Exhibit 99.1
GOVERNANCE AGREEMENT
Agreement dated as of January 25, 1998, among Continental
Airlines, Inc., a Delaware corporation (the "Company"), Newbridge
Parent Corporation, a Delaware corporation (the "Stockholder"),
and Northwest Airlines Corporation, a Delaware corporation that
is the holder of all of the outstanding stock of the Stockholder
("Parent").
WHEREAS, the Parent, the Stockholder and Air Partners, L.P.,
a Texas limited partnership ("AP"), propose to enter into an
Investment Agreement (the "Investment Agreement") dated as of the
date hereof, to which the Company is not a party and, pursuant to
which, among other things, and subject to the terms and
conditions to be contained in the Investment Agreement, the
Stockholder would acquire the outstanding interests in AP and the
shares of Class A Common Stock, par value $.01 per share ("Class
A Common Stock"), held by certain affiliates of AP resulting in
its Beneficial Ownership of 8,535,868 shares of Class A Common
Stock of the Company (the "Stock Purchase"), and
WHEREAS, Northwest Airlines, Inc., an indirect wholly
owned subsidiary of Parent, and the Company have negotiated a
Master Alliance Agreement (the "Alliance Agreement") dated as of
the date hereof and the Company has conditioned its entering into
the Alliance Agreement on the Parent and the Stockholder entering
into this Agreement with the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending
to be legally bound hereby, the Company, the Parent and the
Stockholder 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 (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) Except as set forth in the next sentence, 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. If Voting Securities Beneficially Owned
by the Stockholder and its Affiliates exceed the Permitted
Percentage (i) solely by reason of repurchases of Voting
Securities by the Companyor (ii) 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.
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
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Stockholder pursuant to Section 4.1(d) of the Investment
Agreement or Section 5 of this Agreement; and (vi) 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 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, at the option
of the Stockholder, either (i) as recommended by the Board of
Directors or (ii) (A) in the case of votes at a stockholders
meeting, in the same proportion as the votes cast by other
holders of Voting Securities, and (B) 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
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:
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(a) except by virtue of the Stockholder's representation
on the Board of Directors of the Company, if any, 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 employees from engaging in
ordinary course business activities with the Company);
(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) any
Stockholder Designee acting in his or her capacity as a
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director of the Company, (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) Immediately after the consummation of the Stock Purchase
(the "Closing"), the Board of Directors shall take such corporate
actions as are necessary to cause an individual designated by the
Stockholder and reasonably acceptable to the Board of Directors,
which designee shall not be an officer or an employee of the
Parent, the Stockholder 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 (the "Stockholder Designee"), to
be appointed to the Board of Directors. The directors comprising
the Board of Directors immediately after the Closing shall be
otherwise unchanged from those as of the date of this Agreement,
and the individuals listed on Exhibit 2.01 hereto shall, for the
purposes of this Agreement, constitute the Independent Directors
at such time.
(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) Following the Closing and until the Standstill
Termination Date, upon the death, resignation or disability of
any Stockholder Designee, the Company shall take all such
corporate actions as are necessary to cause a successor
individual designated by the Stockholder and reasonably
acceptable to the Board of Directors of the Company by a Majority
Vote, which designee shall not be an officer or an employee of
the Parent, the Stockholder or the Company or
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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, to be
appointed to the Board of Directors.
(d) 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
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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
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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
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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
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(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
10
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
11
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
12
(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.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Morris, Nichols, Arsht & ▇▇▇▇▇▇▇
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Attention: ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
if to the Parent, to:
Northwest Airlines Corporation
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
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with a copy to:
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Stockholder, to:
Newbridge Parent Corporation
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Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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.
14
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 except the obligations of
the Stockholder and the Parent pursuant to Section 7.
15
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.
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BOARD COMPOSITION
Section 7.01. Board of Directors Composition. From and
after the earlier of (i) the sixth anniversary of the Closing,
and (ii) the date on which all provisions of this Agreement
terminate pursuant to Section 5, the Stockholder shall take, and
shall cause to be taken, such actions as are necessary to cause
the Board of Directors to include at least five directors who are
independent of and otherwise unaffiliated with the Parent or the
Company 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 such capacity within the three-year period
immediately preceding the date such determination is made.
Section 7.02. Board of Directors Power. 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 prior
approval thereof by a majority vote of the Independent Directors.
SECTION 8
CLOSING EVENTS
Section 8.01. 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
16
(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
8.01, 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 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 (other than their obligations
pursuant to Section 7), 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 (other than their obligations
pursuant to Section 7) 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 no less than 15% of the Voting Securities, 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.
SECTION 9
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 have the meaning set forth in the
recitals hereto.
"Associate" shall have the meaning set forth in Rule
12b-2 under the Exchange Act (as in effect on the date of this
Agreement).
"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.
"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.
"Closing" shall have the meaning specified in Section 2.01
of this Agreement.
17
"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.
"Investment Agreement" shall have the meaning set forth in
the recitals hereto.
"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.
18
"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 have the meaning set forth in the
recitals for this 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.
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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: _________________________________
Name:
Title:
NEWBRIDGE PARENT CORPORATION
By: _________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.
By: _________________________________
Name:
Title:
EXHIBIT 2.01 TO GOVERNANCE AGREEMENT
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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.
1
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.
2