SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 *)
CONTINENTAL AIRLINES, INC.
(Name of Issuer)
CLASS A COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
210795209
(CUSIP Number)
Douglas M. Steenland
Senior Vice President, General Counsel and Secretary
Northwest Airlines Corporation
2700 Lone Oak Parkway
Eagan, Minnesota 55121
Telephone: (612) 727-6500
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 2, 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 [ ]
Note: Six copies of this Statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
(Continued on following pages)
Exhibit Index appears on Page A-1. Page 1 of 11 pages
- ---------------------------
(*) 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).
2
CUSIP No. 210795209
- --------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Person
Northwest Airlines Corporation (IRS Identification No. 95-4205287)
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)
(b)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
OO; WC (See Item 3)
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
State of Delaware
------------------------------
- -----------------------------------
7. Sole Voting Power
NUMBER
-0-
OF SHARES
-------------------------------------
BENEFICIALLY 8. Shared Voting Power
OWNED BY 9,514,868 shares (1)
EACH
-------------------------------------
REPORTING 9. Sole Dispositive Power
-0-
PERSON WITH
-------------------------------------
10. Shared Dispositive Power
9,514,868 shares (1)
-------------------------------------
3
11. Aggregate Amount Beneficially Owned by Each Reporting Person
9,514,868 shares (1)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Class A - 83.3% (1)(2) (See Item 5)
- --------------------------------------------------------------------------------
14 Type of Reporting Person
CO
- --------------------------------------------------------------------------------
(1) Includes 3,039,468 shares of Issuer Class A Common Stock that may be
acquired upon the exercise of warrants held by Air Partners, L.P.
(2) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Securities Exchange Act
of 1934, that there are 11,418,932 shares of Issuer Class A Common Stock
outstanding, which includes the shares issuable upon exercise of the
warrants to purchase shares of Issuer Class A Common Stock held by Air
Partners, L.P.
4
This Amendment No. 1 (this "Amendment") amends and supplements the
Statement on Schedule 13D (the "Schedule 13D") filed on February 4, 1998, on
behalf of Northwest Airlines Corporation, a Delaware corporation
("Northwest"), relating to the Class A Common Stock, $0.01 par value per
share ("Issuer Class A Common Stock"), of Continental Airlines, Inc., a
Delaware corporation (the "Issuer"). Capitalized terms used and not defined
in this Amendment have the meanings set forth in the Schedule 13D.
This Amendment is being filed by Northwest in connection with the
Purchase Agreement dated as of March 2, 1998 (the "Purchase Agreement"),
among Northwest, Newbridge Parent Corporation, a Delaware corporation
("Newbridge"), Barlow Investors III, LLC, a California limited liability
company (the "Seller"), and the guarantors signatory thereto (the
"Guarantors"), which Purchase Agreement contains certain provisions regarding
the voting and disposition of the securities of the Issuer owned by the
Guarantors and which is further described in Item 6.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 of the Schedule 13D is hereby amended and supplemented by
adding the following at the end thereof:
In exchange for the shares of Issuer Class A Common Stock to be
acquired by Northwest and Newbridge pursuant to the Purchase Agreement, the
Seller will receive cash in the amount of $59,542,780. The cash is expected
to be funded from Northwest's general working capital and from the proceeds
of unsecured borrowings in the public capital markets.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended and supplemented by
adding the following at the end thereof:
Northwest has entered into the Purchase Agreement in order to
comply with its intention and obligation, pursuant to the Investment
Agreement, to achieve an ownership level of Issuer Common Stock equal to
50.1% of the fully diluted voting power of the Issuer Common Stock, as
described in Item 6 of the Schedule 13D under the heading "Investment
Agreement -- Acquisition of Additional Shares of Issuer Common Stock."
Except as described above and in the Schedule 13D, Northwest has no
plans or proposals which relate to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
5
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer
or of any of its subsidiaries;
(d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the
Securities Act of 1933; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
Item 5 of the Schedule 13D is hereby amended and supplemented by
adding the following at the end of each of paragraphs (a), (b) and (c), as
the case may be:
(a) Upon entering into the Purchase Agreement and as a result of
the agreements described in Item 6 under the heading "Purchase Agreement
- --Restrictions on the Guarantors and the Seller", together with the
consequences of having entered into the Investment Agreement, Northwest may
be deemed to have become the beneficial owner of 9,514,868 shares of Issuer
Class A Common Stock, consisting of 979,000 shares of Issuer Class A Common
Stock (the "Barlow Shares") to be acquired pursuant to the Purchase Agreement
and 8,535,868 shares of Issuer Class A Common Stock (the "Initial Shares") to
be acquired pursuant to the Investment Agreement as reported in the Schedule
13D. The 9,514,868 shares of Issuer Class A Common Stock represent
approximately 83.3% of the outstanding Issuer Class A Common Stock,
approximately 15.4% of the outstanding Issuer Common Stock and approximately
57.8% of the
6
outstanding voting power of the Issuer Common Stock (based on the number of
shares of Issuer Common Stock outstanding on December 31, 1997). Upon the
consummation of the Purchase described in Item 6 and the Exchange described
in Item 6 of the Schedule 13D, Northwest and Newbridge will own, directly and
indirectly, the shares of Issuer Class A Common Stock described in the
preceding sentence. Except as set forth in this Item 5, none of Northwest
or, to the best of its knowledge, any of the persons named on Attachment A to
the Schedule 13D beneficially owns or has the right to acquire any Issuer
Class A Common Stock.
(b) Northwest does not have the sole power to vote or direct the
vote of or to dispose or direct the disposition of any shares of Issuer Class
A Common Stock. As a result of the agreements described in Item 6 under the
heading "Purchase Agreement -- Restrictions on the Guarantors and the
Seller", Northwest may be deemed to have acquired shared power to vote or
direct the vote of and to dispose or direct the disposition of the 979,000
Barlow Shares, in addition to the 8,535,868 shares reported in the Schedule
13D. Upon consummation of the Purchase described in Item 6 and the Exchange
described in Item 6 of the Schedule 13D, Northwest will have shared power to
vote or to direct the vote of and to dispose or to direct the disposition of
all such shares of Issuer Class A Common Stock on the terms set forth in the
Governance Agreement, as more fully described in Item 6 of the Schedule 13D.
The following describes certain information regarding the
Guarantors and the Seller, with whom Northwest, until the consummation of the
Purchase described in Item 6, may be deemed to share the power to vote or to
direct the vote and to dispose or to direct the disposition with respect to
the Barlow Shares. The following information has been provided to Northwest
by the Seller and Northwest makes no representations as to its accuracy.
Barlow Investors III, LLC
Barlow Investors III, LLC ("Seller") is a California limited
liability company the principal business of which is to purchase, invest in
and hold securities. The principal business address of the Seller, H.P.
Partners and Thomas Hacker is c/o Equibond, Inc., 100 Wilshire Boulevard,
Suite 1700, Santa Monica, California 90401, which also serves as each of
their principal offices.
H.P. Partners
H.P. Partner is a California limited partnership, the principal
business of which is to serve as an investment vehicle for Thomas Hacker.
7
Hakatak Enterprises, Inc.
Hakatak Enterprises, Inc. ("Hakatak") is a California corporation,
the principal business of which is to serve as an investment vehicle for
Thomas Hacker. The principal business address of Hakatak, which also serves
as its principal office, is P.O. Box 1623, Pacific Palisades, California
90272. As of the date of the Purchase Agreement, Hakatak has the shared
power to vote or direct the vote and to dispose or direct the disposition of
255,300 shares of the Barlow Shares.
Jay Buchbinder
Jay Buchbinder is an individual whose principal occupation is as a
private investor. His principal business address is 2650 El Presidio, Long
Beach, California 90810 which also serves as his principal office. As of
the date of the Purchase Agreement, Jay Buchbinder has the shared power to
vote or direct the vote and to dispose or direct the disposition of 723,700
shares of the Barlow Shares.
Thomas Hacker
Thomas Hacker is an individual and the general partner of H.P.
Partners. His principal occupation is as a private investor. As president of
Hakatak, Thomas Hacker, as of the date of the Purchase Agreement, has the
shared power to vote or direct the vote and to dispose or direct the
disposition of 255,300 shares of the Barlow Shares.
To the best of Northwest's knowledge, none of the persons listed
above has during the last five years: (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); or (ii)
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(c) Since February 4, 1998, except as described above, no
transactions were effected in Issuer Class A Common Stock by Northwest or, to
the best of its knowledge, any person listed in Attachment A attached to the
Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Item 6 of the Schedule 13D is hereby amended and supplemented as
follows:
(a) The last sentence under the heading "Investment Agreement" is
hereby deleted in its entirety and replaced with the following:
8
"The aggregate consideration to be paid in the transaction is valued
at approximately $519 million, expected to consist of approximately $308
million in cash and approximately 4.2 million shares of newly issued
Newbridge Class A Common Stock."
(b) The following shall be added at the end of Item 6:
Purchase Agreement
On March 2, 1998, Northwest, Newbridge, the Seller and the
Guarantors entered into the Purchase Agreement. Pursuant to the Purchase
Agreement and subject to the terms and conditions set forth therein,
Newbridge will acquire from the Seller 979,000 shares of Issuer Class A
Common Stock presently held by the Guarantors for an aggregate purchase price
of $59,542,780, representing $60.82 in cash per share of Issuer Class A
Common Stock (the "Purchase").
The Guarantors beneficially own at least 979,000 shares of Issuer
Class A Common Stock, which represents approximately 8.6% of the outstanding
Issuer Class A Common Stock, approximately 1.6% of the outstanding Issuer
Common Stock and approximately 5.9% percent of the outstanding voting power
of the Issuer Common Stock. The 979,000 shares owned by the Guarantors,
together with the shares to be acquired pursuant to the Investment Agreement
described in the Schedule 13D, represent approximately 83.3% of the
outstanding Issuer Class A Common Stock, approximately 15.4% of the
outstanding Issuer Common Stock and approximately 57.8% of the outstanding
voting power of Issuer Common Stock. Pursuant to the Purchase Agreement, the
Guarantors have agreed to transfer, or to arrange for the transfer of,
979,000 shares of Issuer Class A Common Stock to the Seller (the "Transfer")
prior to the closing of the Purchase Agreement.
Restrictions on the Guarantors and the Seller
Pursuant to the Purchase Agreement, the Guarantors and the Seller
agreed (i) not to sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of any of the Barlow Shares except as contemplated by the
Purchase Agreement, (ii) not to convert any of the Barlow Shares into shares
of Issuer Class B Common Stock and (iii) to vote or cause to be voted all
Barlow Shares owned by them against, among other things, any business
combination (other than a business combination with Northwest or any of its
affiliates) involving the Issuer, any change in the majority of the Board of
Directors of the Issuer or any material change in the Issuer's corporate
structure or business. In addition, the Guarantors and the Seller granted to
Robert L. Friedman, as the designee of Northwest, an irrevocable proxy to
vote the Barlow Shares in a manner consistent with the voting agreements set
forth in the Purchase Agreement.
9
First Amendment to the Governance Agreement
On March 2, 1998, Issuer, Newbridge and Northwest entered into
an amendment to the Governance Agreement, as described in Item 6 of the
Schedule 13D, which permitted Northwest and Newbridge to enter into the
Purchase Agreement, notwithstanding that the shares of Issuer Class A Common
Stock beneficially owned by Northwest upon entering into the Purchase
Agreement would exceed 50.1% of the fully diluted voting power of Issuer
Common Stock. Notwithstanding the foregoing, the amendment to the Governance
Agreement does not permit Northwest to own more than 50.1% of the fully
diluted voting power of the Issuer Common Stock under any circumstances other
than in accordance with the terms of the Purchase Agreement and the
Investment Agreement.
Amendment No. 1 to the Investment Agreement
On February 27, 1998, Northwest, Newbridge, the Partnership, the
Partners and the Transferors entered into an amendment to the Investment
Agreement ("Amendment No. 1 to the Investment Agreement"). The purpose of
the amendment was to increase from 40% to 41% the maximum portion of the
aggregate consideration to be paid to the Partners and the Transferors in
exchange for the shares of Issuer Class A Common Stock beneficially owned by
them that may consist of Class A Common Stock, $.01 par value per share, of
Newbridge.
The summary contained in this Amendment of certain provisions of
the Purchase Agreement, the First Amendment to the Governance Agreement and
Amendment No. 1 to the Investment Agreement is qualified in its entirety by
reference to the Purchase Agreement, the First Amendment to the Governance
Agreement and Amendment No. 1 to the Investment Agreement attached as
Exhibits 3, 4 and 5 hereto, respectively, and incorporated herein by
reference.
Except for the Purchase Agreement, the First Amendment to the
Governance Agreement and Amendment No. 1 to the Investment Agreement, and as
otherwise referred to or described in this Amendment and the Schedule 13D, to
the best knowledge of Northwest, there are no other contracts, arrangements,
understandings or relationships (legal or otherwise) between Northwest,
Newbridge, the Guarantors and the Seller or between such persons or any
person with respect to any securities of the Issuer, including but not
limited to transfer or voting of any of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby amended and supplemented by
adding the following at the end thereof:
10
Exhibit 3 Purchase Agreement among Northwest Airlines Corporation,
Newbridge Parent Corporation, Barlow Investors III, LLC and
the Guarantors signatory thereto, dated as of March 2, 1998.
Exhibit 4 First Amendment to the Governance Agreement among Continental
Airlines, Inc., Northwest Airlines Corporation and Newbridge
Parent Corporation, dated as of March 2, 1998.
Exhibit 5 Amendment No. 1 to the Investment Agreement among Northwest
Airlines Corporation, Newbridge Parent Corporation, Air
Partners, L.P., the Partners of Air Partners, L.P. signatory
thereto, Bonderman Family Limited Partership, Air Saipan, Inc.
and 1992 Air, Inc. dated February 27, 1998.
11
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: March 5, 1998
NORTHWEST AIRLINES CORPORATION
By: /s/ Douglas M. Steenland
---------------------------
Douglas M. Steenland
Senior Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
Exhibit 3 Purchase Agreement among Northwest Airlines Corporation,
Newbridge Parent Corporation, Barlow Investors III, LLC and
the Guarantors signatory thereto, dated as of March 2, 1998.
Exhibit 4 First Amendment to the Governance Agreement among Continental
Airlines, Inc., Northwest Airlines Corporation and Newbridge
Parent Corporation, dated as of March 2, 1998.
Exhibit 5 Amendment No. 1 to the Investment Agreement among Northwest
Airlines Corporation, Newbridge Parent Corporation, Air
Partners, L.P., the Partners of Air Partners, L.P. signatory
thereto, Bonderman Family Limited Partership, Air Saipan, Inc.
and 1992 Air, Inc. dated February 27, 1998.
A-1
EXHIBIT 3
____________________________________
PURCHASE AGREEMENT
DATED AS OF MARCH 2, 1998
AMONG
NORTHWEST AIRLINES CORPORATION
NEWBRIDGE PARENT CORPORATION
BARLOW INVESTORS III, LLC
AND
THE GUARANTORS
SIGNATORY HERETO
____________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . 4
2.1 Purchase and Sale of Shares . . . . . . . . . . . . . . . . . . . . 4
2.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Interest Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 5
3.1 Representations and Warranties of Parent and Holdco Sub . . . . . . 5
3.2 Representations and Warranties of the Seller and the
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Representations and Warranties of the Guarantors. . . . . . . . . . 7
ARTICLE IV
COVENANTS. . . . . . . . . . . . . . . . . . 8
4.1 Covenants of the Seller and the Guarantors. . . . . . . . . . . . . 8
4.2 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
CONDITIONS TO CLOSING. . . . . . . . . . . . . . . 10
5.1 Conditions to Obligation of Parent and Holdco Sub . . . . . . . . . 10
5.2 Conditions to Obligations of the Seller and the Guarantors. . . . . 11
ARTICLE VI
INDEMNIFICATION . . . . . . . . . . . . . . . . 11
6.1 Indemnification by Parent and Holdco Sub. . . . . . . . . . . . . . 11
6.2 Losses Net of Insurance, etc. . . . . . . . . . . . . . . . . . . . 12
6.3 Termination of Indemnification. . . . . . . . . . . . . . . . . . . 12
6.4 Procedures Relating to Indemnification Under Article VI . . . . . . 12
6.5 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-i-
PAGE
ARTICLE VII
GENERAL PROVISIONS . . . . . . . . . . . . . . . 15
7.1 Termination or Abandonment of Agreement . . . . . . . . . . . . . . 15
7.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 17
7.8 Entire Agreement; No Oral Waiver; Construction. . . . . . . . . . . 17
7.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.10 No Third-Party Rights. . . . . . . . . . . . . . . . . . . . . . . 18
7.11 Submission To Jurisdiction . . . . . . . . . . . . . . . . . . . . 18
7.12 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 18
7.14 Survival of Representations. . . . . . . . . . . . . . . . . . . . 19
-ii-
PURCHASE AGREEMENT, dated as of March 2, 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"), BARLOW INVESTORS III, LLC,
a California limited liability company (the "SELLER"), and the guarantors
signatory hereto (the "Guarantors").
W I T N E S S E T H :
WHEREAS, the Guarantors own in the aggregate, and on the Closing Date
(as defined herein) the Seller will own, of record and beneficially, 979,000
shares (the "SHARES") of Class A Common Stock, par value $.01 per share (the
"COMPANY CLASS A COMMON STOCK"), of Continental Airlines, Inc. (the "COMPANY");
WHEREAS, on or prior to the Closing Date, the Guarantors will transfer
the Shares (or arrange for the transfer of an equivalent number of shares of
Company Class A Common Stock) to the Seller (the date on which such transfer
occurs, the "TRANSFER DATE");
WHEREAS, the Guarantors desire Seller to sell, Seller wishes to sell,
and Parent and Holdco Sub wish to purchase, the Shares upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 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 Purchase 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.
2
"BUSINESS COMBINATION" means (i) any merger, reorganization, share
exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company, (ii)
any purchase or sale of all or any significant portion of the assets of the
Company, (iii) any issuance or other sale by the Company of any shares of
Company Class A Common Stock or (iv) any issuance or other sale by the
Company of securities representing 20% or more (in any transaction or
series of transactions) of the Voting Power (as such term is defined in the
Investment Agreement) of the Company or any of its subsidiaries.
"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 Parent, 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.
"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.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"INVESTMENT AGREEMENT" means the Investment Agreement dated as of
January 25, 1998, among Parent, Holdco Sub, Air Partners, L.P., the
Partners of Air Partners, L.P., signatory thereto, and the Transferors
named therein.
"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.
3
"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.
"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.
"REVOLVING INTEREST RATE" means at any time 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); PROVIDED, HOWEVER, that no amendment to
the Credit Agreement shall have the effect of modifying the Revolving
Interest Rate hereunder.
"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.
"TRANSACTIONS" means the transactions described in Section 2.3(b).
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions of this Agreement, Holdco Sub agrees to purchase from the Seller, and
the Seller agrees to sell to Holdco Sub, the Shares free and clear of any Lien
or Restriction created by the Seller or otherwise binding upon any such shares
for cash, as more fully set forth in this Article II.
2.2 PURCHASE PRICE. Holdco Sub shall pay to the Seller in respect of
each share of Company Class A Common Stock owned by the Seller $60.82, for an
aggregate purchase price (the "PURCHASE PRICE") of $59,542,780.
2.3 CLOSING DATE. (a) 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 Section 2.1 will take place on the earlier of (i)
the second Business Day following satisfaction or waiver of the conditions set
forth in Article V and (ii) the date of the Closing under the Investment
Agreement, or at such other date and time as the parties shall otherwise
mutually agree, at the offices of Simpson Thacher &
4
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")).
(b) At the Closing, the following actions shall occur:
(i) Holdco Sub shall pay or cause to be paid the aggregate
Purchase Price to or for the account of the Seller by wire transfer to such
bank account (the "DESIGNATED BANK ACCOUNT") as the Seller shall designate
in writing no later than two Business Days prior to the Closing Date;
(ii) The Seller shall deliver to Parent and Holdco Sub or their
designee such documents as Parent and Holdco Sub may reasonably request,
including certificates for the Shares, to evidence the transfer to Parent
and Holdco Sub or their designee of good and marketable title in and to all
of the Shares free and clear of any Lien or Restriction on such Shares; and
(iii) Each party shall take such other actions, and shall execute
and deliver such other instruments or documents, as shall be required under
Article V.
2.4 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
Seller 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 Purchase Price. Such interest shall be payable only
if the Closing occurs.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND HOLDCO SUB. Each of
Parent and Holdco Sub represents and warrants to the Seller as of the date
hereof and as of the Closing Date as follows:
(a) 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.
5
(b) CORPORATE AUTHORIZATION. The execution, delivery and performance
by Parent and Holdco Sub of this Agreement and the consummation by Parent
and Holdco Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, including by resolution of
the respective Boards of Directors of Parent and Holdco Sub. This
Agreement has been duly executed and delivered by each of Parent and Holdco
Sub and constitutes 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). .
(c) NO CONFLICT. Other than (i) compliance with any applicable
requirements of the HSR Act and (ii) compliance with any applicable
requirements of the United States Department of Transportation (the "DOT")
and the European Commission, no filing with, and no permit, authorization,
consent or approval of, any Governmental Authority is necessary for the
execution of this Agreement by Parent or Holdco Sub and the consummation by
Parent and Holdco Sub 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 Parent, Holdco Sub and their subsidiaries, taken as a whole, or
to prevent or materially delay the consummation of the transactions
contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE GUARANTORS.
The Seller and each of the Guarantors represents and warrants to Parent and
Holdco Sub as of the date hereof and as of the Closing Date as follows:
(a) ORGANIZATION, STANDING AND POWER OF THE SELLER. The Seller has
the requisite power and authority to enter into and perform all of its
obligations under this Agreement (including the power and authority without
further action on the part of the Guarantors, other than transferring the
Shares (or arranging for the transfer of an equivalent number of shares of
Company Class A Common Stock) to the Seller prior to the Closing, to
consummate the Transactions (including transferring the shares to Parent or
Holdco Sub) and to comply with Sections 4.1(a) and 4.1(b)). Neither the
execution and delivery of this Agreement by the Seller nor the consummation
by the Seller of the Transactions nor compliance by the Seller with the
provisions hereof conflicts with or results in any breach of the Limited
Liability Company Operating Agreement of the Seller (the "LLC AGREEMENT").
There is no beneficiary or holder of voting trust certificates or other
interest of any trust of which the Seller is trustee whose consent is
required for the execution and delivery of this Agreement or the
consummation of the Transactions.
(b) AUTHORIZATION. The execution, delivery and performance of this
Agreement and the consummation by the Seller of the Transactions have been
duly authorized by the Seller (and by the Guarantors and no other action by
any member of the Seller or any other Person controlling the Seller is
required in order for the consummation of
6
the Transactions by the Seller to be duly authorized). This Agreement has
been duly and validly authorized, executed and delivered by the Seller and
constitutes the Seller's valid and binding agreement, enforceable against
the Seller 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 members of the Seller
are Thomas Hacker and H.P. Partners, a California limited partnership.
(c) TITLE TO SHARES. At the Closing the Seller will be the direct and
record owner of 979,000 shares of Company Class A Common Stock. No person
has the right to acquire from the Seller, and the Seller is not a party to
any contract, understanding, commitment, arrangement or other agreement to
sell, transfer or otherwise dispose of, the Shares. At the Closing the
Seller 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(c), free
and clear of any Liens or Restrictions and it will have the full legal
right, power and authority to assign, transfer and deliver such shares to
Parent pursuant hereto. On and after the Transfer Date, the Seller will
have the sole voting power, and sole power of disposition, with respect to
all of such shares of Company Class A Common Stock and there will be no
restrictions on the Seller's ability to transfer such shares to Parent or
Holdco Sub on the Closing Date.
(d) NO CONFLICT. No filing with, and no permit, authorization,
consent or approval of, any Governmental Authority is necessary for the
execution of this Agreement by the Seller and the consummation by the
Seller 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 Seller and
its subsidiaries, if any, taken as a whole, or to prevent or materially
delay the consummation of the Transactions.
3.3 REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each Guarantor
represents and warrants to Parent and Holdco Sub as of the date hereof and as of
the Closing Date as follows:
(a) POWER OF THE GUARANTORS. Such Guarantor has the legal capacity,
power and right to enter into and perform all of its obligations under this
Agreement (including the capacity to comply with Sections 4.1(a) and
4.1(b)). Neither the execution and delivery of this Agreement by such
Guarantor nor the consummation by such Guarantor of the Transactions nor
compliance by such Guarantor with the provisions hereof conflicts with or
results in any breach of any document that binds or otherwise restricts the
activities of such Guarantor. There is no beneficiary or holder of voting
trust certificates or other interest of any trust of which such Guarantor
is trustee whose consent is required for the execution and delivery of this
Agreement or the consummation of the Transactions. If such Guarantor is
married and such Guarantor's Shares constitute community property, such
Guarantor's spouse has consented to this Agreement and the transactions
contemplated hereby.
7
(b) AUTHORIZATION. The execution, delivery and performance of this
Agreement and the consummation by such Guarantor of the Transactions have
been duly authorized by such Guarantor. This Agreement has been duly and
validly authorized, executed and delivered by such Guarantor and
constitutes such Guarantor's valid and binding agreement, enforceable
against such Guarantor 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).
(c) TITLE TO SHARES. The Guarantors are, and at all times prior to
the Transfer Date will be, the beneficial owners of, in the aggregate, at
least 979,000 shares of Company Class A Common Stock (the "SALE SHARES").
No person has the right to acquire, and such Guarantor is not a party to
any contract, understanding, commitment, arrangement or other agreement to
sell, transfer or otherwise dispose of, the Sale Shares owned by or
issuable to such Guarantor, other than margin agreements and similar pledge
agreements supporting borrowings by such Guarantor in accordance with such
Guarantor's past practices. Such Guarantor has good and valid title to the
Sale Shares, free and clear of any Liens or Restrictions, other than margin
agreements and similar pledge agreements supporting borrowings by such
Guarantor in accordance with such Guarantor's past practices, and such
Guarantor has the full legal right, power and authority to assign, transfer
and deliver such shares to the Seller in accordance with this Agreement and
the LLC Agreement, and to authorize the transfer of such Shares by the
Seller pursuant hereto free and clear of all Liens and Restrictions. Such
Guarantor 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
will be no restrictions on its ability to transfer such shares to Parent or
Holdco Sub on the Transfer Date.
(d) NO CONFLICT. No filing with, and no permit, authorization,
consent or approval of, any Governmental Authority is necessary for the
execution of this Agreement by such Guarantor and the consummation by such
Guarantor of the Transactions, 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 such Guarantor and its
subsidiaries, if any, taken as a whole, or to prevent or materially delay
the consummation of the Transactions.
(e) TRANSFER. Each Guarantor has irrevocably agreed to transfer such
number of Shares (or to arrange for the transfer of an equivalent number of
shares of Company Class A Common Stock) to the Seller as is required in
order to permit the consummation of the Transactions.
(f) VOTING INSTRUCTION. Each Guarantor has determined and advised the
Seller that until the Transfer Date the Shares will be voted as set forth
in Section 4.1(b).
8
ARTICLE IV
COVENANTS
4.1 COVENANTS OF THE SELLER AND THE GUARANTORS.
(a) RESTRICTION ON TRANSFER OF SHARES, PROXIES AND NON-INTERFERENCE.
Neither the Guarantors nor the Seller 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 or, except pursuant to a margin agreement or similar pledge agreement
supporting borrowings by such Guarantor in accordance with such Guarantor's past
practices, pledge, encumber or 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 or, except pursuant to a margin agreement
or similar pledge agreement supporting borrowings by such Guarantor in
accordance with such Guarantor's past practices, pledge, encumbrance, assignment
or other disposition of, any or all of the Shares, (ii) except as expressly
contemplated hereby, grant any proxies or powers of attorney, deposit any Shares
into a voting trust or enter into any other voting arrangement with respect to
any Shares; or (iii) take any action that would make any representation or
warranty contained herein untrue or incorrect or have the effect of preventing
it from performing its obligations under this Agreement; or commit or agree to
take any of the foregoing actions.
(b) VOTING. The Seller and each of the Guarantors hereby agrees 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 Seller's or the Guarantors'
vote, consent or other approval is sought or otherwise eligible to be given, the
Seller or such Guarantor, as applicable, shall vote (or cause to be voted) no
fewer than the number of Shares, if any, owned by it at such time (as set forth
on the signature page hereof, in the case of the Guarantors), except as
otherwise agreed to in writing in advance by Parent, against the following
actions: (i) any Business Combination (other than a Business Combination with
Parent or its affiliates); and (ii) (A) any change in the majority of the board
of directors of the Company; (B) any material change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or By-laws; and (C) any other material change in the Company's
corporate structure or business; and neither the Seller nor the Guarantors 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 the preceding sentence.
(c) PROXY. Prior to the Transfer Date the Guarantors hereby grant
to, and on and after the Transfer Date the Seller hereby grants to, and each
appoints, 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 as indicated in, and solely for the purposes of, Section 4.2(b)
(except that to the extent that either Guarantor shall provide Parent with
reasonably satisfactory proof that it shall have caused a third party to
transfer shares of Company Class A Common Stock to the Seller, such proxy and
attorney-in-fact shall be
9
terminated with respect to such number of Shares). The Guarantors and the
Seller 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 revokes any proxy previously
granted by it with respect to the matters set forth in Section 4.2(b) with
respect to the Shares. Notwithstanding the foregoing, Parent agrees that the
proxy granted by this Section 4.2(c) shall be deemed to be revoked upon the
termination of this Agreement in accordance with its terms.
(d) NO CONVERSIONS. The Guarantors and the Seller agree not to
convert any shares of Company Class A Common Stock, which are subject to this
Agreement, into shares of Company Class B Common Stock.
(e) BINDING OBLIGATIONS. Notwithstanding, and without in any way
limiting, any other provision of this Agreement, the Seller and each of the
Guarantors acknowledge that, subject to the satisfaction (or waiver by it) of
the conditions set forth in Section 5.2, its obligation to consummate the
Transactions, including the transfer of the Shares to the Seller by the
Guarantors and the sale to Holdco Sub and Parent of the Shares, is absolute and
unconditional and shall not terminate except in accordance with Section 7.1,
irrespective of, without limitation, any receipt by the Company of any proposal
for a Business Combination or any resolution by the Board of Directors of the
Company to approve a Business Combination or otherwise.
(f) RELEASE OF SELLER FROM CERTAIN OBLIGATIONS. In the event that the
Parent delivers a "Release Notice" to the Seller, as such term is defined in
Section 4.2(j) of the Investment Agreement, the Seller and each Guarantor shall
be released from its obligations under Sections 4.1(a) and (b). The Release
Notice shall become effective upon the delivery thereof to the Seller in
accordance with the terms of this Agreement.
(g) TRANSFER OF SHARES. Prior to the Closing Date the Guarantors
shall irrevocably transfer the Shares (or cause to be transferred an equivalent
number of shares of Company Class A Common Stock) to the Seller.
4.2 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.
(b) 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.
10
ARTICLE V
CONDITIONS TO CLOSING
5.1 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:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller and the Guarantors 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
Seller and the Guarantors to the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE SELLER AND THE GUARANTORS. The
Seller and the Guarantors 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 Seller and the Guarantors
to the effect set forth in this paragraph.
(c) CLOSING UNDER INVESTMENT AGREEMENT. The conditions to the
obligations of the parties to the Investment Agreement to close the
transactions provided for therein shall have been satisfied or waived by
the parties for whose benefit such conditions exist.
Parent and Holdco Sub agree that if all the conditions set forth in this Section
5.1 have been satisfied or waived by them, the Closing shall occur
simultaneously with the closing under the Investment Agreement
5.2 CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE GUARANTORS. The
obligations of the Seller and the Guarantors to effect the Transactions are
further subject to the satisfaction (or waiver by the Seller and the Guarantors)
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 Seller and
the Guarantors shall have received a certificate signed on behalf of Parent
and Holdco Sub to the effect set forth in this paragraph.
11
(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 it under this
Agreement at or prior to the Closing Date, and the Seller and the
Guarantors shall have received a certificate signed on behalf of Parent and
Holdco Sub to the effect set forth in this paragraph.
(c) CLOSING UNDER INVESTMENT AGREEMENT. The conditions to the
obligations of the parties to the Investment Agreement to close the
transactions provided for therein shall have been satisfied or waived by
the parties for whose benefit such conditions exist.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY PARENT AND HOLDCO SUB. 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 the Seller and each Guarantor 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 arising from or relating to
any lawsuit by any governmental body or any present or former stockholder of the
Company naming any of the parties entitled to indemnification hereunder (each an
"INDEMNIFIED PARTY") and seeking to enjoin or otherwise prevent, prohibit or
impede the consummation of the Transactions or otherwise challenging the
Transactions; PROVIDED, HOWEVER, that such indemnity will not cover actions
taken or failed to be taken by the Seller or any Guarantor which constitute a
breach of Sections 4.1(a) or 4.1(b) of this Agreement.
The Seller and each Guarantor acknowledge and agree that, should the
Closing occur, their sole and exclusive remedy with respect to any and all
claims relating to the transaction as described in this Section 6.1 shall be
pursuant to the indemnification provisions set forth in this Article VI.
6.2 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 indemnified party under insurance policies (net of the
cost of obtaining such recovery). Any Guarantor entitled to indemnification
under insurance policies shall, at the request of Parent or Holdco Sub, use its
reasonable best efforts to obtain such indemnification under such insurance
policies 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 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
12
expenses to the indemnified party in accordance with Section 6.4 (or to
indemnify any indemnified person under this Article VI) by reason of any claim
under any insurance policy, 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.
6.3 TERMINATION OF INDEMNIFICATION. The obligations to indemnify and
hold harmless a party hereto shall not terminate, except that the obligations of
Parent and Holdco Sub pursuant to Section 6.1 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.
6.4 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
13
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, including indemnified parties
under the Investment Agreement, 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 6.4(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
14
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 6.4(b) or
Section 6.4(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.
6.5 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 Seller in writing;
15
(ii) by either Parent or the Seller 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); or
(iii) by either Parent or the Seller if the Investment Agreement
shall be terminated by any party thereto in accordance with the terms
thereof.
(b) In the event of termination of this Agreement by either Parent or
the Seller 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 or the Seller, other than this 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
16
If to the Seller or either Guarantor:
Barlow Investors III, LLC
c/o Equibond, Inc.
100 Wilshire Blvd., Suite 1700
Santa Monica, California 90401
Attention: Thomas Hacker
Fax: (310) 260-6025
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive
Costa Mesa, California 92626-1924
Attention: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
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 or Section, such reference shall be to an Article or Section of 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 Holdco Sub and Parent, prior to or
after the consummation of the transactions contemplated by Sections 2.1 and 2.2,
each may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any of its wholly owned subsidiaries or to
one another or to any partnership of which it is the general partner, but no
such assignment shall relieve it 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.
17
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
18
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 and shall terminate at the close of business on the first
anniversary of the Closing Date other than with respect to Sections 3.2(c) and
3.3(c) which shall not terminate.
19
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Agreement as of the day and year first above written.
"Parent" NORTHWEST AIRLINES CORPORATION
By: /s/ Douglas M. Steenland
--------------------------------
Name: Douglas M. Steenland
Title: Senior Vice-President,
General Counsel and
Secretary
"Holdco Sub" NEWBRIDGE PARENT CORPORATION
By: /s/ Douglas M. Steenland
--------------------------------
Name: Douglas M. Steenland
Title: Vice President,
Secretary and Assistant
Treasurer
"Seller" BARLOW INVESTORS III, LLC
By: /s/ Thomas Hacker
--------------------------------
Name: Thomas Hacker
Title: Manager
"Guarantor" HAKATAK ENTERPRISES, INC.
By: /s/ Thomas Hacker
------------------------------
Name: Thomas Hacker, President
(255,300 shares)
"Guarantor" JAY BUCHBINDER
/s/ Jay Buchbinder
-----------------------------------
(723,700 shares)
EXHIBIT 4
FIRST AMENDMENT
TO THE
GOVERNANCE AGREEMENT
This First Amendment to the Governance Agreement dated as of March 2,
1998, is by and among Continental Airlines, Inc., a Delaware corporation (the
"Company"), Newbridge Parent Corporation, a Delaware corporation (the
"Stockholder"), and Northwest Airlines Corporation, a Delaware corporation that
is the holder of all of the outstanding stock of the Stockholder ("Parent").
WHEREAS, the Company, the Stockholder and the Parent have entered into
that certain Governance Agreement dated as of January 25, 1998 (the "Governance
Agreement"), pursuant to which the Parent and the Stockholder have agreed, among
other things, that they and their respective Affiliates will not, subject to
certain exceptions set forth in the Governance Agreement, Beneficially Own any
Voting Securities in excess of the Permitted Percentage; and
WHEREAS, the Parent and the Stockholder have proposed to enter into a
Purchase Agreement (the "Barlow Agreement") with Barlow Investors III, LLC, a
California limited partnership ("Barlow"), and the guarantors signatory thereto,
pursuant to which the Parent and the Stockholder would acquire Beneficial
Ownership of 979,000 shares of Class A Common Stock Beneficially Owned by
Barlow;
WHEREAS, the Parent and the Stockholder entering into the Barlow
Agreement would cause them to Beneficially Own Voting Securities in excess of
the Permitted Percentage as in effect on the date hereof; and
WHEREAS, the Parent and the Stockholder have requested that the
Company consent to their entering into the Barlow Agreement, and the Company is
willing to agree thereto subject to the terms and conditions of this First
Amendment; and
WHEREAS, the Company, the Parent and the Stockholder desire to clarify
the effect of the conversion of Class A Common Stock to Class B Common Stock by
the holders thereof under Section 1.01 of the Governance Agreement.
NOW, THEREFORE, the Company, the Stockholder and the Parent, intending
to be legally bound, hereby agree as follows:
1. Capitalized terms not otherwise defined herein shall have their
respective meanings set forth in the Governance Agreement.
2. Section 1.01(d) of the Governance Agreement is amended and
restated to read in its entirety as set forth below:
(d) (i) Except as otherwise set forth in this subsection
(d), if at any time the Parent or the Stockholder becomes
aware that it and its Affiliates Beneficially Own more than
the Permitted Percentage, then the Parent shall promptly
notify the Company, and the Parent and the Stockholder, as
appropriate, shall promptly take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by
such Persons to an amount not greater than the Permitted
Percentage.
(ii) If the Voting Securities Beneficially Owned by
the Stockholder and its Affiliates exceed the Permitted
Percentage (A) solely by reason of repurchases of Voting
Securities by the Company or (B) as a result of the
transactions otherwise permitted by the terms of this
Agreement, then the Stockholder shall not be required to
reduce the amount of Voting Securities Beneficially Owned by
such Persons and the percentage of the Fully Diluted Voting
Power represented by the voting Securities Beneficially
Owned by such Persons shall become the Permitted Percentage.
(iii) Notwithstanding the provisions of Section
1.01(a), if the Voting Securities Beneficially Owned by the
Stockholder and
its Affiliates exceed the Permitted Percentage solely by reason of the
Parent's and the Stockholder's entering into (A) the Purchase
Agreement dated as of March 2, 1998 (the "Barlow Agreement") among the
Parent, the Stockholder, Barlow Investors III, LLC, a California
limited liability company ("Barlow"), and the guarantors signatory
thereto, respecting the sale by Barlow of 979,000 shares of Class A
Common Stock to the Stockholder, and (B) the Investment Agreement and
the purchase of (C) the 979,000 shares of Class A Common Stock
pursuant to the Barlow Agreement, and (D) Voting Securities pursuant
to the Investment Agreement, the Stockholder and its Affiliates shall
not be required to reduce the amount of Voting Securities Beneficially
Owned by such Persons; provided that the Permitted Percentage shall
not be changed as a result thereof, and, if the Fully Diluted Voting
Power of the Voting Securities Beneficially Owned by the Stockholder
and its Affiliates is subsequently reduced to or below the Permitted
Percentage, neither the Stockholder, the Parent, nor any of their
respective Affiliates shall Beneficially Own any Voting Securities in
excess of the Permitted Percentage after such reduction.
(iv) Notwithstanding the provisions of Section
1.01(a), if the Voting Securities Beneficially Owned by the
Stockholders and its Affiliates exceed the Permitted
Percentage solely by reason of the conversion of shares of
Class A Common Stock into shares of Class B Common Stock by
the holders thereof, the Stockholder and its Affiliates
shall not be required to reduce the amount of Voting
Securities Beneficially Owned by such Persons; provided
that, the Permitted Percentage shall not be changed as a
result of any such conversion, and if the Fully Diluted
Voting Power of the Voting Securities Beneficially Owned by
the Stockholder and its Affiliates is subsequently reduced
to or below the Permitted Percentage, neither the
Stockholder, the Parent nor any of their respective
Affiliates shall Beneficially Own any Voting Securities in
excess of the Permitted Percentage after such reduction.
3. The Company hereby represents and warrants to the Parent and the
Stockholder that this First Amendment to the Governance Agreement has been
approved by a Majority Vote.
4. This First Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
5. Except as expressly modified by this First Amendment to the
Governance Agreement, all of the terms, conditions and provisions of the
Governance Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Governance Agreement to be executed as of the date first
referred to above.
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: Vice President, Secretary
and Assistant Treasurer
Continental Airlines, Inc.
By: /s/ Jeffery A. Smisek
---------------------------------------
Name: Jeffery A. Smisek
Title: Executive Vice President
Exhibit 5
This AMENDMENT No. 1 made and entered into the 27th day of
February, 1998, among Northwest Airlines Corporation
("Parent"), Newbridge Parent Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Holdco
Sub"), Air Partners, L.P., a Texas limited partnership (the
"Partnership"), the partners of the Partnership
(collectively, the "Partners"), Bonderman Family Limited
Partnership, a Texas limited partnership ("Transferor I"),
Air Saipan, Inc., a CNMI corporation ("Transferor II"), and
1992 Air, Inc., a Texas corporation ("Transferor III").
WHEREAS, Parent, Holdco Sub, the Partnership, the Partners, Transferor
I, Transferor II and Transferor III are parties to an Investment Agreement dated
as of January 25, 1998 (the "Investment Agreement"; capitalized terms used and
not defined herein have the meaning assigned to them in the Investment
Agreement); and
WHEREAS, the parties hereto desire to amend the Investment Agreement
to adjust the maximum percentage of the consideration to be paid to the Partners
pursuant thereto that may be so paid in shares of Holdco Sub Class A Common
Stock;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Amendments. (a) Schedules 2.2(a) and 2.2(b) to the
Investment Agreement are hereby deleted in their entirety and replaced with
Schedules 2.2(a) and 2.2(b) hereto, respectively.
(b) The reference in Section 2.2(c) of the Investment Agreement to
"40%" is hereby deleted and replaced with a reference to "41%".
(c) Immediately following Section 2.2(c) of the Investment Agreement,
a new Section 2.2(d) is hereby inserted, as follows:
"(d) It is understood and agreed by the parties that,
subject to clause (c) of this Section 2.2, 1992 Air GP may elect
to receive part of the consideration for its Allocable Company
Class A Shares in cash and part in shares of Holdco Sub Class A
Common Stock as set forth on Schedules 2.2(a) and 2.2(b), so that
1992 Air GP shall be both a Cash Electing Partner and a Share
Electing Partner."
Section 2. Approval. This Amendment is made pursuant to Section 7.8
of the Investment Agreement, which requires the written consent of each of
Parent, Holdco Sub, the
2
Partnership, the Partners, Transferor I, Transferor II and Transferor III, each
of whom hereby consents to the foregoing amendment.
Section 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York as applied in
contracts entered into and to be performed in New York without regard to the
application of principles of conflicts of laws.
Section 4. Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall be considered an original and all of
which, taken together, shall constitute the same document.
3
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Agreement as of the date and year first above written above.
NORTHWEST AIRLINES CORPORATION
By: /s/ Douglas M. Steenland
----------------------------------------
Name: Douglas M. Steenland
Title: Vice President, General
Counsel and Secretary
NEWBRIDGE PARENT CORPORATION
By: /s/ Douglas M. Steenland
----------------------------------------
Name: Douglas M. Steenland
Title: Vice President, Secretary
and Assistant Treasurer
AIR PARTNERS, L.P.
1992 AIR GP, a Texas general partnership
By: 1992 Air, Inc., a Texas corporation,
managing partner
By: /s/ James J. O'Brien
-----------------------------------
Name: James J. O'Brien
Title: Vice President
THE PARTNERS:
GENERAL PARTNERS:
1992 AIR GP, a Texas general partnership
By: 1992 Air, Inc., a Texas corporation,
general partner
By: /s/ James J. O'Brien
-----------------------------------
Name: James J. O'Brien
Title: Vice President
AIR II GENERAL, INC., a Texas corporation
By: /s/ James J. O'Brien
-----------------------------
Name: James J. O'Brien
Title: Vice President
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/ James J. O'Brien
------------------------------
Name: James J. O'Brien
Title: Vice President
AIR SAIPAN, INC., a CNMI corporation
By: /s/ James J. O'Brien
-----------------------------------
Name: James J. O'Brien
Title: Agent and Attorney-in-Fact
BONDERMAN FAMILY LIMITED
PARTNERSHIP
By: /s/ James J. O'Brien
-----------------------------------
Name: James J. O'Brien
Title: Agent and Attorney-in-Fact
1992 AIR, INC., a Texas corporation
By: /s/ James J. O'Brien
-----------------------------------
Name: James J. O'Brien
Title: Vice President
Schedule 2.2(a)
Cash Electing Partners
and Transferors
Partner or Transferor Estimated Cash Amount(1)
- --------------------- ------------------------
Estate of Larry Hillblom $ 55,819,750
DHL Management Services, Inc. 54,201,548
Sun America, Inc. 20,325,816
American General Corporation 72,864,236
Conair, L.P. 6,097,883
Bondo Air Limited Partnership 62,053,260
1992, Air GP 19,289,758
Air Saipan, Inc. 225,156
------------
$290,877,407
------------
------------
- ----------------
(1) Net of the aggregate exercise price of Warrants.
Schedule 2.2(b)
Share Electing Partners
and Transferors
Partner or Transferor Estimated Value of Shares*(1)
- --------------------- -----------------------------
David Bonderman $ 23,369,916
Bonderman Family Limited Partnership 6,775,146
Lectair Partners 36,586,017
Eli Broad 13,550,293
Donald Sturm 33,876,109
1992 Air GP 71,801,792
1992 Air, Inc. 12,961,350
Bonderman Family Limited Partnership 997,448
------------
$199,918,071
------------
------------
- ----------------
* Based on assumed price used in calculating the Share Exchange Ratio of
1.2079.
(1) Net of the aggregate exercise price of Warrants.
