 3,039,468 shares of Class A Common Stock that may be
acquired upon the exercise of warrants held by Air Partners, L.P.
(4) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 11,445,532 shares of Class A Common Stock outstanding which
includes the warrants to purchase shares of Class A Common Stock
held by Air Partners, L.P. but does not include warrants held by any
other persons.
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 - 5,263,188 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power: -0-
Reporting
Person With 10. Shared Dispositive Power:
Class A - 5,263,188 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,302,656 (2)(3)
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 - 72.5% (3)(4)
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) Includes 3,039,468 shares of Class A Common Stock that may be
acquired upon the exercise of warrants held by Air Partners, L.P.
(4) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 11,445,532 shares of Class A Common Stock outstanding which
includes the warrants to purchase shares of Class A Common Stock
held by Air Partners, L.P. but does not include warrants held by any
other persons.
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 - 5,263,188 (1)(2)
Beneficially
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 213,110 (1)
Person With
10. Shared Dispositive Power:
Class A - 5,263,188 (1)(2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,515,766 (2)(3)
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 - 74.4% (3)(4)
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 5,263,188 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) Includes 3,039,468 shares of Class A Common Stock that may be
acquired upon the exercise of warrants held by Air Partners, L.P.
(4) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 11,445,532 shares of Class A Common Stock outstanding which
includes the warrants to purchase shares of Class A Common Stock
held by Air Partners, L.P. but does not include warrants held by any
other persons.
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 - 16,400 (1)
Class B - 862,933 (2)
Number of 8. Shared Voting Power:
Shares Class A - 5,263,188 (3)
Beneficially
Owned By
Each 9. Sole Dispositive Power:
Reporting Class A - 16,400 (1)
Person With Class B - 862,933 (2)
10. Shared Dispositive Power:
Class A - 5,263,188 (3)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 8,532,166 (1)(3)(4)
Class B - 871,933 (2)(7)
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 - 74.5% (4)(5)
Class B - 1.7% (2)(6)(7)
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.
(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 5,480,000
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) Includes 3,039,468 shares of Class A Common Stock that may be
acquired upon the exercise of warrants held by Air Partners, L.P.
(5) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 11,445,532 shares of Class A Common Stock outstanding which
includes the warrants to purchase shares of Class A Common Stock
held by Air Partners, L.P. but does not include warrants held by any
other persons.
(6) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 50,298,587 shares of Class B Common Stock outstanding which
includes the director options held by Mr. Bonderman.
(7) 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 - 88,979 (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 - 88,979 (2)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 156,764 (2)(3)
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 - 1.9% (3)(4)
Class B - 1.4% (5)
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) Includes 51,385 shares of Class A Common Stock that may be acquired
upon the exercise of warrants held by Air Partners, L.P. and
attributable to the limited partnership interest in Air Partners,
L.P. held by Bonderman Family Limited Partnership.
(4) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 8,457,449 shares of Class A Common Stock outstanding which
includes the warrants to purchase Class A Common Stock held by Air
Partners, L.P. and attributable to the Bonderman Family Limited
Partnership pursuant to the Partnership Agreement but does not
include warrants held by any other persons.
(5) Percentage is based on 50,289,587 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 - 889,805 (1)
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person With
10. Shared Dispositive Power:
Class A - 889,805 (1)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 1,403,664 (1)(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 - 15.7% (2)(3)
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) Includes 513,859 shares of Class A Common Stock that may be acquired
upon the exercise of warrants held by Air Partners, L.P. and
attributable to the limited partnership interest in Air Partners,
L.P. held by Bondo Air.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 8,919,923 shares of Class A Common Stock outstanding which
includes the warrants to purchase Class A Common Stock held by Air
Partners, L.P. and attributable to the limited partnership interest
held by Bondo Air pursuant to the Partnership Agreement but does not
include warrants held by any other persons.
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 - 876,458 (1)
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person With
10. Shared Dispositive Power:
Class A - 876,458 (1)
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
Class A - 1,382,609 (1)(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 - 15.5% (2)(3)
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) Includes 506,151 shares of Class A Common Stock that may be acquired
upon the exercise of warrants held by Air Partners, L.P. and
attributable to 98.5% of the limited partnership interest in Air
Partners, L.P. held by Bondo Air.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that there
are 8,912,215 shares of Class A Common Stock outstanding which
includes the warrants to purchase Class A Common Stock held by Air
Partners, L.P. and attributable to Bondo Air Limited Partnership
pursuant to the Partnership Agreement but does not include warrants
held by any other persons.
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 and Amendment No.
6 dated June 6, 1997 (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 4. PURPOSE OF TRANSACTION.
Item 4 is amended and restated as follows:
On January 25, 1998, Air Partners entered into an Investment
Agreement (the "Investment Agreement") among Northwest Airlines Corporation
("Northwest"), Newbridge Parent Corporation, a wholly owned subsidiary of
Northwest ("Holdco Sub"), Air Partners, the partners of Air Partners,
Bonderman Family, Air, Inc. and Air Saipan, Inc. Pursuant to the Investment
Agreement, Bonderman Family, Air, Inc. and Air Saipan, Inc. (collectively, the
"Transferors") will exchange all of the Class A Stock of the Issuer directly
owned by them, and the partners in Air Partners will exchange all of their
partnership interests in Air Partners, for shares of the common stock of
Holdco Sub and cash upon the terms and subject to the conditions set forth
therein. The Investment Agreement contemplates that, simultaneously with the
closing of the exchange, a wholly owned subsidiary of Holdco Sub will merge
with and into Northwest in a transaction in which the outstanding capital
stock of Northwest will be converted into equivalent capital stock of Holdco
Sub having the same rights and preferences as the converted shares of
Northwest capital stock and Northwest will become a wholly owned subsidiary of
Holdco Sub.
Pursuant to the Investment Agreement, the Reporting Persons agreed
(i) that Air Partners will, prior to the closing of the transactions
contemplated by the Investment Agreement (the "Closing"), exercise all
warrants owned by it to purchase shares of the Issuer's Class A Stock subject
to Air Partners' receipt of a loan from Northwest or Holdco Sub in an amount
equal to the aggregate exercise price ($28,356,015.00) of the warrants, (ii)
until the first anniversary of the Closing, not to solicit, initiate or
otherwise encourage any inquires, offers or proposals regarding any merger,
reorganization, consolidation, business combination or other fundamental
corporate transactions involving the Issuer or to otherwise take any action
that could reasonably be expected to prevent or interfere with the
consummation of the transactions contemplated by the Investment Agreement or
the entry by the Issuer and Northwest into a strategic worldwide operating
alliance, (iii) not to sell any shares of the Issuer's Class A stock or
warrants except as contemplated by the Investment Agreement, and (iv) to vote
or cause to be voted all shares of the Issuer's Class A Stock owned by them
against, among other things, any business combination (other than a business
combination with Northwest or its affiliates) involving the Issuer, any change
in the Board of Directors of the Issuer or any material change in the Issuer's
corporate structure or business. In addition, the Reporting Persons granted
to Robert L. Friedman, as designee of Northwest, a proxy to vote their shares
of the Issuer's Class A Stock in a manner consistent with the voting
agreements set forth in the Investment Agreement.
If, prior to the fifth anniversary of the Closing, Holdco Sub,
Northwest or Air Partners intends to transfer to a third party any shares of
the Issuer's Class A Stock held by them as of the Closing, then Air, Inc. has
the right under the Investment Agreement to receive notice of any such
proposed transfer and to negotiate in good faith with the transferor regarding
the terms of a transaction in which Air, Inc. would acquire the securities to
be transferred.
Each partner of Air Partners and each Transferor must elect to
receive either $60.82 or 1.2079 shares (the "Share Exchange Ratio") of Holdco
Sub Class A Common Stock in exchange for each share of the Issuer's Class A
Stock attributable to such partner's partnership interest in Air Partners and
for each share of the Issuer's Class A Common Stock, if any, owned directly by
such Transferor; provided that no more than 40% of the total exchange
consideration, valuing the Share Exchange Ratio at $60.82, received in the
exchange will consist of shares of Holdco Sub Class A Common Stock.
The foregoing description of the Investment Agreement is qualified
in its entirety by reference to the Investment Agreement, a copy of which is
attached hereto as Exhibit 4.11.
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 72.5% of the 11,445,532 shares of such stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) under the Act.
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 72.5% of the 11,445,532 shares of such stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) under the Act.
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 72.5% of the 11,445,532 shares of such stock deemed outstanding
pursuant to Rule 13d-3(d)(1)(i) under the Act.
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 72.5% of the 11,445,532 shares of such stock
deemed outstanding pursuant to Rule 13d-3(d)(1)(i) under the Act.
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) 8,532,116 shares of the Class A Stock, which
constitutes approximately 74.5% of the 11,445,532 shares of such stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) under the Act, and (ii) an
aggregate 871,933 shares of the Class B Stock, which constitutes approximately
1.7% of the 50,298,587 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 1.9% of the
8,457,449 shares of such stock deemed outstanding pursuant to Rule 13d-
3(d)(1)(i) under the Act. 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 50,289,587 shares
of such stock outstanding. Pursuant to Rule 13d-4 under the Act, Bonderman
Family disclaims beneficial ownership of all such 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 15.7% of the
8,919,923 shares of such stock deemed outstanding pursuant to Rule 13d-
3(d)(1)(i) under the Act. Pursuant to Rule 13d-4 under the Act, Bondo Air
disclaims beneficial ownership of all such shares 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, 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 15.5% of the 8,912,215 shares of such stock deemed outstanding
pursuant to Rule 13d-3(d)(1)(i) under the Act. Pursuant to Rule 13d-4 under
the Act, Brener disclaims beneficial ownership of all such shares attributable
to Bondo Air's limited partnership interest in Air Partners.
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 5,263,188 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
5,263,188 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
5,263,188 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
5,263,188 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 5,263,188 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 88,979 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 889,805 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 876,458 shares of the Class A Stock
attributable to Bondo Air's limited partnership interest in Air Partners.
(c) As reported in Item 4 herein, on January 25, 1998, Air Partners
and certain other of the Reporting Persons entered into the Investment
Agreement.
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:
The response to Item 4 above is hereby incorporated by reference.
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 4.11 Investment Agreement dated as of January 25, 1998, among
Northwest Airlines Corporation, Newbridge Parent Corporation,
Air Partners and the other parties named therein, 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: January 30, 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 filed herewith.
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.
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(f)(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.
EXHIBIT 4.11
INVESTMENT AGREEMENT, dated as of January 25, 1998, among
NORTHWEST AIRLINES CORPORATION, a Delaware corporation ( Parent ), NEWBRIDGE
PARENT CORPORATION, a Delaware corporation and, as of the date of this
Agreement, a wholly owned subsidiary of Parent ( Holdco Sub ), AIR PARTNERS,
L.P., a Texas limited partnership (the Partnership ), the partners of the
Partnership identified on the signature pages hereof (the Partners ),
BONDERMAN FAMILY LIMITED PARTNERSHIP, a Texas limited partnership ( Transferor
I ), 1992 AIR, INC., a Texas corporation ( Transferor II ), and AIR SAIPAN,
INC., a CNMI corporation ("Transferor III" and, collectively with Transferor
I and Transferor II, the Transferors ).
W I T N E S S E T H :
WHEREAS, the Partners own, of record and beneficially, 100% of the
general and limited partnership interests (the Partnership Interests ) in the
Partnership;
WHEREAS, the Partnership owns, of record and beneficially, (i)
5,263,188 shares of Class A Common Stock, par value $.01 per share (the
Company Class A Common Stock ), of Continental Airlines, Inc. (the
Company ), (ii) a warrant to purchase 2,298,134 shares of Company Class A
Common Stock at a price of $7.50 per share (the $7.50 Warrant ) and (iii) a
warrant to purchase 741,334 shares of Company Class A Common Stock at a price
of $15.00 per share (the $15.00 Warrant and, collectively with the $7.50
Warrant, the Warrants );
WHEREAS, the Partners, Parent and Holdco Sub wish to exchange the
Partnership Interests for Holdco Sub Class A Common Stock (as hereinafter
defined) and cash upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Transferors own, of record and beneficially, 233,212
shares of Company Class A Common Stock, which the Transferors, Parent and
Holdco Sub wish to exchange for shares of Holdco Sub Class A Common Stock and
cash upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent has (i) formed Holdco Sub, the certificate of
incorporation, by-laws and equity capital structure of which are substantially
identical in all material respects to those of Parent and (ii) formed a newly
created, wholly owned subsidiary of Holdco Sub named Merger Sub ( Merger
Sub ), which shall merge (the Merger ) with and into Parent on the Closing
Date (as hereinafter defined) in a transaction in which the outstanding
capital stock of Parent shall be converted into equivalent capital stock of
Holdco Sub having the same rights and preferences and Parent shall become a
wholly owned subsidiary of Holdco Sub;
WHEREAS, concurrently with the consummation of the Merger, Holdco
Sub shall issue shares of its Class A Common Stock, par value $.01 per share
(the Holdco Sub Class A Common Stock ), to (x) the Share Electing Partners
(as hereinafter defined) in respect of each share of Company Class A Common
Stock allocable to the Share Electing Partners on the Closing Date, and (y)
Transferor I and Transferor II (the "Share Electing Transferors") in respect
of each share of Company Class A Common Stock owned by such Transferors;
WHEREAS, it is intended that the collective exchange of (i) shares
of capital stock of Parent for shares of capital stock of Holdco Sub in
connection with the Merger, (ii) the Share Electing Partners' interests in the
Partnership in exchange for shares of Holdco Sub Class A Common Stock and
(iii) shares of Company Class A Common Stock owned by the Share Electing
Transferors in exchange for shares of Holdco Sub Class A Common Stock
(collectively, the "Exchange") shall be a tax-free exchange described in
Section 351(a) and/or a reorganization described in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the Code );
WHEREAS, the Merger shall be consummated without the vote of the
stockholders of Parent pursuant to the provisions of Section 251(g) of the
Delaware General Corporation Law (the DGCL );
WHEREAS, concurrently with the closing of the transactions
contemplated hereby (the Closing ), Holdco Sub, the Share Electing Partners
and the Share Electing Transferors will enter into the Standstill Agreement
(as hereinafter defined), to establish certain restrictions with respect to
the shares of Holdco Sub Class A Common Stock to be owned by the Share
Electing Partners and the Share Electing Transferors following the Closing, as
well as certain restrictions in respect of the capital stock of Holdco Sub,
corporate governance and other related corporate matters;
WHEREAS, concurrently with the Closing, the Share Electing
Partners, the Share Electing Transferors, the Holders' Representative (as
hereinafter defined) and Holdco Sub will enter into the Registration Rights
Agreement (as hereinafter defined), to provide the Share Electing Partners and
the Share Electing Transferors with certain rights to sell their shares of
Holdco Sub Class A Common Stock in transactions registered under the
Securities Act of 1933, as amended (the Securities Act ); and
WHEREAS, concurrently with the Closing, the Partners, Parent and
Holdco Sub will enter into the Partnership Agreement Amendment (as hereinafter
defined), (a) to provide for the admission to the Partnership of Holdco Sub
and Parent, (b) to reflect the withdrawal from the Partnership of the Cash
Electing Partners (as hereinafter defined) and the Share Electing Partners and
(c) to substitute Holdco Sub for Transferor I as managing general partner;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
a. Defined Terms. Terms not otherwise defined herein
shall have the following meanings:
affiliate means, when used with respect to another Person, any
Person who is, whether directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
such Person.
Agreement means this Investment Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
beneficially own has the meaning given such term in Rule 13d-3
under the Exchange Act, as in effect on the date hereof. As used
herein, the phrases beneficial ownership and beneficial owner have
correlative meanings.
Business Day means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed
in New York, New York or in Minneapolis, Minnesota.
Credit Agreement means the Amended and Restated Credit Agreement
dated as of October 16, 1996, among Northwest Airlines Corporation, NWA
Inc., Northwest Airlines, Inc., ABN AMRO Bank N.V., Bankers Trust
Company, Chase Securities Inc., Citibank, N.A., National Westminster
Bank PLC, First Bank National Association and various lending
institutions.
Dollars and $ mean lawful currency of the United States of
America.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Fully Diluted Voting Power of any Person shall be calculated by
dividing (i) the sum of (A) ten times the aggregate number of shares of
Company Class A Common Stock beneficially owned by such Person
(assuming exercise of the Warrants, in the case of the Partnership, and
exercise of any other outstanding securities held by such Person that
are convertible into or exercisable or exchangeable for shares of
Company Class A Common Stock) and (B) the number of shares of Company
Class B Common Stock beneficially owned by such Person (assuming
exercise of any outstanding securities held by such Person that are
convertible into or exercisable or exchangeable for shares of Company
Class B Common Stock) by (ii) the sum of (A) ten times the aggregate
number of outstanding shares of Company Class A Common Stock (assuming
the exercise of all outstanding securities convertible into or
exercisable or exchangeable for shares of Company Class A Common Stock)
and (B) the aggregate number of outstanding shares of Company Class B
Common Stock (assuming the exercise of all outstanding securities
convertible into or exercisable or exchangeable for shares of Company
Class B Common Stock).
Governmental Authority means any foreign, federal, state or
local government or any court, administrative agency or commission or
other governmental agency or authority, whether domestic or foreign.
Holders' Representative means Transferor II.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
Lien means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), other
charge or security interest; or any preference, priority or other
arrangement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or
other title retention agreement having substantially the same economic
effect as any of the foregoing).
material adverse effect with respect to any Person means a
material adverse effect (i) on the financial condition, business,
liabilities, properties, assets or results of operations of such Person
and its subsidiaries, taken as a whole, or (ii) on the ability of such
Person to perform its obligations under or to consummate the
transactions contemplated by this Agreement.
Merger Agreement means the Agreement and Plan of Merger dated as
of the date hereof in the form of Exhibit A among Parent, Holdco Sub
and Merger Sub.
Partnership Agreement means the Amended and Restated Limited
Partnership Agreement of Air Partners, L.P., dated as of November 9,
1992, as amended by the First Amendment, dated as of July 25, 1995, the
Second Amendment, dated as of August 7, 1996, and the Third Amendment,
dated as of May 22, 1997.
Partners' Representative means Transferor II.
Person means an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
Registration Rights Agreement means the Registration Rights
Agreement in the form of Exhibit C to be executed by Holdco Sub, the
Holders' Representative, the Share Electing Transferors and the Share
Electing Partners on the Closing Date.
Restated Partnership Agreement means the Second Amended and
Restated Limited Partnership Agreement of Air Partners, L.P., in the
form of Exhibit B to be executed by the Partners, Parent and Holdco
Sub.
Restrictions means, when used with respect to any specified
security, any stockholders or other trust agreement, option, warrant,
escrow, proxy, buy-sell agreement, power of attorney or other contract,
agreement or arrangement which (i) grants to any Person the right to
sell or otherwise dispose of or vote such specified security or any
interest therein or (ii) restricts the transfer of, or the exercise of
any rights or the enjoyment of any benefits by reason of, the ownership
of such specified security.
Standstill Agreement means the Standstill Agreement in the form
of Exhibit D to be entered into by Parent, each of the Share Electing
Partners and each of the Share Electing Transferors on the Closing
Date.
subsidiary of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person; provided, however,
that after the Closing the term subsidiary when used with respect to
Parent or Holdco Sub shall not include the Company.
Transactions means the transactions described in Section 2.4(b).
Voting Power of any Person shall be calculated by dividing (i)
the sum of (A) ten times the aggregate number of outstanding shares of
Company Class A Common Stock beneficially owned by such Person
(assuming, in the case of the Partnership, exercise of the Warrants)
and (B) the number of outstanding shares of Company Class B Common
Stock beneficially owned by such Person by (ii) the sum of (A) ten
times the aggregate number of outstanding shares of Company Class A
Common Stock (assuming exercise of the Warrants) and (B) the aggregate
number of outstanding shares of Company Class B Common Stock.
ARTICLE 2.
EXCHANGE OF PARTNERSHIP INTERESTS; TRANSFER OF SHARES
a. Exchange of Partnership Interests; Transfer of Shares.
Upon the terms and subject to the conditions of this
Agreement, each of Parent and Holdco Sub agrees to
exchange, and each Partner agrees to exchange, each of
such Partner's Partnership Interests free and clear of
any Lien or Restriction created by any Partner or the
Partnership or otherwise binding upon such Partnership
Interest (other than any Lien or Restriction imposed
pursuant to the terms of this Agreement) for shares of
Holdco Sub Class A Common Stock and cash, as more fully
set forth in this Article II. Upon the terms and
subject to the conditions of this Agreement, each of
Parent and Holdco Sub agrees to exchange, and each
Transferor agrees to exchange, each of such Transferor's
shares of Company Class A Common Stock free and clear of
any Lien or Restriction created by such Transferor or
otherwise binding upon any such shares (other than any
Lien or Restriction imposed pursuant to the terms of
this Agreement) for shares of Holdco Sub Class A Common
Stock and cash, as more fully set forth in this Article
II. Parent may assign to Holdco Sub its right to
purchase any portion or all of the Partnership Interests
of the Cash Electing Partners; provided, however, that
no such assignment shall relieve Parent of its
obligations under this Agreement.
b. Cash Election Share Price; Exchange Ratio. Subject
to adjustment in accordance with Section 2.3, Parent or
Holdco Sub shall pay to each Partner set forth on
Schedule 2.2(a) (each a Cash Electing Partner ) in
exchange for all of such Partner's Partnership Interests
and to each Transferor that elects to receive cash in
exchange for all the shares of Company Class A Common
Stock owned by such Transferor, as set forth on Schedule
2.2(a), $60.82 (the Cash Election Share Price ) in
respect of each share of Company Class A Common Stock
owned by the Partnership on the Closing Date and
allocable to such Cash Electing Partner in accordance
with the Partnership Agreement (each an Allocable
Company Class A Share ) and each share of Company Class
A Common Stock owned by such a Transferor, as the case
may be.
i. Subject to adjustment in accordance with Section 2.3,
Holdco Sub shall issue to each Partner set forth on Schedule
2.2(b) (each a Share Electing Partner ) in exchange for all
of such Partner's Partnership Interests and to each
Transferor that elects to receive shares in exchange for all
the shares of Company Class A Common Stock owned by such
Transferor in respect of each Allocable Company Class A Share
of such Share Electing Partner and each share of Company
Class A Common Stock owned by a Transferor, as set forth on
Schedule 2.2(b), 1.2079 shares (the Share Exchange Ratio )
of fully paid and non-assessable Holdco Sub Class A Common
Stock. In the event that the aggregate number of shares of
Holdco Sub Class A Common Stock to be issued to any Share
Electing Partner or Transferor after giving effect to the
calculation set forth in Section 2.3(a) would result in the
issuance by Holdco Sub of a fractional share of Holdco Sub
Class A Common Stock to such Share Electing Partner or
Transferor, such fractional share shall be rounded to the
nearest whole share. The shares of Holdco Sub Class A Common
Stock to be issued to the Share Electing Partners and the
Transferors hereunder are referred to herein as the Exchange
Shares .
ii. It is understood and agreed by the parties that Schedules
2.2(a) and 2.2(b) may be modified by the Partners at any time
on or prior to February 2, 1998; provided that no more than
40% of the total exchange consideration, valuing the Share
Exchange Ratio at $60.82, received by the Partners and the
Transferors will consist of shares of Holdco Sub Class A
Common Stock.
c. Adjustments to Cash Election Share Price and Exchange
Ratio.
i. Exercise of Warrants. In the event the Closing shall not
have occurred prior to April 27, 1998 (or such later date on
which the Warrants are to expire) (the Warrant Exercise
Date ), the Partnership shall exercise the Warrants in full
prior to the close of business, New York City time, on such
date. In the event the Closing shall occur prior to the
Warrant Exercise Date, the Partnership shall exercise the
Warrants in full immediately prior to the Closing. The
Partnership shall not be required to exercise the Warrants in
accordance with this Section 2.3(a) unless on or prior to the
Warrant Exercise Date or the Closing Date, as the case may
be, it shall have received from Parent or Holdco Sub
immediately available funds in an amount equal to
$28,356,015, which is equal to the aggregate exercise price
for the Warrants (the Aggregate Exercise Price ), or until
immediately available funds in an amount equal to the
Aggregate Exercise Price have been transferred to the Company
by Parent on behalf of the Partnership. The obligation of
the Partnership to repay such advance shall be evidenced by
a note in the form of Exhibit E (the Note ), which note
shall be secured by a pledge of the shares of Company Class
A Common Stock issued upon exercise of the Warrants in the
form of Exhibit F (the Pledge ). The Partnership shall pay
to Parent interest on the Aggregate Exercise Price from (and
including) the date on which the Aggregate Exercise Price is
advanced to (or on behalf of) the Partnership to (but
excluding) the date the Note (and such interest) is repaid.
Such interest, if any, and the Aggregate Exercise Price shall
be payable by the Partnership to Parent, without offset, at
the earlier to occur of (i) the Closing and (ii) the date
this Agreement is terminated in accordance with its terms
(the Termination Date ). Such interest shall accrue (A) for
any period ending on or prior to July 25, 1998, at a rate
equal to the sum of the Applicable Eurodollar Margin and
the Eurodollar Rate at the time in effect under the Credit
Agreement, assuming a 30-day Interest Period (as defined in
the Credit Agreement) (such interest rate from time to time
in effect, the Revolving Interest Rate ; provided, however,
that no amendment to the Credit Agreement shall have the
effect of modifying the Revolving Interest Rate hereunder)
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 under
the Note (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 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.
ii. Stock Splits, Dividends, etc. In the event that, between
the date of this Agreement and the Closing, the outstanding
shares of Parent Class A Common Stock or Holdco Sub Class A
Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Share Exchange
Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
d. Closing Date. Unless this Agreement shall have been
terminated and the transactions herein contemplated
shall have been abandoned pursuant to Section 7.1(a) and
subject to the satisfaction or waiver of the conditions
set forth in Article V, the closing (the Closing ) of
the transactions contemplated by Sections 2.1 and 2.2
will take place on the second Business Day following
satisfaction or waiver of the conditions set forth in
Article V, or at such other date and time as the parties
shall otherwise mutually agree, at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017 at 10:00 a.m., New York City time
(the date on which the Closing occurs (the Closing
Date )).
i. At the Closing, the following actions shall occur:
(1) Parent or Holdco Sub shall pay or cause to be paid
the aggregate Cash Election Share Price to or for the
account of the Cash Electing Partners and Transferor III
by wire transfer to such bank account (the Designated
Bank Account ) as the Partners' Representative shall
designate in writing no later than two Business Days
prior to the Closing Date;
(2) At the effective time of the Merger, Holdco Sub
shall issue shares of Holdco Sub Class A Common Stock to
the Share Electing Partners and the Share Electing
Transferors as directed by the Partners' Representative
in writing no later than two Business Days prior to the
Closing Date;
(3) The parties shall execute and deliver, as
applicable, (A) the Restated Partnership Agreement, (B)
the Standstill Agreement and (C) the Registration Rights
Agreement;
(4) Each of the Partners and the Transferors shall
deliver to Parent and Holdco Sub or their designee such
documents as Parent and Holdco Sub may reasonably
request, including certificates for all shares of
Company Class A Common Stock owned by the Partnership,
to evidence the transfer to Parent and Holdco Sub or
their designee of good and marketable title in and to
all of the Partnership Interests being conveyed pursuant
to this Agreement and the absence of any Liens or
Restrictions on such shares of Company Class A Common
Stock (other than any Lien or Restriction imposed
pursuant to the terms of this Agreement), and all the
shares of Company Class A Common Stock owned by the
Transferors free and clear of any Lien or Restriction
(other than any Lien or Restriction imposed pursuant to
the terms of this Agreement); and
(5) Each party shall take such other actions, and shall
execute and deliver such other instruments or documents,
as shall be required under Article V.
e. Interest Payment. In the event the Closing does not
occur on or prior to May 25, 1998 (the Interest Accrual
Date ), Parent shall pay to the Partners and the
Transferors at the Closing by wire transfer to the
Designated Bank Account a lump-sum cash amount equal to
the interest accrued (a) at the Revolving Interest Rate
from (and including) the Interest Accrual Date to (but
excluding) the six month anniversary of the Interest
Accrual Date and (b) at a rate of 10% per annum from and
including such six month anniversary to (but excluding)
the Closing Date, in each case on the aggregate cash (or
cash equivalent) value of the purchase price payable by
Parent and Holdco Sub hereunder (assuming for purpose of
such calculation that all the Partners and the
Transferors are Cash Electing Partners). Such interest
shall be payable only if the Closing occurs.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
a. Representations and Warranties of Parent and Holdco
Sub. Each of Parent and Holdco Sub represents and
warrants to the Partnership, the Partners and the
Transferors as of the date hereof and as of the Closing
Date as follows:
i. Organization, Standing and Corporate Power. Each of Parent
and Holdco Sub is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Holdco
Sub is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) could not
reasonably be expected to have a material adverse effect with
respect to Parent or Holdco Sub.
ii. Corporate Authorization. The execution, delivery and
performance by Parent and Holdco Sub of this Agreement and
the Registration Rights Agreement and the consummation by
Parent and Holdco Sub of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary
corporate action, including by resolution of the respective
Boards of Directors of Parent and Holdco Sub. Each of this
Agreement and the Registration Rights Agreement has been, or
in the case of the Registration Rights Agreement, will be
duly executed and delivered by each of Parent and Holdco Sub
and constitutes or will constitute a valid and binding
agreement of each of Parent and Holdco Sub, enforceable
against Parent or Holdco Sub, as applicable, 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). The shares of Holdco Sub Class A Common
Stock issued to the Share Electing Partners and the
Transferors pursuant to Section 2.2(b), when issued in
accordance with the terms hereof, will be duly authorized,
validly issued, fully paid and nonassessable and not subject
to preemptive rights, and will be free and clear of any Lien
or Restriction (other than any Lien or Restriction imposed
pursuant to the terms of this Agreement).
iii. Investment Intention. Each of Parent and Holdco Sub is
acquiring the Partnership Interests for its own account as
principal for investment and not with a view to resale or
distribution or with any present intention of distributing or
selling the same. Each of Parent and Holdco Sub is fully
aware that such Partnership Interests have not been
registered under the Securities Act or under any applicable
state securities laws, and are being offered and sold in
reliance on exemptions from the registration requirements of
the Securities Act and all such laws. Parent is and at the
Closing Holdco Sub will be an accredited investor as such
term is defined in Regulation D promulgated under the
Securities Act. Parent is and at the Closing Holdco Sub will
be able to bear the economic risk of the investment in such
Partnership Interests and has such knowledge and experience
in financial and business matters, and knowledge of the
business of the Partnership, as to be capable of evaluating
the merits and risks of a prospective investment.
iv. Parent Capitalization. As of the date hereof, the
authorized capital stock of Parent consists of (i) 45,020,000
shares of preferred stock, par value $.01 per share ( Parent
Preferred Stock ), of which (w) 10,000 shares have been
designated Series A Preferred Stock, par value $.01 per share
( Parent Series A Preferred Stock ), (x) 10,000 shares have
been designated Series B Preferred Stock, par value $.01 per
share ( Parent Series B Preferred Stock ), (y) 25,000,000
shares have been designated Series C Preferred Stock, par
value $.01 per share ( Parent Series C Preferred Stock ), and
(z) 3,000,000 shares have been designated Series D Junior
Participating Preferred Stock, par value $.01 per share
( Parent Series D Preferred Stock ) and (ii) (x) 250,000,000
shares of Class A Common Stock, par value $.01 per share
( Parent Class A Common Stock ), and (y) 65,000,000 shares of
Class B Common Stock, par value $.01 per share ( Parent Class
B Common Stock and together with Parent Class A Common
Stock, Parent Common Stock ). It is understood and agreed
by the Parties that on or prior to the Closing Date the
certificate of incorporation of Parent may be amended to
convert all outstanding shares of Parent Class B Common Stock
into shares of Parent Class A Common Stock and to eliminate
the Parent Class A Common Stock. As of the close of business
on December 31, 1997, there were (i) no shares of Parent
Series A Preferred Stock, no shares of Parent Series B
Preferred Stock, 6,628,566 shares of Parent Series C
Preferred Stock and no shares of Parent Series D Preferred
Stock issued and outstanding; (ii) 95,587,010 shares of
Parent Class A Common Stock and 1,393,867 shares of Parent
Class B Common Stock issued and outstanding; (iii) 6,800,000
shares of Class A Common Stock held in the treasury of
Parent; (iv) 5,391,311 shares of Parent Class A Common Stock
reserved for issuance upon exercise of stock options of
Parent outstanding or which may be granted pursuant to
employee stock option and similar plans; and (v) 10,435,231
shares of Parent Class A Common Stock reserved for issuance
upon the conversion of Parent Class B Common Stock and Parent
Series C Preferred Stock. Except as described in the
immediately preceding sentence and except for the preferred
share purchase rights relating to the Parent Series D
Preferred Stock, there are no securities of Parent or Holdco
Sub (or their affiliates) currently outstanding that are
convertible into or exercisable or exchangeable for shares of
Parent Class A Common Stock. On the Closing Date, all
outstanding shares of Parent's capital stock will be duly
authorized, validly issued, fully paid and non-assessable.
v. Holdco Sub Capitalization. As of the date hereof, the
authorized capital stock of Holdco Sub consists of 1,000
shares of Holdco Sub Class A Common Stock. As of the close
of business on January 23, 1998, there were 1,000 shares of
Holdco Sub Class A Common stock issued and outstanding.
Parent owns and, immediately prior to the Closing, Parent
will own, of record and beneficially, 100% of the outstanding
shares of Holdco Sub's capital stock, free and clear of all
Liens and Restrictions other than those set forth in this
Agreement and in the Merger Agreement. As of the date hereof
there are, and immediately prior to the Closing there will
be, no warrants, options, rights, convertible securities or
any other agreements, arrangements or commitments (other than
this Agreement and the Merger Agreement) which obligate
Parent or Holdco Sub to issue, sell or exchange any shares of
Holdco Sub's capital stock to any Person (it being understood
that at the effective time of the Merger, certain securities
convertible into or exercisable or exchangeable for shares of
Parent Common Stock will become convertible into shares of
Holdco Sub Common Stock), other than shares of Parent Class
A Common Stock, which are convertible into shares of Parent
Class B Common Stock at any time on a one-for-one basis, and
shares of Parent Class B Common Stock, which are convertible
into shares of Parent Class A Common Stock at any time on a
one-for-one basis. The certificate of incorporation, by-laws
and equity capital structure of Holdco Sub are, and at the
Closing will be, identical in all material respects to those
of Parent except as required by Section 251(g) of the DGCL.
The parties acknowledge that the capitalization of Holdco Sub
will be modified in connection with the Merger as described
in the Merger Agreement. On the Closing Date, all
outstanding shares of Holdco Sub's capital stock will be duly
authorized, validly issued, fully paid and nonassessable.
vi. No Conflict. Other than (i) the filing of a Form 3 and a
Report on Schedule 13D under the Exchange Act, (ii)
compliance with any applicable requirements of the HSR Act,
(iii) compliance with any applicable requirements of the
United States Department of Transportation (the DOT ) and
the European Commission, (iv) listing the Exchange Shares for
quotation on the NASDAQ National Market and (v) the filing of
a certificate of merger with respect to the Merger with the
Secretary of State of the State of Delaware and appropriate
documents in other states where Parent is qualified to do
business, no filing with, and no permit, authorization,
consent or approval of, any Governmental Authority is
necessary for the execution of this Agreement or the
Registration Rights Agreement by Parent or Holdco Sub and the
consummation by Parent and Holdco Sub of the transactions
contemplated hereby and thereby, except for such filings the
failure of which to be made, individually or in the
aggregate, could not reasonably be expected to have a
material adverse effect on Parent, Holdco Sub and their
subsidiaries, taken as a whole, or to prevent or materially
delay the consummation of the transactions contemplated
hereby and thereby. Neither the execution and delivery of
this Agreement or the Registration Rights Agreement by Parent
or Holdco Sub nor the consummation by Parent or Holdco Sub of
the transactions contemplated hereby or thereby, nor
compliance by Parent or Holdco Sub with any of the provisions
hereof or thereof (i) conflicts with or results in any breach
of the charter or bylaws of Parent or Holdco Sub, (ii)
contravenes, conflicts with or would constitute a violation
of any provision of any law, regulation, judgment,
injunction, order or decree binding upon Parent or Holdco
Sub, or (iii) constitutes a default under or gives rise to
any right of termination, cancellation or acceleration of any
right or obligation of Parent or Holdco Sub or any of their
respective subsidiaries or to a loss of any benefit to which
Parent or Holdco Sub or any of their respective subsidiaries
is entitled under any provision of any agreement, contract or
other instrument binding on Parent or Holdco Sub or any of
their respective subsidiaries or any license, franchise,
permit or other similar authorization held by Parent or
Holdco Sub or any of their respective subsidiaries, except,
in the case of clauses (ii) and (iii), for any such
contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that would not have a
material adverse effect on Parent or Holdco Sub and their
respective subsidiaries taken as a whole. The Merger will be
consummated without the vote of the stockholders of Parent,
pursuant to the provisions of Section 251(g) of the DGCL.
vii. SEC Filings.
(i) Parent has timely filed all reports, schedules, forms,
statements and other documents required by the Exchange Act to be
filed with the Securities and Exchange Commission (the SEC )
since December 31, 1995 (the Parent SEC Documents ).
(ii) As of its filing date, each Parent SEC Document did not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, except to the extent that such statements
have been modified or superseded by a later filed Parent SEC
Document.
viii. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim
financial statements of Parent included in Parent's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the Parent 10-K ) and its Quarterly
Report on Form 10-Q for the fiscal quarter ended
September 30, 1997 have been prepared in accordance with
generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated
subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim
financial statements).
ix. No Business Activities. (i) Holdco Sub has not conducted
any activities other than in connection with the organization
of Holdco Sub and Merger Sub, the negotiation and execution
of this Agreement and the Merger Agreement and the
consummation of the transactions contemplated hereby and
thereby.
(ii) As of the date of this Agreement Holdco Sub has, and as of
immediately prior to the Closing Holdco Sub will have, no liabilities
or obligations of any nature whatsoever, whether fixed, accrued,
contingent, determined, determinable or otherwise and whether pursuant
to contracts or otherwise (collectively, Liabilities ), except those
arising under or in connection with this Agreement, the Merger
Agreement, the Standstill Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated hereby
and thereby.
x. No Required Vote. No vote of the holders of any class of
the outstanding capital stock of Parent is necessary to
approve this Agreement, the Merger or the Transactions.
xi. No Broker. No investment banker, broker, finder,
consultant or intermediary is entitled to be paid any
investment banking, brokerage, finder's or similar fee or
commission by Parent or Holdco Sub in connection with this
Agreement or the Transactions.
b. Representations and Warranties of the Partnership and
the Partners. The Partnership and each Partner,
severally and not jointly, represents and warrants to
Parent and Holdco Sub as of the date hereof and as of
the Closing Date as follows:
i. Organization, Standing and Power of the Partnership. The
Partnership is duly organized, validly existing and in good
standing under the laws of the State of Texas and has the
requisite partnership power and authority to carry on its
business as now being conducted. The Partnership is duly
qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) could not
reasonably be expected to have a material adverse effect with
respect to the Partnership. The Partnership has delivered to
Parent complete and correct copies of its certificate of
limited partnership and the Partnership Agreement, in each
case as amended to the date of this Agreement.
ii. Partnership Authorization. The execution, delivery and
performance by the Partnership of this Agreement and the
consummation by the Partnership of the transactions
contemplated hereby have been duly authorized by all
necessary partnership action, and by all necessary action on
the part of each Partner. This Agreement has been duly
executed and delivered by the Partnership and constitutes a
valid and binding agreement 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).
iii. Partnership Capitalization. The authorized and issued
equity capital of the Partnership consists solely of the
general partnership interests and limited partnership
interests described on Schedule 3.2(c). The Partners own,
and at the Closing Date the Partners will own, of record and
beneficially, collectively 100% of the general and limited
partnership interests of the Partnership, free and clear of
all Liens and Restrictions (other than any Liens or
Restrictions imposed pursuant to the terms of this Agreement
or disclosed on Schedule 3.2(c)). Immediately following the
transactions contemplated by this Agreement, no Person (other
than Holdco Sub and Parent) will own any interest in the
Partnership. There are no warrants, options, rights,
convertible securities or other agreements, arrangements or
commitments which obligate the Partnership to admit any
Person to the Partnership or to issue or dispose of any
equity interest in the Partnership except for this Agreement.
iv. Ownership of Shares of Company Common Stock; No Other
Operations. The Partnership is the direct and record owner
of (i) 5,263,188 shares of Company Class A Common Stock, (ii)
no shares of Class B Common Stock, par value $.01 per share,
of the Company ( Company Class B Common Stock and, together
with the Company Class A Common Stock, the Company Common
Stock ), (iii) the $7.50 Warrant, which may be exercised as
to 2,298,134 shares of Company Class A Common Stock at a
price of $7.50 per share and the $15.00 Warrant, which may be
exercised as to 741,334 shares of Company Class A Common
Stock at a price of $15.00 per share and which Warrants
expire on April 27, 1998 (it being understood that at
Closing, instead of the Warrants, the Partnership shall own
all the shares of Company Class A Common Stock issued upon
exercise of the Warrants), and (iv) no warrants to purchase
shares of Company Class B Common Stock. Except as set forth
in the immediately preceding sentence, (i) the Partnership
does not own or have the right to acquire, whether presently
exercisable or at any time in the future, any shares of
Company Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Company Common
Stock or any other equity securities of the Company and (ii)
the Partnership does not own any other assets or conduct any
other business. No Person has the right to acquire, and
neither the Partnership nor any of the Partners is a party to
any contract, understanding, commitment, arrangement or other
agreement to sell, transfer or otherwise dispose of, any
shares of Company Common Stock owned by or issuable to the
Partnership. To the best knowledge of the Partnership and
the Partners, based solely on inquiry of appropriate officers
of the Company, as of December 31, 1997, the shares of
Company Class A Common Stock described in the first sentence
of this Section 3.2(d), assuming exercise of the Warrants,
constituted 13.9% of the outstanding shares of Company Common
Stock and 50.4% of the Voting Power represented by the
outstanding shares of Company Common Stock. To the best
knowledge of the Partnership and the Partners, based solely
on inquiry of appropriate officers of the Company, after
giving effect to the issuance of shares of Company Common
Stock pursuant to all securities described in the second
sentence of Section 3.3(h), such shares would have
constituted 9.6% of the outstanding shares of Company Common
Stock and 43.9% of the Fully Diluted Voting Power at December
31, 1997. The Partnership has, and at the Closing will have,
good and valid title to the shares of Company Class A Common
Stock described in the first sentence of this Section 3.2(d)
and the shares of Company Class A Common Stock issuable upon
exercise of the Warrants, free and clear of any Liens or
Restrictions, except those arising under this Agreement. The
Partnership has the sole voting power, and sole power of
disposition, with respect to all of such shares of Company
Class A Common Stock and the Warrants, and there are no
restrictions on the Partnership's ability to transfer such
shares or the Warrants.
v. Absence of Undisclosed Liabilities. At the Closing, the
Partnership will have no Liabilities, except those arising
out of the Transactions.
vi. No Conflict. Other than (i) the filing of an amendment to
its Report on Schedule 13D under the Exchange Act and (ii)
compliance with any applicable requirements of the HSR Act,
no filing with, and no permit, authorization, consent or
approval of, any Governmental Authority is necessary for the
execution of this Agreement by the Partnership or the
consummation by the Partnership or any Partner of the
transactions contemplated hereby, except for such filings the
failure of which to be made, individually or in the
aggregate, could not reasonably be expected to have a
material adverse effect on the Partnership or any Partner or
to prevent or materially delay the consummation of the
transactions contemplated hereby. Neither the execution and
delivery of this Agreement by the Partnership nor the
consummation by the Partnership of the transactions
contemplated hereby nor compliance by the Partnership with
any of the provisions hereof conflicts with or results in any
breach of any applicable trust or other organizational
documents applicable to the Partnership, including the
Partnership Agreement.
c. Representations and Warranties of the Partners and the
Transferors. Each Partner (which term shall for
purposes of this Section 3.3 include the Transferors)
severally, and not jointly, represents and warrants to
Parent and Holdco Sub as to itself, in the case of
Sections 3.3(a) through (f), as of the date hereof and
as of the Closing Date as follows:
i. Organization, Standing and Power of each of the Partners.
Such Partner has the legal capacity (in the case of
individual Partners) or, as the case may be, the corporate or
partnership power and authority to enter into and perform all
of such Partner's obligations under this Agreement and the
Standstill Agreement. Neither the execution and delivery of
this Agreement or the Standstill Agreement by such Partner
nor the consummation by such Partner of the transactions
contemplated hereby nor compliance by such Partner with the
provisions hereof or of the Standstill Agreement conflicts
with or results in any breach of any applicable trust or
other organizational documents applicable to such Partner or
of the Partnership Agreement or constitutes a dissolution
event under the Partnership Agreement or otherwise. There is
no beneficiary or holder of voting trust certificates or
other interest of any trust of which such Partner is trustee
whose consent is required for the execution and delivery of
this Agreement or the consummation of the transactions
contemplated hereby. If such Partner is married and such
Partner's Partnership Interest or Allocable Company Class A
Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes
a valid and binding agreement of, such Partner's spouse,
enforceable against such Person in accordance with its terms.
ii. Partner Authorization. The execution, delivery and
performance of this Agreement and the Standstill Agreement
and the consummation by such Partner of the transactions
contemplated hereby and thereby have been duly authorized by
such Partner (and if necessary, by any stockholders or
partners of such Partner). This Agreement has been and the
Standstill Agreement will be as of the Closing Date duly and
validly executed and delivered by such Partner and
constitutes or will constitute a valid and binding agreement
of such Partner, enforceable against such Partner 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).
iii. Title to Partnership Interests. Such Partner is the legal
and valid owner and, in the case of the Transferors, the
direct and record owner of, and, except as set forth on
Schedule 3.2(c), has good and valid title, free and clear of
any Liens or Restrictions to, its Partnership Interest or, in
the case of the Transferors, the shares of Company Class A
Common Stock owned by it and set forth on Schedule 2.2(b).
Such Partner's allocable interest in the total number of
shares of Company Class A Common Stock and the Warrants owned
by the Partnership is set forth on Schedule 2.2(a) in the
case of Cash Electing Partners (which term shall for purposes
of this Section 3.3 include Transferor III) and Schedule
2.2(b) in the case of Share Electing Partners (which term
shall for purposes of this Section 3.3 include Transferor I
and Transferor II).
iv. Investment Intention. Such Partner, if it is a Share
Electing Partner, is acquiring the Exchange Shares to be
acquired by it for its own account as principal for
investment and not with a view to resale or distribution or
with any present intention of distributing or selling the
same. Such Share Electing Partner is fully aware that such
Exchange Shares have not been registered under the Securities
Act or under any applicable state securities laws, and are
being offered and sold in reliance on exemptions from the
registration requirements of the Securities Act and all such
laws. Such Share Electing Partner is an accredited
investor as such term is defined in Regulation D promulgated
under the Securities Act. Such Share Electing Partner is
able to bear the economic risk of the investment in such
Exchange Shares and has such knowledge and experience in
financial and business matters, and knowledge of the business
of Parent (and after the Merger, Holdco Sub), as to be
capable of evaluating the merits and risks of a prospective
investment.
v. Limitations on Transferability. Such Partner, if it is a
Share Electing Partner, acknowledges that it may not transfer
any of the Exchange Shares received by it pursuant hereto
unless and until the same are registered under the Securities
Act and any applicable state securities laws, or unless an
exemption from such registration is available and that it may
transfer such Exchange Shares only in accordance with the
terms of this Agreement and the Standstill Agreement.
vi. Legend. In furtherance of the agreements contained in
Sections 3.3(d) and (e), each of the Share Electing Partners
agrees that the certificate or certificates representing the
Exchange Shares beneficially owned by it shall bear the
following legend:
The Shares represented by this Certificate are subject to the
provisions of the Investment Agreement, dated as of January 25,
1998, among Northwest Airlines Corporation, Newbridge Parent
Corporation, Air Partners, L.P., the Partners of Air Partners,
L.P. identified on the signature pages thereof, Bonderman Family
Limited Partnership, 1992 Air, Inc. and Air Saipan, Inc. and the
Standstill Agreement, dated as of __________ __, 1998, between
Northwest Airlines Corporation and the Holders identified on the
signature pages thereof (collectively, the Agreements ), which
provide that (A) the Holder is prohibited from transferring these
shares as provided in the Agreements and (B) the shares
represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under the securities laws
of any state and may not be sold, assigned, transferred, pledged
or otherwise disposed of except in compliance with, or pursuant to
an exemption from, the requirements of such Act or such laws.
Holdco Sub will exchange certificates without the foregoing legend upon
the request of a Share Electing Partner at such time as the holder
thereof may sell such shares without registration of such sale under
the Securities Act, as evidenced (if requested by Holdco Sub) by an
opinion of counsel to such holder.
vii. No Broker. No investment banker, broker, finder,
consultant or intermediary is entitled to be paid any
investment banking, brokerage, finder's or similar fee or
commission by the Partnership, any Partner or any Transferor
in connection with this Agreement or the Transactions for
which any of the Partnership, Parent or Holdco Sub would be
liable following the Closing.
viii. Company Capitalization. To the best knowledge of the
Partners, based solely on inquiry of appropriate
officers of the Company, the authorized capital stock of
the Company consists of (i) 10,000,000 shares of
Preferred Stock, par value $.01 per share ( Company
Preferred Stock ), and (ii) (x) 50,000,000 shares of
Company Class A Common Stock, (y) 200,000,000 shares of
Company Class B Common Stock and (z) 50,000,000 shares
of Class D Common Stock, par value $.01 per share (the
Company Class D Common Stock ). To the best knowledge
of the Partners, based solely on inquiry of appropriate
officers of the Company, as of the close of business on
December 31, 1997, there were (i) no shares of Company
Preferred Stock, 8,379,464 shares of Company Class A
Common Stock, 50,512,010 shares of Company Class B
Common Stock and no shares of Company Class D Common
Stock issued and outstanding; (ii) no shares of capital
stock held in the treasury of the Company; (iii)
5,991,472 shares of Company Class B Common Stock
reserved for issuance upon exercise of authorized but
unissued stock options of the Company pursuant to the
Company's employee stock option and similar plans; (iv)
7,617,155 shares of Company Class B Common Stock
reserved for issuance upon the conversion of the
Company's outstanding 6-3/4% Convertible Subordinated
Notes due 2006; (v) 10,311,208 shares of Company Class
B Common Stock reserved for issuance upon the conversion
of the Company's outstanding 8-1/2% Convertible
Subordinated Deferrable Interest Debentures due 2020;
(vi) 3,039,468 shares of Company Class A Common Stock
issuable upon exercise of the Warrants; and (vii)
308,343 shares of Company Class B Common Stock issuable
upon exercise of the Warrants. To the best knowledge of
the Partners, based solely on inquiry of appropriate
officers of the Company, except as described in the
immediately preceding sentence, there are no securities
of the Company (or any of its affiliates) currently
outstanding that are convertible into or exercisable or
exchangeable for shares of Company Common Stock other
than (a) options to purchase shares of Company Class B
Common Stock granted in accordance with past practices
pursuant to stock option and similar plans, (b) options
to purchase shares of Company Class B Common Stock
granted pursuant to the Company's 1997 Employee Stock
Purchase Plan, (c) shares of Company Class A Common
Stock, which are convertible into shares of Company
Class B Common Stock or Company Class D Common Stock on
a one-for-one basis and (d) commitments to issue not in
excess of 25,000 shares of Company Class B Common Stock
to correct recordkeeping errors in connection with the
Company's 1994 Employee Stock Purchase Plan. To the
best knowledge of the Partners, based solely on inquiry
of appropriate officers of the Company, on the Closing
Date, all outstanding shares of the Company's capital
stock will be duly authorized, validly issued, fully
paid and non-assessable.
d. Representations and Warranties of the Transferors.
Transferor I, Transferor II and Transferor III are the
direct and record owners of 16,400, 213,110 and 3,702
shares, respectively, of Company Class A Common Stock.
Except as set forth in the immediately preceding
sentence and except in accordance with their rights as
Partners in the Partnership, no Transferor owns or has
the right to acquire, whether presently exercisable or
at any time in the future, any shares of Company Class
A Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Company Class
A Common Stock. No person has the right to acquire, and
no Transferor is a party to any contract, understanding,
commitment, arrangement or other agreement to sell,
transfer or otherwise dispose of, any shares of Company
Class A Common Stock owned by or issuable to such
Transferor. To the best knowledge of the Transferors,
based solely on inquiry of appropriate officers of the
Company, the shares of Company Class A Common Stock
described in the first sentence of this Section 3.4
constituted 0.4% of the outstanding shares of Company
Common Stock and 1.74%% of the Voting Power represented
by the outstanding shares of Company Common Stock as of
December 31, 1997. To the best knowledge of the
Transferors, based solely on inquiry of appropriate
officers of the Company, after giving effect to the
issuance of shares of Company Common Stock pursuant to
all securities described in the second sentence of
Section 3.3(h), such shares would have constituted 0.27%
of the outstanding shares of Company Common Stock and
1.23% of the Fully Diluted Voting Power as of December
31, 1997. The Transferors have, and at the Closing will
have, good and valid title to the shares of Company
Class A Common Stock described in the first sentence of
this Section 3.4, free and clear of any Liens or
Restrictions, except those arising under this Agreement.
Each Transferor has the sole voting power, and sole
power of disposition, with respect to all of such shares
of Company Class A Common Stock and there are no
restrictions on such Transferor's ability to transfer
such shares.
ARTICLE 4.
COVENANTS
a. Covenants of Parent and Holdco Sub.
i. NASDAQ National Market. Parent and Holdco Sub shall use
their reasonable best efforts to cause the shares of Holdco
Sub Class A Common Stock to be issued to the Share Electing
Partners and the Transferors pursuant to Section 2.2(b) to be
approved for quotation on the NASDAQ National Market, subject
to official notice of issuance.
ii. Holdco Sub Board of Directors. (i) As promptly as
practicable following the Closing, the Board of Directors of
Holdco Sub shall take such corporate actions as are necessary
to cause an individual designated by Transferor II and
reasonably acceptable to the Board of Directors of Holdco Sub
to be elected or appointed to the Board of Directors of
Holdco Sub, to serve until the next annual meeting of the
Holdco Sub stockholders; provided, however, that it is hereby
acknowledged that David Bonderman and William S. Price have
been deemed to be acceptable by the Board of Directors of
Holdco Sub for purposes of this Section 4.1(b)(i) and Section
4.1(b)(ii).
(ii) Commencing with the first annual or special meeting of
stockholders of Holdco Sub called for the election of directors to the Board
of Directors of Holdco Sub held following the Closing and at each annual or
special meeting of stockholders of Holdco Sub thereafter called for the
election of directors to the Board of Directors of Holdco Sub so long as, at
the time of such meeting, (A) the Share Electing Partners and the Share
Electing Transferors beneficially own in the aggregate at least 66-2/3% of the
Exchange Shares issued to them at the Closing or (B) the Offeree under Section
4.1(d) shall not have acquired more than 50% of the shares of Company Common
Stock beneficially acquired by Parent and Holdco Sub in the Transactions
(unless in the event of such acquisition an Operating Alliance or Alliance
Agreement shall be in effect and no notice shall have been given by either
party to an Alliance Agreement of its intention to terminate such Alliance
Agreement or the related Operating Alliance), Transferor II shall be entitled
to designate one person who shall be reasonably acceptable to the Holdco Sub
Board of Directors (the "Transferor II Designee") for election to the Board of
Directors of Holdco Sub and Holdco Sub shall nominate and recommend the
Transferor II Designee for election to the Board of Directors of Holdco Sub
and shall use its best efforts to ensure that the Transferor II Designee is
elected to such Board. In the event that any Transferor II Designee shall
cease to serve as a director for any reason, the vacancy resulting thereby
shall be filled by a Person designated by Transferor II and reasonably
acceptable to the Board of Directors of Holdco Sub.
(iii) If at any time (A) the Share Electing Partners and the
Share Electing Transferors beneficially own in the aggregate less than 66-2/3%
of the Exchange Shares issued to them at the Closing or (B) the Offeree under
Section 4.1(d) acquires more than 50% of the shares of Company Common Stock
beneficially acquired by Parent and Holdco Sub in the Transactions, and there
shall not be in effect an Operating Alliance or an Alliance Agreement or
notice shall have been given by either party to an Alliance Agreement of its
intention to terminate such Alliance Agreement or the related Operating
Alliance, (1) Transferor II shall as promptly as practicable cause the
Transferor II Designee to resign from the Board of Directors of Holdco Sub and
(2) the right set forth in Section 4.1(b)(ii) shall not be reinstated
notwithstanding any increase in the number of shares of Holdco Sub Class A
Common Stock held by the Share Electing Partners or the Share Electing
Transferors that would cause such percentage ownership to equal or exceed 66-
2/3%.
(iv) Transferor II hereby agrees that all Transferor II Designees
shall be "Citizens of the United States" as such term is defined in the
Federal Aviation Act of 1958, as amended.
iii. Corporate Structure. Parent and Holdco Sub agree that, for
a period of at least two years following the Closing Date,
they shall not take any action which would cause or permit
the liquidation of Holdco Sub or the merger of Holdco Sub
with or into Parent.
iv. Rights of Offer and Re-Offer. In the event that prior to
the fifth anniversary of the Closing, if Holdco Sub, Parent
or the Partnership (each a Transferring Stockholder ) at any
time intends to sell, transfer or otherwise dispose of
( Transfer ) any shares of Company Class A Common Stock held
by Parent, Holdco Sub or the Partnership as of the Closing
Date to a third person, Holdco Sub shall ensure that the
Transferring Stockholder shall give written notice (a
Transferor's Notice ) to Transferor II (the Offeree )
stating the Transferring Stockholder's intention to make such
Transfer and the number of shares of Company Class A Common
Stock proposed to be transferred (the Offered Securities ).
(1) Upon receipt of the Transferor's Notice, the Offeree
may elect to, and if the Offeree so elects the
Transferring Stockholder shall, negotiate in good faith,
for a period of up to 30 days (such 30 day period, the
Offer Period ) from the date of the receipt by the
Offeree of the Transferor's Notice, the terms of a
transaction in which the Offeree will acquire all of the
Offered Securities. The Transferring Stockholder shall
be under no obligation to accept any offer made by the
Offeree. An offer made by the Offeree or the
Transferring Stockholder shall not be considered to be
an offer for purposes of the remainder of this Section
4.1(d) unless it is a bona fide offer made in good faith
and subject only to such conditions as are customary for
offers of such type and, in the good faith judgment of
Parent or Holdco Sub, reasonably capable of being
satisfied within 60 days of the date of such offer.
(2) If the Offeree does not reach a definitive agreement
with the Transferring Stockholder to purchase all of the
Offered Securities or if the Offeree offers to purchase
less than all of the Offered Securities, the
Transferring Stockholder shall have the right, for a
period of 75 days from the earlier of (A) the expiration
of the Offer Period and (B) the date on which such
Transferring Stockholder shall have received written
notice from the Offeree stating that the Offeree does
not intend to exercise its right to offer to purchase
all of the Offered Securities, to enter into an
agreement to Transfer all or any portion of the Offered
Securities to any third person at a price equal to or
greater than the price offered by the Offeree in its
last offer (the Last Offer ), if any, for the Offered
Securities (the Last Offer Price ); provided, however,
that in the event the Transferring Stockholder notifies
the Offeree that it intends to publicly offer the
Offered Securities or sell the Offered Securities in the
open market, unless the Offeree agrees to pay the
Transferring Stockholder a price per share for all the
Offered Securities at least equal to 100% of the closing
price on the New York Stock Exchange Composite
Transactions Tape on the trading day immediately
preceding the date of the Transferor's Notice), the
Transferring Stockholder shall, for a period of six
months following such notification, be free to sell the
Offered Securities in such an offering or open market
transaction at a price no less than 95% of the market
price at the time of any such sale without regard to
this Section 4.1(d) other than this Section 4.1(d)(iii).
If any portion of the Last Offer Price is proposed to be
paid in a form other than cash, the third person may pay
such consideration in the form proposed or in an amount
of cash equal to the fair market value of such non-cash
consideration, as determined by an independent appraiser
jointly selected by the Transferring Stockholder and the
Offeree (the "Independent Appraiser").
(3) If (A) the proposed purchase price of a third party
transferee for the Offered Securities is less than the
Last Offer Price or (B) such third person offers to buy
fewer Offered Securities than the Offeree had been
offered (but not if such latter offer is at a higher
price than the Last Offer Price), the Transferring
Stockholder shall not Transfer any of the Offered
Securities unless the Transferring Stockholder shall
first reoffer the Offered Securities at such lesser
price or such lesser amount to the Offeree (the
Reoffer ) by giving written notice (the Reoffer
Notice ) to the Offeree of the Transferring
Stockholder's intention to make such Transfer at such
lower price or in such lesser amount (the Reoffer
Price ) and the material terms and conditions of such
proposed Transfer. The Offeree shall then have an
irrevocable option (provided notice of intent to
exercise such option is given within ten days of receipt
of the Reoffer Notice by the Offeree (the Option
Period )), subject to Section 4.1(d)(vi), to purchase
all or such number of the Offered Securities as is set
forth in the Reoffer Notice at the Reoffer Price and on
the other terms and conditions set forth therein;
provided, however, that if any portion of the Reoffer
Price is to be paid in a form other than cash, the
Offeree shall have the option to pay such consideration
in an amount of cash equal to the fair market value of
such non-cash consideration as determined by an
Independent Appraiser, so long as such payment would not
cause the Transferring Stockholder to incur incremental
tax liability from the terms set forth in the Reoffer
Notice, and otherwise in a form of non-cash
consideration determined by an Independent Appraiser to
provide reasonably equivalent economic value (taking
into account tax and credit considerations, as well as
such other considerations as the Independent Appraiser
considers appropriate). If the Offeree does not elect
to purchase all of the Offered Securities at the Reoffer
Price or elects (if permissible because the Transferring
Stockholder shall have consented to the purchase by a
third party of less than all of the Offered Securities)
to purchase less than all of the Offered Securities, the
Transferring Stockholder shall have the right to enter
into an agreement to Transfer the Offered Securities to
such third person or any other third person, on terms at
least as favorable to the Transferring Stockholder as
those specified in the Reoffer Notice, for a period of
75 days following the earlier of (A) the expiration of
the Option Period with respect to the Reoffer or (B) the
date on which the Transferring Stockholder shall have
received written notice from the Offeree stating that it
does not intend to exercise its option to purchase all
of the Offered Securities specified on the terms in the
Reoffer Notice.
(4) If the Offeree exercises its right of Reoffer, the
closing of the purchase of the Offered Securities with
respect to which such right has been exercised shall
take place on the 15th day after the later of (A) the
date the Offeree gives notice of such exercise and (B)
the expiration of such time as the parties may
reasonably require in order to comply with applicable
United States federal and state laws and regulations,
which in no event shall be more than 60 days after the
date specified in clause (A) (or such longer period as
may be necessary to obtain all required governmental
consents or approvals identified in Section 5.1);
provided, however, that in the event that the
Transferor's Notice is received by the Offeree prior to
the date that is six months following the Closing (the
"Initial Period"), no such purchase (nor any negotiated
purchase pursuant to Section 4.1(d)(i)) shall be
required to close prior to the date which is three days
following the last day of the Initial Period. Upon
exercise by the Offeree of its right of Reoffer under
this Section 4.1(d), the Offeree and the Transferring
Stockholders shall be legally obligated to consummate
the purchase contemplated thereby and shall use their
best efforts to make all necessary filings and to secure
any approvals required and to comply as soon as
practicable with all applicable United States federal
and state laws and regulations in connection therewith.
(5) The Transferring Stockholder may determine at any time
prior to the earlier of the execution of a definitive
agreement and the termination of the Option Period not
to Transfer the Offered Securities, in which case all of
the provisions of this Section 4.1(d) shall again become
applicable to any Transfers of shares of Company Class
A Common Stock by the Transferring Stockholders.
(6) The parties agree that all communications from Parent,
Holdco Sub or the Partnership in connection with the
matters set forth in this Section 4.1(d) constitute
material and confidential inside information and shall
not be disclosed by the Offeree to its affiliates or to
any other person without the prior written consent of
Holdco Sub, except as may be required by law in the
written opinion of counsel of the Offeree.
(7) If the Offeree and the Transferring Stockholder do not
reach an agreement to Transfer the Offered Securities to
the Offeree in accordance with the provisions of this
Section 4.1(d) and the Transferring Stockholder shall
not have entered into an agreement to Transfer the
Offered Securities to a third Person in accordance with
the provisions of this Section 4.1(d), the right of
first offer under this Section 4.1(d) shall again apply
in connection with any subsequent Transfer of such
Offered Securities.
v. Purchases of Company Common Stock Prior to the Closing.
Parent agrees to use its best efforts to purchase or
otherwise acquire, concurrently with or prior to the Closing,
such number of shares of Company Common Stock (the "Acquired
Shares"), whether through open market purchases, in
negotiated transactions or otherwise, as is necessary so that
the Voting Power of the Acquired Shares, together with the
Voting Power of the shares of Company Common Stock
beneficially owned by the Partnership and the Transferors,
shall at the Closing constitute at least 50.1% of the Fully
Diluted Voting Power of all holders of Company Common Stock.
b. Covenants of the Partnership, the Partners and the
Transferors.
i. No Solicitation.
(1) From the date of this Agreement until the earlier
of (i) the termination of this Agreement and (ii) the
first anniversary of the Closing, none of the
Partnership (so long as the Partnership is owned and
controlled by the Partners and/or the Transferors) or
any of the Partners (which term shall for purposes of
this Section 4.2(a) include the Transferors) shall,
directly or indirectly, through any partner, officer,
director, employee, representative or agent of the
Partnership or any of the Partners or any of their
affiliates or otherwise, solicit, initiate or encourage
any inquiries, offers or proposals, or any indications
of interest, regarding (A) any merger, reorganization,
share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Company (together with the
transactions described in clauses (B)(1), (D) and (E) of
this Section 4.2(a)(i), a Business Combination ) or the
Partnership, (B) any purchase or sale of all or any
significant portion of the assets of (1) the Company or
(2) the Partnership (it being understood that in the
case of the Partnership any sale of any Company Class A
Common Stock or any portion of the Warrants or the
shares of Company Class A Common Stock issuable upon
exercise thereof shall be deemed a significant portion),
(C) any issuance or other sale or transfer of equity
interests in the Partnership, (D) any issuance or other
sale by the Company of any shares of Company Class A
Common Stock or (E) any issuance or other sale by the
Company of 5% or more (in any transaction or series of
transactions) of any other class of equity securities of
the Company or any of its subsidiaries (any of the
foregoing inquiries, offers or proposals enumerated in
clauses (A) through (E) being referred to herein as an
Acquisition Proposal ), or participate in negotiations
or discussions with, or provide any nonpublic
information to, any Person (including the Company)
relating to any Acquisition Proposal. Without limiting
the foregoing, neither the Partnership nor the Partners
shall take any action that, in any such case, is
intended to or could reasonably be expected to (w)
prevent, (x) delay or postpone, (y) impede, frustrate or
interfere with (in the case of this clause (y) in a
manner that could reasonably be expected to
substantially deprive Parent and Holdco Sub of the
benefits of) the Transactions or the entry by the
Company and Northwest Airlines, Inc. into a strategic
worldwide operating alliance between them (an Operating
Alliance ) or the execution by the Company and Parent of
any agreement contemplating the establishment of an
Operating Alliance (an Alliance Agreement ) or (z)
cause the Fully Diluted Voting Power represented by the
shares of Company Class A Common Stock held by the
Partnership and the Transferors to be less than that
percentage of the Fully Diluted Voting Power of the
Company represented by such shares on the date of this
Agreement.
(2) The Partnership and the Partners shall notify
Parent and Holdco Sub as promptly as practicable if any
Acquisition Proposal is made and shall in such notice
indicate in reasonable detail the identity of the Person
making such Acquisition Proposal and the terms and
conditions of such Acquisition Proposal.
(3) The Partnership and each of the Partners shall
immediately cease any existing discussions or
negotiations with any Persons (other than Parent and
Holdco Sub) with which the Partnership or any Partner
may have conducted discussions or negotiations
heretofore with respect to any Acquisition Proposal.
The Partnership and each of the Partners agree not to
release (by waiver or otherwise) any third party from
the provisions of any confidentiality or standstill
agreement to which the Partnership or any Partner is a
party. The Partners represent and warrant to Parent
that, as of the time of execution, of this Agreement
neither the Partnership nor any Partner is involved in
any discussions or negotiations with any Person (other
than Parent and Holdco Sub) relating to or that could
reasonably be expected to lead to any Acquisition
Proposal.
(4) The Partnership and each of the Partners shall
ensure that the partners, officers, directors and
employees of the Partnership and each Partner and their
respective subsidiaries and any investment banker or
other advisor or representative retained by the
Partnership or any Partner are aware of the restrictions
described in this Section 4.2(a).
ii. Restriction on Transfer of Company Shares, Proxies and Non-
Interference; Restriction on Withdrawal. Neither the
Partnership nor any Partner or Transferor shall, directly or
indirectly, without the prior written consent of Parent: (i)
except pursuant to or as expressly contemplated hereby, offer
for sale, sell (including short sales), transfer, tender,
pledge, encumber, assign or otherwise dispose of (including
by gift), or enter into any contract, option or other
arrangement or understanding (including any profit-sharing
arrangement) with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of, (A) any or all of the shares of
Company Class A Common Stock owned by it (or, in the case of
any Partner, allocable to it) or the Warrants (or, in the
case of any Partner, its allocable interest therein and in
the shares of Company Class A Common Stock issuable upon the
exercise thereof) or (B) in the case of any Partner, all or
any portion of its Partnership Interest, or any interest in
any thereof; (ii) except as expressly contemplated hereby,
grant any proxies or powers of attorney (other than to a
Partner or Transferor), deposit any shares of Company Class
A Common Stock into a voting trust or enter into any other
voting arrangement with respect to any shares of Company
Class A Common Stock; (iii) take any action that would make
any representation or warranty of the Partnership or any
Partner or Transferor contained herein untrue or incorrect or
have the effect of preventing or disabling the Partnership or
any Partner or Transferor from performing its obligations
under this Agreement; or (iv) in the case of the Partners,
withdraw any of its Allocable Company Class A Shares (or its
allocable portion of the Warrants) from the Partnership or
elect to have any of its Allocable Company Class A Shares
distributed to it; or commit or agree to take any of the
foregoing actions; provided, however, that in the event that
(i) a third party commences a bona fide tender offer for
shares of Company Class A Common Stock, (ii) neither the
Partnership nor any Partner or Transferor is in breach in any
material respect of its representations and warranties or its
obligations (including its obligation to effect the Closing)
under this Agreement and (iii) all of the other conditions to
Parent's and Holdco Sub's obligations to close the
Transactions set forth in Sections 5.1 and 5.2 have been
satisfied, unless Parent and Holdco Sub cause the Closing to
occur within five Business Days following receipt of written
notice from the Partnership or any of the Transferors of
their intention to tender their shares, the Partnership and
the Transferors will be permitted to tender their shares of
Company Class A Common Stock in such tender offer, unless
such Closing shall not have occurred as a result of facts or
occurrences not within the control of Parent and Holdco Sub
(including the failure of any of the conditions set forth in
Section 5.1 or Section 5.3 to be satisfied).
iii. Voting. The Partnership, each Transferor and each Partner
(with respect to its right to direct the vote of the shares
of Company Class A Common Stock owned by the Partnership in
accordance with the terms of the Partnership Agreement)
hereby agree that, during the time this Agreement is in
effect, at any meeting of the stockholders of the Company (or
at any adjournments or postponements thereof), however
called, or in any other circumstances upon which the
Partnership's or such Transferor's vote, consent or other
approval is sought or otherwise eligible to be given, the
Partnership, each Transferor and such Partners shall vote (or
cause to be voted) the shares of Company Class A Common Stock
owned by the Partnership or such Transferor, as the case may
be, (i) against any action or agreement that would result in
a breach in any material respect of any covenant,
representation or warranty or any other obligation or
agreement of the Partnership or the Partners or such
Transferor under this Agreement; and (ii) except as otherwise
agreed to in writing in advance by Parent, against the
following actions: (A) any Business Combination (other than
a Business Combination with Parent or its affiliates); and
(B) (1) any change in the majority of the board of directors
of the Company; (2) any material change in the present
capitalization of the Company or any amendment of the
Company's Certificate of Incorporation or By-laws; (3) any
other material change in the Company's corporate structure or
business; (4) any other action which is intended, or could
reasonably be expected, to (x) prevent, (y) delay or postpone
or (z) impede, frustrate or interfere with (in the case of
this clause (z), in a manner that could reasonably be
expected to substantially deprive Parent and Holdco Sub of
the material benefits of any of) the Transactions or the
entry by the Company and Northwest Airlines, Inc. into an
Operating Alliance or their execution of an Alliance
Agreement, or (5) any action that would cause the Fully
Diluted Voting Power represented by the shares of Company
Class A Common Stock held by the Partnership and the
Transferors to be less than that percentage of the Fully
Diluted Voting Power of the Company represented by such
shares on the date of this Agreement other than grants by the
Company to its employees in accordance with its past
practices of options and other stock-based compensation.
Neither the Partnership nor any Partner or Transferor shall
enter into any agreement or understanding with any Person or
entity prior to the termination of this Agreement to vote or
give instructions after such termination in a manner
inconsistent with clauses (i) or (ii) of the preceding
sentence.
iv. Proxy. The Partnership (and, to the extent provided by the
Partnership Agreement, the Partners) and each Transferor
hereby grant to, and appoint, Robert L. Friedman and any
other designee of Parent, individually, its irrevocable proxy
and attorney-in-fact (with full power of substitution) to
vote the shares of Company Class A Common Stock owned by the
Partnership or such Transferor as indicated in, and solely
for the purposes of, Section 4.2(c). The Partnership (and
the Partners) and each Transferor intend this proxy to be
irrevocable and coupled with an interest and will take such
further action and execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby
revoke any proxy previously granted by it with respect to the
matters set forth in Section 4.2(c) with respect to the
shares of Company Class A Common Stock owned by the
Partnership. Notwithstanding the foregoing, Parent agrees
that the proxy granted by this Section 4.2(d) shall be deemed
to be revoked upon the termination of this Agreement in
accordance with its terms.
v. Tax Representations Letter. Each of the Share Electing
Partners and the Transferors agrees that it will provide to
Simpson Thacher & Bartlett and to Kelly, Hart & Hallman such
representations and warranties as may be required for the
delivery of the tax opinions referred to in Sections 5.2(e)
and 5.3(c).
vi. No Conversions. The Partnership and each Transferor agree
not to convert any shares of Company Class A Common Stock
into shares of Company Class B Common Stock.
vii. Binding Obligations. Notwithstanding, and without in any
way limiting, any other provision of this Agreement, the
Partnership, each of the Partners and each Transferor
acknowledges that, subject to the satisfaction (or waiver by
them) of the conditions set forth in Sections 5.1 and 5.3,
their obligations to consummate the Transactions, including
the exchange of the Partnership Interests and the transfer of
beneficial ownership of the Company Class A Common Stock
owned by the Partnership, and the exchange of the shares of
Company Class A Common Stock owned by the Transferors, are
absolute and unconditional and shall not terminate except in
accordance with Section 7.1, irrespective of, without
limitation, any receipt by the Company of an Acquisition
Proposal or any resolution by the Board of Directors of the
Company to approve a Business Combination or otherwise.
viii. Transfer of Shares of Holdco Sub Class A Common Stock.
Each of the Share Electing Partners and the Transferors
agrees that it shall not, directly or indirectly, offer,
sell, transfer, tender, pledge or encumber, assign or
otherwise dispose of any Exchange Shares until the date
that is two years from the Closing Date, other than in
connection with bona fide pledges of such Exchange
Shares to secure bona fide borrowings or in connection
with bona fide hedging transactions executed by
registered broker-dealers; provided, however, that the
Share Electing Partners and the Transferors shall be
permitted to offer, sell, transfer, tender, pledge or
encumber, assign or otherwise dispose of, during such
two-year period (i) in the aggregate, such percentage of
the aggregate number of Exchange Shares issued to the
Share Electing Partners and the Transferors at the
Closing as is equal to the percentage of the aggregate
shares of Holdco Sub Class A Common Stock beneficially
owned by Alfred Checchi, Gary Wilson and Richard Blum on
the Closing Date that are sold, transferred, assigned or
otherwise actually disposed of by Alfred Checchi, Gary
Wilson and Richard Blum in the aggregate during such
two-year period; (ii) in the event that the Offeree
acquires Offered Securities under Section 4.1(d), in the
aggregate, such percentage of the aggregate number of
Exchange Shares issued to the Share Electing Partners
and the Transferors at the Closing as is represented by
the percentage such Offered Securities acquired by the
Offeree bears to the total number of shares of Company
Class A Common Stock the beneficial ownership of which
is acquired by Parent and Holdco Sub at the Closing and
(iii) Exchange Shares to one or more of its affiliates
that is directly or indirectly controlled by it.
ix. No Amendments. The Partnership and the Partners shall not
agree to amend, supplement or otherwise modify or terminate
in any manner or waive any provision of the Partnership
Agreement, the Warrants, the Subscription and Stockholders'
Agreement, dated as of April 27, 1993, among the Partnership,
Air Canada and the Company, as amended through the date of
this Agreement, or the Amended and Restated Registration
Rights Agreement, dated as of April 19, 1996, among the
Partnership, Air Canada and the Company or enter into any
other agreement with the Company relating to the Warrants or
the shares of Company Class A Common Stock beneficially owned
by the Partnership, without the prior written consent of
Parent.
(j) Release of Partnership from Certain Obligations. In the
event that the Company receives a bona fide proposal (i) to undertake a
transaction described in clause (A) of the definition of Business Combination
set forth in Section 4.2(a)(i) (including a tender offer to acquire shares of
Company Common Stock that would represent at least 20% of the Voting Power of
all holders of Company Common Stock), (ii) to acquire all or substantially all
of the Company's assets or (iii) to acquire from the Company newly issued
shares of Company Common Stock that would represent at least 20% of the Voting
Power of all holders of Company Common Stock before giving effect to such
issuance, Parent shall have the right for a period of ten Business Days after
such proposal is publicly announced to deliver a notice (the "Release Notice")
to the Partners' Representative and the Transferors stating its intention to
release the Partnership, each Transferor and each Partner from its obligations
under Sections 4.2(b) and (c); provided, however, that Parent shall not be
permitted to exercise such right unless an independent committee of the Board
of Directors of the Company shall determine, taking into account the opinion
of a nationally recognized investment banking firm, that such proposal is
superior, from a financial point of view, to the stockholders of the Company,
to the transactions contemplated hereby, it being understood that if such
committee fails to make such a determination, Parent shall have the
opportunity to engage a nationally recognized investment banking firm mutually
selected by Parent and the Holders' Representative, and if such firm makes
such a determination, Parent shall be permitted to exercise such right. The
Release Notice shall become effective upon the delivery thereof to the
Partners' Representative and the Transferors in accordance with the terms of
this Agreement.
c. Reasonable Best Efforts. (a) Subject to the terms
and conditions of this Agreement, each party will use
its reasonable best efforts to take, or cause to be
taken, all actions to do, or cause to be done, all
things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions
contemplated by this Agreement. In furtherance and not
in limitation of the foregoing, each of Parent and the
Partnership agrees, and the Partnership and each of the
Partners and the Transferors agrees to use its
reasonable best efforts to cause the Company, to file a
Notification and Report Form pursuant to the HSR Act and
any other required regulatory filings with foreign
antitrust authorities, the DOT and any other entity as
promptly as practicable following the execution of this
Agreement and in any event no more than ten Business
Days thereafter and to supply as promptly as practicable
any additional information and documentary material that
may be requested pursuant to the HSR Act or by any
Governmental Authority and to take all other actions
necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as
practicable. Such filings shall seek approval for the
transactions contemplated by this Agreement on the basis
as if Parent was acquiring more than 50% of the
outstanding capital stock of the Company (the Company
Acquisition Case ).
(b) Each of the parties hereto shall, in connection with the
efforts referenced in Section 4.3(a) to obtain all requisite approvals and
authorizations for the transactions contemplated hereby, including the Company
Acquisition Case, under the HSR Act or any other Antitrust Law (as defined
below), use its reasonable best efforts to (i) cooperate in all respects with
each other in connection with any filing or submission and in connection with
any investigation or other inquiry, including any proceeding initiated by a
private party; (ii) keep the other parties informed in all material respects
of any material communication received by such party from, or given by such
parties to, the Federal Trade Commission (the FTC ), the Antitrust Division
of the Department of Justice (the DOJ ), the DOT, the European Commission or
any other Governmental Authority and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding the transactions contemplated hereby, including the Company
Acquisition Case; and (iii) permit the other parties to review any material
communication given by it to, and consult with each other in advance of any
meeting or conference with, the FTC, the DOJ, the DOT, the European Commission
or any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other Person, and to the extent permitted by the
FTC, the DOJ, the DOT, the European Commission or such other applicable
Governmental Authority or other Person, give the other parties the opportunity
to attend and participate in such meetings and conferences. For purposes of
this Agreement, Antitrust Law means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended,
applicable DOT regulations, and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade
or lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 4.3(a) and (b), each of the parties hereto shall
use its reasonable best efforts to resolve such objections, if any, as may be
asserted with respect to the Transactions, including the Company Acquisition
Case, under any Antitrust Law, including taking all reasonable actions to
obtain clearance, or if such clearance cannot be obtained, to reach an
agreement, settlement, consent providing for divestiture, a "hold separate"
agreement or any other relief with the Governmental Authorities investigating
the Transactions; provided, however, that the foregoing shall not require
Parent to agree to any asset divestiture or restriction on its or its
subsidiaries' or the Company's or its subsidiaries' business operations that
would have a material adverse effect on Parent or the Company. In connection
with the foregoing, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to
be instituted) challenging any of the Transactions, including the Company
Acquisition Case, as violative of any Antitrust Law, each of the parties
hereto shall cooperate in all respects with each other and use its respective
reasonable best efforts to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that
is in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated hereby, including the Company Acquisition Case.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 4.3 shall limit a party's right to terminate this
Agreement pursuant to 7.1(a)(iii) so long as such party has up to then
complied in all material respects with its obligations under this Section 4.3.
(d) Each party hereby agrees, while this Agreement is in effect,
and except as contemplated hereby, not to intentionally and knowingly take any
action with the intention and knowledge that such action would make any of its
representations or warranties contained herein untrue or incorrect in any
material respect or have the effect of preventing or disabling it from
performing any of its obligations under this Agreement.
d. Public Announcements. Parent and Holdco Sub, on the
one hand, and the Partnership, the Partners and the
Transferors, on the other hand, will consult with each
other before issuing any press release or making any SEC
filing or other public statement (including holding
press conferences or analyst calls) with respect to this
Agreement or the transactions contemplated hereby and,
except as may be required by applicable law, court
process or any listing agreement with any national
securities exchange, shall not issue any press release,
make any such SEC filing or other public statement prior
to such consultation and providing the Partnership, the
Partners and the Transferors, on the one hand, and
Parent and Holdco Sub, on the other hand, as the case
may be, with a reasonable opportunity to comment
thereon.
ARTICLE 5.
CONDITIONS TO CLOSING
a. Conditions to Obligation of Parent, Holdco Sub and the
Partners to Effect the Transactions. The respective
obligations of Parent, Holdco Sub and the Partners to
effect the Transactions are subject to the satisfaction
or waiver on or prior to the Closing Date of the
following conditions:
i. HSR Act. The waiting period (and any extension thereof)
applicable to the Transactions under the HSR Act shall have
been terminated or shall have expired.
ii. No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other
Governmental Authority or other legal restraint or
prohibition enjoining or preventing the consummation of the
Transactions shall be in effect.
iii. DOT Approvals. The DOT shall have granted any necessary
approvals for the Transactions.
iv. Foreign Antitrust Approvals. The European Commission shall
have given any necessary approvals for the Transactions.
b. Conditions to Obligation of Parent and Holdco Sub.
The obligations of Parent and Holdco Sub to effect the
Transactions are further subject to the satisfaction (or
waiver by Parent and Holdco Sub) of the following
conditions:
i. Representations and Warranties. The representations and
warranties of the Partnership, the Partners and the
Transferors set forth in this Agreement qualified as to
materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date,
except for those representations and warranties which address
matters only as of a particular date (which shall have been
true and correct in all material respects as of such date).
Parent and Holdco Sub shall have received a certificate
signed by the Partners' Representative to the effect set
forth in this paragraph.
ii. Performance of Obligations of the Partnership, the Partners
and the Transferors. Each of the Partnership, the Partners
and the Transferors shall have performed in all material
respects all of the covenants and the obligations required to
be performed by them under this Agreement at or prior to the
Closing Date, and Parent and Holdco Sub shall have received
a certificate signed by the Partners' Representative to the
effect set forth in this paragraph.
iii. Ownership of Company Stock Held by the Partnership. The
Fully Diluted Voting Power represented by the shares of
Company Class A Common Stock held by the Partnership and the
Transferors, together with the Fully Diluted Voting Power
represented by all other shares of Company Common Stock held
by Parent and Holdco Sub immediately prior to the Closing,
shall be no less than 50.1% of the aggregate Fully Diluted
Voting Power of all holders of Company Common Stock, and
Parent shall have received evidence reasonably satisfactory
to it and its counsel to such effect.
iv. Tax Opinion. Parent and Holdco Sub shall have received the
opinion of Simpson Thacher & Bartlett, in form and substance
reasonably satisfactory to Parent and Holdco Sub, dated the
Closing Date, based on appropriate representations and
warranties of the parties to the Agreement and certain
stockholders of such parties, to the effect that the Merger
and the exchange of shares of the capital stock of Parent for
shares of the capital stock of Holdco Sub shall be a
transaction described in Section 351(a) and/or Section 368(a)
of the Code and that no income or gain will be recognized by
Parent or Holdco Sub or by their stockholders as a result of
the Merger or the Exchange.
v. Standstill Agreement. The Share Electing Partners and the
Share Electing Transferors shall have executed and delivered
to Parent signed counterparts of the Standstill Agreement.
vi. No Stockholder Rights Plan. The Company shall not have
adopted a stockholder rights plan, poison pill or other
agreement or arrangement having a similar effect, whether or
not such effect is intended, except as contemplated by the
Governance Agreement dated as of the date hereof among the
Company, Parent and Holdco Sub.
vii. Approval of Business Combination. The Company's Board of
Directors shall not have adopted a resolution approving a
Business Combination (other than one with Parent, Holdco Sub
or their subsidiaries) or recommending such a Business
Combination to the Company's stockholders.
viii. No Frustration of Transactions by the Company. The
Company shall not have taken any other action that will
(i) (A) prevent, (B) delay or postpone for a period in
excess of 45 days from the date the conditions set forth
in this Article V would otherwise be satisfied or (C)
impede, frustrate or interfere with (in the case of this
clause (C), in a manner that will substantially deprive
Parent and Holdco Sub of the benefits of) (1) any of the
Transactions or (2) the entry by Northwest Airlines,
Inc. and the Company into an Operating Alliance or their
execution of an Alliance Agreement, or (ii) cause the
Fully Diluted Voting Power represented by the shares of
Company Class A Common Stock held by the Partnership and
the Transferors, together with the Fully Diluted Voting
Power represented by all other shares of Company Common
Stock held by Parent and Holdco Sub at the Closing, to
be less than 50.1% of the aggregate Fully Diluted Voting
Power of all holders of Company Common Stock, other than
in connection with grants by the Company to its
employees in accordance with its past practices of
options and other stock-based compensation.
ix. No Frustration of Transactions by the Partnership and the
Partners. The Partnership and the Partners shall not have
taken any action that will (i) prevent, (ii) delay or
postpone for a period in excess of 45 days from the date the
conditions set forth in this Article V would otherwise be
satisfied or (iii) impede, frustrate or interfere with (in
the case of this clause (iii), in a manner that will
substantially deprive Parent and Holdco Sub of the benefits
of) (A) any of the Transactions or (B) the entry by Northwest
Airlines, Inc. and the Company into an Operating Alliance or
their execution of an Alliance Agreement.
c. Conditions to Obligation of the Partners and the
Transferors. The obligations of the Partners and the
Transferors to effect the Transactions are further
subject to the satisfaction (or waiver by the Partners
holding a majority in Partnership Interests) of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Holdco Sub set forth in this Agreement
qualified as to materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except for those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct in all material
respects as of such date), and the Partners' Representative shall have
received a certificate signed on behalf of Parent and Holdco Sub to the
effect set forth in this paragraph.
(b) Performance of Obligations of Parent and Holdco Sub. Each of
Parent and Holdco Sub shall have performed in all material respects all
of the covenants and obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and the Partners'
Representative shall have received a certificate signed on behalf of
Parent and Holdco Sub to the effect set forth in this paragraph.
(c) Tax Opinion. The Share Electing Partners shall have received
the opinion of Kelly, Hart & Hallman, in form and substance reasonably
satisfactory to the Partner's Representative, dated the Closing Date,
based on appropriate representations and warranties of the parties to
the Agreement, to the effect that the exchange of Partnership Interests
for shares of Holdco Sub Class A Common Stock pursuant to Section
2.2(b) shall be a transfer described in Section 351(a) of the Code.
(d) Registration Rights Agreement. Holdco Sub shall have
executed and delivered to the Partners' Representative a signed
counterpart of the Registration Rights Agreement.
(e) Consummation of the Merger. No provision of the Merger
Agreement shall have been waived, modified or amended by the parties
thereto, and the Merger shall have been consummated in accordance with
the terms of the Merger Agreement.
(f) NASDAQ National Market Listing. The shares of Holdco Sub
Class A Common Stock to be issued to the Share Electing Partners and
the Transferors pursuant to Section 2.2(b) shall have been approved for
quotation on the NASDAQ National Market, subject to official notice of
issuance.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Parent and Holdco Sub. From and after the
Closing (except in the case of Section 6.1(b)(ii), which shall be from and
after the date of this Agreement whether or not the Transactions are
consummated), Parent and Holdco Sub shall, jointly and severally (and shall
cause their respective subsidiaries to) indemnify each Partner (which term
shall for purposes of this Article VI include the Transferors) and their
respective affiliates, directors, officers, employees, partners, stockholders,
agents and representatives (including attorneys and accountants)
(collectively, the "Representatives") against and hold them harmless from any
loss, liability, claim, damage or expense (including reasonable legal fees and
expenses) ("Loss") suffered or incurred by any such indemnified party (a)
directly caused by any breach of representation or warranty (without regard to
any materiality qualification therein) in Section 3.1 on the part of Parent or
Holdco Sub; or (b) arising from or relating to (i) any failure by Parent or
Holdco Sub to perform any agreement or obligation hereunder or (ii) the
Transactions (whether pertaining to any acts or omissions occurring or
existing prior to, at or following the date of this Agreement), other than
taxes and Losses arising under Section 16 of the Exchange Act; provided,
however, that:
(w) such indemnity will not cover actions taken or failed to be
taken by any Partner or the Partnership which constitute a breach of Sections
4.2(a)(i), 4.2(b) or 4.2(c) of this Agreement;
(x) neither Parent nor Holdco Sub shall have any liability under
clauses (a) and (b)(i) unless the aggregate of all Losses relating thereto
(other than in connection with the last sentence of Section 3.1(b), Section
3.1(e) and Section 3.1(i)) for which Parent and Holdco would, but for this
proviso, be liable exceeds on a cumulative basis $3,000,000 and then only to
the extent of such excess;
(y) Parent and Holdco Sub shall not have any liability in respect
of any individual item under clauses (a) and (b)(i) (other than in connection
with the last sentence of Section 3.1(b), Section 3.1(e) and Section 3.1(i))
where the Loss is less than $100,000 and such items shall not be aggregated
for purposes of clause (x); and
(z) Parent s and Holdco Sub s liability in respect of Losses
under clauses (a) and (b)(i) (other than in connection with the last sentence
of Section 3.1(b), Section 3.1(e) and Section 3.1(i)) shall in no event exceed
$15,000,000.
Each Partner acknowledges and agrees that, should the Closing occur, its sole
and exclusive remedy with respect to any and all claims relating to this
Agreement and the transactions contemplated hereby (other than claims of, or
causes of action arising from, fraud, which shall not be subject to this
Article VI) shall be pursuant to the indemnification provisions set forth in
this Article VI.
6.2 Indemnification by each of the Partners and Transferors.
From and after the Closing, each Partner shall, severally and not jointly,
indemnify Parent and Holdco Sub and their respective affiliates and their
respective Representatives against and hold them harmless from any Loss
suffered or incurred by any such indemnified party (a) directly caused by any
breach of representation or warranty in Sections 3.2, 3.3 and 3.4 (other than
the fourth and fifth sentences of Section 3.2(d), Section 3.3(h) and the
fourth and fifth sentences of Section 3.4) (without regard to any materiality
qualification in any of such sections) on the part of the Partnership or such
Partner; or (b) arising from, relating to or otherwise in respect of (i) any
failure by the Partnership or any Partner to perform any agreement or
obligation hereunder or (ii) any Liabilities of the Partnership incurred prior
to the Closing (other than Liabilities arising out of the Transactions other
than taxes and losses arising under Section 16 of the Exchange Act) and not
disclosed on Schedule 3.2(e); provided, however, that:
(w) notwithstanding the several but not joint nature of the
indemnification provided under this Section 6.2, each Partner shall be liable
in respect of any claim under this Article VI for up to 130% of such Partner s
pro rata share, calculated by reference to the number of shares of Company
Class A Common Stock (including shares issuable upon the exercise of the
Warrants) allocable to or owned by such Partner (the Pro Rata Share ), of the
aggregate Losses in respect of such claim;
(x) no Partner shall have any liability under clauses (a) and
(b)(i) of this Section 6.2 unless the aggregate of all Losses relating thereto
(other than in connection with the second sentence of Section 3.2(b), Section
3.2(c), Section 3.2(d) (other than the fourth and fifth sentences thereof),
Section 3.2(e), the second sentence of Section 3.3(b), Section 3.3(c) and
Section 3.4 (other than the fourth and fifth sentences thereof)) for which the
Partners would, but for this proviso, be liable exceeds on a cumulative basis
$3,000,000 and then only to the extent of such excess;
(y) no Partner shall have any liability in respect of any
individual item under clauses (a) and (b)(i) of this Section 6.2 (other than
in connection with the second sentence of Section 3.2(b), Section 3.2(c),
Section 3.2(d) (other than the fourth and fifth sentences thereof), Section
3.2(e), the second sentence of Section 3.3(b), Section 3.3(c) and Section 3.4
(other than the fourth and fifth sentences thereof)) where the Loss is less
than $100,000 and such items shall not be aggregated for purposes of clause
(x); and
(z) the aggregate liability of the Partners in respect of Losses
under clauses (a) and (b)(i) of this Section 6.2 (other than in connection
with the second sentence of Section 3.2(b), Section 3.2(c), Section 3.2(d)
(other than the fourth and fifth sentences thereof, Section 3.2(e), the second
sentence of Section 3.3(b), Section 3.3(c) and Section 3.4 (other that the
fourth and fifth sentences thereof)) shall in no event exceed $15,000,000.
Each of Parent and Holdco Sub acknowledges and agrees that, should the Closing
occur, its sole and exclusive remedy with respect to any and all claims
relating to this Agreement and the transactions contemplated hereby (other
than claims of, or causes of action arising from, fraud, which shall not be
subject to this Article VI) shall be pursuant to the indemnification
provisions set forth in this Article VI. Recovery by Parent and Holdco Sub
from any Partner of amounts in excess of a Partner s Pro Rata Share of any
Loss shall be conditioned on Parent and Holdco Sub having used reasonable
efforts to obtain indemnification from each of the Partners in accordance with
their respective Pro Rata Shares, including by pursuing appropriate legal
proceedings against each of the Partners.
6.3 Losses Net of Insurance, etc. The amount of any Loss for
which indemnification is provided under this Article VI shall be net of any
amounts actually recovered by the party entitled to indemnification (the
"indemnified party") under insurance policies and, in the case of the
Partners, under the indemnification policies of the Company that are available
to such indemnified party with respect to such Loss (net of the cost of
obtaining such recovery). Any Partner entitled to indemnification under
insurance policies or under the indemnification policies of the Company shall,
at the request of Parent or Holdco Sub, use its reasonable best efforts to
obtain such indemnification under such insurance policies or from the Company
before seeking indemnification from Parent or Holdco Sub, and any expenses
incurred in connection therewith shall be advanced by the party obligated to
provide such indemnification (the "indemnifying party"). It is understood
that the indemnification obligation of Parent and Holdco Sub is secondary and
supplemental to any indemnification by the Company or under any insurance
policy maintained for the benefit of the indemnified party. The indemnifying
party shall not be relieved of its obligation to advance fees and expenses to
the indemnified party in accordance with Section 6.5 (or to indemnify any
indemnified person under this Article VI) by reason of any claim under any
insurance policy or under the indemnification policies of the Company, but
shall be entitled to receive, and the indemnified party does hereby assign to
the indemnifying party the right to receive, direct payment of any recovery
under any such claim.
6.4 Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto (a) pursuant to Sections 6.1(a) and 6.2(a)
shall terminate when the applicable representation or warranty terminates
pursuant to Section 7.14 and (b) pursuant to the other clauses of Sections 6.1
and 6.2 shall not terminate, except that the obligations of Parent and Holdco
Sub pursuant to Section 6.1(b)(ii) shall terminate upon a termination by
either party pursuant to Section 7.1(a), but only with respect to actions or
omissions from and after the time of such termination; provided, however, that
as to clause (a) above such obligations to indemnify and hold harmless shall
not terminate with respect to any item as to which the Person to be
indemnified or the related party thereto shall have, before the expiration of
the applicable period, previously made a claim by delivering a notice of such
claim (stating in reasonable detail the basis of such claim) to the
indemnifying party.
6.5 Procedures Relating to Indemnification under Article VI.
(a) An indemnified party entitled to any indemnification in
respect of, arising out of or involving a claim or demand made by any Person
against the indemnified party (a "Third Party Claim") shall notify the
indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within 10 Business Days after receipt by such indemnified party of
written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually and
materially prejudiced as a result of such failure (it being understood that
the indemnifying party shall not be liable for any expenses incurred during
the period in which the indemnified party failed to give notice).
(b) If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and unconditionally acknowledges its obligation to
indemnify the indemnified party with respect to such Third Party Claim, to
assume the defense thereof with counsel selected by the indemnifying party and
not reasonably objected to by the indemnified party. Should the indemnifying
party so elect to assume the defense of a Third Party Claim, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party (except that, for any period following receipt of notice of
any Third Party Claim during which the indemnifying party has failed to assume
the defense of such claim, the indemnifying party shall pay such fees and
expenses as incurred), it being understood that the indemnifying party shall
control such defense; provided, that the indemnifying party shall not take any
action in the conduct of such defense that would materially adversely affect
the indemnified party without the consent of the indemnified party. The
indemnified party shall also have the right to employ no more than one
separate counsel for all indemnified parties (and no more than one local
counsel in any jurisdiction where it is reasonably necessary) not reasonably
objected to by the indemnifying party, at the expense of the indemnifying
party, but only if: (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party or parties would present such counsel with
a conflict of interest, (ii) the actual or potential defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or are in addition to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall in writing authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party.
(c) If the indemnifying party elects to assume the defense of any
Third Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation
shall include (upon the indemnifying party's reasonable request) the provision
to the indemnifying party of existing records and information which are
reasonably relevant to such Third Party Claim, and making themselves (in the
case of individuals) and using reasonable best efforts to make their employees
and their Representatives, if any, available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and to attend depositions, give testimony or otherwise appear at
any trial or hearing to the extent reasonably requested by the indemnifying
party. Whether or not the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnifying party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the indemnified party s prior written consent (which consent shall not
be unreasonably withheld). If the indemnifying party shall have assumed the
defense of a Third Party Claim, the indemnified party shall agree to any
settlement, compromise or discharge of a Third Party Claim which the
indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnified party completely in
connection with such Third Party Claim, and which would not otherwise
adversely affect the indemnified party.
(d) Notwithstanding the foregoing, the indemnifying party shall
not be entitled to assume the defense of any Third Party Claim (but shall be
liable for the reasonable fees and expenses of counsel incurred by the
indemnified party in defending such Third Party Claim, which fees and expenses
the indemnifying party shall pay as incurred in advance of the final
disposition of such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the indemnified party which the indemnified party reasonably
determines, after conferring with its outside counsel, cannot be separated
from any related claim for money damages; provided, however, that the
foregoing shall not apply to any Third Party Claim prior to the Closing
seeking to enjoin or otherwise prevent, prohibit or impede the consummation of
the Transactions, which Third Party Claim prior to the Closing shall be
defended jointly by the indemnifying party and the indemnified party, it being
understood and agreed that (i) only one counsel (plus only one local counsel
in any jurisdiction where it is reasonably necessary) shall be permitted for
all of the indemnified parties and (ii) if the parties cannot in good faith
agree on a particular matter, such dispute shall be resolved in good faith by
the indemnifying party, with a good faith effort to balance the interests of
both the indemnified parties and the indemnifying party. If such equitable
relief or other relief portion of the Third Party Claim can be so separated
from that for money damages, the indemnifying party shall be entitled to
assume the defense of the portion relating to money damages. In the event
that the indemnifying party is not permitted to assume the defense of any
Third Party Claim pursuant to this Section 6.5(d), the indemnified party shall
not agree to any settlement, compromise or discharge of such Third Party Claim
which by its terms obligates the indemnifying party to pay any monetary
damages or otherwise imposes any obligation on the indemnifying party without
the prior written consent of the indemnifying party.
(e) In the event that the indemnified party is entitled to retain
counsel at the indemnifying party's expense in accordance with Section 6.5(b)
or Section 6.5(d), the indemnifying party shall reimburse the indemnified
party for the reasonable fees, costs and expenses of such counsel upon
presentation of invoices detailing with reasonable specificity the nature of
the services provided and the basis of the fees, costs and expenses incurred.
6.6 Other Claims. In the event any indemnified party should have
a claim against any indemnifying party under Section 6.1 (other than Section
6.1(b)(ii)) or 6.2 that does not involve a Third Party Claim, the indemnified
party shall deliver notice of such claim (stating with reasonable specificity
the basis and amount of the claim) with reasonable promptness to the
indemnifying party.
6.7 Arbitration. In the event that any parties are unable to
resolve any dispute as to whether an indemnified party is entitled to
indemnification hereunder and/or the amount of the related claim, the
exclusive method for resolving such dispute shall be binding, nonappealable
arbitration in New York, New York initiated by a party by a written notice to
the other party demanding arbitration and specifying the claim to be
arbitrated. Such arbitration shall be conducted pursuant to the Expedited
Procedures of the Commercial Arbitration Rules ("Rules") of the American
Arbitration Association ("AAA"), with the following modifications. The party
initiating arbitration (the "Claimant") shall appoint its arbitrator in its
request for arbitration (the "Request"). The other party (the "Respondent")
shall appoint its arbitrator within 15 Business Days of receipt of the Request
and shall notify the Claimant of such appointment in writing. If the
Respondent fails to appoint an arbitrator within such 15 Business Day period,
the arbitrator named in the Request shall decide the controversy or claim as
a sole arbitrator. Otherwise, the two arbitrators appointed by the parties
shall appoint a third arbitrator within 15 Business Days after the Respondent
has notified Claimant of the appointment of the Respondent's arbitrator. When
the third arbitrator has accepted the appointment, the two party-appointed
arbitrators shall promptly notify the parties of such appointment. If the two
arbitrators appointed by the parties fail or are unable to so appoint a third
arbitrator, then the appointment of the third arbitrator shall be made by the
AAA, which shall promptly notify the parties of the appointment. The third
arbitrator shall act as chairperson of the panel. Upon appointment of the
third arbitrator, the arbitrators shall proceed to commence and conduct all
proceedings promptly and in accordance with the Rules. The arbitral award
shall be in writing and shall be final and binding on the parties to the
arbitration. The arbitrator shall be instructed to award costs, including
reasonable attorneys fees and disbursements, which shall be paid by the party
against whom the award is entered. Judgment upon the award may be entered by
any court having jurisdiction thereof or having jurisdiction over the parties
or their assets, without review of the merits of the award, in accordance
with Section 7.11.
ARTICLE VII
GENERAL PROVISIONS
7.1 Termination or Abandonment of Agreement. (a) This Agreement
may be terminated and abandoned at any time prior to the Closing:
(i) by mutual consent of Parent and the Partnership in writing;
(ii) by either Parent or the Partnership if the Closing shall not
have occurred prior to the first anniversary of the date of this
Agreement (other than due to the failure of the party seeking to
terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to such first
anniversary);
(iii) by either Parent or the Partnership if any Governmental
Authority within the United States or any country or other jurisdiction
in which Parent or the Partnership, directly or indirectly, has
material assets or operations shall have issued an order, decree or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the Transactions, and such order, decree, ruling or other
action shall have become final and nonappealable;
(iv) by Parent, if after the date of this Agreement the Company
issues (A) any shares of Company Common Stock (other than upon the
conversion, exercise or exchange of securities outstanding on the date
of this Agreement that are convertible into or exercisable or
exchangeable for shares of Company Common Stock) or (B) any securities
convertible into or exercisable or exchangeable for shares of Company
Common Stock which result in the Voting Power held by the Partnership
and the Transferors, together with the Voting Power represented by all
other shares of Company Common Stock held by Parent and Holdco Sub,
falling below 50.1% of the aggregate Voting Power of all holders of
Company Common Stock (assuming the conversion, exercise or exchange of
all securities referred to in clause (B));
(v) by Parent, in the event that Parent exercises its right to
release the Partnership from certain obligations in accordance with
Section 4.2(j); or
(vi) by the Partnership, in the event that Parent exercises its
right to release the Partnership from certain obligations in accordance
with Section 4.2(j).
(b) In the event of termination of this Agreement by either
Parent or the Partnership as provided in Section 7.1(a), this Agreement shall
forthwith become void and have no effect, without any liability or obligation
on the part of Parent, Holdco Sub, the Partnership, the Partners, the
Transferors and the Company, other than Article VI and Article VII. Nothing
contained in this Section shall relieve any party for any willful breach of
the representations, warranties, covenants or agreements set forth in this
Agreement.
7.2 Expenses. Whether or not the transactions contemplated
hereby are consummated, all fees, commissions and other expenses incurred by
any party hereto in connection with the negotiation of this Agreement and the
other transactions contemplated hereby, including any fees and expenses of
their respective counsel, shall be borne by the party incurring such fee or
expense.
7.3 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 parties.
7.4 Notices. All notices, requests, demands or other
communications provided herein shall be made in writing and shall be deemed to
have been duly given if delivered as follows:
If to Parent or Holdco Sub:
Northwest Airlines Corporation
5101 Northwest Drive
St. Paul, Minnesota 55111-3034
Attention: General Counsel
Fax: (612) 726-7123
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Robert L. Friedman, Esq.
Fax: (212) 455-2502
If to the Partnership, the Partners or the Transferors:
1992 Air, Inc.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: James J. O'Brien
Fax: (817) 871-4010
with a copy to:
Kelly, Hart & Hallman
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attention: Clive D. Bode, Esq.
F. Richard Bernasek, Esq.
Fax: (817) 878-9280
or to such other address as any party shall have specified by notice in
writing to the other parties. All such notices, requests, demands and
communications shall be deemed to have been received on (i) the date of
delivery if sent by messenger, (ii) on the Business Day following the Business
Day on which delivered to a recognized courier service if sent by overnight
courier or (iii) on the date received, if sent by fax.
7.5 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 into and to be performed in New York and without regard to
the application of principles of conflict of laws.
7.6 Interpretation. When a reference is made in this Agreement
to an Article, Section, Exhibit or Schedule, such reference shall be to an
Article or Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents 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. Whenever the words include,
includes or including are used in this Agreement, they shall be deemed to
be followed by the words without limitation.
7.7 Successors and Assigns. Except as otherwise expressly
provided in this Agreement, 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 any of the parties without the
prior written consent of the other parties, except that Parent, prior to or
after the consummation of the transactions contemplated by Sections 2.1 and
2.2, may assign, in its sole discretion, any or all of its rights, interests
and obligations under this Agreement to any wholly owned subsidiary of Parent
or any partnership of which Parent is the general partner, but no such
assignment shall relieve Parent of any of its obligations under this
Agreement. 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, assigns and heirs. It is understood and agreed by the
parties that in the event of the dissolution of any Partner after the date of
this Agreement, such Partner's obligations hereunder shall be borne by the
general partner of such Partner, and thereafter by the general partner of such
general partner, and so forth.
7.8 Entire Agreement; No Oral Waiver; Construction. This
Agreement and the agreements, certificates and other documents contemplated
hereby and thereby constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings and representations, whether oral
or written, of the parties in connection therewith. No covenant or condition
or representation not expressed in this Agreement shall affect or be effective
to interpret, change or restrict this Agreement. No prior drafts of this
Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action, suit or other proceeding involving
this Agreement or the transactions contemplated hereby. This Agreement may
not be amended, changed or terminated orally, nor shall any amendment, change,
termination or attempted waiver of any of the provisions of this Agreement be
binding on any party unless in writing signed by the parties hereto. No
modification, waiver, termination, rescission, discharge or cancellation of
this Agreement and no waiver of any provision of or default under this
Agreement shall affect the right of any party thereafter to enforce any other
provision or to exercise any right or remedy in the event of any other
default, whether or not similar. This Agreement has been negotiated by the
parties hereto and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement against the
party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
7.9 Severability. If any provision of this Agreement (or any
portion thereof) shall be declared by any court of competent jurisdiction to
be illegal, void or unenforceable, all other provisions of this Agreement (and
portions thereof) shall not be affected and shall remain in full force and
effect.
7.10 No Third-Party Rights. Nothing in this Agreement, expressed
or implied, shall or is intended to confer upon any Person other than the
parties hereto or their respective successors or assigns, any rights or
remedies of any nature or kind whatsoever under or by reason of this
Agreement.
7.11 Submission To Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally:
(a) submits 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;
(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 address for notices to it set forth in Section 7.4; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other appropriate jurisdiction.
7.12 Remedies. Each of the parties hereto acknowledges and
agrees that (i) the provisions of this Agreement are reasonable and necessary
to protect the proper and legitimate interests of the other parties hereto,
and (ii) the other parties hereto would be irreparably damaged in the event
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to preliminary and permanent
injunctive relief to prevent breaches of the provisions of this Agreement by
the other parties hereto without the necessity of proving irreparable injury
or actual damages or of posting any bond, and to enforce specifically the
terms and provisions hereof and thereof, which rights shall be cumulative and
in addition to any other remedy to which the parties hereto may be entitled
hereunder or at law or equity.
7.13 Further Assurances. From time to time, at the reasonable
request of any other party hereto and without further consideration, each
party hereto shall execute and deliver such additional documents and take all
such further action as may be necessary to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
7.14 Survival of Representations. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto
shall survive the Closing solely for purposes of Article VI and (a) shall
terminate at the Closing with respect to Sections 3.1(g) and (h), the fourth
and fifth sentences of Section 3.2(d), Section 3.3(h) and the fourth and fifth
sentences of Section 3.4, (b) shall terminate at the close of business on the
first anniversary of the Closing Date with respect to Section 3.1 (other than
Sections 3.1(b), (d), (g), (h) and (i)), Section 3.2 (other than Sections
3.2(b), (c), (d) and (e)) and Section 3.3 (other than Sections 3.3(b), (c) and
(h)), (c) shall terminate at the close of business on the fourth anniversary
of the Closing Date with respect to Section 3.1(i) and Section 3.2(e) and
(d) shall not terminate with respect to Sections 3.1(b) and (d), Sections
3.2(b) and (c) and, other than the fourth and fifth sentences, Section 3.2(d),
Sections 3.3 (b) and (c) and, other than the fourth and fifth sentences,
Section 3.4.
7.15 No Restrictions on Directors of the Company.
Notwithstanding anything to the contrary in this Agreement or the Standstill
Agreement, it is understood and agreed that no provision of this Agreement or
the Standstill Agreement and the transactions contemplated hereby and thereby
shall in any way limit or restrict the actions of any Person to the extent
such Person is acting in such Person's capacity as a director on the Board of
Directors of the Company, and nothing in this Agreement or the Standstill
Agreement is intended to, or shall be deemed to, restrict the exercise of
fiduciary duties by any such Person in such capacity.
IN WITNESS WHEREOF, the parties have executed, delivered and
entered into this Agreement as of the day and year first above written.
NORTHWEST AIRLINES CORPORATION
By: /s/ Douglas M. Steenland
Name: Douglas M. Steenland
Title: Senior Vice President, General
Counsel and Secretary
NEWBRIDGE PARENT CORPORATION
By: /s/ Douglas M. Steenland
Name: Douglas M. Steenland
Title: Director
AIR PARTNERS, L.P.
1992 AIR GP, a Texas general partnership
By: 1992 Air, Inc., a Texas
corporation, managing partner
By: /s/ David Bonderman
Name: David Bonderman
Title:
THE PARTNERS:
GENERAL PARTNERS:
1992 AIR GP, a Texas general partnership
By: 1992 Air, Inc., a Texas
corporation, general partner
By: /s/ David Bonderman
Name: David Bonderman
Title:
AIR II GENERAL, INC., a Texas corporation
By: /s/ David Bonderman
Name: David Bonderman
Title:
LIMITED PARTNERS:
DAVID BONDERMAN
BONDERMAN FAMILY LIMITED
PARTNERSHIP
ESTATE OF LARRY LEE HILLBLOM
By: Russel K. Snow, Jr.
Managing Executor
Bank of Saipan, Executor
DHL MANAGEMENT SERVICES, INC.
LECTAIR PARTNERS
By: Planden Corp., G.P.
SUNAMERICA INC. (Formerly Broad, Inc.)
ELI BROAD
AMERICAN GENERAL CORPORATION
DONALD STURM
CONAIR LIMITED PARTNERS, L.P.
BONDO AIR LIMITED PARTNERSHIP
By: 1992 Air, Inc.
By: 1992 AIR GP, as attorney-in-fact for
the foregoing
By: 1992 Air, Inc., a Texas
corporation, general partner
By: /s/ David Bonderman
Name: David Bonderman
Title:
AIR SAIPAN, INC., a CNMI corporation
By: /s/ David Bonderman
Name: David Bonderman
Title:
BONDERMAN FAMILY LIMITED
PARTNERSHIP
By: /s/ David Bonderman
Name: David Bonderman
Title:
1992 AIR, INC., a Texas corporation
By: /s/ David Bonderman
Name: David Bonderman
Title:
EXECUTION COPY
_________________________ ___________
INVESTMENT AGREEMENT
DATED AS OF JANUARY 25, 1 998
among
NORTHWEST AIRLINES CORPOR ATION
NEWBRIDGE PARENT CORPORAT ION
AIR PARTNERS, L.P.,
THE PARTNERS OF AIR PARTN ERS, L.P.,
signatory hereto,
BONDERMAN FAMILY LIMITED PARTNERSHIP
1992 AIR, INC.
AND
AIR SAIPAN, INC.
_________________________ ___________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . 3
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EXCHANGE OF PARTNERSHIP INTERESTS; TRANSFER OF SHARES . . . . .5
2.1 Exchange of Partnership Interests; Transfer of Shares . . . . . 5
2.2 Cash Election Share Price; Exchange Ratio . . . . . . . . . . . 6
2.3 Adjustments to Cash Election Share Price and Exchange Ratio . . 6
2.4 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Interest Payment. . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .9
3.1 Representations and Warranties of Parent and Holdco Sub . . . . 9
3.2 Representations and Warranties of the Partnership and the Partners 13
3.3 Representations and Warranties of the Partners and the Transferors 15
3.4 Representations and Warranties of the Transferors . . . . . . . 18
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . 18
4.1 Covenants of Parent and Holdco Sub. . . . . . . . . . . . . . . 18
4.2 Covenants of the Partnership, the Partners and the Transferors. 22
4.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . 27
4.4 Public Announcements. . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
CONDITIONS TO CLOSING . . . . . . . . . . . . 29
5.1 Conditions to Obligation of Parent, Holdco Sub and the Partners to
Effect the Transactions. . . . . . . . . . . . . . 29
5.2 Conditions to Obligation of Parent and Holdco Sub . . . . . . . 29
5.3 Conditions to Obligation of the Partners and the Transferors. . 31
ARTICLE VI
INDEMNIFICATION. . . . . . . . . . . . . . 32
6.1 Indemnification by Parent and Holdco Sub. . . . . . . . . . . . 32
6.2 Indemnification by each of the Partners and Transferors . . . . 33
6.3 Losses Net of Insurance, etc. . . . . . . . . . . . . . . . . . 34
6.4 Termination of Indemnification. . . . . . . . . . . . . . . . . 34
6.5 Procedures Relating to Indemnification under Article VI . . . . 34
6.6 Other Claims. . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.7 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII
GENERAL PROVISIONS . . . . . . . . . . . . . 37
7.1 Termination or Abandonment of Agreement . . . . . . . . . . . . 37
7.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.6 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 39
7.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 39
7.8 Entire Agreement; No Oral Waiver; Construction. . . . . . . . . 40
7.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.10 No Third-Party Rights . . . . . . . . . . . . . . . . . . . . . 40
7.11 Submission To Jurisdiction. . . . . . . . . . . . . . . . . . . 40
7.12 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 41
7.14 Survival of Representations.. . . . . . . . . . . . . . . . . . 41
7.15 No Restrictions on Directors of the Company.. . . . . . . . . . 42
EXHIBITS
Exhibit A Form of Agreement and Plan of Merger
Exhibit B Form of Second Amended and Restated Limited Partnership Agreement
of Air Partners L.P.
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Standstill Agreement
Exhibit E Form of Note
Exhibit F Form of Pledge
SCHEDULES
Schedule 2.2(a) Cash Electing Partners
Schedule 2.2(b) Share Electing Partners
Schedule 3.2(c) Capitalization of Air Partners, L.P.