SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
February 8, 2000
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-09781 74-2099724
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1600 Smith Street, Dept. HQSEO
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 324-2950
(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events.
(a) Effective as of February 8, 2000, Continental
Airlines, Inc. (the "Company") adopted an amendment (the "Rights
Agreement Amendment") to the Rights Agreement (the "Rights
Agreement") between the Company and Harris Trust and Savings Bank,
as Rights Agent, dated as of November 20, 1998. The Rights
Agreement Amendment provides for an exception to the "Acquiring
Person" definition in the Rights Agreement that permits an
Institutional Investor (as defined in the Rights Agreement
Amendment) to be or become the beneficial owner of common stock of
the Company representing less than 20% of the voting power of the
common stock then outstanding without becoming an Acquiring Person,
as long as the Institutional Investor continues to meet the
definition of such term as set forth in the Rights Agreement
Amendment. Generally, an Institutional Investor is defined as a
person who, as of January 31, 2000, beneficially owned more than
14% of the voting power of the common stock then outstanding and
had a Schedule 13G on file with the Securities and Exchange
Commission with respect to its holdings and is principally engaged
in the business of managing investment funds for unaffiliated
securities investors, acquires the common stock pursuant to trading
activities undertaken in the ordinary course of such person's
business and not with the purpose or effect of exercising or
influencing control over the Company, and is not obligated to and
does not file a Schedule 13D with respect to securities of the
Company. If the Board of Directors of the Company determines in
good faith that a person no longer meets the Institutional Investor
definition, then such person shall as promptly as practicable
divest itself of a sufficient number of shares of common stock so
that such person beneficially owns less than 15% of the voting
power of the common stock then outstanding. If the Board of
Directors determines in good faith that such person does not so
divest itself of common shares, then such person will be or become
an Acquiring Person under the Rights Agreement.
(b) In conjunction with the Rights Agreement Amendment,
the Company, Northwest Airlines Corporation, a Delaware corporation
(formerly Newbridge Parent Corporation, a Delaware corporation)
("Northwest"), and Northwest Airlines Holdings Corporation, a
Delaware corporation (formerly Northwest Airlines Corporation, a
Delaware corporation) ("Holdings"), entered into an Amended and
Restated Governance Agreement, dated as of February 8, 2000 (the
"Amended and Restated Governance Agreement"). The Amended and
Restated Governance Agreement restated the Governance Agreement,
dated as of January 25, 1998, among the Company, Northwest and
Holdings, as amended by the First Amendment, dated as of March 2,
1998, and by the Second Amendment, dated as of November 20, 1998
(the "Governance Agreement"). The Amended and Restated Governance
Agreement also amended the Governance Agreement to add the
following definition of "Institutional Investor":
"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 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.
The Amended and Restated Governance Agreement also added to the
Governance Agreement: the phrase "or (3) an Institutional Investor
(while an Institutional Investor)" to Section 1.01(a)(A) of the
Governance Agreement; the phrase "that the threshold for an
Institutional Investor shall be 20%, and further provided" to
Section 7.01(c) of the Governance Agreement; and the following
sentence to the end of Section 7.01(c) of the Governance Agreement:
"Parent agrees and acknowledges that the Rights Agreement is an
Eligible Rights Plan."
(c) In conjunction with the Rights Agreement Amendment and
the Amended and Restated Governance Agreement, the Company,
Northwest and Holdings entered into the First Amendment to
Supplemental Agreement, dated as of February 8, 2000 (the
"Supplemental Agreement Amendment"). The Supplemental Agreement
Amendment reflected amendments made in the Amended and Restated
Governance Agreement and the Rights Agreement Amendment.
(d) The Company and Northwest also entered into the First
Amendment to Northwest Airlines/Air Partners Voting Trust
Agreement, dated as of February 8, 2000, to reflect amendments made
in the Amended and Restated Governance Agreement and the Rights
Agreement Amendment.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4.1 First Amendment to Rights Agreement, dated as
of February 8, 2000, between Continental
Airlines, Inc. and Harris Trust and Savings
Bank.
99.1 First Amendment to Northwest Airlines/Air
Partners Voting Trust Agreement, dated as of
February 8, 2000, between the Company and
Northwest Airlines Corporation.
99.2 Amended and Restated Governance Agreement,
dated as of February 8, 2000, among the
Company, Northwest Airlines Corporation and
Northwest Airlines Holdings Corporation.
<PAGE>
99.3 First Amendment to Supplemental Agreement,
dated as of February 8, 2000, among the
Company, Northwest Airlines Corporation and
Northwest Airlines Holdings Corporation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
CONTINENTAL AIRLINES, INC.
By: /s/ Jeffery A. Smisek
Name: Jeffery A. Smisek
Title: Executive Vice President,
General Counsel and Secretary
Dated: February 8, 2000
<PAGE>
EXHIBIT INDEX
Exhibit Description
4.1 First Amendment to Rights Agreement, dated as of February
8, 2000, between Continental Airlines, Inc. and Harris
Trust and Savings Bank.
99.1 First Amendment to Northwest Airlines/Air Partners Voting
Trust Agreement, dated as of February 8, 2000, between
the Company and Northwest Airlines Corporation.
99.2 Amended and Restated Governance Agreement, dated as of
February 8, 2000, among the Company, Northwest Airlines
Corporation and Northwest Airlines Holdings Corporation.
99.3 First Amendment to Supplemental Agreement, dated as of
February 8, 2000, among the Company, Northwest Airlines
Corporation and Northwest Airlines Holdings Corporation.
<PAGE>
EXHIBIT 4.1
FIRST AMENDMENT TO RIGHTS AGREEMENT
BETWEEN
CONTINENTAL AIRLINES, INC.
AND
HARRIS TRUST AND SAVINGS BANK
THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is
made as of this 8th day of February, 2000 by and between
CONTINENTAL AIRLINES, INC., a Delaware corporation (the "Company"),
and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation,
as rights agent (the "Rights Agent"). Capitalized terms used but
not defined herein shall have the meanings given to such terms in
the "Rights Agreement" (as defined below).
WHEREAS, the Company and the Rights Agent are parties to the
Rights Agreement dated as of November 20, 1998 (the "Rights
Agreement"); and
WHEREAS, the Company has determined that the amendments to the
Rights Agreement set forth herein are desirable and directed the
Rights Agent to agree to such amendments; and
WHEREAS, the amendments set forth herein have been approved by
the Required Board Vote on February 8, 2000.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein set forth, the parties hereby agree that:
1. The definition of "Acquiring Person" set forth in Section
1 of the Rights Agreement shall be amended and restated in its
entirety as follows:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
shall, after the Announcement Date, be or become the
Beneficial Owner of Common Shares representing 15% or more of
the Voting Power of the Common Shares of the Company then
outstanding (or, if such Person is an Institutional Investor
(as such term is hereinafter defined), 20% or more of the
Voting Power of the Common Shares of the Company then
outstanding). Notwithstanding the foregoing, no Person shall
be or become an Acquiring Person (1) if such Person is an
Exempt Person (so long as such Person remains an Exempt
Person), (2) as the result of (A) an acquisition of Common
Shares by the Company or (B) the conversion of Class A Common
Shares into Class B Common Shares which, by reducing the
number or Voting Power of shares outstanding, increases the
Voting Power of the shares beneficially owned by such Person
to 15% or more of the Voting Power of the Common Shares of the
Company then outstanding (or, if such Person is an
Institutional Investor, 20% or more of the Voting Power of the
Common Shares of the Company then outstanding); provided,
however, that if a Person shall so become the Beneficial Owner
of Common Shares representing 15% or more of the Voting Power
of the Common Shares of the Company then outstanding (or, if
such Person is an Institutional Investor, 20% or more of the
Voting Power of the Common Shares of the Company then
outstanding) by reason of the acquisition of Common Shares by
the Company or the conversion of Class A Common Shares into
Class B Common Shares and shall, after such share purchases by
the Company or such conversion, purchase or otherwise take
action to cause it to become the Beneficial Owner of Common
Shares representing an additional 1% of the Voting Power of
the Common Shares of the Company then outstanding, then such
Person shall be an Acquiring Person, or (3) if the Board of
Directors determines in good faith that a Person who would
otherwise be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph, has become such
inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such
Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this paragraph, then
such Person shall not be an Acquiring Person for any purposes
of this Agreement. Notwithstanding any of the foregoing, in
the event that the Board of Directors determines in good faith
that a Person no longer meets the requirements set forth in
the definition of "Institutional Investor," then such Person
shall as promptly as practicable divest itself of a sufficient
number of Common Shares so that such Person beneficially owns
Common Shares representing less than 15% of the Voting Power
of the Common Shares then outstanding. If the Board of
Directors determines in good faith that such Person does not
divest itself of Common Shares in accordance with the
requirements set forth in the prior sentence, then such Person
shall be or become an "Acquiring Person" for any and all
purposes of this Agreement.
2. Section 1 of the Rights Agreement shall be amended to add
the following definition of "Institutional Investor":
"Institutional Investor" shall mean a Person who, as of
January 31, 2000, was the Beneficial Owner of Common
Shares representing more than 14% of the Voting Power of
the Common Shares then outstanding and had a Schedule 13G
on file with the Securities and Exchange Commission
pursuant to the requirements of Rule 13d-1 under the
Exchange Act with respect to such holdings, so long as
such Person (i) is principally engaged in the business of
managing investment funds for unaffiliated securities
investors and, as part of such Person's duties as agent
for fully managed accounts, holds or exercises voting or
dispositive power over Common Shares of the Company, (ii)
such Person acquires Beneficial Ownership of Common
Shares of the Company pursuant to trading activities
undertaken 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(b)(1)(ii) of
the Exchange Act, such Person is not obligated to, and
does not, file a Schedule 13D with respect to the
securities of the Company.
3. The Rights Agreement, as amended by this Amendment, shall
remain in full force and effect in accordance with its terms.
4. This Amendment is a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws thereof applicable to
contracts to be made and performed entirely within such State.
This Amendment may be executed in any number of counterparts, each
of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties herein have caused this First
Amendment to be duly executed and attested, all as of the date and
year first above written.
CONTINENTAL AIRLINES, INC.
Attest:
By: ___________________________ By: _________________________
Name: Name:
Title: Title:
HARRIS TRUST AND SAVINGS BANK,
Rights Agent
Attest:
By: __________________________ By: _________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT 99.1
FIRST AMENDMENT
TO
NORTHWEST AIRLINES/AIR PARTNERS
VOTING TRUST AGREEMENT
THIS FIRST AMENDMENT TO NORTHWEST AIRLINES/AIR PARTNERS VOTING
TRUST AGREEMENT (this "Amendment") is made as of this 8th day of
February, 2000 among Continental Airlines, Inc., a Delaware
corporation (the "Company"), and Northwest Airlines Corporation, a
Delaware corporation formerly named Newbridge Parent Corporation
("NPC").
WHEREAS, the Company, NPC, Northwest Airlines Holdings
Corporation, a Delaware corporation formerly named Northwest
Airlines Corporation ("NWA"), Air Partners, L.P., a Texas limited
partnership ("Air Partners"), and Wilmington Trust Company, a
Delaware banking corporation ("Wilmington Trust"), have entered
into the Northwest Airlines/Air Partners Voting Trust Agreement
dated as of the 20th day of November, 1998 (the "Voting Trust
Agreement").
WHEREAS, the Company has entered into the First Amendment to
Rights Agreement, dated as of February 8, 2000, by and between the
Company and Harris Trust and Savings Bank (the "Rights Agreement
Amendment").
WHEREAS, NWA, NPC and the Company have entered into that
certain Amended and Restated Governance Agreement dated as of
February 8, 2000 (the "Amended and Restated Governance Agreement").
WHEREAS, the Company and NPC have determined that it is
desirable to amend the Voting Trust Agreement to reflect therein
the amendments made in the Amended and Restated Governance
Agreement and the Rights Agreement Amendment.
NOW THEREFORE, the Company and NPC 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 Voting Trust Agreement.
2. The third recital in the Voting Trust Agreement shall be
restated in its entirety as follows:
WHEREAS, the Governance Agreement (as defined herein)
requires NWA and NPC to cause Air Partners to deposit the
shares of Class A Common Stock of which NWA and NPC have
acquired beneficial ownership pursuant to the Investment
Agreement (except for such 853,644 shares with respect to which
NWA and NPC or their designees have been granted a proxy
pursuant to the Investment Agreement) in a voting trust;
3. The definition of "Governance Agreement" in Section 14 of
the Voting Trust Agreement shall be amended and restated in its
entirety as follows:
"Governance Agreement" shall mean the Amended and Restated
Governance Agreement, dated as of February 8, 2000, among
the Company, NWA and NPC.
4. The definition of "Rights Agreement" in Section 14 of the
Voting Trust Agreement shall be amended and restated in its
entirety as follows:
"Rights Agreement" shall mean the Rights Agreement, dated
as of November 20, 1998, as amended by the First Amendment
to Rights Agreement, dated as of February 8, 2000, between
the Company and Harris Trust and Savings Bank.
5. This Amendment has been approved by the Company by the
"Majority Vote" (as defined in the Voting Trust Agreement) and by
NPC.
6. This 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.
7. Except as expressly modified by this Amendment, all of the
terms, conditions and provisions of the Voting Trust Agreement
shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Northwest Airlines/Air Partners Voting Trust Agreement
to be executed as of the date first referred to above.
NORTHWEST AIRLINES CORPORATION
By:
Douglas M. Steenland
Executive Vice President,
General Counsel and Secretary
CONTINENTAL AIRLINES, INC.
By:
Jeffery A. Smisek
Executive Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 99.2
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 "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 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 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;
(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 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.
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 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; 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 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 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 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.
1600 Smith Street
Dept. HQSEO
Houston, Texas 77002
Fax: (713) 324-2687
Attention: General Counsel
with a copy to:
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
Fax: (302) 658-3989
Attention: A. Gilchrist Sparks, III
if to the Parent, to:
Northwest Airlines Holdings Corporation
5101 Northwest Drive
St. Paul, Minnesota 55111
Fax: (612) 726-7123
Attention: General Counsel
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Caroline B. Gottschalk
Fax: (212) 455-2502
if to the Stockholder, to:
Northwest Airlines Corporation
5101 Northwest Drive
St. Paul, Minnesota 55111
Attention: General Counsel
Fax: (612) 726-7123
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Caroline B. Gottschalk
Fax: (212) 455-2502
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
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 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 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 David Bonderman, James Coulter or
William S. Price, 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.
"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 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 Harris
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 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]
<PAGE>
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:_________________________________
Douglas M. Steenland
Executive Vice President,
General Counsel and Secretary
NORTHWEST AIRLINES HOLDINGS CORPORATION
By:_________________________________
Douglas M. Steenland
Executive Vice President,
General Counsel and Secretary
CONTINENTAL AIRLINES, INC.
By:_________________________________
Jeffery A. Smisek
Executive Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 2.01 TO GOVERNANCE AGREEMENT
Lloyd M. Bentsen, Jr.
Douglas H. McCorkindale
George G.C. Parker
Richard W. Pogue
Karen Hastie Williams
Charles A. Yamarone
Donald L. Sturm
Patrick Foley
<PAGE>
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.
11. The termination or election or appointment of executive
officers of the Company.
<PAGE>
EXHIBIT 99.3
FIRST AMENDMENT TO SUPPLEMENTAL AGREEMENT
THIS FIRST AMENDMENT TO SUPPLEMENTAL AGREEMENT (this
"Amendment") is made as of this 8th day of February, 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 Parent, the Stockholder and the Company have
entered into that certain Supplemental Agreement dated as of
November 20, 1998 (the "Supplemental Agreement").
WHEREAS, the Company has entered into the First Amendment to
Rights Agreement, dated as of February 8, 2000, by and between the
Company and Harris Trust and Savings Bank (the "Rights Agreement
Amendment").
WHEREAS, the Parent, the Stockholder and the Company have
entered into that certain Amended and Restated Governance Agreement
dated as of February 8, 2000 (the "Amended and Restated Governance
Agreement").
WHEREAS, the Parent, the Stockholder and the Company have
determined that it is desirable to amend the Supplemental Agreement
to reflect therein the amendments made in the Amended and Restated
Governance Agreement and the Rights Agreement Amendment.
WHEREAS, this Amendment has been approved by a Majority Vote
(as defined in the Supplemental Agreement).
NOW THEREFORE, the Parent, the Stockholder and the Company
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 Supplemental Agreement.
2. The definition of "Eligible Rights Plan" in Section 28 of
the Supplemental Agreement shall be amended and restated in its
entirety as follows:
"Eligible Rights Plan" shall have the meaning set
forth in Section 7.01 (c) of the Governance
Agreement.
3. The definition of "Governance Agreement" in Section 28 of
the Supplemental Agreement shall be amended and restated in its
entirety as follows:
"Governance Agreement" shall mean the Amended and
Restated Governance Agreement between the Company,
the Parent and the Stockholder, dated as of
February 8, 2000.
4. The definition of "Rights Plan" in Section 28 of the
Supplemental Agreement shall be amended and restated in its
entirety as follows:
"Rights Plan" shall mean the Rights Agreement,
dated as of November 20, 1998, as amended by the
First Amendment to Rights Agreement, dated as of
February 8, 2000, between the Company and Harris
Trust and Savings Bank.
5. All references in the Supplemental Agreement to Newbridge
Parent Corporation, a Delaware corporation, are hereby modified to
refer to Northwest Airlines Corporation, a Delaware corporation.
6. All references in the Supplemental Agreement to Northwest
Airlines Corporation, a Delaware corporation, are hereby modified
to refer to Northwest Airlines Holdings Corporation, a Delaware
corporation.
7. This 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.
8. Except as expressly modified by this Amendment, all of the
terms, conditions and provisions of the Supplemental Agreement
shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Supplemental Agreement to be executed as of the date
first referred to above.
NORTHWEST AIRLINES CORPORATION
By:
Douglas M. Steenland
Executive Vice President,
General Counsel and Secretary
NORTHWEST AIRLINES HOLDINGS CORPORATION
By:
Douglas M. Steenland
Executive Vice President,
General Counsel and Secretary
CONTINENTAL AIRLINES, INC.
By:
Jeffery A. Smisek
Executive Vice President,
General Counsel and Secretary
