Share Exchange Agreement

SHARE EXCHANGE AGREEMENT


BETWEEN


NORTHWEST AIRLINES CORPORATION


AND


KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V.


DATED AS OF JUNE 28, 1996


------------------------------------


TABLE OF CONTENTS


Page


ARTICLE I


DEFINITIONS................................................. 1


1.1 Defined Terms..................................................................................... 1


ARTICLE II


EXCHANGE OF SHARES.............................................. 5


2.1 Transfer of Shares................................................................................ 5
2.2 Delivery of Shares................................................................................ 5
2.3 Consideration..................................................................................... 5


ARTICLE III


THE CLOSINGS................................................. 6


3.1 The Closing....................................................................................... 6


ARTICLE IV


REPRESENTATIONS AND WARRANTIES........................................ 7


4.1 Representations and Warranties of KLM............................................................. 7
4.2 Representations and Warranties of NWA Corp........................................................ 9


ARTICLE V


CONDITIONS PRECEDENT............................................. 10


5.1 Conditions to Series A Closing.................................................................... 10
5.2 Conditions to Series B Closing.................................................................... 12


ARTICLE VI


COVENANTS.................................................. 14


6.1 Consent to Future Dividends; Stock Repurchases.................................................... 14
6.2 Holdback Agreement................................................................................ 16
6.3 Certain Actions................................................................................... 17


ARTICLE VII


INDEMNIFICATION............................................... 17


7.1 Tax Indemnification; Contest...................................................................... 17


Page
ARTICLE VIII


GENERAL PROVISIONS.............................................. 18


8.1 Termination or Abandonment of Agreement........................................................... 18
8.2 Expenses.......................................................................................... 19
8.3 Execution in Counterparts......................................................................... 19
8.4 Notices .......................................................................................... 19
8.5 Governing Law..................................................................................... 20
8.6 Titles and Headings............................................................................... 20
8.7 Successors and Assigns............................................................................ 20
8.8 Entire Agreement; No Oral Waiver.................................................................. 21
8.9 Severability...................................................................................... 21
8.10 No Third-Party Rights............................................................................ 21
8.11 Submission To Jurisdiction....................................................................... 21
8.12 Certain Litigation Matters....................................................................... 22
8.13 Remedies......................................................................................... 22
8.14 Brokers and Finders.............................................................................. 22
8.15 Further Assurances............................................................................... 22
8.16 Letter Agreement................................................................................. 22


SCHEDULES


Schedule I Discounted Payments for Base Values


EXHIBITS


Exhibit A Form of Promissory Note Exhibit B Form of Series B Purchase Agreement Exhibit C Form of Series B Put/Call Agreement Exhibit D Form of Amendment to Series B Registration Rights
Agreement


SHARE EXCHANGE AGREEMENT


SHARE EXCHANGE AGREEMENT dated as of June 28, 1996 between NORTHWEST AIRLINES CORPORATION, a Delaware corporation ("NWA Corp."), and KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V., a Netherlands corporation ("KLM").


W I T N E S S E T H :


WHEREAS, on the date hereof, KLM is the beneficial owner of (i) 3,691.2 shares (the "Series A Shares") of NWA Corp.'s Series A Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"), and (ii) 2,962.7 shares (the "Series B Shares" and, together with the Series A Shares, the "Shares") of NWA Corp.'s Series B Preferred Stock, par value $.01 per share (the "Series B Preferred Stock");


WHEREAS, on the date hereof, in addition to the Series A Shares and the Series B Shares, KLM is the beneficial owner of 1,308.8 shares of Series A Preferred Stock and 436.3 shares of Series B Preferred Stock; and


WHEREAS, KLM and NWA Corp. desire to exchange the Series A Shares and the Series B Shares for the Series A Consideration and the Series B Consideration (each as defined herein), respectively, upon the terms and subject to the conditions set forth herein;


NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto hereby agree as follows:


ARTICLE I


DEFINITIONS


1.1 Defined Terms. As used in this Agreement, the terms defined in the recitals to this Agreement have the meanings assigned to such terms therein and the following terms have the following meanings:


"Affiliate" when used with respect to another Person, means
any Person who is, whether directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
such Person. As used herein, "control" means the beneficial ownership
of at least a majority of the equity interests of a Person entitling
the owner of such interests to direct the policies and operations of
such Person.


"Agent Bank Certificate" means a certificate executed by
Citibank, N.A., in its capacity as an agent under the Credit Agreement,
to the effect that NWA Corp. sought but was not able to obtain the
consent of the requisite number of banks parties to the Credit
Agreement to permit the Series B Closing to occur.


"Agreement" means this Share Exchange Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with
its terms.


"beneficially own" has the meaning given such term in Rule
13d-3 under the Securities Exchange Act of 1934, as amended, as in
effect on the date hereof. As used herein, the phrases "beneficial
ownership" and "beneficial owner" have correlative meanings.


"Business Day" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed
in New York, New York or in Minneapolis, Minnesota.


"Cash" means Dollars paid in immediately available
funds.


"Closing" means each of the Series A Closing and the Series B
Closing, as the context may require.


"Closing Date" means each of the Series A Closing Date and the
Series B Closing Date, as the context may require.


"Consideration Agreements" means, collectively, the Series A
Consideration, the Series B Note, the Series B Purchase Agreement and
the Series B Put/Call Agreement.


"Credit Agreement" means the Credit Agreement dated as of
December 15, 1995 among NWA Corp., NWA, Inc., Northwest Airlines, Inc.,
ABN Amro Bank N.V., as Compliance Agent, Bankers Trust Company, as
Administrative Agent, Chemical Securities Inc., as Syndication Agent,
Citibank, N.A., as Documentation Agent, National Westminster Bank PLC
and First Bank National Association, as Agents, and various lending
institutions parties thereto, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.


"Dollars" and "$" mean lawful currency of the United
States of America.


"LIBOR" means the rate per annum that appears on page 3750
provided by the Telerate News Service as of 11:00 A.M., London time, on
the day when a Consideration Agreement is being executed and delivered
(or, if such day is not a day when transactions in the London interbank
market are conducted, the next preceding day when such transactions are
conducted) for deposits of U.S. dollars having a maturity of (i) in the
case of any determination with respect to Series A Consideration, six
months, and (ii) in the case of any determination with respect to
Series B Consideration, twelve months.


"Person" means an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or
other entity of whatever nature.


"Series A Base Value" means, for each Series A Share, the
present value as of the Series A Closing Date, discounted at a rate of
11.50% per annum, of the payments scheduled to be made in the amounts
and on the dates set forth on Schedule I hereto, divided by the total
number of Series A Shares as of the date of this Agreement. As of July
1, 1996, the aggregate Series A Base Values of the Series A Shares will
be $227,059,957.44.


"Series A Certificate of Designation" means the Amended and
Restated Certificate of Designation, which designated the Series A
Preferred Stock, in the form in which it was filed with Secretary of
State of Delaware on December 28, 1993 as part of NWA Corp.'s Second
Amended and Restated Certificate of Incorporation.


"Series A Closing" has the meaning assigned to such
term in Section 3.1(a).


"Series A Closing Date" has the meaning assigned to such term
in Section 3.1(a).


"Series A Consideration" means a promissory note of NWA Corp.
in a principal amount equal to the aggregate Series A Base Values for
the Series A Shares, bearing interest at a rate per annum equal to
LIBOR plus 1.125%, maturing on December 30, 1996 and otherwise
substantially in the form of Exhibit A hereto.


"Series B Base Value" means, for each Series B Share, the
present value as of the Series B Closing Date, discounted at a rate of
12.00% per annum, of the payments scheduled to be made in the amounts
and on the dates set forth on Schedule I hereto, divided by the total
number of Series B Shares as of the date of this Agreement. If the
Series B Closing Date were July 28, 1996, the aggregate Series B Base
Values of the Series B Shares would be $152,230,206.75.


"Series B Certificate of Designation" means the Amended and
Restated Certificate of Designation, which designated the Series B
Preferred Stock, in the form in which it was filed with Secretary of
State of Delaware on December 28, 1993 as part of NWA Corp.'s Second
Amended and Restated Certificate of Incorporation.


"Series B Closing" has the meaning assigned to such
term in Section 3.1(b).


"Series B Closing Date" has the meaning assigned to such term
in Section 3.1(b).


"Series B Consideration" means any of the following, as
selected by NWA Corp. in accordance with Section 3.1(b) hereof: (i) a
Series B Note, (ii) a Series B Purchase Agreement; (iii) a Series B
Put/Call Agreement; (iv) Cash; or (v) any combination of the foregoing
forms of consideration; provided that the aggregate amount payable
pursuant to such Consideration Agreements shall equal the sum of the
aggregate Series B Base Values of the Series B Shares (less the amount
of Cash, if any, paid on the Series B Closing Date for Series B Shares)
plus, for each Series B Payment Date contemplated by the Consideration
Agreements, an amount equal to (A) the aggregate Series B Base Values
of the Series B Shares to be purchased and sold on such Series B
Payment Date multiplied by (B) LIBOR plus 1.125% multiplied by (C) a
fraction, the numerator of which is equal to the actual number of days
from and including the Series B Closing Date to and including each
applicable Series B Payment Date and the denominator of which is 360.


"Series B Note" means a promissory note of NWA Corp. bearing
interest at a rate per annum equal to LIBOR plus 1.125%, maturing on
June 13, 1997 and otherwise substantially in the form of Exhibit A
hereto.


"Series B Payment Date" means, with respect to any form of
Series B Consideration, the date on which such form of Series B
Consideration becomes payable in cash in accordance with the terms of
such form of Series B Consideration.


"Series B Purchase Agreement" means a Share Purchase Agreement
relating to Series B Shares providing for a Series B Payment Date on or
before June 13, 1997 and otherwise substantially in the form of Exhibit
B hereto.


"Series B Put/Call Agreement" means an agreement substantially
in the form of Exhibit C hereto.


"Series B Registration Rights Agreement" means the Series B
Preferred Stock Registration Rights Agreement, dated as of July 21,
1989, by and among NWA Corp., KLM and certain other stockholders of NWA
Corp. parties thereto, as in effect on the date hereof.


"Stockholders' Agreement" means the Second Amended and
Restated Investor Stockholders' Agreement dated as of December 23, 1993
by and among NWA Corp., KLM and certain other stockholders of NWA Corp.
parties thereto, as in
effect on the date hereof.


ARTICLE II


EXCHANGE OF SHARES


2.1 Transfer of Shares. (a) On the terms and subject to the conditions contained herein, KLM agrees to transfer to NWA Corp., and NWA Corp. agrees to acquire from KLM, at the Series A Closing, all of the Series A Shares.


(b) On the terms and subject to the conditions contained herein, KLM agrees to transfer to NWA Corp., and NWA Corp. agrees to acquire from KLM, at the Series B Closing, all of the Series B Shares; provided that, if the Series B Consideration includes a Series B Purchase Agreement or a Series B Put/Call Agreement with respect to all or a portion of the Series B Shares, then that portion of the Series B Shares subject to the Series B Purchase Agreement and/or Series B Put/Call Agreement, as the case may be, shall be transferred on the applicable Series B Payment Date(s) (if, in the case of any Series B Put/Call Agreement, a Series B Payment Date occurs thereunder as a result of an exercise of an Option (as defined therein) pursuant thereto) and, on the Series B Closing Date, each of KLM and NWA Corp. shall execute and deliver such Series B Purchase Agreement and/or Series B Put/Call Agreement, as the case may be.


2.2 Delivery of Shares. (a) At the Series A Closing, KLM shall deliver to NWA Corp. a certificate or certificates representing all of the Series A Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank, with all necessary stock transfer stamps affixed.


(b) At the Series B Closing, KLM shall deliver to NWA Corp. a certificate or certificates representing all of the Series B Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank, with all necessary stock transfer stamps affixed, provided that, if the Series B Consideration includes a Series B Purchase Agreement or a Series B Put/Call Agreement with respect to all or a portion of the Series B Shares, then that portion of the Series B Shares subject to the Series B Purchase Agreement and/or Series B Put/Call Agreement, as the case may be, shall be delivered on the applicable Series B Payment Date(s) (if, in the case of any Series B Put/Call Agreement, a Series B Payment Date occurs thereunder as a result of an exercise of an Option (as defined therein) pursuant thereto).


2.3 Consideration. (a) At the Series A Closing, NWA Corp. shall deliver to KLM the Series A Consideration.


(b) At the Series B Closing, NWA Corp. shall deliver to KLM the Series B Consideration selected by NWA Corp. in accordance with Section 3.1(b) and, if such Series B Consideration includes a Series B Purchase Agreement and/or a Series B Put/Call Agreement, as the case may be, then, at the Series B Closing, each of KLM and NWA Corp. shall execute and deliver such Series B Purchase Agreement and/or Series B Put/Call Agreement, as the case may be.


ARTICLE III


THE CLOSINGS


3.1 The Closings. (a) The closing of the exchange of the Series A Shares provided for in this Agreement (the "Series A Closing") shall take place at the offices of Simpson Thacher & Bartlett at 10:00 a.m., New York City time, on July 1, 1996 (or as promptly as practicable thereafter following the satisfaction or waiver of the conditions to the Series A Closing set forth in Section 5.1), or at such other time and place as the parties hereto shall agree upon in writing, subject to the satisfaction or waiver of the conditions to the obligations of the parties to effect the Series A Closing set forth in Section 5.1 hereof. The time and date of the Series A Closing are herein referred to as the "Series A Closing Date".


(b) The closing of the exchange of the Series B Shares provided for in this Agreement (the "Series B Closing") shall take place at the offices of Simpson Thacher & Bartlett at 10:00 a.m., New York City time, on such date on or prior to the 30th day following the date of this Agreement (or, if such 30th day following the date of this Agreement is not a Business Day, on the next succeeding Business Day) as shall be specified by NWA Corp. to KLM in a written notice (the "Series B Notice") delivered to KLM not later than two Business Days prior to the date specified by NWA Corp. in the Series B Notice as the date of the Series B Closing, or at such other time and place as the parties hereto shall agree upon in writing, subject to the satisfaction or waiver of the conditions to the obligations of the parties to effect the Series B Closing set forth in Section 5.2 hereof. The time and date of the Series B Closing are herein referred to as the "Series B Closing Date". In the Series B Notice, NWA Corp. shall select, in NWA Corp.'s sole discretion, the Series B Consideration that will be delivered at the Series B Closing and, if more than one form of Series B Consideration is selected by NWA Corp., the number of Series B Shares (and the corresponding aggregate Series B Base Values of such Series B Shares) that will be exchanged for each form of Series B Consideration.


ARTICLE IV


REPRESENTATIONS AND WARRANTIES


4.1 Representations and Warranties of KLM. KLM represents and warrants to NWA Corp. as follows:


(a) KLM is a corporation duly organized and validly existing under the laws of the Netherlands.


(b) KLM has all requisite corporate power and authority to execute and deliver this Agreement and each Consideration Agreement to which it may become a party and to perform its obligations hereunder and thereunder. The execution and delivery by KLM of this Agreement and each Consideration Agreement to which it may become a party and the performance of the transactions herein and therein contemplated to be performed by KLM have been duly authorized by the Supervisory Board of KLM and no further corporate action on the part of KLM is necessary to authorize this Agreement or any such Consideration Agreement and the performance of such transactions. This Agreement has been duly executed and delivered by KLM and, assuming due authorization, execution and delivery by NWA Corp., constitutes the legal, valid and binding agreement of KLM, enforceable against KLM in accordance with its terms, except as affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding at law or in equity). Each Consideration Agreement to which KLM may become a party, when duly executed and delivered by KLM and, assuming due authorization, execution and delivery by NWA Corp., will constitute the legal, valid and binding agreement of KLM, enforceable against KLM in accordance with its terms, except as affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding at law or in equity).


(c) None of the execution and delivery of this Agreement, the Consideration Agreements to which KLM may become a party or the performance by KLM of the transactions contemplated hereby or thereby will (i) violate or conflict with any of the provisions of the charter or other organizational documents of KLM, (ii) with or without the giving of notice or the lapse of time or both, violate or constitute a default under, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under any mortgage, indenture, deed of trust, lease, contract, agreement, license or other instrument or any provision of any law, order, judgment, decree, restriction or ruling of any governmental authority to which KLM is a party or by which any of its property is bound or (iii) result in the creation of any liens, encumbrances, equities or claims upon any of the Shares, except, in the case of clause (ii) above, for any such events which, individually or in the aggregate, could not materially adversely affect the ability of KLM to consummate the transactions contemplated hereby and by each of the Consideration Agreements which may be executed and delivered pursuant hereto.


(d) No consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body or any other Person is required for the execution, delivery and performance by KLM of this Agreement or any of the Consideration Agreements to which KLM may become a party and the consummation of the transactions contemplated hereby and thereby, including the exchange of the Shares pursuant hereto and thereto, except for the release by the Voting Trustee (as defined below) of the 2,754 Series A Shares held by it pursuant to the Voting Trust (as defined below).


(e) There are no lawsuits, actions, arbitrations or legal or administrative or regulatory proceedings, charges, complaints or investigations pending or, to the best knowledge of KLM, threatened against KLM, and KLM is not a party to, or subject to or bound by, any order, judgment, injunction, stipulation, award or decree (whether rendered by a court or administrative agency or by arbitration), in any such case, which could, individually or in the aggregate, materially adversely affect the ability of KLM to consummate the transactions contemplated hereby and by each of the Consideration Agreements.


(f) KLM has, and immediately prior to each Closing hereunder and each Series B Closing under (and as defined in) a Consideration Agreement KLM will have, good and valid title to the Shares to be exchanged at such Closing or Series B Closing, as the case may be, free and clear of all liens, encumbrances, equities or claims, except that, as of the date of this Agreement, 2,754 shares of the Series A Shares are held by Citibank, N.A., as trustee (the "Voting Trustee"), pursuant to the terms of the Voting Trust Agreement dated as of March 29, 1990, as amended (the "Voting Trust"), among KLM, NWA Corp. (formerly known as Wings Holdings Inc.) and Citibank, N.A.; and upon delivery of such Shares by KLM and delivery of the consideration therefor by NWA Corp. pursuant hereto or such Consideration Agreement, NWA Corp. will acquire good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims.


(g) Except for 2,754 shares of Series A Preferred Stock which are held of record by the Voting Trustee and which are beneficially owned by KLM, KLM is the record and beneficial owner on the date hereof of 5,000 shares of Series A Preferred Stock (including the Series A Shares) and 3,399 shares of Series B Preferred Stock (including the Series B Shares), and does not own of record or beneficially any other shares of any series of preferred capital stock of NWA Corp.


(h) Neither KLM nor any of its officers, directors, employees or agents has authorized any Person to act as a broker, finder or in any similar capacity on behalf of KLM in connectio ...