Exhibit 10.8
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT, dated as of November 20, 1998 (this
"AGREEMENT"), between NORTHWEST AIRLINES CORPORATION, a Delaware corporation
("NORTHWEST"), and the persons identified on the signature pages hereof (each a
"HOLDER" and, collectively, the "HOLDERS").
W I T N E S S E T H :
WHEREAS, pursuant to an Investment Agreement, dated as of January 25,
1998, as amended by Amendment No. 1, dated as of February 27, 1998, and
Amendment No. 2, dated as of November 20, 1998 (the "INVESTMENT AGREEMENT";
capitalized terms used but not defined herein have the meanings assigned to such
terms in the Investment Agreement), among Northwest, Northwest Airlines Holdings
Corporation, a Delaware corporation ("HOLDINGS"), Air Partners, L.P. (the
"PARTNERSHIP"), 1998 CAI Partners, L.P., a Texas limited partnership, and the
Holders, Northwest and Holdings are acquiring the Partners' interests in the
Partnership concurrently with the execution of this Agreement; and
WHEREAS, Northwest and the Holders are entering into this Agreement to
establish certain arrangements with respect to the shares of Northwest's Common
Stock, par value $.01 per share (the "NORTHWEST COMMON STOCK"), issued by
Northwest to the Holders pursuant to the Investment Agreement, as well as
certain restrictions in respect of the capital stock of Northwest, corporate
governance and other related corporate matters;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
Section 1. DEFINED TERMS. Unless otherwise defined herein:
"GROUP" means two or more Persons acquiring, holding, voting or
disposing of securities which would constitute a "person" within the
meaning of Section 13(d)(3) of the Exchange Act of 1934, as amended.
"NORTHWEST BOARD OF DIRECTORS" shall mean the board of directors of
Northwest or any successor thereof.
"NORTHWEST COMBINED VOTING POWER" at any measurement date shall mean
the total number of votes which could have been cast in an election of
members of the Northwest Board of Directors had a meeting of the
stockholders of Northwest (or any successor thereof) been duly held based
upon a record date as of the measurement date if all Northwest Voting
Securities then outstanding and entitled to vote at such meeting were
present and voted to the fullest extent possible at such meeting.
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"NORTHWEST VOTING SECURITIES" shall mean, collectively, (i) the
Northwest Common Stock, (ii) any other securities entitled, or that may be
entitled, to vote generally for the election of members of the Northwest
Board of Directors and (iii) any other securities, warrants or options or
rights of any nature (whether or not issued by Northwest) that are
convertible into, exchangeable for, or exercisable for, or otherwise give
the holder thereof any rights in respect of (whether or not subject to the
passage of time, contingencies or contractual restrictions or any
combination thereof), any security described in clause (i) or (ii) of this
definition; PROVIDED that rights issued pursuant to the Rights Agreement,
dated as of November 20, 1998 (as amended, supplemented or otherwise
modified from time to time), between Northwest and Norwest Bank Minnesota,
N.A., or any other stockholder rights plan shall not be deemed to be
Northwest Voting Securities.
"REORGANIZATION TRANSACTION" means (i) any merger, consolidation,
recapitalization, liquidation or other business combination transaction
involving Northwest or any of its subsidiaries (or any successors to any of
such entities), (ii) any tender offer or exchange offer for any securities
of Northwest or any of its subsidiaries (or any successors to any of such
entities) or (iii) any sale or other disposition of assets of Northwest or
any of its subsidiaries (or any successors to any of such entities) in a
single transaction or in a series of related transactions in each of the
foregoing cases constituting individually or in the aggregate 5% or more of
the assets of Northwest (or any successor), or 5% or more of the then
outstanding Northwest Voting Securities.
"STANDSTILL PERIOD" shall mean the period commencing on the Closing
Date and continuing until the earlier of (a) the fifth anniversary of the
Closing Date, (b) the date on which Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxx have, directly or indirectly, sold, transferred, assigned
or otherwise disposed of, in the aggregate since the Closing Date, 60% or
more of the aggregate Northwest Voting Securities owned by Xxxx X. Xxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxx on the Closing Date and (c) the
occurrence of a breach by Northwest or Holdings of any material obligations
under the Investment Agreement or the Registration Rights Agreement which
breach shall have a material adverse effect on the rights of the Partners
and the Transferors as a whole with respect to the Northwest Common Stock
held by them; PROVIDED, in the case of this clause (c), that the Partners'
Representative shall have notified Northwest of such breach in writing with
sufficient detail to allow Northwest to cure such breach and Northwest
shall have failed to cure such breach within 30 days following receipt of
such notice.
Section 2. COVENANTS WITH RESPECT TO NORTHWEST VOTING SECURITIES AND
OTHER MATTERS.
2.1 ACQUISITION OF NORTHWEST VOTING SECURITIES. During the
Standstill Period, no Holder will, or will cause any of its affiliates to,
directly or indirectly, acquire, offer to acquire, agree to acquire, become the
beneficial owner of or obtain any rights in respect of any
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Northwest Voting Securities to the extent that such acquisition would result
in the Northwest Voting Securities beneficially owned by the Holders
(including by any Group of which any Holder is a member) representing, in the
aggregate, more than 10% of the Northwest Combined Voting Power, whether by
purchase or otherwise, or take any action in furtherance thereof; PROVIDED,
that (i) no Holder shall be deemed to be in breach of this obligation, or be
obliged to dispose of any Northwest Voting Securities, to the extent that
such percentage limit is exceeded as a result of a repurchase of any
Northwest Voting Securities by Northwest or any of its affiliates, and (ii)
no Holder shall be prohibited from buying Northwest Voting Securities
directly from Northwest.
2.2 DISPOSITION OF NORTHWEST VOTING SECURITIES. Until the earlier of
the termination of the Standstill Period and such time as 1992 Air, Inc. (or its
successor) no longer has the right to designate an individual to be elected or
appointed to the Northwest Board of Directors as set forth in Section 4.1(b) of
the Investment Agreement, no Holder will, or will cause any of its affiliates
to, directly or indirectly, sell, transfer any beneficial interest in, pledge,
hypothecate or otherwise dispose of any Northwest Voting Securities in any
transaction that to the knowledge of such Holder would result in a transfer,
pledge, hypothecation or other disposition to any Person or Group that would
have, upon consummation of such sale, transfer, pledge, hypothecation or other
disposition, directly or indirectly, beneficial ownership of or the right to
acquire beneficial ownership of such number of Northwest Voting Securities as
represent more than 5% of the Northwest Combined Voting Power; PROVIDED, that
each Holder shall be permitted to sell, transfer or otherwise dispose of
Northwest Voting Securities (a) to one or more of its affiliates that is
directly or indirectly controlled by it, (b) to any one or more of Xxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxx, (c) to any Person who (i) is
principally engaged in the business of managing investment funds for
unaffiliated securities investors, (ii) acquires such Voting Securities from the
Holder in the ordinary course of such Person's business and not with the purpose
nor the effect, either alone or in concert with any Person, of exercising the
power to direct or cause the direction of the management and policies of the
Company or of otherwise changing or influencing the control of the Company, nor
in connection with or as a participant in any transaction having such purpose or
effect, including any transaction subject to Rule 13d-3(b) of the Exchange Act,
and (iii) if such Person is a Person included in Rule 13d-1(a) of the Exchange
Act, such Person is not obligated to, and does not, file a Schedule 13D (and
instead files a Schedule 13G) with respect to the Voting Securities of
Northwest, (d) pursuant to a tender or exchange offer for Northwest Voting
Securities which is not opposed by the Northwest Board of Directors, (e) in a
merger transaction or (f) by testamentary devise; PROVIDED, that in the case of
clauses (a) and (f) the transferee shall agree in writing to be bound by the
terms of this Agreement; PROVIDED, FURTHER, that no sales, transfers or other
dispositions to any Person or Group pursuant to clause (c) may occur if to the
knowledge of such Holder such Person or Group would have, upon consummation of
such sale, transfer or other disposition, directly or indirectly, beneficial
ownership of or the right to acquire beneficial ownership of such number of
Northwest Voting Securities as represent more than 14.9% of the Northwest
Combined Voting Power.
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2.3 PROXY SOLICITATIONS, VOTING, ETC. (a) During the Standstill
Period, no Holder will, or will cause any of its affiliates to, directly or
indirectly, solicit proxies, assist any other Person in any way, directly or
indirectly, in the solicitation of proxies, or otherwise become a "participant"
in a "solicitation," or assist any "participant" in a "solicitation" (as such
terms are defined in Rule 14a-1 of Regulation 14A under the Exchange Act as in
effect on the date of this Agreement) in opposition to the recommendation or
proposal of the Northwest Board of Directors, or submit any proposal for the
vote of stockholders of Northwest or any successor thereof or recommend or
request or induce or attempt to induce any other Person to take any such
actions, or seek to advise, encourage or influence any other Person with respect
to the voting of Northwest Voting Securities, unless in each case it obtains the
prior approval of the Northwest Board of Directors to do so as evidenced by a
formal resolution adopted by the Northwest Board and recorded in its minutes.
(b) In furtherance of each of the Holders' obligations pursuant to
Section 2.3(a), during the Standstill Period each of the Holders shall, and
shall cause its affiliates to, at any annual or special meeting of stockholders
at which members of the Northwest Board of Directors are to be elected or in
connection with a solicitation of consents through which members of the
Northwest Board of Directors are to be elected, vote or cause to be voted (or
give or cause to be given a written consent or proxy with respect to) all
Northwest Voting Securities beneficially owned by it in favor of the election to
the Northwest Board of Directors of the individuals recommended by the Northwest
Board of Directors; PROVIDED, that if the right of Transferor II to designate a
nominee to the Northwest Board of Directors pursuant to Section 4.1(b)(ii) of
the Investment Agreement is still in effect and Northwest has failed to ensure
that a Transferor II Designee is elected to the Northwest Board of Directors,
then the Holders and its affiliates shall not be obligated to vote (or to give a
written consent or proxy with respect to) the Northwest Voting Securities
beneficially owned by them in accordance with this sentence.
2.4 NO VOTING TRUSTS, POOLING AGREEMENTS, OR FORMATION OF GROUPS.
During the Standstill Period, no Holder will, or will cause any of its
affiliates to, directly or indirectly, join in or in any other way participate
in a pooling agreement, syndicate, voting trust or other Group with respect to
Northwest Voting Securities, or enter into any agreement or arrangement or
otherwise act in concert with any other Person, for the purpose of acquiring,
holding, voting or disposing of Northwest Voting Securities; PROVIDED, that the
Holders shall not be prohibited from entering into such agreements or
understandings, or engaging in such conduct, among themselves or with any one or
more of Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxx.
2.5 LIMITATIONS ON PROPOSALS. During the Standstill Period, no
Holder will, or will cause any of its affiliates to, directly or indirectly,
initiate, propose or otherwise solicit stockholders for the approval of one or
more stockholder proposals with respect to Northwest or any successor thereof or
any affiliate thereof or induce or attempt to induce any other Person to (a)
initiate any stockholder proposal, (b) other than in accordance with Section
4.1(b)(i) of the Investment Agreement, seek election to or seek to place a
representative on the
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Northwest Board of Directors or equivalent governing body of any successor
thereof or any affiliate thereof (except to the extent expressly invited to
do so by the Northwest Board of Directors) or (c) seek removal of any member
of the Northwest Board of Directors or equivalent governing body of any
successor thereof or any affiliate thereof; PROVIDED, that clauses (b) and
(c) of this Section 2.5 shall not apply in the event that the right of
Transferor II to designate a nominee to the Northwest Board of Directors
pursuant to Section 4.1(b)(ii) of the Investment Agreement is still in effect
and Northwest has failed to ensure that a Transferor II Designee is elected
to the Northwest Board of Directors.
2.6 LIMITATION ON VARIOUS OTHER ACTIONS. During the Standstill
Period, no Holder will, or will cause any of its affiliates to, take any
action, alone or in concert with any other Person, (a) to seek to effect a
change in control of Northwest, its successors or any of its affiliates, (b)
to seek to effect a Reorganization Transaction with respect to Northwest, its
successors or any of its affiliates, (c) to seek to effect any control or
influence over the management of Northwest, its successors or any of its
affiliates, the Northwest Board of Directors or the policies of Northwest,
its successors or any of its affiliates, (d) to advise, assist or encourage
or finance (or assist or arrange financing to or for) any other Person in
connection with any of the matters restricted by, or to otherwise seek to
circumvent the limitations of the provisions of, Section 2 of this Agreement
(any such action described in clause (a), (b), (c) or (d) of this Section
2.6, a "NORTHWEST TRANSACTION PROPOSAL"), (e) to present to Northwest, its
stockholders or any third party any proposal that can reasonably be expected
to result in a Northwest Transaction Proposal or in an increase in the
Northwest Combined Voting Power represented by Northwest Voting Securities
beneficially owned in the aggregate by the Holders and their respective
successors or any of their affiliates that would be prohibited by Section
2.1, (f) to publicly suggest or announce its willingness or desire to engage
in a transaction or group of transactions or have another Person engage in a
transaction or group of transactions that would result in (i) a Northwest
Transaction Proposal or (ii) an increase in the Northwest Combined Voting
Power represented by Northwest Voting Securities beneficially owned in the
aggregate by the Holders and their respective successors or any of their
affiliates that would be restricted by Section 2.1, (g) to initiate, request,
induce, encourage or attempt to induce or give encouragement to any other
Person to initiate, or otherwise provide assistance to any Person who has
made or is contemplating making, any proposal that can reasonably be expected
to result in (i) a Northwest Transaction Proposal or (ii) an increase in the
Northwest Combined Voting Power represented by Northwest Voting Securities
beneficially owned in the aggregate by the Holders and their respective
successors or any of their affiliates that would be restricted by Section
2.1, or (h) to request a waiver, modification or amendment (an "AMENDMENT")
of any of the provisions of Section 2 of this Agreement; PROVIDED, HOWEVER,
that this subclause (h) shall not apply to any Holder's request for any such
Amendment so long as (1) such request is made in writing delivered only to
the Chief Executive Officer and the General Counsel of Northwest and (2) such
Holder and the Partner's Representative keep confidential and refrain from
disclosing to any other Person (including any member of the media but
excluding other Holders, it being understood that such other Holders shall
also be bound by this proviso) the fact that the Holder or the Partner's
Representative has made such a request, that discussions or negotiations are
taking place or
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have taken place concerning any such request or the subject matter thereof or
any of the terms, conditions or other facts with respect to any possible
Amendment.
2.7 REPRESENTATION. During the Standstill Period, each Holder shall,
if requested by Northwest, be present, in person or represented by proxy, at all
meetings of stockholders of Northwest at which members of the Northwest Board of
Directors are to be elected so that all Northwest Voting Securities beneficially
owned by such Holder shall be counted for the purpose of determining the
presence of a quorum at such meetings and for voting such securities.
2.8 NO RESTRICTIONS ON DIRECTORS OF THE COMPANY. Notwithstanding
anything to the contrary in this Agreement, it is understood and agreed that no
provision of this Agreement shall in any way limit or restrict the actions of
any Person to the extent such Person is acting in such Person's capacity as a
director on the Board of Directors of the Company, and nothing in this Agreement
is intended to, or shall be deemed to, restrict the exercise of fiduciary duties
by any such Person in such capacity.
Section 3. TERM OF AGREEMENT. This Agreement shall terminate on the
last day of the Standstill Period.
Section 4. REMEDIES. Each of the Holders acknowledges and agrees
that (i) the provisions of this Agreement are reasonable and necessary to
protect the proper and legitimate interests of Northwest, and (ii) Northwest
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 Northwest shall be entitled
to preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by any Holder without the necessity of proving
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 Northwest may be entitled hereunder or at law or
equity.
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Section 5. GENERAL PROVISIONS.
5.1 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.
5.2 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 Northwest:
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Attention: Executive Vice President,
General Counsel and Secretary
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Holders:
1992 Air, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. X'Xxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxx, Xxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
F. Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
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.
5.3 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.
5.4 INTERPRETATION. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The titles and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words Ainclude,@ Aincludes@ or
Aincluding@ are used in this Agreement, they shall be deemed to be followed by
the words Awithout limitation.@
5.5 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
5.6 ENTIRE AGREEMENT; NO ORAL WAIVER; CONSTRUCTION. This
Agreement and the other agreements and 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 changed or
terminated orally, nor shall any 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
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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.
5.7 SEVERABILITY. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
5.8 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.
5.9 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, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to its
address set forth in Section 5.2; 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 xxx in any other appropriate jurisdiction.
5.10 FURTHER ASSURANCES. From time to time, at the reasonable
request of the 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 or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Agreement as of the day and year first above written.
NORTHWEST AIRLINES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
General Counsel and Secretary
THE HOLDERS:
XXXXX XXXXXXXXX
BONDERMAN FAMILY LIMITED
PARTNERSHIP
LECTAIR PARTNERS
XXX XXXXX
XXXXXX XXXXX
1992 AIR GP
1992 AIR, INC.
AIR II GENERAL, INC.
By: 1992 AIR GP, as attorney-in-fact for
the foregoing
By: 1992 Air, Inc., a Texas corporation,
managing partner
By: /s/ Xxxxx X. X'Xxxxx
----------------------------
Name: Xxxxx X. X'Xxxxx
Title: Vice President
