Exhibit 10.4
Execution Copy
AMENDED AND RESTATED
GOVERNANCE AGREEMENT
This Amended and Restated Governance Agreement, dated as of February
8, 2000, among Continental Airlines, Inc., a Delaware corporation (the
"Company"), Northwest Airlines Corporation, a Delaware corporation formerly
named Newbridge Parent Corporation (the "Stockholder"), and Northwest Airlines
Holdings Corporation, a Delaware corporation formerly named Northwest Airlines
Corporation ("Parent").
WHEREAS, the Company, the Stockholder and the Parent have entered
into that certain Governance Agreement, dated as of January 25, 1998 (the
"Original Governance Agreement"), as amended by the First Amendment dated as of
March 2, 1998, and by the Second Amendment dated as of November 20, 1998 (such
agreement, as so amended, the "Governance Agreement");
WHEREAS, the Company, the Stockholder and the Parent wish to restate
the Governance Agreement to incorporate into a single document amendments to the
Original Governance Agreement and to amend further the Governance Agreement as
set forth herein;
WHEREAS, this Amended and Restated Governance Agreement has been
approved by a Majority Vote (as defined herein).
NOW, THEREFORE, the Company, the Stockholder and the Parent,
intending to be legally bound, hereby agree as follows:
SECTION 1
STANDSTILL AND VOTING
Section 1.01. Acquisition of Voting Securities.
(a) Until the Standstill Termination Date, the Parent and the
Stockholder each covenant and agree that they and their respective Affiliates
will not Beneficially Own any Voting Securities in excess of the Permitted
Percentage; provided that if any of the following events shall occur: (A) it is
publicly disclosed that Voting Securities representing 15% or more of the Total
Voting Power have been acquired subsequent to the date hereof by any Person or
13D Group (other than (1) any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries or any Person holding Voting
Securities for or pursuant to the terms of any such employee benefit plan or (2)
the Parent or the Stockholder, or an Affiliate of, or any Person acting in
concert with, the Parent or the Stockholder, or any Person that has been
induced, in whole or in part, directly or indirectly, by the Parent, the
Stockholder or the Voting Trust to make such acquisition or (3) an Institutional
Investor (while an Institutional Investor)), or (B) a bona fide tender or
exchange offer is made by any Person (other than the Company, the Parent, the
Stockholder, or an Affiliate of, or any Person acting in concert with, or
induced by, directly or indirectly, any of them) to purchase outstanding shares
of Voting Securities representing 15% or more of the Total Voting Power and such
offer is not withdrawn or terminated prior to the Stockholder acquiring
additional Voting Securities, or (C) the Board of Directors shall approve the
acquisition by any Person or 13D Group of Voting Securities that would otherwise
trigger the adverse consequences of any stockholder rights plan of the Company
that may at the time be in effect, then in any event referred to in clauses (A),
(B) or (C) above,
notwithstanding the foregoing provisions of this Section 1.01(a) or any other
provisions of this Agreement, the Parent, the Stockholder and their Affiliates
may acquire additional Voting Securities in any manner, whether in market
purchases, privately negotiated transactions, a tender or exchange offer on any
terms or in any other manner, and the Parent or the Stockholder may submit a
competing proposal or a proposal for a merger or any other type of business
combination.
(b) Notwithstanding the provisions of Section 1.01(a), following the
Closing and until the Standstill Termination Date, the Stockholder may purchase
shares of Voting Securities in any manner in order to maintain at the Permitted
Percentage its percentage of the Fully Diluted Voting Power.
(c) Except as expressly provided herein, the Parent and the
Stockholder shall not permit any Affiliate to Beneficially Own any Voting
Securities in excess of the Permitted Percentage.
(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 "Xxxxxx Agreement") among the Parent, the Stockholder, Xxxxxx Investors
III, LLC, a California limited liability company ("Xxxxxx"), and the guarantors
signatory thereto, respecting the sale by Xxxxxx 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
Xxxxxx 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.
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(iv) 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 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.
Section 1.02. Restrictions on Transfer. Prior to the Standstill
Termination Date, neither the Stockholder nor the Parent will Transfer or permit
any of their respective Affiliates to Transfer any Voting Securities except for:
(i) Transfers of Voting Securities pursuant to any tender or exchange offer to
acquire Voting Securities approved and recommended by the Company's Board of
Directors (which recommendation has not been withdrawn); (ii) Transfers of
Voting Securities to the Stockholder provided that such Voting Securities are
immediately transferred to the public stockholders of the Stockholder by means
of a pro rata dividend or other pro rata distribution; (iii) Transfers of Voting
Securities by the Stockholder to any of its controlled Affiliates, provided that
such Affiliate agrees to be bound by the provisions of this Agreement applicable
to the Stockholder; (iv) Transfers of the Shares by the Voting Trust to the
Stockholder upon termination of the Voting Trust; (v) Transfers of Voting
Securities by the Stockholder pursuant to Section 4.1(d) of the Investment
Agreement or Section 5 of this Agreement; (vi) Transfers of Voting Securities to
the B/C/P Group; and (vii) Transfers of Voting Securities by the Stockholder to
any transferee who, together with its Affiliates and Associates, would not, to
the knowledge of Parent or the Stockholder, Beneficially Own in excess of 10% of
the Total Voting Power as a result of such Transfer; provided that no such
Transfers under clauses (i) or (iii) of this Section 1.02 may be made to any
Person (including such Person's Affiliates and any Person or entities which are
part of any 13D Group which includes such transferee or any of its Affiliates)
that, after giving effect to such Transfer, would to the knowledge of Parent or
the Stockholder Beneficially Own Voting Securities representing more than 10% of
the Total Voting Power.
Section 1.03. Voting Trust. Immediately following the Closing, the
Stockholder and the Parent shall cause AP to deposit the Shares, and the
Stockholder and the Parent shall deposit any other shares of Voting Securities
Beneficially Owned by either of them or any of their Affiliates, into a voting
trust (the "Voting Trust") to be established pursuant to a voting trust
agreement (the "Voting Trust Agreement") with an independent voting trustee in a
form reasonably satisfactory to Parent and the Company and which shall include
the following provisions for the voting of the shares of Voting Securities
deposited therein: until the Standstill Termination Date, all such shares shall
(a) be voted or consented on all matters submitted to a vote of the Company's
stockholders, other than the election of directors, either (i) in the case of
votes at a stockholders meeting, in the same proportion as the votes cast by
other holders of Voting Securities, or (ii) in the case of consents, so that the
percentage of Stockholder Voting Power consented to on any matter equals the
percentage of all other outstanding Voting Securities so consented; provided,
that with respect to (x) any vote on a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or
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similar transaction involving the Company, any sale of all or substantially all
of the Company's assets or any issuance of Voting Securities that would
represent in excess of 20% of the Total Voting Power prior to such issuance,
including any of the foregoing involving the Stockholder or the Parent, or (y)
any amendment to the Company's amended and restated certificate of incorporation
or by-laws that would materially and adversely affect the Stockholder (including
through its effect on the Alliance Agreement and the rights of the Voting
Securities Beneficially Owned by the Stockholder), such shares may be voted as
directed by the Stockholder and (b) in the election of directors, for the
election of the Independent Directors nominated by the Board of Directors of the
Company determined by a Majority Vote; provided, that with respect to any
election of directors in respect of which any Person other than the Company is
soliciting proxies, the Stockholder and the Parent shall cause all such shares
to be voted, at the option of the Stockholder, either (i) as recommended by the
Board of Directors or (ii) in the same proportion as the votes cast by the other
holders of Voting Securities. The Voting Trust Agreement shall also provide that
the Voting Trust shall not issue voting trust certificates or any interest in
the Voting Trust to a Person other than the Stockholder or any of its
Affiliates.
Section 1.04. Further Restrictions on Conduct. The Parent and the
Stockholder, as applicable, covenant and agree that until the Standstill
Termination Date:
(a) except in connection with the performance of the Alliance
Agreement and the subsequent negotiations and agreements contemplated thereby,
neither the Parent, the Stockholder nor any of their respective Affiliates will
otherwise act, alone or in concert with others, to seek to affect or influence
the Board of Directors or the control of the management of the Company or the
businesses, operations, affairs, financial matters or policies of the Company
(it being agreed that this paragraph shall not prohibit the Parent and its
Subsidiaries, and their respective directors, officers and employees, from
engaging in ordinary course business activities with the Company or having
periodic discussions with directors, officers and employees of the Company
regarding the Company's business, it being understood that such matters shall
not include matters that, under applicable antitrust laws, could not be
discussed among competitors);
(b) other than in connection with the deposit of the Shares and
other Voting Securities into the Voting Trust as required by Section 1.03, the
Stockholder shall not deposit any Voting Securities into any voting trust or
subject any Voting Securities to any proxy (other than any revocable proxy to
vote the Shares in a manner consistent with Sections 1.03 and 2.01 hereof),
arrangement or agreement with respect to the voting or consenting with respect
to such Voting Securities or other agreement having similar effect;
(c) neither the Parent, the Stockholder nor any of their respective
Affiliates shall initiate or propose any stockholder proposal or action or make,
or in any way participate in or encourage, directly or indirectly, any
"solicitation" of "proxies" to vote or written consents, or seek to influence
any Person with respect to the voting of or consenting with respect to, any
Voting Securities, or become a "participant" in a "solicitation" (as such terms
are defined in Regulation 14A under the Exchange Act, as in effect on the date
hereof) in any election contest with respect to the election or removal of the
Independent Directors or in opposition to the recommendation of the majority of
the directors of the Company with respect to any other matter;
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(d) other than as is contemplated by this Agreement, neither the
Parent, the Stockholder, the Voting Trust nor any of their respective Affiliates
shall join a partnership, limited partnership, syndicate or other group, or
otherwise act in concert with any other Person, for the purpose of acquiring,
holding, voting or disposing of Voting Securities, or, otherwise become a
"person" within the meaning of Section 13(d)(3) of the Exchange Act;
(e) neither the Parent nor the Stockholder shall transfer its
partnership interests in AP, nor cause or permit AP to admit new partners;
(f) each of the Parent and the Stockholder shall, and shall cause
its Affiliates to, deposit into the Voting Trust such additional shares of
Voting Securities as they may acquire after the Closing; and
(g) neither the Parent nor the Stockholder nor any of their
respective Affiliates shall take any action inconsistent with the foregoing;
provided that the restrictions set forth in Sections 1.04 (a), (b), (c) and (d)
of this Agreement shall not apply to (i) any vote by the Parent or the
Stockholder described in clauses (x), (y) or (z) of Section 1.03 of this
Agreement, (ii) [intentionally omitted], (iii) Northwest Airlines, Inc. acting
as an alliance partner pursuant to the Alliance Agreement, (iv) the Parent or
the Stockholder seeking a merger with the Company following the Company's
delivery of a Termination Notice pursuant to Section 21 of the Alliance
Agreement or (v) any action taken as permitted by Section 1.01(a).
Section 1.05 Reports. During the term of this Agreement, the
Stockholder shall deliver to the Company, promptly after any Transfer of Voting
Securities by the Stockholder, the Voting Trust or their respective Affiliates,
an accurate written report specifying the amount and class of Voting Securities
so Transferred and the amount of each class of Voting Securities owned by them
after giving effect to such Transfer; provided, however, that such reporting
obligation may be satisfied with respect to any such Transfer that is reported
in a statement on Schedule 13D pursuant to the Exchange Act and the rules
thereunder by delivering promptly to the Company a copy of such Schedule 13D
statement. The Company shall be entitled to rely on such reports and statements
on Schedule 13D for all purposes of this Agreement.
SECTION 2
BOARD OF DIRECTORS AND RELATED MATTERS
Section 2.01. Composition of Board of Directors.
(a) The individuals listed on Exhibit 2.01 hereto shall, for
purposes of this Agreement, constitute the Independent Directors immediately
after the consummation of the Stock Purchase (the "Closing").
(b) Following the Closing, and until the Standstill
Termination Date, the Company, the Parent, the Stockholder and their respective
Affiliates shall take all such actions as are required under applicable law to
cause Independent Directors to constitute at all times at least a majority of
the Board of Directors. At each annual meeting of stockholders of the Company
following the Closing, or at any time that a vacancy in a seat previously
occupied
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by an Independent Director on the Board of Directors is to be filled, the
identity of the Independent Director or Directors to stand for election to the
Board of Directors or to fill the vacancy, as the case may be, shall be
determined by a Majority Vote.
(c) Without the prior written consent of the Parent, the
Company shall not amend, alter or repeal its amended and restated certificate of
incorporation or by-laws so as to eliminate or diminish the ability of
stockholders of the Company to act by written consent or Section 1.10 of the
Company's by-laws.
Section 2.02. Transactions Involving the Stockholder. The parties
agree that any material transaction between the Company and the Parent, the
Stockholder or any of their respective Affiliates, or relating to this Agreement
or the Alliance Agreement, including without limitation, any amendment,
modification or waiver of any provision hereof or thereof, shall not be taken
without the prior approval thereof by a Majority Vote.
Section 2.03. Significant Actions. Promptly following the Closing,
the Company shall amend its by-laws to provide that no action described in
Exhibit 2.03 hereto may be taken without prior approval thereof by a Majority
Vote.
Section 2.04. Management of the Business. Following the Closing and
until the Standstill Termination Date, except as indicated in Section 2.02
above, management of the Company will continue to have full authority to operate
the day-to-day business affairs of the Company to the same extent as prior to
the Closing. In this regard, the Chief Executive Officer of the Company shall
continue to be in charge of all matters within his authority on the date hereof,
subject, as required by Delaware law, to the requirement that the business and
affairs of the Company shall be managed by or under the direction of the Board
of Directors.
Section 2.05. Executive Committee. Prior to the Closing, the Company
shall cause the authority of the Executive Committee of the Company's Board of
Directors to be modified to the reasonable satisfaction of the Parent, to permit
such committee to approve only ordinary course transactions in which the Company
engages from time to time, but which nonetheless require approval by the Board
of Directors.
SECTION 3
COVENANTS
Section 3.01. Legends. The Company shall cooperate and instruct its
transfer agent and registrar to place legends on all shares of Class A Common
Stock (and the Warrants) held by AP or any of its Affiliates to reflect that
such shares are subject to the restrictions on voting and transfer set forth in
the Investment Agreement and in this Agreement.
Section 3.02. Issuance of Class A Common Stock. The Company shall
not issue any additional shares of Class A Common Stock (except upon exercise of
the Warrants outstanding as of the date hereof) or securities convertible into
or exercisable or exchangeable for shares of Class A Common Stock or enter into
any agreement or arrangement to do the same without giving the Stockholder
pre-emptive rights which shall permit the Stockholder to acquire shares of Class
A Common Stock concurrently with any such issuance.
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Section 3.03. Issuance of Class B Common Stock. The Company shall
not, without giving the Stockholder pre-emptive rights, issue shares of Class B
Common Stock, par value $.01 per share, of the Company (the "Class B Common
Stock"), or securities convertible into or exercisable or exchangeable for
shares of Class B Common Stock except to the extent that such shares (including
underlying shares, in the case of securities convertible into or exercisable or
exchangeable for shares of Class B Common Stock) (a) in the case of such shares
or convertible securities issued for the purpose of fulfillment of the Company's
obligations under any present or future stock option plan, do not exceed the
number of shares issued under such plans consistent with past practices, (b) in
the case of such shares or convertible securities issued for any other purpose,
do not exceed in the aggregate 5% of the outstanding shares of Class B Common
Stock on the date of the Investment Agreement or (c) are issued pursuant to
options, warrants or convertible securities issued and outstanding on, or
commitments to issue such shares that are in effect on, the date hereof and
which are disclosed in Section 4.01(b).
Section 3.04. Conversion; Interested Stockholders. The Company shall
not seek a vote of its stockholders, approving any amendment to the Company's
amended and restated certificate of incorporation or by-laws, nor shall it take
any other action, that would, without the consent of the Parent, (a) eliminate
AP's right in Section 2(e) of the Company's amended and restated certificate of
incorporation to convert shares of Class A Common Stock into shares of Class D
Common Stock, par value $.01 per share, (b) cause Section 203 of the Delaware
General Corporation laws to be applicable to the Company or (c) adopt an
"interested stockholders" provision.
Section 3.05. Transfer of Voting Trust Certificates. Prior to the
Standstill Termination Date, the Stockholder shall not Transfer the voting trust
certificates issued to it by the Voting Trust or any interest in the Voting
Trust represented thereby.
Section 3.06. Conduct. Each of the Company, the Parent and the
Stockholder agrees that from the date hereof until the Closing, except as
otherwise contemplated by this Agreement or with the prior written consent of
the other, it and its subsidiaries shall not (a) change its principal line of
business, (b) change the fundamental nature of its business or (c) dispose of
any substantial portion of its assets.
Section 3.07. No Solicitation.
(a) From the date hereof until the Closing, the Company and its
subsidiaries, and the officers, directors, financial or legal advisors of the
Company and its subsidiaries will not, directly or indirectly, (i) take any
action to solicit, initiate or encourage any Acquisition Proposal or (ii) engage
in negotiations with, or disclose any nonpublic information relating to the
Company or any of its subsidiaries or afford access to the properties, books or
records of the Company or any of its subsidiaries to, any person that may be
considering making, or has made, an Acquisition Proposal; provided that, the
Company may, in response to an unsolicited written proposal from a third party
regarding an Acquisition Proposal engage in the activities specified in clause
(ii), if the Board of Directors of the Company determines in good faith, after
obtaining and taking into account the advice of outside counsel, that such
action is required for the Board of Directors of the Company to comply with its
fiduciary duties under applicable law. The Company will promptly (and in no
event later than 24 hours after having received the relevant Acquisition
Proposal) notify the Parent (which notice shall be provided orally and in
writing and
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shall identify the person making the Acquisition Proposal and set forth the
material terms thereof) after having received any Acquisition Proposal, or
request for nonpublic information relating to the Company or any of its
subsidiaries or for access to the properties, books or records of the Company or
any of its subsidiaries by any person who is considering making or has made an
Acquisition Proposal. The Company will, to the extent consistent with the
fiduciary duties of the Company's Board of Directors under applicable law, keep
the Parent fully informed of the status and details of any such Acquisition
Proposal or request. The Company shall, and shall cause its subsidiaries, and
shall instruct the directors, officers and financial and legal advisors of the
Company and its subsidiaries to, cease immediately and cause to be terminated
all activities, discussions or negotiations, if any, with any persons conducted
heretofore with respect to any Acquisition Proposal. Notwithstanding any
provision of this Section, nothing in this Section shall prohibit the Company or
its Board of Directors from taking and disclosing to the Company's stockholders
a position with respect to an Acquisition Proposal by a third party to the
extent required under the Exchange Act or from making such disclosure to the
Company's stockholders which, in the judgment of the Board of Directors, taking
into account the advice of outside counsel, is required under applicable law;
provided that nothing in this sentence shall affect the obligations of the
Company and its Board of Directors under any other provision of this Agreement.
(b) From the date hereof until the Closing, the Parent and its
subsidiaries, and the officers, directors, financial or legal advisors of the
Parent and its subsidiaries will not, directly or indirectly, (i) take any
action to solicit, initiate or encourage any Acquisition Proposal or (ii) engage
in negotiations with, or disclose any nonpublic information relating to the
Parent or any of its subsidiaries or afford access to the properties, books or
records of the Parent or any of its subsidiaries to, any person that may be
considering making, or has made, an Acquisition Proposal; provided that, the
Parent may, in response to an unsolicited written proposal from a third party
regarding an Acquisition Proposal engage in the activities specified in clause
(ii), if the Board of Directors of the Parent determines in good faith, after
obtaining and taking into account the advice of outside counsel, that such
action is required for the Board of Directors of the Parent to comply with its
fiduciary duties under applicable law. The Parent will promptly (and in no event
later than 24 hours after having received the relevant Acquisition Proposal)
notify the Company (which notice shall be provided orally and in writing and
shall identify the person making the Acquisition Proposal and set forth the
material terms thereof) after having received any Acquisition Proposal, or
request for nonpublic information relating to the Parent or any of its
subsidiaries or for access to the properties, books or records of the Parent or
any of its subsidiaries by any person who is considering making or has made an
Acquisition Proposal. The Parent will, to the extent consistent with the
fiduciary duties of the Parent's Board of Directors under applicable law, keep
the Company fully informed of the status and details of any such Acquisition
Proposal or request. The Parent shall, and shall cause its subsidiaries, and
shall instruct the directors, officers and financial and legal advisors of the
Parent and its subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any persons conducted
heretofore with respect to any Acquisition Proposal. Notwithstanding any
provision of this Section, nothing in this Section shall prohibit the Parent or
its Board of Directors from taking and disclosing to the Parent's stockholders a
position with respect to an Acquisition Proposal by a third party to the extent
required under the Exchange Act or from making such disclosure to the Parent's
stockholders which, in the judgment of the Board of Directors, taking into
account the advice of outside counsel, is required under applicable law;
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provided that nothing in this sentence shall affect the obligations of the
Parent and its Board of Directors under any other provision of this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Company. (a) The
Company represents and warrants to the Parent and the Stockholder that (i) the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, (ii) the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, and (iii) this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company, and is
enforceable against the Company 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).
(b) Company Capitalization. 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 Class A
Common Stock, (y) 200,000,000 shares of Class B Common Stock and (z) 50,000,000
shares of Class D Common Stock. As of the close of business on December 31,
1997, there were (i) no shares of Company Preferred Stock, 8,379,464 shares of
Class A Common Stock, 50,512,010 shares of Class B Common Stock and no shares of
Class D Common Stock issued and outstanding; (ii) no shares of capital stock of
the Company held in the treasury of the Company; (iii) 5,991,472 shares of Class
B Common Stock reserved for issuance upon exercise of outstanding stock options
of the Company pursuant to the Company's employee stock option and similar
plans; (iv) 7,617,155 shares of 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 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
Class A Common Stock issuable upon exercise of the Warrants; and (vii) 308,343
shares of Class B Common Stock issuable upon exercise of the Warrants. 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 Class B Common Stock granted in
accordance with past practice pursuant to stock option and similar plans, (b)
options to purchase shares of Class B Common Stock granted pursuant to the
Company's 1997 Employee Stock Purchase Plan, (c) shares of Class A Common Stock,
which are convertible into shares of Class B Common Stock or Class D Common
Stock on a one-for-one basis and (d) commitments to issue not in excess of
25,000 shares of Class B Common Stock to correct record-keeping errors in
connection with the Company's 1994 Employee Stock Purchase Plan. All outstanding
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shares of the Company's capital stock are duly authorized, validly issued, fully
paid and non-assessable.
Section 4.02. Representations and Warranties of the Parent. The
Parent represents and warrants to the Company that (a) it and the Stockholder
are corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and each has the power and authority to enter into
this Agreement and to carry out its respective obligations hereunder, (b) the
execution and delivery of this Agreement by the Parent and the Stockholder and
the consummation thereby of the transactions contemplated hereby have been duly
authorized by all necessary action on their parts and no other proceedings on
their parts are necessary to authorize this Agreement or any of the transactions
contemplated hereby, and (c) this Agreement has been duly executed and delivered
by the Parent and the Stockholder and constitutes a valid and binding obligation
of each of them, and is enforceable against each of them 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).
SECTION 5
TERMINATION OF ALLIANCE AGREEMENT
Section 5.01. Stockholder's Election. Within thirty (30) days
following the delivery by the Company of a Termination Notice pursuant to
Section 21(a) of the Alliance Agreement, the Parent shall make an election (an
"Election") of either the merger procedures specified in Section 5.02 (the
"Merger Procedures") or the stock sale procedure specified in Section 5.03 (the
"Stock Sale Procedure") by delivering to the Company a Notice of Election. If
the Stockholder initially elects the Merger Procedure (a "Merger Election"), it
may at any time prior to the execution by the Parent and the Company of a
definitive agreement for a merger transaction, upon written notice to the
Company, irrevocably elect to abandon the Merger Procedure and elect the Stock
Sale Procedure, in which latter event the Parent shall have 18 months following
its election of the Stock Sale Procedure to consummate the sale of its shares.
If the Stockholder initially elects the Stock Sale Procedure (the "Stock Sale
Election"), it may not, at any time thereafter, make a Merger Election. If the
Stockholder fails timely to make an Election, it shall be deemed to have made a
Stock Sale Election.
Section 5.02. Merger Procedure. (a) If the Stockholder makes a
Merger Election, it shall within 30 days after doing so submit a notice to the
Company setting forth the material terms and conditions upon which it would
propose to acquire the Voting Securities not Beneficially Owned by it and its
Affiliates (the "Merger Proposal"). After the Merger Election, the Company shall
promptly establish a committee of the Board of Directors (the "Special
Committee") composed of only, and at least three (3), Independent Directors as
determined by a Majority Vote, which shall have the authority to consider,
review, and negotiate the terms of, and to make a recommendation to the full
Board of Directors regarding, the Merger Proposal, and to retain, at the
Company's expense, counsel, financial advisors and other advisors, and to take
such other actions customarily delegated to a committee of independent directors
in similar circumstances. If the Stockholder submits a Merger Proposal, the
Stockholder and the Special
10
Committee shall negotiate in good faith and use their best efforts to agree upon
the terms of a merger at the earliest practicable date consistent with the
Special Committee's fiduciary duties.
(b) (i) If the Stockholder and the Company do not enter into a
definitive merger agreement within six (6) months of the establishment of the
Special Committee, on the third day after the six month anniversary of the
establishment of the Special Committee (the "Initiation Date"), the Company will
designate an investment banking firm of recognized national standing (the
"Company's Appraiser") and the Stockholder will designate an investment banking
firm of recognized national standing (the "Parent's Appraiser"), in each case to
determine the "Merger Value". The Stockholder acknowledges and agrees that the
consideration that would constitute the Merger Value is the price per share of
Voting Securities that an unrelated third party would pay if it were to acquire
all outstanding shares of Voting Securities (other than the shares held by the
Stockholder and its Affiliates) in one or more arm's-length transactions,
assuming that the Shares were being sold in a manner designed to attract all
possible participants. Each of the investment banking firms referred to herein
will be instructed to determine the Merger Value in this manner.
(ii) Within thirty (30) days after the Initiation Date, the
Company's Appraiser and the Parent's Appraiser will each determine its initial
view as to the Merger Value and consult with one another with respect thereto.
By the 45th day after the Initiation Date, the Company's Appraiser and the
Parent's Appraiser will each have determined its final view as to the Merger
Value. At that point, if the Higher Appraised Amount (as defined below) is not
more than 110% of the Lower Appraised Amount (as defined below), the Merger
Value will be the average of those two views. Otherwise, the Company's Appraiser
and the Parent's Appraiser will agree upon and jointly designate a third
investment banking firm of recognized national standing (the "Mutually
Designated Appraiser") to determine its view of the Merger Value. The Mutually
Designated Appraiser will not be permitted to see or otherwise have access to,
or be informed of, the results of the appraisals of Merger Value by the
Company's Appraiser and the Parent's Appraiser, or any component of either
appraiser's analysis which led to its conclusions, and each of the Parent and
the Company agree to comply with the foregoing provision. The Mutually
Designated appraiser will, no later than the 65th day after the Initiation Date,
determine the Merger Value (the "Mutually Appraised Amount"). The Merger Value
will be (x) the Mutually Appraised Amount, if such amount falls within the range
of values that is between the Lower Appraised Amount and the Higher Appraised
Amount, (y) the Lower Appraised Amount if such amount is below the Lower
Appraised Amount, and (z) the Higher Appraised Amount if such amount is above
the Higher Appraised Amount.
As used herein, "Lower Appraised Amount" means the lower of the
respective final views of the Company's Appraiser and the Parent's Appraiser as
to the Merger Value and "Higher Appraised Amount" means the higher of such
respective final views.
The Company and the Parent shall be responsible for the payment of
fees and expenses to the respective investment banking firms designated by them,
and shall each be responsible for 50% of the fees and expenses payable to the
Mutually Designated Appraiser.
(iii) If, within fifteen (15) days of the determination of the
Merger Value as provided above (such fifteenth day being referred to as the
"Trigger Date"), (A) the Stockholder is unwilling to enter into a definitive
merger agreement at the Merger Value, then the
11
Stockholder shall be required to dispose of the shares of Voting Securities
Beneficially Owned by it and its Affiliates pursuant to the Stock Sale Procedure
within eighteen (18) months of the Trigger Date or (B) the Company's Board of
Directors and the Special Committee are unwilling to approve and recommend a
definitive merger agreement at the Merger Value, then the provisions of this
Agreement (other than Section 7) shall terminate in all respects.
5.03. Stock Election Procedure. (a) If the Stockholder makes a Stock
Sale Election, then it shall, within twenty-four (24) months of the delivery of
the Termination Notice, sell the shares of Voting Securities Beneficially Owned
by it and its Affiliates (the "Selling Stockholders"), at its option, either (i)
in one or a series of privately negotiated sales of 15% or more of Voting
Securities Beneficially Owned by the Selling Stockholders (each, a "Private
Sale" and together, "Private Sales") or (ii) in any other manner that the
Selling Stockholders elect in their sole discretion.
(b) Each Selling Stockholder shall give the Company fifteen (15)
days' prior written notice of its intention to effect a Private Sale, which
notice (a "Sales Notice") shall include the material terms and conditions of the
Private Sale, the date that the sale is expected to close, and the proposed
purchaser or purchasers. A Sales Notice given with respect to a Private Sale
shall also include a certification by such Stockholder that the Private Sale
described therein is to a bona fide purchaser who such Stockholder reasonably
believes has the financial resources to complete the sale and would not be
prohibited by law or regulation from doing so.
(c) The Company may, by action of its Board of Directors upon a
Majority Vote, by notice to such Stockholder given not more than twenty (20)
days after the Sales Notice, reject a Private Sale (or a series of
contemporaneous Private Sales) based upon its good faith determination that the
sale or sales to such prospective purchaser (or purchasers) would be injurious
to the interests of the Company and the holders of the Company's Voting
Securities (other than such Stockholder and its Affiliates) by virtue of the
prior business practices of such prospective purchaser or purchasers, it being
understood in that regard that the fact that such purchaser is an airline or is
affiliated with an airline shall not be the basis for any such determination nor
shall the fact that the Board of Directors concludes that wide dispersal of the
ownership of Voting Securities is in the best interests of the Company's
stockholders. Upon receiving notice of such determination, the Stockholder and
its Affiliates shall terminate discussions with such prospective purchaser or
purchasers. The Company's right to reject a purchaser (or purchasers) under this
Section shall be exercised only once and, upon its exercise, the Company shall
have no such further rights.
SECTION 6
MISCELLANEOUS
Section 6.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy)
and shall be given,
if to the Company, to:
Continental Airlines, Inc.
0000 Xxxxx Xxxxxx
12
Dept. HQSEO
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Morris, Nichols, Arsht & Xxxxxxx
0000 X. Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: X. Xxxxxxxxx Xxxxxx, III
if to the Parent, to:
Northwest Airlines Holdings Corporation
0000 Xxxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
if to the Stockholder, to:
Northwest Airlines Corporation
0000 Xxxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
or such address or telecopy number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective
13
when delivered personally, telegraphed, or telecopies, or, if mailed, five
business days after the date of the mailing.
Section 6.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver has been approved pursuant to Section 2.02 and
is in writing and signed, in the case of an amendment, by the parties hereto, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 6.03. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 6.04. Governing Law; Consent to Jurisdiction. (a) This
Agreement shall be construed in accordance with and governed by the internal
laws of the State of Delaware.
(b) Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby may be brought in any federal court
located in the State of Delaware or any Delaware state court, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is being brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 6.01 shall be deemed
effective service of process on such party.
Section 6.05. Counterparts; Effectiveness. This Agreement 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. This Agreement shall become effective when each party hereto shall
have received counterparts thereof signed by the other party hereto.
Section 6.06. Specific Performance. The parties hereto each
acknowledge and agree that the parties' respective remedies at law for a breach
or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by any of them of the provisions of this Agreement,
in addition to any remedies at law, the aggrieved party, without posting any
bond and without any showing of irreparable injury shall be entitled to obtain
equitable relief in the form of specific
14
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available.
Section 6.07. Termination.
(a) If, prior to the Closing, the Investment Agreement shall have
been terminated or abandoned pursuant to Section 7.1 of the Investment
Agreement, this Agreement shall terminate.
(b) If, after Closing, the Stockholder and its Affiliates cease to
Beneficially Own Voting Securities representing at least 10% of the Fully
Diluted Voting Power, this Agreement shall terminate.
(c) If the sixth anniversary of the Closing shall have occurred and
this Agreement shall not have already been terminated pursuant to (a) or (b)
above, the parties' obligations under this Agreement shall terminate.
Section 6.08. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, provided that
the parties hereto shall negotiate in good faith to attempt to place the parties
in the same position as they would have been in had such provision not been held
to be invalid, void or unenforceable.
Section 6.09. Non-Exclusivity. No action or transaction taken in
accordance with the express provisions of, and as expressly permitted by, any
provision of this Agreement shall be treated as a breach of any other provision
of this Agreement, notwithstanding that such action or transaction shall not
have been expressly excepted from such latter provision.
SECTION 7
CLOSING EVENTS
Section 7.01. Agreements. At Closing: (a) the Company shall enter
into an amendment to the Registration Rights Agreement with AP, which amendment
shall extend the benefits of such agreement, including "demand" registration
rights, to the Stockholder in respect of all shares of Voting Securities owned
directly or indirectly by the Stockholder and all shares of Company Class A
Common Stock and any other Voting Securities held by AP or distributed to the
partners of AP;
(b) The Parent and the Stockholder shall enter into the Voting Trust
Agreement; and
(c) The Company shall have adopted an "Eligible Rights Plan" and the
rights issued thereunder shall have been distributed to the holders of Voting
Securities. For purposes of this Section 7.01, an "Eligible Rights Plan" shall
mean a shareholder rights plan, with reasonably customary terms and conditions,
with an "acquiring person" threshold of 15%; provided that the threshold for an
Institutional Investor shall be 20%, and further provided that the definition of
acquiring person shall exclude the Stockholder and the Parent (a) prior to the
termination of the Parent's and the Stockholder's obligations hereunder, if and
to the extent they take any action
15
permitted by and in compliance with the terms of this Agreement and (b) after
the termination of the Parent's and the Stockholder's obligations hereunder with
respect to any and all transfers of Voting Securities owned by them in any
manner. The Company covenants and agrees that, so long as the Parent
Beneficially Owns Voting Securities representing no less than 15% of the Total
Voting Power, it shall not (a) amend an existing Eligible Rights Plan so as to
cause such plan not to constitute an Eligible Rights Plan or (b) adopt a
shareholder rights plan that is not an Eligible Rights Plan. Parent agrees and
acknowledges that the Rights Agreement is an Eligible Rights Plan.
SECTION 8
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, a merger, consolidation or other business combination
involving a Person or any of its subsidiaries or the acquisition of any equity
interest in, or a substantial portion of the assets of, a Person or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement).
"Alliance Agreement" shall mean that certain Master Alliance
Agreement dated as of January 25, 1998 between Northwest Airlines, Inc., an
indirect wholly owned subsidiary of Parent, and the Company.
"AP" shall mean Air Partners, L.P., a Texas limited partnership.
"Associate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement).
"B/C/P Group" shall mean Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxx or Xxxxxxx
X. Xxxxx, III, or any Person with respect to which one or more of them (i)
directly or indirectly controls at least 50.1% of the voting power, (ii)
directly or indirectly controls at least 50.1% of the equity, or (iii) directly
or indirectly controls in a manner substantially similar to the control that the
general partner of AP has over AP pursuant to and as provided in the
"Partnership Agreement" (as defined in the Investment Agreement), which Persons
described in clause (iii) shall include 1998 CAI Partners, L.P., a Texas limited
partnership, under its partnership agreement and ownership structure in effect
on November 20, 1998.
"Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing; for the
avoidance of doubt, securities with respect to which the Stockholder or the
Parent has been granted a proxy pursuant to the Investment Agreement shall be
deemed to be beneficially owned by the Stockholder or the Parent.
16
"Board of Directors" shall mean the board of directors of the
Company. Without limiting the foregoing, any Securities owned by the Voting
Trust shall be deemed to be Beneficially Owned by the Stockholder and the
Parent.
"Class A Common Stock" shall mean shares of Class A Common Stock,
par value $.01 per share, of the Company.
"Closing" shall have the meaning specified in Section 2.01 of this
Agreement.
"Company Common Stock" shall mean Class A Common Stock, Class B
Common Stock or Class D Common Stock.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"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).
"Independent Director" shall mean any person listed on Exhibit 2.01
to this Agreement, (ii) and any other person selected as an Independent Director
in accordance with Section 2.01(b) of this Agreement and (iii) any other person,
who is elected to the Board of Directors in an election of directors in respect
of which any Person other than the Company is soliciting proxies; provided that
any such other person so selected shall be independent of and otherwise
unaffiliated with the Parent or the Company (other than as an Independent
Director), and shall not be an officer or an employee, consultant or advisor
(financial, legal or other) of the Parent or the Company or any of their
respective Affiliates, or any person who shall have served in any such capacity
within the three-year period immediately preceding the date such determination
is made.
"Institutional Investor" shall mean (i) a Person who is an
"Institutional Investor," as that term is defined in the Rights Agreement,
provided that such Person has not also become an "Acquiring Person," as that
term is defined in the Rights Agreement or (ii) a Person who was an
Institutional Investor, as that term is defined in the Rights Agreement, but
ceased to be an Institutional Investor pursuant to the second to last sentence
of the definition of "Acquiring Person" set forth in the Rights Agreement,
provided that such Person has not (x) become an Acquiring Person as the result
of a determination made by the Board of Directors in accordance
17
with the last sentence of the definition of "Acquiring Person" set forth in the
Rights Agreement or (y) otherwise become an "Acquiring Person" under the Rights
Agreement.
"Investment Agreement" shall mean that certain Investment Agreement
dated as of January 25, 1998, as amended by Amendment No. 1 dated February 27,
1998 and Amendment No. 2 dated as of November 20, 1998, among the Parent, the
Stockholder, AP, the partners of AP signatory thereto, Bonderman Family Limited
Partnership, 1992 Air, Inc. and Air Saipan, Inc..
"Majority Vote" shall mean the affirmative vote of a majority of the
Board of Directors, including the affirmative vote of a majority of the
Independent Directors.
"Permitted Percentage" shall mean 50.1% of the Fully Diluted Voting
Power or such percentage as shall hereafter become the Permitted Percentage in
accordance with Section 1.01(d).
"Person" shall mean any individual partnership (limited or general),
joint venture, limited liability company, corporation, trust, business trust,
unincorporated organization, government or department or agency of a government.
"Rights Agreement" shall mean that certain Rights Agreement dated as
of November 20, 1998, as amended by the First Amendment dated as of February 8,
2000 by and between the Company and Xxxxxx Trust and Savings Bank.
"Standstill Termination Date" shall mean the earlier of (i) the
sixth anniversary of the Closing and (ii) the date on which the Stockholder and
its Affiliates cease to Beneficially Own Voting Securities representing at least
10% of the Fully Diluted Voting Power.
"Stockholder Voting Power" at any time shall mean the aggregate
voting power in the general election of directors of all Voting Securities then
Beneficially Owned by the Stockholder and its Affiliates.
"Stock Purchase" shall mean the Stockholder's acquisition of the
shares of Class A Common Stock held by certain affiliates of AP pursuant to the
terms of the Investment Agreement.
"Subsidiary" shall mean, as to any Person, any Person at least a
majority of the shares of stock or other equity interests of which having
general voting power under ordinary circumstances to elect a majority of the
board of directors (or comparable governing body) thereof (irrespective of
whether or not at the time stock or equity of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
is, at the time as of which the determination is being made, owned by such
Person, or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
"13D Group" shall mean any group of Persons acquiring, holding,
voting or disposing of Voting Securities which would be required under Section
13(d) of the Exchange Act and the rules and regulations thereunder (as in
effect, and based on legal interpretations thereof existing, on the date hereof)
to file a statement on Schedule 13D with the Securities and Exchange Commission
as a "person" within the meaning of Section 13(d)(3) of the Exchange
18
Act if such group beneficially owned Voting Securities representing more than 5%
of any class of Voting Securities then outstanding.
"Total Voting Power" at any time shall mean the total combined
voting power in the general election of directors of all the Voting Securities
then outstanding.
"Transfer" shall mean any sale, exchange, transfer, pledge,
encumbrance or other disposition, and "to Transfer" shall mean to sell,
exchange, transfer, pledge, encumber or otherwise dispose of.
"Voting Securities" shall mean at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the
election of directors including, without limitation, the Class A Common Stock
and the Class B Common Stock.
"Voting Trust" shall have the meaning set forth in Section 1.03.
"Warrants" shall have the meaning set forth in the Investment
Agreement.
[Remainder of this page intentionally left blank]
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first referred to above.
NORTHWEST AIRLINES CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx
Executive Vice President, General Counsel
and Secretary
NORTHWEST AIRLINES HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxx
Executive Vice President, General Counsel
and Secretary
CONTINENTAL AIRLINES, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
Executive Vice President, General Counsel
and Secretary
EXHIBIT 2.01 TO GOVERNANCE AGREEMENT
Xxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. XxXxxxxxxxxx
Xxxxxx X.X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxx Xxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxxx Xxxxx
EXHIBIT 2.03 TO GOVERNANCE AGREEMENT
(Significant Actions)
1. Any amendment to the certificate of incorporation or by-laws of
the Company.
2. Any reclassification, combination, split, subdivision,
redemption, purchase or other acquisition, directly or indirectly, of any debt
or equity security of the Company or any Subsidiary of the Company (other than
pursuant to existing stock option plans or agreements or by or on behalf of any
existing employee benefit plan of the Company).
3. Any sale, lease, transfer or other disposition (other than in the
ordinary course of business consistent with past practice), in one or more
related transactions, of the assets of the Company or any Subsidiary, the book
value of which assets exceeds 5% of the consolidated assets of the Company and
its Subsidiaries.
4. Any merger, consolidation, liquidation or dissolution of the
Company or any Subsidiary of the Company, other than any such merger or
consolidation of any Subsidiary of the Company with and into the Company or
another wholly-owned Subsidiary of the Company.
5. Any acquisition of any other business which would constitute a
"Significant Subsidiary" (as defined in Section 1.02 of Regulation S-X under the
Exchange Act) of the Company.
6. Any acquisition by the Company or any Subsidiary of the Company
of assets (not in the ordinary course of business consistent with past practice)
in one or more related transactions which assets have a value which exceeds 5%
of the consolidated assets of the Company and its Subsidiaries.
7. Any issuance or sale of any capital stock of the Company or any
Subsidiary of the Company, other than issuance of capital stock of the Company
authorized for issuance pursuant to stock plans or agreements in effect, or
securities issued and outstanding, at the date of Closing.
8. Any declaration or payment of any dividend or distribution with
respect to shares of the capital stock of the Company or any Subsidiary (other
than wholly-owned Subsidiaries of the Company).
9. Any incurrence, assumption or issuance by the Company or its
Subsidiaries of any indebtedness for money borrowed, not in the ordinary course
of business consistent with past practice, if, immediately after giving effect
thereto and the application of proceeds therefrom, the aggregate amount of such
indebtedness of the Company and its Subsidiaries would exceed $500 million.
10. Establishment of, or continued existence of, any committee of
the Board of Directors with the power to approve any of the foregoing.
1
11. The termination or election or appointment of executive officers
of the Company.
2
