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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
8-K
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CURRENT
REPORT PURSUANT
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TO
SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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Date
of Report (Date of earliest event reported): December 11,
2009
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CONTINENTAL
AIRLINES, INC.
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(Exact
Name of Registrant as Specified in Its
Charter)
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DELAWARE
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(State
or Other Jurisdiction of
Incorporation)
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1-10323
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74-2099724
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1600
Smith Street, Dept. HQSEO, Houston, Texas
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77002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(713)
324-2950
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(Registrant’s
Telephone Number, Including Area
Code)
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______________________________________
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(Former
Name or Former Address, if Changed Since Last
Report)
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Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2.
below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
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(17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
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(17
CFR 240.13e-4(c))
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Item
1.01 Entry into a Material
Definitive Agreement.
On
December 11, 2009, Continental Airlines, Inc. (the “Company”) completed the
public offering of $230,000,000 aggregate principal amount of the Company’s 4.5%
Convertible Notes due 2015 (the “Notes”). The Notes were issued under the
Indenture, dated as of July 15, 1997 (the “Indenture”), between the Company and
The Bank of New York Trust Company, N.A. (as successor to Bank One, N.A.), as
trustee, as supplemented by the Third Supplemental Indenture, dated as of
December 11, 2009 (the “Third Supplemental Indenture”), among the Company and
The Bank of New York Trust Company, N.A., as trustee. The Indenture was filed
with the Securities and Exchange Commission (the “Commission”) on December 10,
1998 as Exhibit 4.2 to the Company’s Current Report on Form 8-K. A copy of the
Third Supplemental Indenture is filed herewith as Exhibit 4.1 and incorporated
by reference herein. The form of the Notes issued pursuant to the Third
Supplemental Indenture is filed herewith as Exhibit 4.2, and the terms and
conditions thereof are incorporated by reference herein.
The Notes
have been issued pursuant to the Company’s automatic shelf registration
statement on Form S-3 (Registration No. 333-158781), filed with the Commission
on April 24, 2009. The material terms of the Notes are described in
the prospectus supplement, dated December 7, 2009, as filed by the Company with
the Commission on December 8, 2009 pursuant to Rule 424(b) under the Securities
Act of 1933, which relates to the offer and sale of the Notes and supplements
the prospectus dated April 24, 2009.
Item
2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant.
The
information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
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Item
7.01.
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Regulation FD
Disclosure.
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On December 17, 2009, the Company
will provide an update for investors presenting information relating to its
financial and operational outlook for the fourth quarter 2009 and other
information. The update is furnished herewith as Exhibit 99.1 and is
incorporated herein by reference.
Item
9.01. Financial Statements and
Exhibits.
(d) Exhibits
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4.1
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Third
Supplemental Indenture, dated as of December 11, 2009, among the Company
and The Bank of New York Trust Company, N.A., as trustee, with respect to
the Indenture, dated as of July 15, 1997, between the Company and The Bank
of New York Trust Company, N.A. (as successor to Bank One, N.A.), as
trustee
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4.2
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Form
of 4.5% Convertible Note due 2015 (included in Exhibit 4.1, as Exhibit A
thereto)
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99.1
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Investor
Update
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SIGNATURE
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Pursuant to the requirements of the
Securities Exchange Act of 1934, Continental Airlines, Inc. has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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CONTINENTAL
AIRLINES, INC.
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December
17, 2009
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By /s/ Lori A.
Gobillot
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Lori
A. Gobillot
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Staff Vice President and
Assistant
General Counsel
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EXHIBIT
INDEX
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4.1
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Third
Supplemental Indenture, dated as of December 11, 2009, among the Company
and The Bank of New York Trust Company, N.A., as trustee, with respect to
the Indenture, dated as of July 15, 1997, between the Company and The Bank
of New York Trust Company, N.A. (as successor to Bank One, N.A.), as
trustee
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4.2
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Form
of 4.5% Convertible Note due 2015 (included in Exhibit 4.1, as Exhibit A
thereto)
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99.1
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Investor
Update
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Exhibit
4.1
Execution
Version
CONTINENTAL
AIRLINES, INC.,
AS
ISSUER,
TO
THE BANK
OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS
TRUSTEE
___________________________
THIRD
SUPPLEMENTAL INDENTURE
DATED
DECEMBER 11, 2009
SUPPLEMENTING
AND AMENDING THE INDENTURE
DATED AS
OF JULY 15, 1997
TABLE
OF CONTENTS
Page
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RELATION
TO ORIGINAL INDENTURE; DEFINITIONS AND INCORPORATION BY
REFERENCE
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2
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Section
1.1
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Definitions.
For all purposes of the Original Indenture and this Third Supplemental
Indenture as they relate to the 2015 Notes, except as otherwise expressly
provided or unless the context otherwise requires:
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2
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Section
1.2
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Other
Definitions
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5
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ARTICLE
II
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THE
SECURITIES
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6
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Section
2.1
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2015
Notes
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6
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Section
2.2
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Conversion
Agent
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7
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Section
2.3
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Cancellation
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8
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ARTICLE
IIIPURCHASE UPON FUNDAMENTAL
CHANGE8
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Section
3.1
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Purchase
of 2015 Notes at Option of the Holder upon Fundamental
Change
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8
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Section
3.2
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Effect
of Fundamental Change Purchase Notice
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11
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Section
3.3
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Deposit
of Fundamental Change Purchase Price
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11
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Section
3.4
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2015
Note Purchased in Part
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12
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Section
3.5
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Repayment
to the Company
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12
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Section
3.6
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Covenant
to Comply with Applicable Securities Laws upon Purchase of 2015
Notes
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12
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ARTICLE
IV[RESERVED]13
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ARTICLE
V
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DEFAULTS
AND REMEDIES
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13
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Section
5.1
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Additional
Events of Default
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13
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ARTICLE
VISUPPLEMENTAL INDENTURES13
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Section
6.1
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Supplemental
Indentures
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13
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ARTICLE
VII[RESERVED]14
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ARTICLE
VIIICONVERSION14
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Section
8.1
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Conversion
Privilege
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14
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Section
8.2
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Conversion
Procedure
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14
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Section
8.3
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Fractional
Shares
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16
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Section
8.4
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Taxes
on Conversion
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16
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Section
8.5
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Company
to Provide Stock
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16
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Section
8.6
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Adjustment
for Change in Capital Stock
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17
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Section
8.7
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Adjustment
for Rights Issue
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17
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Section
8.8
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Adjustment
for Other Distributions
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19
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Section
8.9
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When
Adjustment May Be Deferred
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22
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Section
8.10
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When
No Adjustment Required
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22
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Section
8.11
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Notice
of Adjustment
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22
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Section
8.12
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Voluntary
Increase
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22
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Section
8.13
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Notice
of Certain Transactions
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23
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Section
8.14
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Business
Combinations
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23
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Section
8.15
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Adjustment
to Shares Delivered Upon Conversion in Connection with a Make Whole Change
of Control
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24
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Section
8.16
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Company
Determination Final
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25
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Section
8.17
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Trustee’s
Adjustment Disclaimer
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26
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Section
8.18
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Simultaneous
Adjustments
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26
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Section
8.19
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Successive
Adjustments
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26
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Section
8.20
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Rights
Issued in Respect of Common Stock Issued upon
Conversion
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26
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ARTICLE
IXMISCELLANEOUS27
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Section
9.1
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Trust
Indenture Act Controls
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27
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Section
9.2
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Concerning
the Trustee; Force Majeure
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27
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Section
9.3
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Supplemental
Indenture Controls
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27
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Section
9.4
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Rules
by Paying Agent, Conversion Agent and Registrar
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27
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Section
9.5
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Calculations
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27
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Section
9.6
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Governing
Law
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27
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Section
9.7
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Multiple
Originals
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28
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Section
9.8
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Benefits
of Third Supplemental Indenture
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28
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Section
9.9
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Confirmation
of Indenture
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28
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Section
9.10
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Headings
and Table of Contents
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28
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Schedule
A Make
Whole Change of Control Table
Exhibit
A Form
of 2015 Note
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i
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THIS
THIRD SUPPLEMENTAL INDENTURE, dated as of December 11, 2009, (hereinafter called
the “Third
Supplemental Indenture”), is between CONTINENTAL AIRLINES, INC., a
Delaware Corporation (hereinafter called the “Company”), and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly
organized and existing under the laws of the United States of America, as
successor trustee under the Original Indenture referred to below (hereinafter
called the “Trustee”).
RECITALS
OF THE COMPANY
WHEREAS, The Company and the
Trustee (as successor to Bank One, N.A.) are parties to an Indenture, dated as
of July 15, 1997 (the “Original Indenture”),
relating to the issuance from time to time by the Company of its Securities on
terms to be specified at the time of issuance, as supplemented and amended by
the First Supplemental Indenture, dated as of January 23, 2002 (the “First Supplemental
Indenture”) and the Second Supplemental Indenture, dated as of November
13, 2006 (the “Second
Supplemental Indenture”);
WHEREAS, the Company has duly
authorized the creation of a series of its Securities denominated its “4.5%
Convertible Notes due 2015” (such Securities, as they may be amended from time
to time, being referred to herein as the “2015
Notes”);
WHEREAS, the Company has duly
authorized the execution and delivery of this Third Supplemental Indenture in
order to provide for the issuance of the 2015 Notes;
WHEREAS, the Company has
requested the Trustee, and the Trustee has agreed, to join with it in the
execution and delivery of this Third Supplemental Indenture;
WHEREAS, Section 8.1(7) of the
Original Indenture provides that the Company, acting pursuant to a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
an indenture supplemental to the Original Indenture, without the consent of any
Holders of Securities, to establish the form and terms of Securities of any
series as permitted by Sections 2.1 and 3.1 of the Original
Indenture;
WHEREAS, on the basis of the
foregoing, the Trustee has determined that this Third Supplemental Indenture is
in form satisfactory to it;
WHEREAS, the Company has
furnished the Trustee with an Officers’ Certificate and an Opinion of Counsel
complying with the requirements of Section 8.4 of the Original Indenture,
stating that the execution of this Third Supplemental Indenture is authorized or
permitted by the Original Indenture, and has delivered to the Trustee a Board
Resolution authorizing the execution and delivery of this Third Supplemental
Indenture;
WHEREAS, all things necessary
to make this Third Supplemental Indenture a valid agreement of the Company and
the Trustee and a valid amendment of and supplement to the Original Indenture
have been done. The entry into this Third Supplemental Indenture by
the parties hereto is in all respects authorized by the provisions of the
Original Indenture;
WHEREAS, the Company has duly
authorized the execution and delivery of this Third Supplemental Indenture, and
all things necessary have been done to make the 2015 Notes, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Third
Supplemental Indenture a valid agreement of the Company, in accordance with
their and its terms;
NOW
THEREFORE:
It is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the 2015 Notes, as follows:
ARTICLE
I
RELATION
TO ORIGINAL INDENTURE;
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1 Definitions. For all
purposes of the Original Indenture and this Third Supplemental Indenture as they
relate to the 2015 Notes, except as otherwise expressly provided or unless the
context otherwise requires:
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(a)
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the
terms defined in this Article have the meanings assigned to them in this
Article;
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(b)
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the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Third Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision;
and
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(c)
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capitalized
terms used but not defined herein are used as they are defined in the
Original Indenture.
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(i) “Applicable
Procedures” means, with respect to any transfer or transaction involving
a Global Security or beneficial interest therein, the rules and procedures of
the Depositary for such 2015 Note, in each case to the extent applicable to such
transaction and as in effect from time to time.
(ii) “Business Day” is any
weekday that is not a day on which banking institutions in The City of New York
are authorized or obligated to close.
(iii) “Capital Stock” for
any Person means any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) stock or other equity issued by that Person.
(iv) A “Change of Control”
means the occurrence of any of the following after the Issue Date:
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1.
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any
“person” or “group” within the meaning of Section 13(d) of the Exchange
Act, other than the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or any of its Subsidiaries, files a
Schedule TO or any schedule, form or report under the Exchange Act,
disclosing that such person or group has become the direct or indirect
ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange
Act, of the Company’s common equity representing more than 50% of the
voting power of the Company’s common equity entitled to vote generally in
the election of directors; or
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2.
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consummation
of any share exchange, consolidation or merger of the Company pursuant to
which all or substantially all of the Company’s Common Stock will be
converted into cash, securities or other property or any sale, lease or
other transfer in one transaction or a series of transactions of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, taken as a whole, to any Person other than the Company or
one or more of its Subsidiaries; provided, however, that a
transaction where the holders of the Company’s common equity immediately
prior to such transaction have, directly or indirectly, more than 50% of
the aggregate voting power of all classes of common equity of the
continuing or surviving corporation (or parent thereof) or transferee
entitled to vote generally in the election of directors immediately after
such event shall not be a Change of
Control.
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A Change
of Control shall not be deemed to have occurred in respect of any of the
foregoing, however, if at least 90% of the consideration, excluding cash
payments for fractional shares, in the transaction or transactions that would,
but for the operation of this paragraph, constitute a Change of Control consists
of shares of capital stock (as defined in the following sentence) (or depositary
shares or receipts in respect thereof) traded on a United States national
securities exchange or quoted on a national automated dealer quotation system or
which will be so traded or quoted when issued or exchanged in connection with
the Change of Control (these securities being referred to as “Publicly Traded
Securities”) and as a result of this transaction or transactions the 2015
Notes become convertible into such Publicly Traded Securities. For
purposes of this paragraph, the term “capital stock” of any Person means any and
all shares (including ordinary shares), interests, participations or other
equivalents however designated of corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person and any rights (other than debt securities convertible or
exchangeable into an equity interest), warrants or options to acquire an equity
interest in such Person.
(v) “Closing Sale Price”
or “Closing Sale
Prices” of Common Stock or any other security on any Trading Day means
the reported last sale price per share (or, if no last sale price is reported,
the average of the closing bid and ask prices per share or, if more than one in
either case, the average of the average closing bid and the average closing ask
prices per share) on such date reported by the NYSE or, if the Common Stock or
such other security is not listed for trading on the NYSE, as reported by the
principal national securities exchange on which the Common Stock is listed,
admitted for trading or quoted or, in the absence of such quotation, such price
as the Company shall reasonably determine on the basis of such quotations as the
Company reasonably considers appropriate.
(vi) “Common Stock” means
the Company’s Class B common stock, par value $.01 per share, as it exists on
the date of this Third Supplemental Indenture or any other shares of Capital
Stock of the Company into which the Common Stock shall be reclassified or
changed.
(vii) “DTC” means The
Depository Trust Company, a New York corporation, and any successors and
assigns.
(viii) “Ex-Dividend Date”
means the first date on which the shares of Common Stock trade on the relevant
exchange or in the relevant market, regular way, without the right to receive
the distribution or participate in the transaction related to the relevant
adjustment.
(ix) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(x) “Fundamental Change”
means the occurrence of a Change of Control or a Termination of
Trading.
(xi) “Global Securities”
means any of the 2015 Notes that are in global form.
(xii) “Issue Date” of any
2015 Notes means the date on which the series of 2015 Notes are originally
issued pursuant to this Third Supplemental Indenture.
(xiii) “NYSE “ means the New
York Stock Exchange.
(xiv) “Stated Maturity” when
used with respect to any 2015 Note, means the date specified in such 2015 Note
as the fixed date on which the principal of such 2015 Note is due and
payable.
(xv) “Termination of
Trading” shall be deemed to have occurred if the Common Stock (or other
common stock into which the 2015 Notes are then convertible) is not listed or
quoted on any of the NYSE, the NASDAQ Global Select Market or the NASDAQ Global
Market (or any of their respective successors).
(xvi) “Trading Day” means
any day on which the NYSE or, if the Common Stock is not listed on the NYSE, the
principal national securities exchange on which the Common Stock is listed,
admitted for trading or quoted, is open for trading or, if the Common Stock is
not so listed, admitted for trading or quoted, any Business Day.
Section
1.2 Other
Definitions.
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Term
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Defined
in Third Supplemental Indenture Section
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“2015
Notes”
|
Recitals
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“Business
Combination”
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8.14
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|
“Company”
|
Recitals
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“Conversion
Agent”
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2.2
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“Conversion
Date”
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8.2
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“Conversion
Rate”
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8.1
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“Expiration
Time”
|
8.8(c)
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|
“First
Supplemental Indenture”
|
Recitals
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“Fundamental
Change Company Notice”
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3.1(b)
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“Fundamental
Change Purchase Date”
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3.1(a)
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“Fundamental
Change Purchase Notice”
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3.1(c)
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“Fundamental
Change Purchase Price”
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3.1(a)
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“Interest
Payment Date”
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2.1(d)
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“Make
Whole Change of Control”
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8.15(a)
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“Make
Whole Change of Control Effective Date”
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8.15(a)
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“Make
Whole Change of Control Stock Price”
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8.15(b)
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“Original
Indenture”
|
Recitals
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“Reference
Property”
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8.14
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“Register”
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2.3
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“Registrar”
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2.3
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“Regular
Record Date”
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2.1(e)
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“Rights”
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8.20
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|
“Rights
Agreement”
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8.20
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|
“Second
Supplemental Indenture”
|
Recitals
|
|
“Third
Supplemental Indenture”
|
Recitals
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|
“Trustee”
|
Recitals
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|
“Spin-Off”
|
8.8(b)
|
ARTICLE
II
THE
SECURITIES
Section
2.1 2015
Notes.
(a) Title; Form and
Dating. There shall be a series of Securities designated the
“4.5% Convertible Notes due 2015.” The 2015 Notes and the Trustee’s
certificate of authentication shall be substantially in the form of Exhibit A-1,
which is a part of this Third Supplemental Indenture. The 2015 Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage (provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each 2015 Note
shall be dated the date of its authentication.
(b) Unlimited Aggregate
Principal Amount. The aggregate principal amount of 2015 Notes
that may be authenticated and delivered under this Third Supplemental Indenture
is unlimited. 2015 Notes in the aggregate principal amount of
$230,000,000 may be executed by the Company on the Issue Date and delivered to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said 2015 Notes upon a Company Order, without any further action by the
Company hereunder. In addition, subject to the satisfaction of the
conditions provided in Section 1.2 of the Original Indenture, an unlimited
aggregate principal amount of additional 2015 Notes with the same terms and
conditions and CUSIP number (subject to any temporary CUSIP numbers required by
applicable securities laws) as the 2015 Notes, except for date of issuance and,
if applicable, issue price and the date of the first Interest Payment Date, may
be executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall, upon receipt of an Officers’ Certificate specifying the
amount of such additional 2015 Notes to be authenticated and the date on which
such additional 2015 Notes are to be authenticated and certifying that all
conditions precedent to the issuance of such additional 2015 Notes contained
herein have been complied with, authenticate and deliver said additional 2015
Notes to or upon a Company Order. Additional 2015 Notes issued in
accordance with this Section 2.1(b) shall be consolidated with, and shall form a
single series with, the previously outstanding 2015 Notes unless such additional
2015 Notes shall not be treated as fungible with the initial 2015
Notes.
(c) Principal Payment
Dates. The Stated Maturity date for the 2015 Notes is
January 15, 2015, unless earlier converted pursuant to Article VIII of this
Third Supplemental Indenture or repurchased pursuant to Article III of this
Third Supplemental Indenture.
(d) Interest and Interest
Rates. The rate of interest on each 2015 Note shall be 4.5%
per annum, accruing from the Issue Date or from the most recent date to which
interest on such 2015 Notes has been paid or duly provided
for. Interest shall be payable on each 2015 Note semiannually in
arrears on January 15 and July 15 of each year during the term of the 2015
Notes, commencing on July 15, 2010 (each, an “Interest Payment
Date”) to Holders of record at the close of business on each Regular
Record Date immediately preceding such Interest Payment Date. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months.
(e) Regular Record
Dates. The “Regular Record Dates”
for the 2015 Notes are January 1 and July 1 (whether or not a Business
Day).
(f) Redemption. The
2015 Notes are not redeemable by the Company at its option prior to the Stated
Maturity.
(g) Denominations. The
2015 Notes shall be issued in denominations of $1,000 and integral multiples
thereof.
(h) Currency. All
cash payments of principal, interest and other amounts with respect to the 2015
Notes shall be made in Dollars.
(i) Registered
Securities. The 2015 Notes shall be issued as Registered
Securities without coupons.
(j) Defeasance and Covenant
Defeasance. The provisions of Sections 4.4 and 4.5 of the
Original Indenture shall not apply to the 2015 Notes.
(k) Global
Form. The 2015 Notes will initially be issued in whole in
global form and the Depositary for the 2015 Notes shall initially be
DTC.
(l) No Sinking
Funds. The provisions of Article 11 of the Original Indenture
shall not apply to the 2015 Notes.
(m) Registrar, Paying Agent and
Conversion Agent. The Company initially appoints the Trustee
as Registrar, Conversion Agent and Paying Agent for the 2015 Notes.
(n) Execution. Notwithstanding
Section 3.3 of the Original Indenture, the 2015 Notes shall be executed on
behalf of the Company by an Officer of the Company and attested to by its
Secretary or one of its Assistant Secretaries, and there shall be no requirement
that the Company’s seal be affixed to, or a facsimile of such seal be engraved,
printed or otherwise reproduced on, the 2015 Notes.
Section
2.2 Conversion
Agent. The Company shall maintain a Place of Payment where the
2015 Notes may be presented for conversion (“Conversion
Agent”). The Company may have one or more additional
conversion agents. The Company shall enter into an appropriate agency
agreement with any Conversion Agent that is not also the Trustee. The
agreement shall implement the provisions of the Original Indenture and this
Third Supplemental Indenture that relate to such Conversion
Agent. The Company shall notify the Trustee of the name and address
of any such Conversion Agent. If the Company fails to maintain a
Conversion Agent, the Trustee shall act as Conversion Agent and shall be
entitled to appropriate compensation therefor pursuant to Section 6.9 of the
Original Indenture. The Company or any Subsidiary or an Affiliate of
either of them may act as Conversion Agent.
Section
2.3 Cancellation. For
purposes of the 2015 Notes, Section 3.9 of the Original Indenture shall be
amended to read as follows:
“Section
3.9 Cancellation. All
2015 Notes surrendered to the Trustee for payment, purchase by the Company
pursuant to Article III of the Third Supplemental Indenture or conversion shall
be promptly cancelled by the Trustee. The Company may at any time
deliver to the Trustee for cancellation any 2015 Notes previously authenticated
and delivered hereunder which the Company may have acquired in any other manner
whatsoever, and all 2015 Notes so delivered shall be promptly cancelled by the
Trustee. The Company may not issue new 2015 Notes to replace 2015
Notes that have been paid or purchased by the Company pursuant to Article III of
the Third Supplemental Indenture, that the Company has delivered to the Trustee
for cancellation or that any Holder has converted pursuant to Article VIII of
the Third Supplemental Indenture. No 2015 Notes shall be
authenticated in lieu of or in exchange for any 2015 Notes cancelled as provided
in this Section 3.9, except as expressly permitted by this
Indenture. All cancelled 2015 Notes held by the Trustee shall be
disposed of by the Trustee in its customary manner.”
ARTICLE
III
PURCHASE
UPON FUNDAMENTAL CHANGE
Section
3.1 Purchase of 2015 Notes at
Option of the Holder upon Fundamental Change.
(a) If there
shall have occurred a Fundamental Change, each Holder shall have the right, at
the Holder’s option, to require the Company to purchase for cash all or any
portion of such Holder’s 2015 Notes in integral multiples of $1,000 principal
amount on a Business Day specified by the Company that is not earlier than the
30th and not later than the 60th day following the date the Fundamental Change
Company Notice is mailed pursuant to Section 3.1(b) of this Third Supplemental
Indenture, subject to extension to comply with law (the “Fundamental
Change Purchase Date”), at a price equal to 100% of the
principal amount of the 2015 Notes to be purchased, plus, except as described in
the following sentence, any accrued and unpaid interest to, but excluding, the
Fundamental Change Purchase Date (such purchase price, the “Fundamental Change Purchase
Price”). If the Fundamental Change Purchase Date is after a
Regular Record Date and on or prior to the related Interest Payment Date, the
interest payable on that Interest Payment Date shall be paid to the Holder of
record of the 2015 Notes on such Regular Record Date (which may or may not be
the same Person to whom the Company shall pay the Fundamental Change Purchase
Price), and the Fundamental Change Purchase Price shall equal 100% of the
principal amount of the 2015 Notes to be purchased.
(b) Fundamental Change Company
Notice. Within 15 Business Days after the occurrence of a
Fundamental Change, the Company shall mail a written notice of Fundamental
Change (the “Fundamental Change Company
Notice”) by first-class mail to the Trustee, the Paying Agent and each
Holder. The notice shall include a form of Fundamental Change
Purchase Notice to be completed by the Holder and shall state:
(i) the
events causing a Fundamental Change and the date of such Fundamental
Change;
(ii) the date
by which the Fundamental Change Purchase Notice must be given;
(iii) the
Fundamental Change Purchase Date;
(iv) the
Fundamental Change Purchase Price;
(v) the name
and address of the Paying Agent and the Conversion Agent;
(vi) the
Conversion Rate and any adjustments thereto resulting from the Fundamental
Change;
(vii) that 2015
Notes as to which a Fundamental Change Purchase Notice has been given may be
converted pursuant to Article VIII of this Third Supplemental Indenture only if
the Fundamental Change Purchase Notice has been withdrawn in accordance with the
terms of this Third Supplemental Indenture;
(viii) that 2015
Notes must be surrendered to the Paying Agent to collect payment of the
Fundamental Change Purchase Price;
(ix) that the
Fundamental Change Purchase Price for any 2015 Note as to which a Fundamental
Change Purchase Notice has been duly given and not withdrawn, will be paid
promptly following the later of the Fundamental Change Purchase Date and the
time of surrender of such 2015 Note as described in (viii);
(x) the
procedures the Holder must follow to exercise rights under this
Section 3.1;
(xi) the
conversion rights of the 2015 Notes and that Holders who want to convert 2015
Notes must satisfy the applicable requirements set forth in Article VIII of this
Third Supplemental Indenture;
(xii) (xii) the
procedures for withdrawing a Fundamental Change Purchase Notice;
(xiii) that,
unless the Company defaults in making payment of such Fundamental Change
Purchase Price on 2015 Notes surrendered for purchase, interest on 2015 Notes
surrendered for purchase will cease to accrue on and after the Fundamental
Change Purchase Date; and
(xiv) the CUSIP
number of the 2015 Notes.
At the
Company’s request, the Trustee shall give such Fundamental Change Company Notice
in the Company’s name and at the Company’s expense; provided, however, that, in all
cases, the text of such Fundamental Change Company Notice shall be prepared by
the Company.
(c) Fundamental Change Purchase
Notice. A Holder may exercise its rights specified in Section
3.1(a) of this Third Supplemental Indenture upon satisfaction of all of the
following:
(i) delivery
to the Paying Agent of a duly completed notice (a “Fundamental Change Purchase
Notice”) in the form set forth on the reverse of the 2015 Note by the
close of business on the Business Day prior to the Fundamental Change Purchase
Date, stating:
(A) if
certificated 2015 Notes have been issued, the certificate number of the 2015
Note to be delivered by the Holder for purchase;
(B) the
portion of the principal amount of the 2015 Note which the Holder shall deliver
for purchase, which shall be $1,000 or an integral multiple thereof;
and
(C) that such
2015 Note shall be purchased pursuant to the terms and conditions specified in
the 2015 Notes and in this Third Supplemental Indenture;
provided, that if a
Person holds a beneficial interest in a Global Security, the Fundamental Change
Purchase Notice shall comply with the Applicable Procedures.
(ii) the
delivery or book-entry transfer of such 2015 Note to the Paying Agent prior to,
on or after the Fundamental Change Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent, such delivery being a
condition to the receipt by the Holder of the Fundamental Change Purchase Price
therefor; provided, however, that such
Fundamental Change Purchase Price shall be so paid pursuant to this Section 3.1
only if the 2015 Note so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Fundamental Change
Purchase Notice, as determined by the Company.
Notwithstanding
anything herein to the contrary, any Holder delivering to the Paying Agent the
Fundamental Change Purchase Notice contemplated by this Section 3.1(c) shall
have the right to withdraw such Fundamental Change Purchase Notice at any time
prior to the close of business on the Business Day prior to the Fundamental
Change Purchase Date by delivery of a written notice of withdrawal to the Paying
Agent in accordance with Section 3.2 of this Third Supplemental
Indenture.
The
Paying Agent shall promptly notify the Company of the receipt by it of any
Fundamental Change Purchase Notice or written withdrawal thereof.
The
Company shall not be required to comply with this Section 3.1 to repurchase the
2015 Notes in connection with a Fundamental Change if a third party makes the
offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Article III applicable to an offer to
repurchase 2015 Notes in connection with a Fundamental Change and purchases all
2015 Notes validly tendered and not withdrawn under such offer.
Section
3.2 Effect of Fundamental Change
Purchase Notice. Upon receipt by the Paying Agent of the
Fundamental Change Purchase Notice as specified in Section 3.1(c) of this Third
Supplemental Indenture, the Holder of the 2015 Note in respect of which such
Fundamental Change Purchase Notice was given shall (unless such Fundamental
Change Purchase Notice is withdrawn as specified in the following two
paragraphs) thereafter be entitled to receive solely the Fundamental Change
Purchase Price with respect to such 2015 Note. Such Fundamental
Change Purchase Price shall be paid to such Holder, subject to receipt of funds
by the Paying Agent, promptly following the later of (x) the Fundamental Change
Purchase Date with respect to such 2015 Note (provided the conditions in Section
3.1(c) of this Third Supplemental Indenture have been satisfied) and (y) the
time of delivery of such 2015 Note to the Paying Agent by the Holder thereof in
the manner required by Section 3.1(c) of this Third Supplemental
Indenture. 2015 Notes in respect of which a Fundamental Change
Purchase Notice has been given by the Holder thereof may not be converted
pursuant to Article VIII of this Third Supplemental Indenture on or after the
date of the delivery of such Fundamental Change Purchase Notice, unless such
Fundamental Change Purchase Notice has first been validly withdrawn as specified
in the following two paragraphs.
A
Fundamental Change Purchase Notice may be withdrawn by means of a written notice
of withdrawal delivered to the Place of Payment in accordance with Fundamental
Change Purchase Notice at any time prior to the close of business on the
Business Day prior to the Fundamental Change Purchase Date,
specifying:
(i) if
certificated 2015 Notes have been issued, the certificate number of the 2015
Note in respect of which such notice of withdrawal is being
submitted,
(ii) the
portion of the principal amount of the 2015 Note with respect to which such
notice of withdrawal is being submitted, which shall be $1,000 or an integral
multiple of $1,000, and
(iii) the
principal amount, if any, of such 2015 Note which remains subject to the
original Fundamental Change Purchase Notice, as the case may be, and which has
been or will be delivered for purchase by the Company;
provided, that for
Global Securities, a withdrawal notice must comply with the Applicable
Procedures.
There
shall be no purchase of any 2015 Note pursuant to Section 3.1 of this Third
Supplemental Indenture if the principal amount of the 2015 Notes has been
accelerated, and such acceleration has not been rescinded, on or prior to the
relevant Fundamental Change Purchase Date.
Section
3.3 Deposit of Fundamental
Change Purchase Price. Prior to 11:30 a.m., New York City
time, on the Business Day following the Fundamental Change Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 9.3 of
the Original Indenture) an amount of money (in immediately available funds if
deposited on such Business Day) sufficient to pay the aggregate Fundamental
Change Purchase Price of all the 2015 Notes or portions thereof which are to be
purchased as of the Fundamental Change Purchase Date. If the Trustee
or any Paying Agent holds money sufficient to pay the Fundamental Change
Purchase Price of such 2015 Note or portion thereof on the Business Day
following the Fundamental Change Purchase Date, in accordance with the terms of
this Third Supplemental Indenture, then from and after such the Fundamental
Change Purchase Date, such 2015 Note or portion thereof will cease to be
Outstanding and interest on such 2015 Note or portion thereof will cease to
accrue, whether or not such 2015 Note or portion thereof is delivered to the
Trustee or any Paying Agent. Thereafter, all other rights of the
Holder shall terminate, other than the right to receive the Fundamental Change
Purchase Price upon delivery of such 2015 Note (together with any necessary
endorsements).
Section
3.4 2015 Note Purchased in
Part. Any 2015 Note which is to be purchased only in part
shall be surrendered at the Place of Payment (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder’s attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such 2015 Note, without service charge, a new 2015 Note or 2015 Notes, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of the
2015 Note so surrendered which is not purchased.
The
Company shall purchase from the Holder thereof, pursuant to this Section 3.4, a
portion of a 2015 Note, provided that the
principal amount of such portion shall be $1,000 or an integral multiple of
$1,000. Provisions of this Third Supplemental Indenture that apply to
the purchase of all of a 2015 Note also apply to the purchase of such portion of
such 2015 Note.
Section
3.5 Repayment to the
Company. The Trustee and the Paying Agent shall promptly
return to the Company any cash that remains unclaimed as provided in paragraph
12 of the 2015 Notes, together with interest or dividends, if any, thereon
(subject to the provisions of Section 6.3 of the Original Indenture), held by
them for the payment of the Fundamental Change Purchase Price; provided, however, that to the
extent that the aggregate amount of cash deposited by the Company pursuant to
Section 3.3 of this Third Supplemental Indenture exceeds the aggregate
Fundamental Change Purchase Price of the 2015 Notes or portions thereof which
the Company is obligated to purchase as of the Fundamental Change Purchase Date,
whether as a result of withdrawal or otherwise, then promptly after the Business
Day following the Fundamental Change Purchase Date, the Trustee shall return any
such excess cash to the Company together with interest or dividends, if any,
thereon (subject to the provisions of Section 6.4 of the Original
Indenture).
Section
3.6 Covenant to Comply with
Applicable Securities Laws upon Purchase of 2015 Notes. In
connection with any offer to purchase or purchase of 2015 Notes under Article
III of this Third Supplemental Indenture the Company shall to the extent
required (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii)
file any required Schedule TO (or any successor schedule, form or report) under
the Exchange Act, and (iii) otherwise comply with all Federal and state
securities laws so as to permit the rights and obligations under Section 3.1 of
this Third Supplemental Indenture to be exercised in the time and in the manner
specified in Section 3.1 of this Third Supplemental Indenture.
ARTICLE
IV
[RESERVED]
ARTICLE
V
DEFAULTS
AND REMEDIES
Section
5.1 Additional Events of
Default. In addition to the Events of Default specified in
Section 5.1 of the Original Indenture, the following shall constitute Events of
Default (as contemplated by Section 5.1(6) of the Original Indenture) with
respect to the 2015 Notes:
(i) the
Company defaults in its obligation to provide a Fundamental Change Company
Notice in accordance with Section 3.1(b) of this Third Supplemental
Indenture;
(ii) the
Company defaults in its obligation to repurchase the 2015 Notes following the
valid exercise by any Holder of such Holder’s repurchase rights upon the
occurrence of a Fundamental Change; or
(iii) the
Company fails to deliver shares of Common Stock when due upon the exercise of a
Holder’s conversion right in accordance with Article VIII of this Third
Supplemental Indenture, and such failure continues for a period of 10 days
following the applicable settlement date for such conversion.
ARTICLE
VI
SUPPLEMENTAL
INDENTURES
Section
6.1 Supplemental
Indentures. For purposes of the 2015 Notes, the following
provisions of the Original Indenture shall be amended as follows:
(a) Section
8.1 of the Original Indenture shall be amended by (i) deleting the period at the
end of clause (11) thereof and replacing it with the text “; or” and (ii) adding
the following:
“(12) to
increase the Conversion Rate.”
(b) Section
8.2 of the Original Indenture shall be amended by (i) deleting the period at the
end of clause (4) thereof and replacing it with the text “; or” and (ii) adding
the following:
“(5) reduce
the Fundamental Change Purchase Price of any 2015 Note; or
(6) make
any change that adversely affects the right of a Holder to convert any 2015 Note
in accordance with Article VIII of this Third Supplemental Indenture;
or
(7) make
any change that adversely affects the right of a Holder to require the Company
to purchase the 2015 Notes upon a Fundamental Change.”
ARTICLE
VII
[RESERVED]
ARTICLE
VIII
CONVERSION
Section
8.1 Conversion
Privilege. A Holder of a 2015 Note may convert such 2015 Note
into Common Stock at any time prior to the close of business on the Business Day
immediately preceding the Stated Maturity. The number of shares of
Common Stock issuable upon conversion of a 2015 Note per $1,000 of principal
amount thereof (the “Conversion Rate”)
shall initially equal 50.3145, subject to adjustment as provided in this Article
VIII.
A Holder
may convert a portion of the principal amount of a 2015 Note if the portion is
$1,000 or an integral multiple of $1,000. Provisions of this Third
Supplemental Indenture that apply to conversion of all of a 2015 Note also apply
to conversion of a portion of a 2015 Note.
A 2015
Note in respect of which a Holder has delivered a Fundamental Change Purchase
Notice exercising the option of such Holder to require the Company to purchase
such security may be converted only if such notice of exercise is withdrawn in
accordance with the terms of Section 3.2 of this Third Supplemental
Indenture.
Section
8.2 Conversion
Procedure. To convert a 2015 Note, a Holder must (1) complete
and manually sign the conversion notice set forth on the reverse of the 2015
Note (or complete and manually sign a facsimile of such notice) and deliver such
notice to the Conversion Agent, (2) surrender the 2015 Note to the Conversion
Agent, (3) furnish appropriate endorsements and transfer documents if required
by the Conversion Agent and (4) pay any transfer or similar tax, if required;
provided that a
Person that holds a beneficial interest in a Global Security shall comply with
the Applicable Procedures. The date on which the Holder satisfies all
those requirements is the conversion date (the “Conversion
Date”).
On the
third Business Day following the Conversion Date, the Company shall deliver to
the Holder, through the Conversion Agent, the number of full shares of Common
Stock issuable upon the conversion and cash in lieu of any fractional share
determined pursuant to Section 8.3 of this Third Supplemental
Indenture. The Company shall determine the number of full shares of
Common Stock and the amounts of cash with respect to any fractional share
determined as described in Section 8.3 of this Third Supplemental
Indenture.
Notwithstanding
the preceding paragraph, if any calculation required in order to determine the
number of shares of Common Stock the Company shall deliver in respect of any
conversion under this Section 8.2 is based upon data that shall not be available
to the Company on the Conversion Date (including, without limitation, in the
event of a conversion immediately following a Spin-Off described in Section
8.8(b) of this Third Supplemental Indenture, or a tender offer or exchange offer
described in Section 8.8(c) of this Third Supplemental Indenture), the Company
shall delay the settlement of such conversion until the third Business Day after
the relevant data becomes available.
Persons
holding beneficial interests in Global Securities may surrender an interest in a
2015 Note for conversion by means of a book-entry delivery in accordance with
the Applicable Procedures of the Depositary.
No
payment or adjustment will be made for dividends on, or other distributions with
respect to, any Common Stock except as provided in this Article
VIII. On conversion of a 2015 Note, that portion of accrued and
unpaid interest, if any, through the Conversion Date with respect to the
converted 2015 Note shall not be cancelled, extinguished or forfeited, but
rather shall be deemed to be paid in full to the Holder thereof through delivery
of the Common Stock and cash payment, if any, in lieu of fractional shares, in
exchange for the 2015 Note being converted pursuant to the provisions hereof;
and the fair market value of such shares of Common Stock (together with any such
cash payment including cash in lieu of fractional shares) shall be treated as
issued, to the extent thereof, first in exchange for the accrued and unpaid
interest, if any, on the 2015 Note being converted through the Conversion Date,
and the balance, if any, of such fair market value of such shares of Common
Stock (and any such cash payment) shall be treated as issued in exchange for the
principal amount of the 2015 Note being converted pursuant to the provisions
hereof.
If a
Holder converts more than one 2015 Note at the same time, the number of shares
of Common Stock issuable upon the conversion shall be based on the aggregate
principal amount of the 2015 Notes converted.
Upon
surrender of a 2015 Note that is converted in part, the Company shall execute,
and the Trustee shall authenticate and deliver to the Holder, a new 2015 Note in
an authorized denomination equal in principal amount to the unconverted portion
of the 2015 Note surrendered. Upon conversion of a beneficial
interest in a Global Security, the Trustee shall make or cause to be made a
notation on such Global Security, and comply with the Applicable Procedures, to
reflect a decrease in the aggregate amount of the 2015 Notes represented
thereby.
Holders
of 2015 Notes surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date will receive the
semiannual interest payable on such 2015 Notes on the corresponding Interest
Payment Date notwithstanding the conversion at any time after the close of
business on such Regular Record Date. 2015 Notes surrendered for
conversion by a Holder during the period from the close of business on any
Regular Record Date to the opening of business on the next Interest Payment Date
must be accompanied by payment of an amount equal to the interest that is to be
paid on such Interest Payment Date on the 2015 Notes so converted; provided such payment
shall not be required: (1) in connection with a conversion following the Regular
Record Date next preceding the Stated Maturity; (2) if the Company has specified
a Fundamental Change Purchase Date that is after a Regular Record Date and on or
prior to the corresponding Interest Payment Date; or (3) to the extent of any
overdue interest, if any such overdue interest exists at the time of conversion
with respect to the 2015 Notes.
If a 2015
Note is converted in accordance with Article VIII of this Third Supplemental
Indenture, then from and after the time of conversion on the Conversion Date,
such 2015 Note shall cease to be Outstanding and interest shall cease to accrue
on such 2015 Note.
Section
8.3 Fractional
Shares. The Company will not issue a fractional share of
Common Stock upon conversion of a 2015 Note. Instead, the Company
will deliver cash for the current market value of the fractional share
determined by multiplying the per share Closing Sale Price of the Common Stock,
on the last Trading Day prior to the Conversion Date, by the fractional amount
and rounding the product to the nearest whole cent.
Section
8.4 Taxes on
Conversion. If a Holder converts a 2015 Note, the Company may
require the Holder to pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the
conversion. In addition, the Holder shall pay any such tax which is
due because the Holder requests the shares of Common Stock to be issued in a
name other than the Holder’s name. The Conversion Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name
other than the Holder’s name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder’s name. Nothing herein shall preclude
any income tax withholding required by law or regulations.
Section
8.5 Company to Provide
Stock. The Company shall, prior to issuance of any 2015 Notes
under this Article VIII, and from time to time as may be necessary, reserve out
of its authorized but unissued Common Stock a sufficient number of shares of
Common Stock to permit the conversion of the 2015 Notes.
All
shares of Common Stock delivered upon conversion of the 2015 Notes shall be
newly issued shares or treasury shares, shall be duly authorized, validly issued
and fully paid and nonassessable and shall be free from preemptive rights and
free of any lien or adverse claim created by the Company.
The
Company will use reasonable best efforts to comply with all Federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of 2015 Notes, if any, and will use reasonable best efforts to list
or cause to have quoted such shares of Common Stock on the NYSE or, if shares of
Common Stock are then not listed on the NYSE, on such other United States
national securities exchange or United States over-the-counter market on which
the Common Stock is then principally listed or quoted.
Section
8.6 Adjustment for Change in
Capital Stock. Except as set forth in Section 8.14 of this
Third Supplemental Indenture, if, after the Issue Date of the 2015 Notes, the
Company:
(a) pays
a dividend or makes a distribution on its Common Stock in shares of its Common
Stock;
(b) subdivides
its outstanding shares of Common Stock into a greater number of
shares;
(c) pays
a dividend or makes a distribution on its Common Stock in shares of its Capital
Stock (other than Common Stock or rights, warrants or options for its Capital
Stock);
(d) combines
its outstanding shares of Common Stock into a smaller number of shares;
or
(e) issues
by reclassification of its Common Stock any shares of its Capital Stock (other
than rights, warrants or options for its Capital Stock),
then the
conversion privilege and the Conversion Rate in effect immediately prior to such
action shall be adjusted so that the Holder of a 2015 Note thereafter converted
may receive the number of shares of Common Stock or other units of Capital Stock
of the Company which such Holder would have owned immediately following such
action if such Holder had converted the 2015 Note immediately prior to such
action.
The
adjustment shall become effective, in the case of a dividend or distribution
described in Section 8.6(a) or (c) above, immediately after the record date of
such dividend or distribution. If any dividend or distribution
described in Section 8.6 (a) or (c) above is declared but not so paid or made,
the new Conversion Rate shall be readjusted, as of the date that is the earlier
of (x) the public announcement of such non-payment or (y) the date the dividend
or distribution was to have been paid or made, to the Conversion Rate that would
then be in effect if such dividend or distribution had not been
declared.
The
adjustment shall become effective, in the case of a subdivision, combination or
reclassification described in Section 8.6(b), (d) or (e) above, immediately
after the effective date in the case of such subdivision, combination or
reclassification.
Section
8.7 Adjustment for Rights
Issue. Except as set forth in Sections 8.14 and 8.20 of this
Third Supplemental Indenture, if after the Issue Date of the 2015 Notes, the
Company distributes any rights, warrants, options or other securities to all or
substantially all holders of its Common Stock entitling them, for a period of
not more than 45 days from the record date for such distribution to subscribe
for or purchase shares of Common Stock at a price per share less than the
average of the Closing Sale Price of the Common Stock over the ten consecutive
Trading Day period ending on, and including, the Trading Day immediately
preceding the date of announcement of the distribution of such rights, warrants,
options or other securities, the Conversion Rate shall be adjusted in accordance
with the formula below; provided that if such
rights are exercisable only upon the occurrence of a triggering event, then the
Conversion Rate will not be adjusted until such triggering event
occurs:
|
R’
= R x
|
(O
+ N)
|
|
O
+[ (N x P)/M]
|
where:
|
|
R’
=
|
the
adjusted Conversion Rate.
|
|
|
R
=
|
the
current Conversion Rate.
|
|
|
O
=
|
the
number of shares of Common Stock outstanding on the record date for the
distribution to which this Section 8.7 is being
applied.
|
|
|
N
=
|
the
number of additional shares of Common Stock issued pursuant to such
rights, warrants, options or other
securities.
|
|
|
P
=
|
the
purchase price per share payable to exercise such rights, warrants,
options or other securities.
|
|
|
M
=
|
the
average of the Closing Sale Prices of the Common Stock over the ten
consecutive Trading Day period ending on, and including, the Trading Day
immediately preceding the date of announcement of the distribution of such
rights, warrants, options or other
securities.
|
For
purposes of this Section 8.7, in determining whether any rights, warrants,
options or other securities entitle the Holders to subscribe for or purchase, or
exercise a conversion right for, Common Stock, at a purchase price less than the
applicable average Closing Sale Price of Common Stock, and in determining the
exercise or purchase price payable for such Common Stock, there shall be taken
into account any consideration the Company receives for such rights, warrants,
options or other securities and any amount payable on exercise or conversion
thereof, with the value of such consideration, if other than cash, to be
determined by the Board of Directors or a committee thereof.
The
adjustment shall become effective immediately after the record date for the
determination of shareholders entitled to receive the rights, warrants, options
or other securities to which this Section 8.7 applies. If any shares
of Common Stock subject to such rights, warrants, options or other securities
have not been issued when such rights, warrants, options or other securities
expire (or to the extent such rights, warrants, options or other securities are
redeemed by the Company, or otherwise cease to be convertible into, to be
exchangeable for or to carry any such right to purchase shares), then the
Conversion Rate shall promptly be readjusted to the Conversion Rate which would
then be in effect had the adjustment upon the issuance of such rights, warrants,
options or other securities been made on the basis of the actual number of
shares of Common Stock issued upon the exercise of such rights, warrants,
options or other securities.
No
adjustment shall be made under this Section 8.7 if the application of the
formula stated above in this Section 8.7 would result in a value of R’ that is
equal to or less than the value of R.
Section
8.8 Adjustment for Other
Distributions.
(a) Except as
set forth in Section 8.14 of this Third Supplemental Indenture, if, after the
Issue Date of the 2015 Notes, the Company distributes to all or substantially
all holders of its Common Stock any cash, assets (excluding any Capital Stock of
a Subsidiary or business unit of the Company referred to in Section 8.8(b)
below), or evidences of indebtedness issued by the Company (but excluding any
dividends and distributions referred to in Sections 8.6 and 8.7 of this Third
Supplemental Indenture), the Conversion Rate shall be adjusted in accordance
with the formula:
|
R’
= R x
|
M
|
|
M –
F
|
where:
|
|
R’
=
|
the
adjusted Conversion Rate.
|
|
|
R
=
|
the
current Conversion Rate.
|
|
|
M
=
|
the
average of the Closing Sale Prices of the Common Stock over the ten
consecutive Trading Day period ending on the Trading Day immediately
preceding the Ex-Dividend Date for such distribution, subject to
adjustment as provided herein.
|
|
|
F
=
|
the
fair market value on the record date for the distribution to which this
Section 8.8(a) applies of cash, assets (excluding any Capital Stock of a
Subsidiary or business unit of the Company referred to in Section 8.8(b)
below) or evidences of indebtedness to be distributed in respect of each
share of Common Stock in the distribution to which this Section 8.8(a)
applies (including, in the case of cash dividends or other cash
distributions giving rise to an adjustment, all such cash distributed
concurrently).
|
An
adjustment to the Conversion Rate made pursuant to this Section 8.8(a) shall be
made successively whenever any such distribution is made and shall become
effective on the record date for such distribution. If any
distribution described in this Section 8.8(a) is declared but not so paid or
made, the new Conversion Rate shall be readjusted, as of the date that is the
earlier of (x) the public announcement of such non-payment and (y) the date the
distribution was to have been paid or made, to the Conversion Rate that would
then be in effect if such distribution had not been declared.
If, with
respect to any distribution to which this Section 8.8(a) otherwise applies, the
difference “M-F” as defined in the above formula is less than $1.00 or “F” is
greater than “M”, then the adjustment provided by the preceding paragraphs in
this Section 8.8(a) shall not be made and in lieu thereof, the following
provision shall apply: from and after the record date for determining the
holders of Common Stock entitled to receive the distribution, a Holder of a 2015
Note that converts such 2015 Note in accordance with the provisions of this
Third Supplemental Indenture shall upon such conversion be entitled to receive,
in addition to the shares of Common Stock into which the 2015 Note is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such Holder would have received if such Holder had
converted the 2015 Note immediately prior to the record date for determining the
holders of Common Stock entitled to receive the distribution.
(b) Except as
set forth in Section 8.14 of this Third Supplemental Indenture, if, after the
Issue Date of the 2015 Notes, the Company pays a dividend or makes a
distribution to all or substantially all holders of Common Stock consisting of
Capital Stock of any class or series, or similar equity interests, of or
relating to a Subsidiary or other business unit of the Company, in each case
which will be listed for trading on a stock exchange or automated quotation
system (a “Spin-Off
“), the Conversion Rate shall be adjusted in accordance with the
formula:
R’ = R x
(1 + F/M)
where:
|
|
R’
=
|
the
adjusted Conversion Rate.
|
|
|
R
=
|
the
current Conversion Rate.
|
|
|
M
=
|
the
average of the Closing Sale Prices of the Common Stock over the ten
consecutive Trading Day period commencing on and including the Trading Day
after the effective date of the
distribution.
|
|
|
F
=
|
the
fair market value of the securities distributed in respect of each share
of Common Stock for which this Section 8.8(b) applies, which shall mean
the number of securities distributed in respect of each share of Common
Stock multiplied by the average of the Closing Sale Prices of those
securities distributed over the ten consecutive Trading Day period
commencing on and including the Trading Day after the effective date of
the distribution.
|
An
adjustment to the Conversion Rate made pursuant to this Section 8.8(b) shall
become effective upon the opening of business on the day after the date fixed
for determination of holders of the Common Stock entitled to receive such
distribution in the Spin-Off. The Company shall not be required to
calculate the conversion rate adjustment relating to any Spin-Off for the 2015
Notes until the third Business Day following the ten consecutive Trading Day
period referred to above. If any dividend or distribution described
in this Section 8.8(b) is declared but not so paid or made, the new Conversion
Rate shall be readjusted, as of the date that is the earlier of (x) the public
announcement of such non-payment and (y) the date the dividend or distribution
was to have been paid or made, to the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared.
(c) In the
case of a tender or exchange offer (but not including any purchases pursuant to
a stock buy-back program that is compliant with Rule 10b-18 of the Exchange Act)
made by the Company or any Subsidiary for all or any portion of the Common Stock
(excluding any transactions solely involving odd lots of shares of Common Stock)
that has expired and such tender or exchange offer (as amended upon the
expiration thereof) requires the payment to stockholders of consideration per
share of Common Stock in cash or other consideration having a fair market value
that as of the Expiration Time (as defined below), exceeds the Closing Sale
Price per share of Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Rate shall be adjusted in accordance with the
formula below.
|
R’
= R x
|
F + (SP x
S’)
|
|
SP
x S
|
where:
|
|
R
=
|
the
Conversion Rate in effect immediately prior the close of business on the
Expiration Time;
|
|
|
R’
=
|
the
Conversion Rate in effect immediately after the Expiration
Time;
|
|
|
F
=
|
the
fair market value of the aggregate consideration payable to stockholders
(up to any maximum specified in the terms of the tender or exchange offer)
for shares validly tendered or exchanged and not withdrawn as of the
Expiration Time;
|
|
|
S’
=
|
the
number of shares of Common Stock outstanding at the Expiration Time,
excluding shares accepted for purchase or exchange pursuant to such tender
offer or exchange offer;
|
|
|
S
=
|
the
number of shares of Common Stock outstanding at the Expiration Time,
including any tendered or exchanged shares;
and
|
|
|
SP
=
|
the
average of the Closing Sale Prices of Common Stock over the ten
consecutive Trading Day period commencing on and including the Trading Day
next succeeding the Expiration
Time.
|
Any
adjustment to the Conversion Rate made pursuant to this Section 8.8(c) shall
become effective upon the opening of business on the day following the
Expiration Time. “Expiration Time” with
respect to a tender offer or exchange offer, means the last date on which
tenders or exchanges may be made pursuant to such tender or exchange
offer. Notwithstanding the foregoing, if the Company is obligated to
purchase shares pursuant to any tender or exchange offer, but the Company is
permanently prevented by applicable law or court or governmental order from
effecting any such purchases, or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such tender or exchange offer had not been
made.
(d) For
purposes of this Section 8.8, the Board of Directors or a committee thereof
shall determine fair market values for the purposes of this Section 8.8, which
determination shall be conclusive.
Section
8.9 When Adjustment May Be
Deferred. No adjustment to the Conversion Rate need be made
unless the adjustment would require an increase or decrease of at least 1% in
the Conversion Rate. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment and all
adjustments that are made and carried forward shall be taken in the aggregate in
order to determine if the 1% threshold is met. Notwithstanding the
foregoing, all adjustments not previously made shall have effect and be made
upon any conversion of the 2015 Notes.
All
calculations under this Article VIII shall be made to the nearest cent or to the
nearest 1/1,000th of a share, as the case may be.
Section
8.10 When No Adjustment
Required. For the avoidance of doubt, the Conversion Rate
shall only be subject to adjustment for the circumstances and in the manner set
forth in Sections 8.6, 8.7, 8.8, 8.12 and 8.15 of this Third Supplemental
Indenture and for no other event or circumstance.
No
adjustment to the Conversion Rate need be made for a transaction referred to in
Section 8.6, 8.7 or 8.8 of this Third Supplemental Indenture if Holders may
participate in such transaction on an as-converted basis, as a result of holding
the 2015 Notes, at the same time as holders of Common Stock participate, without
having to convert their 2015 Notes, as if such Holders held the full number of
shares of Common Stock underlying their 2015 Notes; provided that an
adjustment shall be made at such time as the Holders are no longer entitled to
participate.
No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. No adjustment
need be made for a change in the par value of the Common Stock.
No
adjustment will be made pursuant to this Article VIII that would result, through
the application of two or more provisions hereof, in the duplication of any
adjustment.
Section
8.11 Notice of
Adjustment. Whenever the Conversion Rate is adjusted, the
Company shall promptly mail to Holders a notice of the
adjustment. The Company shall file with the Trustee and the
Conversion Agent such notice and an Officers’ Certificate briefly stating the
facts requiring the adjustment and the manner of computing it. Upon
receipt by it of such notice, and at the written request of the Company, the
Conversion Agent shall promptly mail such notice to Holders at the Company’s
expense. The certificate shall be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent
shall be under any duty or responsibility with respect to any such certificate
except to exhibit the same to any Holder desiring inspection
thereof.
Section
8.12 Voluntary
Increase. The Company from time to time may increase the
Conversion Rate by any amount for any period of time. Whenever the
Conversion Rate is increased, the Company shall file with the Trustee and the
Conversion Agent a notice of the increase, and the Conversion Agent will mail
such notice to the Holders, at the Company’s expense. The Company
shall mail the notice at least 15 days before the date the increased Conversion
Rate takes effect. The notice shall state the increased Conversion
Rate and the period it will be in effect.
A
voluntary increase of the Conversion Rate does not change or adjust the
Conversion Rate otherwise in effect for purposes of Section 8.6, 8.7, 8.8 or
8.15 of this Third Supplemental Indenture.
Section
8.13 Notice of Certain
Transactions. If:
(a) the
Company takes any action that would require an adjustment in the Conversion Rate
pursuant to Section 8.6, 8.7 or 8.8 of this Third Supplemental Indenture (unless
no adjustment is to occur pursuant to Section 8.9 or 8.10 of this Third
Supplemental Indenture);
(b) the
Company effects a Business Combination as described in Section 8.14;
or
(c) there is
a liquidation or dissolution of the Company;
then the
Company shall mail to Holders and file with the Trustee and the Conversion Agent
a notice stating the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, binding share exchange, transfer, liquidation or
dissolution. The Company shall file and mail the notice at least 10
days before such date to the extent practicable. Failure to file or
mail the notice or any defect in it shall not affect the validity of the
transaction.
Section
8.14 Business
Combinations. In the case of: (i) any consolidation or merger
of the Company with or into any other Person; (ii) any sale, conveyance,
transfer or disposition of all or substantially all of the Company’s assets to
any Person; or (iii) any binding share exchange which reclassifies or changes
the outstanding Common Stock (each event, a “Business
Combination”); in each case as a result of which Holders of Common Stock
are entitled to receive stock, other securities, other property, assets or cash
(or any combination thereof) with respect to or in exchange for Common Stock,
then from and after the effective date of the Business Combination, without the
consent of holders of 2015 Notes, the right to receive Common Stock upon
conversion of the 2015 Notes will be changed into the right to receive, in lieu
of such Common Stock, the kind and amount of shares of stock, other securities
or other property, assets or cash (or any combination thereof) that such Holder
of 2015 Notes would have been entitled to receive with respect to such Common
Stock in such Business Combination if such Holder had converted the 2015 Notes
into Common Stock immediately prior to such Business Combination (such
consideration, the “Reference
Property”). For purposes of the foregoing, where a Business
Combination involves a transaction that causes the Common Stock to be converted
into the right to receive more than a single type of consideration based upon
any form of stockholder election, the consideration shall be deemed to be the
weighted average of the types and amounts of consideration received by the
holders of the Common Stock that affirmatively make such an
election. The Company shall not become a party to any Business
Combination unless its terms are materially consistent with the foregoing
provisions. In addition, if a Business Combination is subject to
Section 7.1 of the Original Indenture, the provisions of such Section 7.1 shall
also apply. None of the foregoing provisions shall affect the right
of a Holder of the 2015 Notes to convert its 2015 Notes prior to the effective
date of the Business Combination. For the avoidance of doubt,
adjustments to the Conversion Rate set forth under Sections 8.6, 8.7 and 8.8 of
this Third Supplemental Indenture shall not apply to distributions to the extent
that the right to convert the 2015 Notes has been changed into the right to
convert into Reference Property.
Section
8.15 Adjustment to Shares
Delivered Upon Conversion in Connection with a Make Whole Change of
Control. If a Change of Control occurs (determined
after giving effect to any exceptions or exclusions to the definition of Change
of Control, but without regard to the proviso in clause 2 of the definition of
“Change of Control”, a “Make Whole Change of
Control”) and a Holder elects to convert its 2015 Notes in connection
with such Make Whole Change of Control, the Company shall increase the
Conversion Rate for the 2015 Notes surrendered for conversion if and as required
below. The Company shall notify Holders and the Trustee as promptly
as practicable following the date a Make Whole Change of Control becomes
effective (the “Make
Whole Change of Control Effective Date”) (but, in any event, within three
Business Days after the effective date of such transaction). A
conversion of 2015 Notes shall be deemed for these purposes to be “in connection
with” a Make Whole Change of Control if the conversion notice complying with
this Article VIII is received by the Conversion Agent from, and including, the
Make Whole Change of Control Effective Date and prior to the close of business
on the Business Day prior to the Fundamental Change Purchase Date (or, in the
case of an event that would have been a Change of Control but for the proviso in
clause 2 of the definition of Change of Control, the 30th calendar day
immediately following the Make Whole Change of Control Effective
Date).
(a) The
number of additional shares by which the Conversion Rate shall be increased
shall be determined by reference to the Make Whole Change of Control Table
attached as Schedule A to this Third Supplemental Indenture, which is a part of
this Third Supplemental Indenture, and is based on the Make Whole Change of
Control Effective Date and the price paid, or deemed paid, per share of Common
Stock in the Make Whole Change of Control (the “Make Whole Change of Control
Stock Price”). If the holders of Common Stock receive only
cash in a Make Whole Change of Control (other than with respect to appraisal and
similar rights), the Make Whole Change of Control Stock Price shall be the cash
amount paid per share of Common Stock. Otherwise, the Make Whole
Change of Control Stock Price shall be deemed to be the average of the Closing
Sale Prices of the Common Stock over the five Trading Day period ending on the
Trading Day immediately preceding the Make Whole Change of Control Effective
Date.
(b) The Make
Whole Change of Control Stock Prices set forth in the column headings of the
Make Whole Change of Control Table in Schedule A to this Third Supplemental
Indenture shall be adjusted as of any date on which the Conversion Rate of the
2015 Notes is adjusted as set forth under Sections 8.6, 8.7 or 8.8 of this Third
Supplemental Indenture. The adjusted Make Whole Change of Control
Stock Prices shall equal the Make Whole Change of Control Stock Prices
applicable immediately prior to the adjustment multiplied by a fraction, (x) the
numerator of which is the Conversion Rate immediately prior to the adjustment
giving rise to the Make Whole Change of Control Stock Price adjustment and (y)
the denominator of which is the Conversion Rate as so adjusted. The
Conversion Rate adjustment amounts set forth in the Make Whole Change of Control
Table in Schedule A to this Third Supplemental Indenture shall be adjusted in
the same manner as the Conversion Rate as set forth in Sections 8.6, 8.7 and 8.8
of this Third Supplemental Indenture.
(c) If the
actual Make Whole Change of Control Stock Price or the Make Whole Change of
Control Effective Date is not set forth in Make Whole Change of Control Table in
Schedule A to this Third Supplemental Indenture, then:
(i) if the
actual Make Whole Change of Control Stock Price on the Make Whole Change of
Control Effective Date is between two stock prices in such table or the actual
Make Whole Change of Control Effective Date is between two effective dates in
such table, the amount of the Conversion Rate adjustment shall be determined by
straight-line interpolation between the adjustment amounts set forth for the
higher and lower Make Whole Change of Control Stock Prices and the earlier and
later Make Whole Change of Control Effective Dates, as applicable, based on a
365-day year;
(ii) if the
actual Make Whole Change of Control Stock Price on the Make Whole Change of
Control Effective Date exceeds $150.00 per share of Common Stock (subject to
adjustment in the same manner as the Make Whole Change of Control Stock Prices
as set forth in the column headings of such table), no adjustment to the
Conversion Rate will be made; and
(iii) if the
actual Make Whole Change of Control Stock Price on the Make Whole Change of
Control Effective Date is less than $15.90 per share of Common Stock (subject to
adjustment in the same manner as the Make Whole Change of Control Stock Prices
as set forth in the column headings of such table), no adjustment to the
Conversion Rate will be made.
Notwithstanding
the foregoing provisions, the Conversion Rate shall not exceed 62.8931 shares of
Common Stock per $1,000 principal amount of the 2015 Notes, subject to
adjustment in the same manner as the Conversion Rate as set forth in Sections
8.6, 8.7 and 8.8 of this Third Supplemental Indenture.
(d) For the
avoidance of doubt, Holders who require the Company to repurchase some or all of
their 2015 Notes for cash upon the occurrence of a Fundamental Change pursuant
to Section 3.1 of this Third Supplemental Indenture shall not be entitled to an
increase in the Conversion Rate pursuant to this Section 8.15 in respect of such
2015 Notes (or portions thereof) tendered for repurchase.
Section
8.16 Company Determination
Final. Any determination that the Company or the Board of
Directors must make pursuant to Section 8.3, 8.4, 8.6, 8.7, 8.8, 8.9, 8.10,
8.12, 8.14 or 8.15 of this Third Supplemental Indenture is
conclusive.
Section
8.17 Trustee’s Adjustment
Disclaimer. The Trustee has no duty to determine whether a
supplemental indenture in connection with a Business Combination as described in
Section 8.14 need be entered into or whether any provisions of any Third
Supplemental Indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of 2015 Notes. The
Trustee shall not be responsible for the Company’s failure to comply with this
Article VIII. Each Conversion Agent (other than the Company or an
Affiliate of the Company) shall have the same protection under this Section 8.17
as the Trustee.
Section
8.18 Simultaneous
Adjustments. In the event that this Article VIII requires
adjustments to the Conversion Rate under more than one of Section 8.6, 8.7 or
8.8 of this Third Supplemental Indenture, and the record dates for the
distributions giving rise to such adjustments shall occur on the same date, then
such adjustments shall be made by applying, first, the provisions of Section 8.6
of this Third Supplemental Indenture, second, the provisions of Section 8.8 of
this Third Supplemental Indenture and, third, the provisions of Section 8.7 of
this Third Supplemental Indenture.
Section
8.19 Successive
Adjustments. After an adjustment to the Conversion Rate under
this Article VIII, any subsequent event requiring an adjustment under this
Article VIII shall cause an adjustment to the Conversion Rate as so
adjusted.
Section
8.20 Rights Issued in Respect of
Common Stock Issued upon Conversion. Each share of Common
Stock issued upon conversion of 2015 Notes pursuant to this Article VIII
shall be entitled to receive the appropriate number of common stock or preferred
stock purchase rights, as the case may be (the “Rights”), if any,
that all shares of Common Stock are entitled to receive and the certificates
representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as may be provided by the terms of any shareholder
rights agreement adopted by the Company, as the same may be amended from time to
time (in each case, a “Rights Agreement”),
whether or not such rights have separated from the Common Stock at the time of
such conversion; provided, that if
such Rights Agreement requires that each share of Common Stock issued by the
Company (including those that might be issued upon conversion of 2015 Notes) at
any time prior to the distribution of separate certificates representing the
Rights be entitled to receive such Rights, then, notwithstanding anything else
to the contrary in the 2015 Notes or this Article VIII, there shall not be any
adjustment to the conversion privilege or Conversion Rate or any other term or
provision of the 2015 Notes as a result of the issuance of Rights, the
distribution of separate certificates representing the Rights, the exercise or
redemption of such Rights in accordance with any such Rights Agreement, or the
termination or invalidation of such Rights. Notwithstanding anything
to the contrary herein, nothing in this provision is intended to confer on the
Common Stock issuable upon conversion of 2015 Notes any right that is different
than the rights to which all shares of Common Stock of the Company are entitled
to receive.
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Trust Indenture Act
Controls. This Third Supplemental Indenture is subject to the
Trust Indenture Act and if any provision hereof limits, qualifies or conflicts
with a provision of the Trust Indenture Act that is required by the Trust
Indenture Act to be a part of and govern this Third Supplemental Indenture, the
latter provision shall control. If any provision of this Third
Supplemental Indenture modifies or excludes any provision of the Trust Indenture
Act that may be so modified or excluded, the latter provision shall be deemed to
apply to this Third Supplemental Indenture as so modified, or to be excluded, as
the case may be, whether or not such provision of this Third Supplemental
Indenture refers expressly to such provision of the Trust Indenture
Act.
Section
9.2 Concerning the Trustee;
Force Majeure. The Trustee assumes no duties, responsibilities
or liabilities by reason of this Third Supplemental Indenture other than as set
forth in the Original Indenture.
In no
event shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including, without limitation,
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and interruptions,
loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable
efforts which are consistent with accepted practices in the banking industry to
resume performance as soon as practicable under the circumstances.
Section
9.3 Supplemental Indenture
Controls. In the event of a conflict or inconsistency between
the Original Indenture and this Third Supplemental Indenture, the provisions of
this Third Supplemental Indenture shall control.
Section
9.4 Rules by Paying Agent,
Conversion Agent and Registrar. The Registrar, the Conversion
Agent and the Paying Agent may make reasonable rules for their
functions.
Section
9.5 Calculations. The
calculation of the Fundamental Change Purchase Price, Conversion Rate, Closing
Sale Price of the Common Stock and each other calculation to be made hereunder
shall be the obligation of the Company. All such calculations made by
the Company shall be final and binding on the Company and the Holders absent
manifest error. The Trustee, the Paying Agent and the Conversion
Agent shall not be obligated to recalculate, recompute or confirm any such
calculations.
Section
9.6 Governing
Law. THIS THIRD SUPPLEMENTAL INDENTURE AND THE 2015 NOTES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section
9.7 Multiple
Originals. The parties may sign any number of copies of this
Third Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One originally
signed copy is enough to prove this Third Supplemental Indenture.
Section
9.8 Benefits of Third
Supplemental Indenture. Nothing in this Third Supplemental
Indenture or in the 2015 Notes, expressed or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the Holders,
any benefit or any legal or equitable right, remedy or claim under this Third
Supplemental Indenture.
Section
9.9 Confirmation of
Indenture. The Original Indenture, as supplemented and amended
by this Third Supplemental Indenture, is in all respects hereby adopted,
ratified and confirmed.
Section
9.10 Headings and Table of
Contents. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
IN
WITNESS WHEREOF, the undersigned, being duly authorized, have executed this
Third Supplemental Indenture on behalf of the respective parties hereto as of
the date first above written.
CONTINENTAL
AIRLINES, INC.
|
|
By:
|
/s/ Gerald
Laderman
|
|
|
Name:
|
Gerald
Laderman
|
|
|
Title: Senior
Vice President – Finance and
Treasurer
|
|
|
Attest:
|
|
/s/ Gerald W.
Clanton
|
Name: Gerald
W. Clanton
Title:
Assistant Secretary
THE BANK
OF NEW YORK MELLON TRUST
COMPANY,
N.A.
|
|
By:
|
/s/ Rafael
Martinez
|
|
|
Name:
|
Rafael
Martinez
|
|
|
Title:
Senior Associate
|
|
|
||
|
|
2
|
Schedule
A
Make
Whole Change of Control Table
The
following table sets forth the number of additional shares, if any, by which the
Conversion Rate shall increase per $1,000 principal amount of the 2015 Notes for
2015 Notes converted in connection with a Make Whole Change of Control for each
Make Whole Change of Control Stock Price and Make Whole Change of Control
Effective Date set forth below:
|
Make
Whole Change of Control Stock Price
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Make
Whole Change of Control Effective Date
|
$ | 15.90 | $ | 16.00 | $ | 18.00 | $ | 20.00 | $ | 22.50 | $ | 25.00 | $ | 27.50 | $ | 30.00 | $ | 40.00 | $ | 50.00 | $ | 60.00 | $ | 75.00 | $ | 100.00 | $ | 125.00 | $ | 150.00 | |||||||||||||||||||||||||||||||
|
Dec.
11, 2009
|
12.5786 | 12.5000 | 11.1111 | 10.0000 | 8.8861 | 7.6154 | 6.6272 | 5.8361 | 3.8416 | 2.7794 | 2.1298 | 1.5317 | 0.9863 | 0.6864 | 0.4998 | ||||||||||||||||||||||||||||||||||||||||||||||
|
Jan.
15, 2011
|
12.5786 | 12.5000 | 11.1111 | 10.0000 | 8.6618 | 7.3259 | 6.3018 | 5.4932 | 3.5102 | 2.4955 | 1.8943 | 1.3496 | 0.8641 | 0.5995 | 0.4357 | ||||||||||||||||||||||||||||||||||||||||||||||
|
Jan.
15, 2012
|
12.5786 | 12.5000 | 11.1111 | 10.0000 | 8.2156 | 6.8081 | 5.7516 | 4.9342 | 3.0124 | 2.0885 | 1.5629 | 1.1057 | 0.7069 | 0.4913 | 0.3570 | ||||||||||||||||||||||||||||||||||||||||||||||
|
Jan.
15, 2013
|
12.5786 | 12.5000 | 11.1111 | 9.4075 | 7.3287 | 5.8594 | 4.7945 | 3.9989 | 2.2604 | 1.5128 | 1.1178 | 0.7907 | 0.5113 | 0.3587 | 0.2619 | ||||||||||||||||||||||||||||||||||||||||||||||
|
Jan.
15, 2014
|
12.5786 | 12.5000 | 10.3164 | 7.6846 | 5.4659 | 4.0128 | 3.0436 | 2.3778 | 1.1596 | 0.7570 | 0.5712 | 0.4167 | 0.2794 | 0.1995 | 0.1466 | ||||||||||||||||||||||||||||||||||||||||||||||
|
Jan
.15, 2015
|
12.5786 | 12.1855 | 5.2411 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
||
|
|
30
|
EXHIBIT
A-1
[FORM
OF 2015 NOTE]
[FOR SO
LONG AS THIS SECURITY IS A GLOBAL SECURITY DEPOSITED WITH OR ON BEHALF OF THE
DEPOSITORY TRUST COMPANY, IT SHALL BEAR THE FOLLOWING LEGEND:]
UNLESS
THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART,
TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE APPLICABLE INDENTURE
REFERRED TO IN THIS GLOBAL SECURITY.
|
|
||
|
|
A-1
|
CONTINENTAL
AIRLINES, INC.
4.5%
Convertible Note due 2015
|
No. [
___]
|
Principal
Amount $[___]
|
|
Issue
Date: [ ]
|
CUSIP:
210795 PU8
|
|
ISIN:
US210795 PU8
|
|
Continental
Airlines, Inc., a Delaware Corporation (the “Company,” which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ___________________, or its
registered assigns, the principal sum of ________________ Dollars
($_____________) [or such greater or lesser amount as is indicated on the
Schedule of Exchanges attached hereto]1 on January 15, 2015.
Interest
Payment Dates: January 15 and July 15, commencing July 15, 2010.
Regular
Record Dates: January 1 and July 1
This Note
is convertible as specified in Article VIII of the Third Supplemental Indenture
referred to herein.
Reference
is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
[Signature
Page Follows]
|
|
||
|
|
A-3
|
IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed on
the date written below.
Dated:
December 11, 2009
CONTINENTAL
AIRLINES, INC.
|
By:
|
|
|
Name:
|
|
|
Title:
|
Attest:
By:
Trustee’s
Certificate of Authentication
This is
one of the 4.5% Convertible Notes due 2015 issued under the within-named
Indenture.
Dated:
December 11, 2009
THE
BANK OF NEW YORK
MELLON
TRUST COMPANY, N.A.
By:
Authorized Signatory
|
|
||
|
|
A-3
|
REVERSE
OF NOTE
Continental
Airlines, Inc.
4.5%
Note due 2015
1. Interest.
Continental
Airlines, Inc., a Delaware Corporation (the “Company”), promises
to pay interest on the principal amount of this Note at the rate per annum of
4.5%. The Company will pay interest semiannually in arrears on
January 15 and July 15 of each year during the term of this Note, commencing on
July 15, 2010 (each an “Interest Payment
Date”), to Holders of record at the close of business on each January 1
and July 1 (whether or not a Business Day) (each a “Regular Record Date”)
immediately preceding such Interest Payment Date. Interest on the
Notes will accrue from the most recent date to which interest has been paid or
duly provided or, if no interest has been paid, from the Issue
Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
If the
principal amount hereof or any portion of such principal amount is not paid when
due (whether upon acceleration pursuant to Section 5.2 of the Indenture, upon
the date set for payment of the Fundamental Change Purchase Price pursuant to
Section 3.3 of the Third Supplemental Indenture or upon the Stated Maturity of
this Security) or if interest due hereon or any portion of such interest is not
paid when due in accordance with paragraph 7 hereon, then in each such case the
overdue amount shall, to the extent permitted by law, bear interest at the rate
of 4.5% per annum, compounded semiannually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All
such interest shall be payable on demand.
2. Method of
Payment.
Subject
to the terms and conditions of the Indenture, the Company will make payments in
respect of Fundamental Change Purchase Price and at Stated Maturity to Holders
who surrender Notes to a Paying Agent to collect such payments in respect of the
Notes. The Company will pay any cash amounts in
Dollars. However, the Company may make such cash payments by check
payable in such money or by wire transfer.
3. Paying Agent, Conversion
Agent and Registrar.
Initially,
The Bank of New York Mellon Trust Company, N.A., a national banking association
duly organized and existing under the laws of the United States of America, will
initially act as Paying Agent, Conversion Agent and Registrar. The
address of The Bank of New York Mellon Trust Company, N.A. is The Bank of New
York Mellon Corporation, Corporate Trust Operations, 101 Barclay Street – 7
East, New York, NY 10286. The Company may appoint and change any
Paying Agent, Conversion Agent, Registrar or co-registrar without notice, other
than notice to the Trustee, except that the Company will maintain at least one
Paying Agent in the State of New York, City of New York, Borough of Manhattan,
which shall initially be the Place of Payment. The Company or any of
its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.
4. Indenture.
This Note
is one of a duly authorized issue of Securities of the Company designated as its
4.5% Convertible Notes due 2015 (the “Notes”), issued under
an Indenture (the “Original Indenture”),
dated as of July 15, 1997, as supplemented by the Third Supplemental Indenture,
dated as of December 11, 2009 (the “Third Supplemental
Indenture”) (as so supplemented, the “Indenture”), between
the Company and The Bank of New York Mellon Trust Company, N.A., as successor
trustee to Bank One, N.A. (the “Trustee”). The
terms of the Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act. This Note is
subject to all such terms, and Holders are referred to the Indenture and the
Trust Indenture Act for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control.
The Notes
are unsubordinated, unsecured obligations of the Company, initially limited to
$230,000,000 aggregate principal amount, subject to the Company's ability to
issue additional Notes in accordance with the Indenture. The
Indenture does not limit other debt of the Company, secured or
unsecured.
5. Purchase by the Company at
the Option of the Holder.
Upon the
occurrence of a Fundamental Change, the Company shall be required to make an
offer to purchase this Note in accordance with the terms set forth in Article
III of the Third Supplemental Indenture.
6. Conversion.
The Notes
are convertible at the option of the Holder on the terms set forth in Article
VIII of the Third Supplemental Indenture.
7. Defaulted
Interest.
Except as
otherwise specified with respect to the Notes, any Defaulted Interest on any
Note shall forthwith cease to be payable to the registered Holder thereof on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company as provided for in Section 3.7 of
the Original Indenture.
8. Redemption; Sinking
Fund.
The Notes
are not redeemable at the Company's option prior to the Stated Maturity or
subject to a sinking fund.
9. Make Whole Change of
Control.
Subject
to the provisions of the Indenture, if a Holder elects to convert a Note in
connection with a Make Whole Change of Control, the Company will, under certain
circumstances, increase the number of shares of Common Stock issuable upon
conversion of the Note by a number of additional shares as set forth in Section
8.15 of the Third Supplemental Indenture.
10. Denominations; Transfer;
Exchange.
The Notes
are in fully registered form, without coupons, in principal denominations of
$1,000 and integral multiples of $1,000. A Holder may transfer or
exchange Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Notes
in respect of which a Fundamental Change Purchase Notice has been given and not
withdrawn (except, in the case of a Note to be purchased in part, the portion of
the Note not to be purchased).
11. Persons Deemed
Owners.
The
registered Holder of this Note may be treated as the owner of this Note for all
purposes.
12. Unclaimed Money or
Notes.
The
Trustee, the Paying Agent and the Conversion Agent shall return to the Company
upon written request any money or securities held by them for the payment of any
amount with respect to the Notes that remains unclaimed for two years, subject
to any mandatory provisions to the contrary under applicable unclaimed property
law. After return to the Company, Holders entitled to the money or
securities must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person and the Trustee, the
Paying Agent and the Conversion Agent shall have no further liability to the
Holders with respect to such money or securities for that period commencing
after the return thereof.
13. Amendment;
Waiver.
This Note
and the Indenture may be amended, modified or supplemented, and certain Defaults
may be waived, as provided in Article VIII of the Original Indenture (as amended
by Article VI of the Third Supplemental Indenture).
14. Defaults and
Remedies.
If any
Event of Default with respect to the Notes shall occur and be continuing,
including any Event of Default specific to the Notes as set forth in Article VI
of the Third Supplemental Indenture, the principal amount of all the Notes may
be declared due and payable immediately in the manner and with the effect
provided in the Indenture.
15. Trustee May Hold
Notes.
The
Trustee, any Paying Agent, any Registrar, any Conversion Agent or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Notes and, subject to Sections 310(b) and 311 of the Trust
Indenture Act, may otherwise deal with the Company and any Affiliate or
Subsidiary of the Company with the same rights it would have if it were not
Trustee, Paying Agent, Registrar, Conversion Agent or such other
agent.
16. No Recourse Against
Others.
No past,
present or future director, officer, employee, agent, representative, member,
manager, trustee or stockholder, as such, of the Company or any successor Person
or any Affiliate thereof shall have any liability for any obligations of the
Company or any successor Person or any Affiliate thereof, either directly or
through the Company or any successor Person or any Affiliate thereof, under the
Notes or the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation, whether by virtue of any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise. By accepting a
Note, each Holder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Notes.
17. Authentication.
This Note
shall not be valid until an authorized signatory of the Trustee manually signs
the Trustee’s Certificate of Authentication on this Note.
18. Abbreviations.
Customary
abbreviations may be used in the name of a Holder or an assignee, such as TEN
COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint
tenants with right of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
19. GOVERNING
LAW.
THIS NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
|
|
A-4
|
|
ASSIGNMENT
FORM
|
CONVERSION
NOTICE
|
|
To
assign this Note, fill in the form below:
|
To
convert this Note into Common Stock of the Company, check the
box:
|
|
I
or we assign and transfer this Note to
|
|
|
(Insert
assignee’s soc. sec. or tax ID no.)
|
To
convert only part of this Note, state the principal amount to be converted
(which must be $1,000 or an integral multiple of
$1,000):
|
|
(Print
or type assignee’s name, address and zip code)
|
$
If
you want the stock certificate made out in another person’s name, fill in
the form below:
|
|
and
irrevocably appoint
|
(Insert
other person’s soc. sec. or tax ID no.)
|
|
agent to transfer this Note on
the books of the Company. The agent may substitute another to
act for him.
|
(Print
or type other person’s name, address and zip code)
|
|
Date:
|
Your
signature:
|
|
|
A-10
|
[FORM OF
FUNDAMENTAL CHANGE PURCHASE NOTICE]
To: Continental
Airlines, Inc.,
The
undersigned registered owner of this Note hereby acknowledges receipt of a
notice from Continental Airlines, Inc. (the “Company”) as to the occurrence of a
Fundamental Change with respect to the Company and specifying the Fundamental
Change Purchase Date and requests and instructs the Company to pay to the
registered holder hereof in accordance with the applicable provisions of the
Indenture referred to in this Note (1) the entire principal amount of this Note,
or the portion thereof (that is $1,000 principal amount or an integral multiple
thereof) below designated, and (2) if such Fundamental Change Purchase Date does
not fall during the period after an Interest Record Date and on or prior to the
corresponding Interest Payment Date, accrued and unpaid interest thereon to, but
excluding, such Fundamental Change Purchase Date.
In the
case of certificated Notes, the certificate numbers of the Notes to be purchased
are as set forth below:
Dated:
|
|
|
|
Signature(s)
|
|
|
|
|
Social
Security or Other Taxpayer Identification
Number
|
|
|
|
|
Principal
amount to be purchased (if less than all):
$___,000
|
NOTICE: The
above signature(s) of the holder(s) hereof must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
|
|
A-10
|
SCHEDULE
OF EXCHANGES2
The
following exchanges, redemptions, repurchases or conversions of a part of this
Global Security for Definitive Notes have been made:
|
Date
of Transaction
|
Amount
of decrease in
Principal
Amount of’
this
Global Security
|
Amount
of increase in
Principal
Amount of
this
Global Security
|
Principal
Amount of this
Global
Security
Following
such decrease
(or
increase)
|
Signature
of
authorized
signatory
of
Trustee
|
|
|
A-10
|
 |
Exhibit 99.1
DeAnne
Gabel
Director
- Investor Relations
|
|
Investor
Update
|
Issue
Date: December 17, 2009
|
This
investor update provides information on Continental's guidance for the fourth
quarter and full year 2009.
Advanced Booked Seat Factor
(Percentage of Available Seats that are Sold)
Compared
to the same period last year, for the next six weeks, mainline domestic advanced
booked seat factor is running up 1 to 2 points, mainline Latin advanced booked
seat factor is running 2 to 3 points higher, Transatlantic advanced booked seat
factor is running 10 - 11 points higher, Pacific advanced booked seat factor is
down 2 to 3 points, and regional advanced booked seat factor is running 2 to 3
points higher.
For the
fourth quarter of 2009, the Company expects both its consolidated and mainline
load factors to be up approximately 3.0 points year-over-year (“yoy”) compared
to the same period in 2008.
Unrestricted Cash, Cash
Equivalents and Short Term Investments Balance
Continental
anticipates ending the fourth quarter of 2009 with an unrestricted cash, cash
equivalents and short-term investments balance of between $2.8 and $2.9
billion.
Cargo, Mail, and Other
Revenue
The
Company's Cargo, Mail, and Other Revenue for the fourth quarter of 2009 is
expected to be between $360 and $365 million.
|
2009
Estimate
|
|||
|
Available Seat Miles
(ASMs)
|
Year-over-Year %
Change
|
||
|
4th
Qtr.
|
|||
|
Mainline
|
|||
|
Domestic
|
0.5%
|
||
|
Latin
America
|
5.3%
|
||
|
Transatlantic
|
(11.2%)
|
||
|
Pacific
|
16.3%
|
||
|
Total
Mainline
|
(0.5%)
|
||
|
Regional
|
(1.3%)
|
||
|
Consolidated
|
|||
|
Domestic
|
0.2%
|
||
|
International
|
(1.6%)
|
||
|
Total
Consolidated
|
(0.6%)
|
||
For the
full year 2010, Continental expects its consolidated capacity to be up 1.5% to
2.5% yoy. The Company expects its mainline capacity to be up 2% to 3%
yoy, with its mainline domestic capacity about flat yoy and its mainline
international capacity up 5% to 6% yoy. The international increase is
primarily due to the run-rate of international routes added in 2009 and the
restoration of the Company's full schedule to Mexico following its capacity
pulldown earlier this year related to H1N1.
|
Load
Factor
|
4th Qtr. 2009
(E)
|
|||
|
Domestic
|
84%
|
-
|
85%
|
|
|
Latin
America
|
81%
|
-
|
82%
|
|
|
Transatlantic
|
82%
|
-
|
83%
|
|
|
Pacific
|
74%
|
-
|
75%
|
|
|
Total
Mainline
|
82%
|
-
|
83%
|
|
|
Regional
|
77%
|
-
|
78%
|
|
|
Consolidated
|
81%
|
-
|
82%
|
|
Continental's
month-to-date consolidated load factor is updated daily and can be found on
continental.com on the Investor Relations page under the About Continental
menu.
|
CASM Mainline
Operating Statistics
|
2009 Estimate
(cents)
|
|||||
|
4th
Qtr.
|
||||||
|
CASM
|
10.85
|
-
|
10.90
|
|||
|
Special
Items per ASM
|
0.00
|
|||||
|
CASM
Less Special Items (a)
|
10.85
|
-
|
10.90
|
|||
|
Aircraft
Fuel & Related Taxes per ASM
|
(2.85)
|
|||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.00
|
-
|
8.05
|
|||
|
CASM Consolidated
Operating Statistics
|
||||||
|
CASM
|
11.73
|
-
|
11.78
|
|||
|
Special
Items per ASM
|
0.00
|
|||||
|
CASM
Less Special Items (a)
|
11.73
|
-
|
11.78
|
|||
|
Aircraft
Fuel & Related Taxes per ASM
|
(3.06)
|
|||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.67
|
-
|
8.72
|
|||
(a)
Cost per available seat mile less special items is computed by dividing
operating expenses excluding special items by available seat miles. These
financial measures provide management and investors the ability to measure and
monitor Continental's performance on a consistent basis.
(b) Cost
per available seat mile less special items, aircraft fuel and related taxes is
computed by multiplying fuel price per gallon, including fuel taxes, by fuel
gallons consumed and subtracting that amount from operating expenses excluding
special items, then dividing by available seat miles. This statistic
provides management and investors the ability to measure and monitor
Continental's cost performance absent special items and fuel price
volatility. Both the cost and availability of fuel are subject to
many economic and political factors beyond Continental's control.
Variable
Compensation
Continental
has granted profit based restricted stock unit ("RSU") awards pursuant to its
Long-Term Incentive and RSU Program. Expense for these awards is
recognized ratably over the required service period, with changes in the price
of the Company's common stock and the payment percentage (which is tied to
varying levels of cumulative profit sharing) resulting in a corresponding
increase or decrease in "Wages, Salaries, and Related Costs" in the Company's
consolidated statements of operations. A $17.00 stock price was used
in estimating the expense impact of the awards for the Company's 2009 cost
estimates included herein. Based on the Company's current assumptions
regarding payment percentages and the cumulative profit sharing targets to be
achieved pursuant to the awards, the Company estimates that a $1 increase or
decrease in the price of its common stock from $17.00 will result in an increase
or decrease of approximately $1 million in Wages, Salaries, and Related Costs
attributable to the awards to be recognized in the fourth quarter
2009. For more information regarding these awards, including
performance periods and how the Company accrues for the awards, see the
Company's 2008 Form 10-K.
|
Fuel Requirements
(Gallons)
|
||||
|
4th
Qtr.
|
||||
|
Mainline
|
333
million
|
|||
|
Regional
|
72
million
|
|||
|
Consolidated
Fuel Price per Gallon (including fuel
taxes and
|
$ | 1.99 | ||
|
impact
of hedges)
|
||||
Fuel Hedges - As of December
11, 2009
As of
December 11, 2009, the Company's projected consolidated fuel requirements were
hedged as follows:
|
Maximum
Price
|
Minimum
Price
|
|||||||||||||||
|
%
of
Expected
Consumption
|
Weighted
Average Price (per gallon)
|
%
of
Expected
Consumption
|
Weighted
Average
Price
(per
gallon)
|
|||||||||||||
|
Fourth Quarter
2009
|
||||||||||||||||
|
WTI
crude oil swaps
|
5 | % | $ | 1.36 | 5 | % | $ | 1.36 | ||||||||
|
Gulf
Coast jet fuel swaps
|
15 | % | $ | 1.83 | 15 | % | $ | 1.83 | ||||||||
|
Total
|
20 | % | 20 | % | ||||||||||||
|
First Quarter
2010
|
||||||||||||||||
|
Gulf
Coast jet fuel swaps
|
5 | % | $ | 1.94 | 5 | % | $ | 1.94 | ||||||||
|
WTI
crude oil swaps
|
8 | % | $ | 1.84 | 8 | % | $ | 1.84 | ||||||||
|
WTI
crude call options
|
1 | % | $ | 1.88 | n/a | n/a | ||||||||||
|
Total
|
14 | % | 13 | % | ||||||||||||
|
Full Year
2010
|
||||||||||||||||
|
Gulf
Coast jet fuel swaps
|
1 | % | $ | 1.94 | 1 | % | $ | 1.94 | ||||||||
|
WTI
crude oil swaps
|
2 | % | $ | 1.84 | 2 | % | $ | 1.84 | ||||||||
|
WTI
crude call options
|
4 | % | $ | 2.19 | n/a | n/a | ||||||||||
|
Total
|
7 | % | 3 | % | ||||||||||||
|
Selected Expense
Amounts (Consolidated Expense)
|
2009 Estimate Amounts
(millions)
|
|||
|
4th
Qtr
|
||||
|
Aircraft
Rent
|
$ | 229 | ||
|
Depreciation
& Amortization
|
$ | 130 | ||
|
Net
Interest Expense*
|
$ | 82 | ||
|
*Net
Interest Expense includes interest expense, capitalized interest and
interest income.
|
||||
Pension Expense and
Contributions
During
2009, the Company contributed $176 million to its defined benefit pension plans.
The Company does not plan to make additional contributions during calendar
year 2009.
The
Company estimates that its minimum funding requirements for its defined benefit
pension plans for calendar year 2010 will be approximately $120
million.
The
Company estimates that its non-cash pension expense for 2009 will be
approximately $250 million, which excludes non-cash settlement charges
related to lump sum distributions from the pilot’s frozen defined benefit
plan. Settlement charges are expected for the fourth quarter 2009, but the
Company is not able at this time to estimate the amount of these
charges.
The
Company estimates that its non-cash pension expense for 2010 will be
approximately $250 million.
Continental Airlines, Inc.
Tax Computation
The
Company's ability to record a tax benefit on net losses is limited by its net
deferred tax position. The Company previously recorded the maximum
available deferred tax benefit permitted by its prior net deferred tax liability
position. Subsequent losses will generally not be benefitted until the
Company re-establishes a net deferred tax liability. Subsequent pretax
income, when considered along with subsequent other comprehensive income, will
generally not carry tax expense until the Company exhausts its beginning
unbenefitted net deferred tax assets via release of valuation
allowance.
Debt and Capital
Leases
Scheduled
debt and capital lease payments for the full year 2009 are estimated to total
$605 million, with $98 million, $71 million, and $373 million paid in the first,
second, and third quarters, respectively, and approximately $63 million to be
paid in the fourth quarter of 2009.
|
Cash
Capital Expenditures
($Millions)
|
2009
Estimate
|
2010
Estimate
|
||||||
|
Fleet
Related
|
$ | 297 | * | $ | 270 | |||
|
Non-Fleet
|
126_
|
140_
|
||||||
|
Net
Capital Expenditures**
|
$ | 423 | $ | 410 | ||||
|
Net
Purchase Deposits Paid/(Refunded)
|
(33)_
|
20_
|
||||||
|
Total
Cash Expenditures
|
$390_
|
$430_
|
||||||
*Includes
lease termination payments on 737-500 aircraft Continental temporarily took
ownership of just prior to completing the sale of these aircraft to a third
party.
**Includes
rotable parts and capitalized interest.
EPS Estimated Share
Count
Share
count estimates for calculating basic and diluted earnings per share at
different income levels are as follows:
Fourth
Quarter 2009 (Millions)
|
Quarterly
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
||||||||||
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|||||||||
|
Over
$133
|
138 | 155 | $ | 10 | ||||||||
|
Between
$89 - $133
|
138 | 151 | $ | 6 | ||||||||
|
Between
$36 - $89
|
138 | 142 | $ | 1 | ||||||||
|
Under
$36
|
138 | 140 | -- | |||||||||
|
Net
Loss
|
138 | 138 | -- | |||||||||
Full
Year 2009 (Millions)
|
Year-to-date
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
||||||||||
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|||||||||
|
Over
$329
|
129 | 143 | $ | 25 | ||||||||
|
Between
$212 - $329
|
129 | 139 | $ | 15 | ||||||||
|
Under
$212
|
129 | 130 | -- | |||||||||
|
Net
Loss
|
129 | 129 | -- | |||||||||
These
share count charts are based upon several assumptions including market stock
price and number of shares outstanding. The number of shares used in
the actual EPS calculation will likely be different than those set forth
above.
This update
contains forward-looking statements that are not limited to historical facts,
but reflect the Company’s current beliefs, expectations or intentions regarding
future events. All forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. For examples of such risks and uncertainties, please
see the risk factors set forth in the Company’s 2008 Form 10-K and its other
securities filings, including any amendments thereto, which identify important
matters such as the significant volatility in the cost of aircraft fuel, its
transition to a new global alliance, the consequences of its high leverage and
other significant capital commitments, its high labor and pension costs, delays
in scheduled aircraft deliveries, service interruptions at one of its hub
airports, disruptions to the operations of its regional operators, disruptions
in its computer systems, and industry conditions, including the recession in the
U.S. and global economies, the airline pricing environment, terrorist attacks,
regulatory matters, excessive taxation, industry consolidation, the availability
and cost of insurance, public health threats and the seasonal nature of the
airline business. The Company undertakes no obligation to publicly update or
revise any forward-looking statements to reflect events or circumstances that
may arise after the date of this update, except as required by applicable
law.