View:
As filed with the Securities and Exchange Commission
on January 10, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Continental Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 4512 74-2099724
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial identification
incorporation or classification code number)
organization) number)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(713) 834-2950
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Jeffery A. Smisek, Esq.
Executive Vice President, General Counsel and Secretary
Continental Airlines, Inc.
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(713) 834-2950
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of correspondence to:
Stephen H. Shalen, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes
effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box: |_|
CALCULATION OF REGISTRATION FEE
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Title of each class Amount to Proposed Proposed Amount
of securities be maximum maximum of
to be registered registered offering aggregate registration
price per offering fee(2)
unit price (1)
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9 1/2% Senior Notes $290,000 100% $290,000 $100
due 2001
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(1) Estimated solely for the purposes of calculating the
registration fee pursuant to Rule 457 under the Securities Act
of 1933, as amended.
(2) Pursuant to Rule 429, a registration fee of $116,890.80 was
previously paid in connection with the registration of
$338,984,000 in aggregate principal amount of pass through
certificates under a Registration Statement on Form S-4 (File
No. 333-12171) filed by the Registrant.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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CONTINENTAL AIRLINES, INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K showing location in the
Prospectus of Information Required by Items in Form S-4
Item Location in Prospectus
1. Forepart of the Facing Page of the Registration
Registration Statement; Cross Reference Sheet;
Statement and Outside Outside Front Cover Page of
Front Cover Page of Prospectus
Prospectus............
2. Inside Front and Available Information; Outside Back
Outside Back Cover Cover Page of Prospectus
Pages of Prospectus...
3. Risk Factors, Ratio of Prospectus Summary; Risk Factors;
Earnings to Fixed The Company; Selected Financial
Charges and Other Data
Information...........
4. Terms of the Prospectus Summary; Risk Factors;
Transaction........... The Exchange Offer; Description of
New Notes; Plan of Distribution;
Certain Federal Income Tax
Considerations
5. Pro Forma Financial Not Applicable
Information...........
6. Material Contracts Not Applicable
With the Company
Being Acquired........
7. Additional Information Not Applicable
Required for
Reoffering by Persons
and Parties Deemed to
be Underwriters.......
8. Interests of Named Not Applicable
Experts and Counsel...
9. Disclosure of Not Applicable
Commission Position
on Indemnification
for Securities Act
Liabilities...........
10. Information with Prospectus Summary; The Company;
Respect to S-3 Recent Developments
Registrants...........
11. Incorporation of Available Information; Incorporation
Certain Information of Certain Documents by Reference
by Reference..........
12. Information with Not Applicable
Respect to S-2 or S-3
Registrants...........
13. Incorporation of Not Applicable
Certain Information
by Reference..........
14. Information with Not Applicable
Respect to
Registrants Other
Than S-3 or S-2
Registrants...........
15. Information with Not Applicable
Respect to S-3
Companies.............
16. Information with Not Applicable
Respect to S-2 or S-3
Companies.............
17. Information with Not Applicable
Respect to Companies
Other Than S-3 or S-2
Companies.............
18. Information if Not Applicable
Proxies, Consents or
Authorizations Are To
Be Solicited..........
19. Information if Prospectus Summary; The Exchange
Proxies, Consents or Offer; Description of the Notes
Authorizations Are
Not To Be Solicited
or in an Exchange
Offer.................
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities
may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall
not constitute an offer to sell or the solicitation of any offer to
buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
State.
SUBJECT TO COMPLETION--DATED JANUARY 10, 1997
PROSPECTUS
Continental Airlines, Inc.
Offer to Exchange 9 1/2% Senior Notes due 2001, which
have been registered under the Securities Act of 1933, as
amended,
for any and all outstanding 9 1/2% Senior Notes due 2001
The Exchange Offer will expire at 5:00 p.m., New York City time,
on , 1997, unless extended.
The 9 1/2% Senior Notes due 2001 (the "New Notes") of
Continental Airlines, Inc. ("Continental" or the "Company"),
which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration
Statement of which this Prospectus is a part, are hereby offered,
upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the
"Letter of Transmittal" and, together with this Prospectus, the
"Exchange Offer"), in exchange for an equal principal amount of
outstanding 9 1/2% Senior Notes due 2001 (the "Old Notes"), of
which $250,000,000 aggregate principal amount is outstanding as
of the date hereof. The New Notes and the Old Notes are
collectively referred to herein as the "Notes".
Any and all Old Notes that are validly tendered and
not withdrawn on or prior to 5:00 P.M., New York City time, on
the date the Exchange Offer expires, which will be
, 1997 (30 calendar days following the
commencement of the Exchange Offer) unless the Exchange Offer is
extended (such date, including as extended, the "Expiration
Date") will be accepted for exchange. Tenders of Old Notes may be
withdrawn at any time prior to 5:00 P.M., New York City time on
the Expiration Date. The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain
customary conditions, which may be waived by the Company, and to
the terms of the Registration Rights Agreement, dated as of
December 10, 1996, between the Company and Lehman Brothers Inc.
(the "Initial Purchaser")(the "Registration Rights Agreement").
Old Notes may be tendered only in integral multiples of $1,000.
See "The Exchange Offer".
The New Notes will be entitled to the benefits of the
same Indenture (as defined herein) that governs the Old Notes and
will govern the New Notes. The form and terms of the New Notes
are the same in all material respects as the form and terms of
the Old Notes, except that the New Notes do not contain terms
with respect to the interest rate step-up provisions and the New
Notes have been registered under the Securities Act and therefore
will not bear legends restricting the transfer thereof. See "The
Exchange Offer" and "Description of the New Notes".
The New Notes will be represented by permanent global
notes in fully registered form and will be deposited with the
Trustee as custodian for and registered in the name of a nominee
of DTC. Beneficial interests in the permanent global notes will
be shown on, and transfers thereof will be effected through,
records maintained by DTC and its participants.
Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission"), as set
forth in no-action letters issued to third parties, including
Exxon Capital Holdings Corporation, SEC No-Action Letter
(available April 13, 1989), Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (available June 5, 1991) and Shearman &
Sterling, SEC No-Action Letter (available July 2, 1993)
(collectively, the "Exchange Offer No-Action Letters"),
the Company believes that the New Notes issued pursuant
to the Exchange Offer may be offered for resale, resold
or otherwise transferred by holders thereof (other than a
broker-dealer who acquires such New Notes directly from the
Trustee for resale pursuant to Rule 144A under the Securities Act
or any other available exemption under the Securities Act or any
holder that is an "affiliate" of the Company as defined in
Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders are not engaged
in, and do not intend to engage in, a distribution of such New
Notes and have no arrangement with any person to participate in a
distribution of such New Notes. By tendering the Old Notes in
exchange for New Notes, each holder, other than a broker-dealer,
will represent to the Company that: (i) it is not an affiliate of
the Company (as defined in Rule 405 under the Securities Act) or
a broker-dealer tendering Old Notes acquired directly from the
Company for its own account; (ii) any New Notes to be received by
it will be acquired in the ordinary course of its business; and
(iii) it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of the New Notes.
If a holder of Old Notes is engaged in or intends to engage in a
distribution of the New Notes or has any arrangement or
understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such holder may
not rely on the applicable interpretations of the staff of the
Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any secondary resale transaction. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange
Offer (a "Participating Broker-Dealer") must acknowledge that it
will deliver a prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection
with resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed that starting on the Expiration
Date it will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution".
(continued on next page)
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FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK
FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS.
------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------------------
The date of this Prospectus is , 1997
(continued from cover page)
The Company will not receive any proceeds from this
offering. The Company has agreed to pay the expenses of the
Exchange Offer. No underwriter is being utilized in connection
with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE
COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES
IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES AND BLUE
SKY LAWS OF SUCH JURISDICTION.
The Old Notes have been designated as eligible for
trading in the Private Offerings, Resale and Trading through
Automated Linkages market. Prior to this Exchange Offer, there
has been no public market for the New Notes. If such a market were
to develop, the New Notes could trade at prices that may be higher
or lower than their principal amount. Continental does not intend
to apply for listing of the New Notes on any securities exchange
or for quotation of the New Notes through The Nasdaq Stock Market's
National Market or otherwise. The Initial Purchaser has previously
made a market in the Old Notes and Continental has been advised
that the Initial Purchaser currently intends to make a market in
the New Notes, as permitted by applicable laws and regulations,
after consummation of the Exchange Offer. The Initial Purchaser
is not obligated, however, to make a market in the Old Notes or
the New Notes and any such market making activity may be
discontinued at any time without notice at the sole discretion of
the Initial Purchaser. There can be no assurance as to the
liquidity of the public market for the New Notes or that any
active public market for the New Notes will develop or continue.
If an active public market does not develop or continue, the
market price and liquidity of the New Notes may be adversely
affected. See "Risk Factors--Absence of a Public Market for the
New Notes".
2
AVAILABLE INFORMATION
Continental is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Commission. Such
reports, proxy statements and other information may be inspected
and copied at the following public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; Seven World Trade
Center, 13th Floor, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may also be obtained from the
Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of prescribed rates. The Commission maintains a Web
site at http://www.sec.gov containing reports, proxy statements
and other information regarding registrants that file
electronically with the Commission, including Continental. In
addition, reports, proxy statements and other information
concerning Continental may be inspected and copied at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.
Continental is the successor to Continental Airlines
Holdings, Inc. ("Holdings"), which merged with and into
Continental on April 27, 1993. Holdings had also been subject to
the informational requirements of the Exchange Act.
This Prospectus constitutes a part of a registration statement
on Form S-4 (together with all amendments and exhibits, the
"Registration Statement") filed by Continental with the
Commission, through the Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR"), under the Securities Act, with
respect to the New Notes offered hereby. This Prospectus omits
certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration
Statement for further information with respect to Continental and
Holdings and the securities offered hereby. Although statements
concerning and summaries of certain documents are included
herein, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with
the Commission. These documents may be inspected without charge
at the office of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies may be obtained
at fees and charges prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No.
0-9781) are hereby incorporated by reference in this Prospectus:
(i) Continental's Annual Report on Form 10-K for the year ended
December 31, 1995 (as amended by Forms 10-K/A1 and 10-K/A2 filed
on March 8 and April 10, 1996, respectively), (ii) Continental's
Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1996, and (iii) Continental's Current
Reports on Form 8-K, filed on January 31, March 26, May 7, June
27, July 22, September 16, October 2, October 10, November 21,
December 5 and December 10, 1996, and January 6, 1997.
All reports and any definitive proxy or information statements
filed by Continental pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the
New Notes offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by
reference, or contained in this Prospectus, shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
This Prospectus incorporates documents by reference that are
not presented herein or delivered herewith. These documents are
available without charge to any person to whom a Prospectus is
delivered, upon written or oral request of such person, from
Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010,
Houston, Texas 77019, Attention: Secretary, telephone (713)
834-2950. In order to ensure timely delivery of the documents,
any request should be made by , 1997.
3
PROSPECTUS SUMMARY
The following summary information is qualified in its
entirety by the detailed information and financial statements
(including the notes thereto) appearing elsewhere or incorporated
by reference in this Prospectus. Prospective investors should
consider carefully the matters discussed under the caption "Risk
Factors". Unless otherwise stated or unless the context otherwise
requires, references to "Continental" or the "Company" include
Continental Airlines, Inc. and its predecessors and subsidiaries.
All route, fleet, traffic and similar information appearing in
this Prospectus is as of or for the year ended December 31, 1996,
unless otherwise stated herein.
The Company
Continental Airlines, Inc. is a major United States air
carrier engaged in the business of transporting passengers, cargo
and mail. Continental is the fifth largest United States airline
(as measured by revenue passenger miles in the year ended
December 31, 1996) and, together with its wholly owned subsidiary,
Continental Express, Inc. ("Express"), and its 91%-owned
subsidiary, Continental Micronesia, Inc. ("CMI"), serves 189
airports worldwide.
The Company operates its route system primarily through
domestic hubs at Newark, Houston Intercontinental and Cleveland,
and a Pacific hub on the neighboring islands of Guam and Saipan.
Each of Continental's three domestic hubs is located in a large
business and population center, contributing to a high volume of
"origin and destination" traffic. The Guam/Saipan hub is
strategically located to provide service from Japanese and other
Asian cities to popular resort destinations in the western
Pacific. Continental is the primary carrier at each of these
hubs, accounting for 56%, 79%, 56% and 68% of average daily jet
departures, respectively.
Continental directly serves 132 U.S. cities, with
additional cities (principally in the western and southwestern
United States) connected to Continental's route system under
agreements with America West Airlines, Inc. ("America West").
Internationally, Continental flies to 57 destinations and offers
additional connecting service through alliances with foreign
carriers. Continental operates 58 weekly departures to five
European cities and markets service to eight other cities through
code-sharing agreements. Continental recently announced new
service from Newark to Dusseldorf, Germany, which is scheduled to
commence March 19, 1997, and to Lisbon, Portugal, scheduled to
commence May 1, 1997, and an agreement with Air France for a
joint marketing arrangement that will involve service from Newark
and Houston to Paris. Continental is one of the leading airlines
providing service to Mexico and Central America, serving more
destinations in Mexico than any other United States airline. In
addition, Continental flies to four cities in South America.
Through its Guam/Saipan hub, Continental provides extensive
service in the western Pacific, including service to more
Japanese cities than any other United States carrier.
The Company is a Delaware corporation. Its executive
offices are located at 2929 Allen Parkway, Suite 2010, Houston,
Texas 77019, and its telephone number is (713) 834-2950.
The Exchange Offer
Registration Rights The Old Notes were issued on December
Agreement................ 10, 1996 to the Initial Purchaser.
The Initial Purchaser placed the Old
Notes with institutional investors.
In connection therewith, the Company
and the Initial Purchaser entered
into the Registration Rights
Agreement, providing, among other
things, for the Exchange Offer. See
"The Exchange Offer".
The Exchange Offer....... New Notes are being offered in
exchange for an equal principal amount
of Old Notes. As of the date hereof,
$250,000,000 aggregate principal
amount of Old Notes is outstanding.
Old Notes may be tendered only in
integral multiples of $1,000.
4
Resale of New Notes...... Based on interpretations by the staff
of the Commission, as set forth in
no-action letters issued to third
parties, including the Exchange Offer
No-Action Letters, the Company
believes that the New Notes issued
pursuant to the Exchange Offer may be
offered for resale, resold or
otherwise transferred by holders
thereof (other than a broker-dealer
who acquires such New Notes directly
from the Company for resale pursuant
to Rule 144A under the Securities Act
or any other available exemption under
the Securities Act or any holder that
is an "affiliate" of the Company as
defined in Rule 405 under the
Securities Act), without compliance
with the registration and prospectus
delivery provisions of the Securities
Act, provided that such New Notes are
acquired in the ordinary course of
such holders' business and such
holders are not engaged in, and do not
intend to engage in, a distribution of
such New Notes and have no arrangement
with any person to participate in a
distribution of such New Notes. By
tendering the Old Notes in exchange
for New Notes, each holder, other than
a broker-dealer, will represent to the
Company that: (i) it is not an
affiliate of the Company (as defined
under Rule 405 of the Securities Act)
or a broker-dealer tendering Old Notes
acquired directly from the Company for
its own account; (ii) any New Notes to
be received by it were acquired in the
ordinary course of its business; and
(iii) it is not engaged in, and does
not intend to engage in, a
distribution of such New Notes and has
no arrangement or understanding to
participate in a distribution of the
New Notes. If a holder of Old Notes
is engaged in or intends to engage in
a distribution of the New Notes or has
any arrangement or understanding with
respect to the distribution of the New
Notes to be acquired pursuant to the
Exchange Offer, such holder may not
rely on the applicable interpretations
of the staff of the Commission and
must comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
any secondary resale transaction.
Each Participating Broker-Dealer that
receives New Notes for its own account
pursuant to the Exchange Offer must
acknowledge that it will deliver a
prospectus in connection with any
resale of such New Notes. The Letter
of Transmittal states that by so
acknowledging and by delivering a
prospectus, a Participating
Broker-Dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the Securities
Act. This Prospectus, as it may be
amended or supplemented from time to
time, may be used by a Participating
Broker-Dealer in connection with
resales of New Notes received in
exchange for Old Notes where such Old
Notes were acquired by such
Participating Broker-Dealer as a
result of market-making activities or
other trading activities. The Company
has agreed that, starting on the
Expiration Date and ending on the
close of business 180 days after the
Expiration Date, it will make this
Prospectus available to any
Participating Broker-Dealer for use in
connection with any such resale. See
"Plan of Distribution". To comply
with the securities laws of certain
jurisdictions, it may be necessary to
qualify for sale or register the New
Notes prior to offering or selling
such New Notes. The Company has
agreed, pursuant to the Registration
Rights Agreement and subject to
certain specified limitations therein,
to register or qualify the New Notes
5
for offer or sale under the securities
or "blue sky" laws of such
jurisdictions as may be necessary to
permit the holders of New Notes to
trade the New Notes without any
restrictions or limitations under the
securities laws of the several states
of the United States.
Consequences of Failure
to Exchange Old Notes.... Upon consummation of the Exchange
Offer, subject to certain exceptions,
holders of Old Notes who do not
exchange their Old Notes for New Notes
in the Exchange Offer will no longer
be entitled to registration rights and
will not be able to offer or sell
their Old Notes, unless such Old Notes
are subsequently registered under the
Securities Act (which, subject to
certain limited exceptions, the
Company will have no obligation to
do), except pursuant to an exemption
from, or in a transaction not subject
to, the Securities Act and applicable
state securities laws. See "Risk
Factors--Risk Factors Relating to the
Notes and the Offering--Consequences of
Failure to Exchange" and "The Exchange
Offer--Terms of the Exchange Offer".
Expiration Date.......... 5:00 p.m., New York City time, on
, 1997 (30 calendar
days following the commencement of the
Exchange Offer), unless the Exchange
Offer is extended, in which case the
term "Expiration Date" means the
latest date and time to which the
Exchange Offer is extended.
Interest on the New Notes The New Notes will accrue interest at
the applicable per annum rate set
forth on the cover page of this
Prospectus, from the last date on
which interest was paid on the Old
Notes surrendered in exchange therefor
or, if no interest has been paid, from
the Issue Date of such Old Notes.
Interest on the New Notes is payable
on June 15 and December 15 of each
year.
Conditions to the The Exchange Offer is not conditioned
Exchange Offer........... upon any minimum principal amount of
Old Notes being tendered for
exchange. However, the Exchange
Offer is subject to certain
customary conditions, which may be
waived by the Company. See "The
Exchange Offer--Conditions". Except
for the requirements of applicable
federal and state securities laws,
there are no federal or state
regulatory requirements to be
complied with or obtained by the
Company in connection with the
Exchange Offer.
Procedures for Tendering Each holder of Old Notes wishing to
Old Notes................ accept the Exchange Offer must
complete, sign and date the Letter
of Transmittal, or a facsimile
thereof, in accordance with the
instructions contained herein and
therein, and mail or otherwise
deliver such Letter of Transmittal,
or such facsimile, together with the
Old Notes to be exchanged and any
other required documentation to the
Exchange Agent (as defined herein)
at the address set forth herein or
effect a tender of Old Notes
pursuant to the procedures for
book-entry transfer as provided for
herein. See "The Exchange
Offer--Procedures for Tendering" and
"--Book Entry Transfer".
Guaranteed Delivery Holders of Old Notes who wish to
Procedures............... tender their Old Notes and whose Old
Notes are not immediately available
or who cannot deliver their Old
Notes and a properly completed
Letter of Transmittal or any other
documents required by the Letter of
6
Transmittal to the Exchange Agent
prior to the Expiration Date may
tender their Old Notes according to
the guaranteed delivery procedures
set forth in "The Exchange
Offer--Guaranteed Delivery
Procedures".
Withdrawal Rights........ Tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New
York City time, on the Expiration
Date. To withdraw a tender of Old
Notes, a written or facsimile
transmission notice of withdrawal must
be received by the Exchange Agent at
its address set forth herein under
"The Exchange Offer--Exchange Agent"
prior to 5:00 p.m., New York City
time, on the Expiration Date.
Acceptance of Old Notes
and Delivery of New Notes Subject to certain conditions, any and
all Old Notes that are properly
tendered in the Exchange Offer prior
to 5:00 p.m., New York City time, on
the Expiration Date will be accepted
for exchange. The New Notes issued
pursuant to the Exchange Offer will be
delivered promptly following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange Offer".
Certain Tax The exchange of New Notes for Old
Considerations........... Notes should not be a sale or exchange
or otherwise a taxable event for
Federal income tax purposes. See
"Certain U.S. Federal Income Tax
Consequences".
Exchange Agent........... Texas Commerce Bank National
Association is serving as exchange
agent (the "Exchange Agent") in
connection with the Exchange Offer.
Fees and Expenses........ All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration
Rights Agreement will be borne by the
Company. See "The Exchange Offer--Fees
and Expenses".
Use of Proceeds.......... There will be no cash proceeds payable
to Continental from the issuance of
the New Notes pursuant to the Exchange
Offer. The proceeds from the sale of
the Old Notes were used for general
corporate purposes. See "Use of
Proceeds".
Summary of Terms of New Notes
The Exchange Offer relates to the exchange of up to
$250,000,000 aggregate principal amount of Old Notes for up to an
equal aggregate principal amount of New Notes. The New Notes will
be entitled to the benefits of the same Indenture that governs
the Old Notes and will govern the New Notes. The form and terms
of the New Notes are the same in all material respects as the
form and terms of the Old Notes, except that the New Notes do not
contain terms with respect to interest rate step-up provisions
and the New Notes have been registered under the Securities Act
and therefore will not bear legends restricting the transfer
thereof. See "Description of the Notes".
Maturity Date............. December 15, 2001.
Interest Payment Dates.... June 15 and December 15, commencing on
June 15, 1997.
Optional Redemption....... The New Notes will be redeemable at the
option of the Company, in whole or from
time to time in part, at any time, on
not less than 20 nor more than 60 days'
prior notice at a redemption price
7
equal to the sum of (i) the principal
amount thereof, plus (ii) accrued and
unpaid interest, if any, to the
redemption date (subject to the right
of holders of record on relevant record
dates to receive interest due on an
interest payment date), plus (iii) a
Make-Whole Premium, if any. See
"Description of the Notes--Redemption".
Change of Control......... Upon the occurrence of a Change of
Control Triggering Event, each holder
of New Notes will have the right to
require the Company to repurchase all
or any part of such holder's New Notes
at an offer price in cash equal to 101%
of the aggregate principal amount
thereof, plus accrued and unpaid
interest, if any, to the date of
purchase. See "Description of the
Notes--Certain Covenants--Purchase of
Notes Upon a Change of Control
Triggering Event".
Ranking................... The New Notes will be senior unsecured
unsubordinated obligations of the
Company and will rank pari passu with
all other unsecured unsubordinated
obligations of the Company. See
"Description of the Notes".
Covenants................. The Indenture under which the New Notes
will be issued will contain certain
covenants that, among other things,
will limit the ability of the Company
and its subsidiaries to pay dividends,
engage in transactions with
stockholders and affiliates, sell
assets, engage in mergers and
consolidations and make investments in
unrestricted subsidiaries. See
"Description of the Notes--Certain
Covenants".
8
RISK FACTORS
Prospective purchasers of the New Notes should carefully
review the information contained and incorporated by reference in
this Prospectus and should particularly consider the following
matters:
Risk Factors Relating to the Company
Continental's History of Operating Losses
Although Continental recorded net income of $224 million in
1995 and $272 million in the nine months ended September 30,
1996, it had experienced significant operating losses in the
previous eight years. In the long term, Continental's viability
depends on its ability to sustain profitable results of
operations.
Leverage and Liquidity
Continental has successfully negotiated a variety of
agreements to increase its liquidity. Nevertheless, Continental
remains more leveraged and has significantly less liquidity than
certain of its competitors, several of whom have available lines
of credit and/or significant unencumbered assets. Accordingly,
Continental may be less able than certain of its competitors to
withstand a prolonged recession in the airline industry.
As of September 30, 1996, Continental and its consolidated
subsidiaries had approximately $1.7 billion (including current
maturities) of long-term indebtedness and capital lease
obligations and had approximately $870 million of minority
interest, Continental-obligated mandatorily redeemable preferred
securities of subsidiary trust, redeemable warrants, redeemable
preferred stock and common stockholders' equity. On December 10,
1996, the Company consummated the offer and sale of the Old
Notes. Common stockholders' equity reflects the adjustment of the
Company's balance sheet and the recording of assets and
liabilities at fair market value as of April 27, 1993 in
accordance with fresh start reporting.
During the first and second quarters of 1995, in connection
with negotiations with various lenders and lessors, Continental
ceased or reduced contractually required payments under various
agreements, which produced a significant number of events of
default under debt, capital lease and operating lease agreements.
Through agreements reached with the various lenders and lessors,
Continental has cured all of these events of default. The last
such agreement was put in place during the fourth quarter of
1995.
As of September 30, 1996, Continental had approximately
$865 million of cash and cash equivalents, including restricted
cash and cash equivalents of $70 million. Continental does not
have general lines of credit and has significant encumbered
assets.
Prior to the third quarter of 1996, Continental had firm
commitments with The Boeing Company ("Boeing") to take delivery
of 43 new jet aircraft during the years 1997 through 2002. During
the third quarter of 1996, Continental amended the terms of its
commitments with Boeing to take delivery of a total of 61 jet
aircraft during the years 1997 through 2003 with options for an
additional 23 aircraft. These amendments changed the aircraft mix
and timing of delivery of aircraft, in order to more closely
match Continental's anticipated future aircraft needs. Subsequent
to the third quarter of 1996, Continental exercised options with
respect to six such aircraft and in connection with such
exercise, was granted new options for six additional aircraft. In
addition, in October 1996, Continental placed an order with
Boeing for 60 firm 737-500 and 737-600 aircraft that will replace
older, less efficient Stage 2 aircraft between August 1997 and
December 1999, with options for 25 additional 737-600 aircraft.
The estimated aggregate cost of the Company's firm commitment
Boeing aircraft is approximately $4.3 billion. The Company
has commitments of approximately $1.4 billion of backstop
financing for its Boeing aircraft orders. Continental currently
plans to finance these new aircraft using enhanced equipment trust
certificates or similar financing, subject to availability and
market conditions. However, further financing will be needed to
satisfy the Company's capital commitments for new Boeing
aircraft, and for other aircraft related expenditures such as
spare parts, simulators (including for the Company's new Embraer
(EMB) 145 aircraft described below) and related items. There can
be no assurance that sufficient financing will be available for
all aircraft and other capital expenditures not covered by firm
financing commitments. The Company has also entered into
9
agreements or letters of intent with several outside parties to
lease five DC-10-30 aircraft and one Boeing 747 aircraft and to
purchase three DC-10-30 aircraft and two MD-82 aircraft. As of
December 31, 1996, five of these aircraft have been delivered,
and the remaining six aircraft are expected to be delivered
during the period from January 1, 1997 through mid-year 1997.
Also, in October 1996, the Company secured a credit facility in
the amount of $74.5 million in relation to the purchase of the
three DC10-30 and two MD-82 aircraft.
In addition, in March 1996, Express entered into an
agreement to acquire eight new ATR aircraft, all of which have
been delivered. The aircraft are being accounted for as operating
leases. In conjunction with the acquisition, the Company returned
eight older ATR aircraft accounted for as capital leases. In
September 1996, Express announced an order for 25 firm EMB-145
50-seat regional jets with options for an additional 175
aircraft. Express plans to sublease these aircraft from
Continental. Neither Express nor Continental will have any
obligation to take aircraft that are not financed by a third
party and leased to Continental. Express took delivery of the
first two of the firm aircraft in late December 1996 and will
take delivery of the remaining 23 firm aircraft during the period
from January 1, 1997 through the third quarter of 1998 and
currently anticipates deploying its new regional jet aircraft
initially in Cleveland. Continental expects to account for all of
these aircraft as operating leases.
For 1996, Continental expects to incur cash expenditures
under operating leases relating to aircraft of approximately $568
million, compared with $521 million for 1995, and approximately
$229 million relating to facilities and other rentals,
approximately the same amount as for 1995. In addition,
Continental has capital requirements relating to compliance with
regulations that are discussed below. See "Regulatory Matters".
In July 1996, CMI consummated a $320 million secured term
loan financing with a group of banks and other financial
institutions. The loan was made in two tranches--a $180 million
five-year amortizing term loan with a floating interest rate of
LIBOR plus 175 basis points and a $140 million seven-year
amortization extended loan. The loan is secured by the stock of
CMI and substantially all its unencumbered assets, consisting
primarily of CMI's route authorities, and is guaranteed by
Continental and Air Micronesia, Inc. ("AMI"), the parent company
of CMI which is 91% owned by Continental.
CMI used the net proceeds of the financing to prepay $160
million in principal amount of indebtedness to General Electric
and its subsidiaries (together, "GE") and to pay transaction
costs, and Continental used the $136 million in proceeds received
by it as an indirect dividend from CMI, together with
approximately $28 million in cash on hand, to prepay
approximately $164 million in principal amount of indebtedness to
GE. The bank financing does not contain any restrictive covenants
at the Continental parent level, and none of the assets of
Continental Airlines, Inc. (other than its stock in AMI) is
pledged in connection with the new financing.
The bank financing contains significant financial covenants
relating to CMI, including maintenance of a minimum fixed charge
coverage ratio, a minimum consolidated net worth and minimum
liquidity, and covenants restricting CMI's leverage, its
incurrence of certain indebtedness and its pledge of assets. The
financial covenants also limit the ability of CMI to pay
dividends to Continental.
Also in July 1996, the Company announced its plan to expand
its gates and related facilities in Terminal B as well as planned
improvements at Terminal C, at Continental's Houston
Intercontinental Airport hub. The expansion is expected to cost
approximately $150 million, which the Company expects will be
funded principally by the issuance of tax-exempt debt by the
applicable municipal authority. In connection therewith, the
Company expects to enter into long-term leases (or amendments to
existing leases) with the applicable municipal authority
containing rental payments sufficient to service the related
tax-exempt debt.
Aircraft Fuel
Since fuel costs constitute a significant portion of
Continental's operating costs (approximately 12.5% for the year
ended December 31, 1995 and 12.8% for the nine months ended
September 30, 1996), significant changes in fuel costs would
materially affect the Company's operating results. Jet fuel
prices have recently increased significantly. Fuel prices
continue to be susceptible to international events, and the
Company cannot predict near or longer-term fuel prices. The
Company has entered into petroleum option contracts to provide
10
some short-term protection (currently approximately three months)
against a sharp increase in jet fuel prices. In the event of a
fuel supply shortage resulting from a disruption of oil imports
or otherwise, higher fuel prices or curtailment of scheduled
service could result.
Certain Tax Matters
The Company's United States federal income tax return
for the year ended December 31, 1995 reflects net operating
loss carryforwards ("NOLs") of $2.6 billion, subject to audit
by the Internal Revenue Service, of which $1.3 billion are
not subject to the limitations of Section 382 of the Internal
Revenue Code ("Section 382"). As a result, the Company will
not pay United States federal income taxes (other than
alternative minimum tax) until it has recorded approximately
an additional $1.3 billion of taxable income following
December 31, 1995. For financial reporting purposes,
Continental began accruing tax expense on its income statement
during the second quarter of 1996.
Section 382 imposes limitations on a corporation's ability
to utilize NOLs if it experiences an "ownership change". In
general terms, an ownership change may result from transactions
increasing the ownership of certain stockholders in the stock of
a corporation by more than 50 percentage points over a three-year
period. In the event that an ownership change should occur,
utilization of Continental's NOLs would be subject to an annual
limitation under Section 382 determined by multiplying the value
of the Company's stock (including both common and preferred
stock) at the time of the ownership change by the applicable
long-term tax exempt rate (which was 5.75% for December 1996).
Unused annual limitations may be carried over to later years, and
the amount of the limitation may under certain circumstances be
increased by the built-in gains in assets held by the Company at
the time of the change that are recognized in the five-year
period after the change. Under current conditions, if an
ownership change were to occur, Continental's NOL utilization
would be limited to approximately $110 million per year.
In connection with the Company's reorganization under
Chapter 11 of the U.S. bankruptcy code effective April 27, 1993,
(the "Reorganization") and the recording of assets and liabilities
at fair market value under the American Institute of Certified
Public Accountants' Statement of Position 90-7 "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"), the Company recorded a deferred tax liability at
April 27, 1993, net of the amount of the Company's estimated
realizable NOLs as required by Statement of Financial Accounting
Standards No. 109--"Accounting for Income Taxes". Realization of
a substantial portion of the Company's NOLs will require the
completion during the five-year period following the Reorganization
of transactions resulting in recognition of built-in gains for
federal income tax purposes. The Company has consummated one such
transaction, which had the effect of realizing approximately 40%
of the built-in gains required to be realized over the five-year
period, and currently intends to consummate one or more additional
transactions. If the Company were to determine in the future that
not all such transactions will be completed, an adjustment to the
net deferred tax liability of up to $116 million would be charged
to income in the period such determination was made.
CMI
CMI's operating profit margins have consistently been
greater than the Company's margins overall. In addition to its
non-stop service between Honolulu and Tokyo, CMI's operations
focus on the neighboring islands of Guam and Saipan, resort
destinations that cater primarily to Japanese travelers. Because
the majority of CMI's traffic originates in Japan, its results of
operations are substantially affected by the Japanese economy and
changes in the value of the yen as compared to the dollar.
Appreciation of the yen against the dollar during 1993 and 1994
increased CMI's profitability and a decline of the yen against
the dollar may be expected to decrease it. The yen has declined
against the dollar during 1996 as compared to 1995. To reduce the
potential negative impact on CMI's dollar earnings, CMI, from
time to time, purchases average rate options as a hedge against a
portion of its expected net yen cash flow position. Any
significant and sustained decrease in traffic or yields to and
from Japan could materially adversely affect Continental's
consolidated profitability.
11
No Limitation on Incurrence of Debt or Limitation on Liens
The Indenture that governs the New Notes does not contain
any provisions that would limit the ability of the Company or its
subsidiaries to incur indebtedness or to encumber assets. As a
result, claims of secured creditors of the Company and its
subsidiaries will have priority over claims of holders of the New
Notes with respect to such secured assets. In addition, claims of
holders of the New Notes will be effectively subordinate to the
claims of creditors of the Company's subsidiaries, including
trade creditors.
Risk Factors Relating to the Airline Industry
Industry Conditions and Competition
The airline industry is highly competitive and susceptible
to price discounting. The Company has in the past both responded
to discounting actions taken by other carriers and initiated
significant discounting actions itself. Continental's competitors
include carriers with substantially greater financial resources,
as well as smaller carriers with lower cost structures. Airline
profit levels are highly sensitive to, and during recent years
have been severely impacted by, changes in fuel costs, fare
levels (or "average yield") and passenger demand. Passenger
demand and yields have been adversely affected by, among other
things, the general state of the economy, international events
and actions taken by carriers with respect to fares. From 1990 to
1993, these factors contributed to the domestic airline
industry's incurring unprecedented losses. Although fare levels
have increased recently, fuel costs have also increased
significantly. In addition, significant industry-wide discounts
could be reimplemented at any time, and the introduction of
broadly available, deeply discounted fares by a major United
States airline would likely result in lower yields for the entire
industry and could have a material adverse effect on the
Company's operating results.
The airline industry has consolidated in past years as a
result of mergers and liquidations and may further consolidate in
the future. Among other effects, such consolidation has allowed
certain of Continental's major competitors to expand (in
particular) their international operations and increase their
market strength. Furthermore, the emergence in recent years of
several new carriers, typically with low cost structures, has
further increased the competitive pressures on the major United
States airlines. In many cases, the new entrants have initiated
or triggered price discounting. Aircraft, skilled labor and gates
at most airports continue to be readily available to start-up
carriers. Although management believes that Continental is better
able than some of its major competitors to compete with fares
offered by start-up carriers because of its lower cost structure,
competition with new carriers or other low cost competitors on
Continental's routes could negatively impact Continental's
operating results.
Regulatory Matters
In the last several years, the United States Federal
Aviation Administration (the "FAA") has issued a number of
maintenance directives and other regulations relating to, among
other things, retirement of older aircraft, collision avoidance
systems, airborne windshear avoidance systems, noise abatement,
commuter aircraft safety and increased inspections and
maintenance procedures to be conducted on older aircraft. The
Company expects to continue incurring expenses for the purpose of
complying with the FAA's noise and aging aircraft regulations. In
addition, several airports have recently sought to increase
substantially the rates charged to airlines, and the ability of
airlines to contest such increases has been restricted by federal
legislation, U.S. Department of Transportation regulations and
judicial decisions.
Management believes that the Company benefited
significantly from the expiration of the aviation trust fund tax
(the "ticket tax") on December 31, 1995, although the amount of
any such benefit directly resulting from the expiration of the
ticket tax cannot precisely be determined. The ticket tax was
reinstated on August 27, 1996, and expired again on December 31,
1996. Management believes that the ticket tax will be reimposed
again in 1997 and that such reimposition will have a negative
impact on the Company. Nevertheless, the amount of the negative
impact directly resulting from the reimposition of the ticket tax
cannot be precisely determined.
12
Additional laws and regulations have been proposed from
time to time that could significantly increase the cost of
airline operations by imposing additional requirements or
restrictions on operations. Laws and regulations have also been
considered that would prohibit or restrict the ownership and/or
transfer of airline routes or takeoff and landing slots. Also,
the availability of international routes to United States
carriers is regulated by treaties and related agreements between
the United States and foreign governments that are amendable.
Continental cannot predict what laws and regulations may be
adopted or their impact, but there can be no assurance that laws
or regulations currently proposed or enacted in the future will
not adversely affect the Company.
Risk Factors Relating to the Notes and the Offering
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes
for New Notes pursuant to the Exchange Offer will continue to be
subject to the restrictions on transfer of such Old Notes as set
forth in the legend thereon as a consequence of the issuance of
the Old Notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. To
the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Notes could be adversely affected.
Absence of a Public Market for the New Notes
Prior to the Exchange Offer, there has been no public
market for the New Notes. If such a market were to develop,
the New Notes could trade at prices that may be higher or
lower than their principal amount. Continental does not
intend to apply for listing of the New Notes on any securities
exchange or for quotation of the New Notes on The Nasdaq Stock
Market's National Market or otherwise. Continental has been
advised by the Initial Purchaser that it currently intends to
make a market in the New Notes, as permitted by applicable laws
and regulations, after consummation of the Offering. The Initial
Purchaser is not obligated, however, to make a market in the Old
Notes or the New Notes, and any such market making activity may
be discontinued at any time without notice at the sole discretion
of the Initial Purchaser. There can be no assurance as to the
liquidity of the public market for the New Notes or that any
active public market for the New Notes will develop or continue.
If an active public market does not develop or continue, the
market price and liquidity of the New Notes may be adversely
affected.
13
RECENT DEVELOPMENTS
Stock Split
On June 26, 1996, the Board of Directors of the Company
declared a two-for-one stock split (the "Stock Split") pursuant
to which (a) one share of the Company's Class A common stock, par
value $.01 per share ("Class A common stock"), was issued for
each share of Class A common stock outstanding on July 2, 1996
and (b) one share of the Company's Class B common stock, par
value $.01 per share ("Class B common stock"), was issued for
each share of Class B common stock outstanding on such date.
Shares issuable pursuant to the Stock Split were distributed on
or about July 16, 1996.
Corporate Governance
On June 26, 1996, at the Company's annual meeting of
stockholders, the Company's stockholders approved changes
proposed by the Company to its Certificate of Incorporation,
which, together with amendments to the Company's Bylaws
previously approved by the Company's Board of Directors
(collectively, the "Amendments"), generally eliminated special
classes of directors (except for the right of Air Partners, L.P.
("Air Partners") to elect one-third of the directors in certain
circumstances as described below) and supermajority provisions,
and made a variety of other modifications aimed at streamlining
the Company's corporate governance structure. The Amendments, as
a whole, reflect the reduction of the equity interest of Air
Canada in the Company, as described below, and the decision of
the former directors designated by Air Canada not to stand for
reelection, along with the expiration of various provisions of
the Company's Certificate of Incorporation and Bylaws
specifically included at the time of the Company's reorganization
in 1993.
The Amendments also provide that, at any time after January
1, 1997, shares of Class A common stock may be freely converted
into an equal number of shares of Class B common stock. Under
agreements put in place at the time of the Company's
reorganization in 1993, and designed in part to ensure compliance
with the foreign ownership limitations applicable to United
States air carriers, in light of the substantial stake in the
Company then held by Air Canada, holders of Class A common stock
were not permitted under the Company's Certificate of
Incorporation to convert their shares to Class B common stock. In
recent periods, the market price of Class A common stock has
generally been below the market price of Class B common stock,
which the Company believes is attributable in part to the reduced
liquidity present in the trading market for Class A common stock.
A number of Class A common stockholders requested that the
Company provide for free convertibility of Class A common stock
into Class B common stock, and in light of the reduction of Air
Canada's equity stake, the Company determined that the
restriction was no longer necessary. Any such conversion would
effectively increase the relative voting power of those Class A
common stockholders who do not convert.
On April 19, 1996, the Company's Board of Directors
approved certain agreements (the "Agreements") with its two major
stockholders, Air Canada and Air Partners. The Agreements contain
a variety of arrangements intended generally to reflect the
intention that Air Canada expressed to the Company of divesting
its investment in Continental during December 1996 or early 1997,
subject to market conditions. Air Canada indicated to the Company
that its original investment in Continental had become less
central to Air Canada in light of other initiatives it has
undertaken--particularly expansion within Canada and exploitation
of the 1995 Open Skies agreement to expand Air Canada's own
flights into the U.S. Because of these initiatives, Air Canada
determined it appropriate to redeploy the funds invested in the
Company into other uses in Air Canada's business. Air Canada sold
its remaining shares of the Company's common stock on January 9,
1997. The Agreements also reflect the distribution by Air Partners,
effective March 29, 1996, to its investors (the "AP Investors") of
all of the shares of the Class B common stock held by Air Partners
and the desire of some of the AP Investors to realize the increase
in value of their investment in the Company by selling all or a
portion of their shares of Class B common stock.
Among other things, the Agreements required the Company to
file a registration statement under the Securities Act to permit
the sale by Air Canada of 4,400,000 shares of Class B common
stock held by it and the sale by certain of the AP Investors of
an aggregate of 3,460,480 such shares pursuant to an underwritten
public offering arranged by the Company (the "Secondary
Offering"). The Secondary Offering was completed on May 14, 1996.
14
The Agreements provided for the following additional steps to be
taken in connection with the completion of the Secondary
Offering:
o in light of its reduced equity stake in the Company, Air
Canada was no longer entitled to designate nominees to the
Board of Directors of the Company, caused the four
then-present or former members of the Air Canada board who
served as directors of Continental to decline nomination
for reelection as directors and converted all of its Class
A common stock to Class B common stock;
o Air Canada and Air Partners entered into a number of
agreements restricting, prior to December 16, 1996, further
disposition of the common stock of the Company held by
either of them; and
o each of the existing agreements among the parties was
modified in a number of respects to reflect, among other
matters, the changing composition of the respective equity
interests of the parties.
The Company and Air Canada also entered into a memorandum
of understanding, subject to the fulfillment of certain
conditions, regarding modifications to certain of the Company's
existing "synergy" agreements with Air Canada, which covered
items such as maintenance and ground facilities, and resolved
certain outstanding commercial issues under the agreements. In
May 1996, the Company entered into an agreement with Air Partners
for the cash sale by Air Partners to the Company from time to
time at Air Partners' election for the one-year period beginning
August 15, 1996, of up to an aggregate of $50 million in
intrinsic value (then-current Class B common stock price minus
exercise price) of Air Partners' warrants to purchase Class B
common stock ("Class B Warrants"). In connection with this
agreement, the Company reclassified $50 million from common
equity to redeemable warrants. On November 21, 1996, Air Partners
exercised its right, and the Company subsequently purchased, for
$50 million, warrants to purchase 2,614,379 shares of Class B
common stock.
Air Partners currently holds approximately 9.6% of the
common equity interests and 39.0% of the general voting power of
the Company. If all of the warrants held by Air Partners were
exercised, approximately 19.7% of the common equity and 51.0% of
the general voting power would be held by Air Partners.
Because certain aspects of the Agreements raised issues
under the change in control provisions of certain of the
Company's employment agreements and employee benefit plans, these
agreements and plans were modified to provide a revised change of
control definition that the Company believes is appropriate in
light of the prospective changes to its equity ownership
structure. In connection with the modifications, payments were
made to certain employees, benefits were granted to certain
employees and options equal to 10% of the amount of the options
previously granted to each optionee were granted (subject to
certain conditions) to substantially all employees holding
outstanding options.
In December 1996, Ben Baldanza, Executive Vice President-
Marketing of the Company, resigned.
USE OF PROCEEDS
There will be no cash proceeds payable to Continental from
the issuance of the New Notes pursuant to the Exchange Offer. The
proceeds from the sale of the Old Notes were used for general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following information for the years ended December 31,
1991 and 1992 and for the period January 1, 1993 through April
27, 1993 relates to Continental's predecessor, Holdings.
Information for the period April 28, 1993 through December 31,
1993, for the years ended December 31, 1994 and 1995 and for the
nine months ended September 30, 1995 and 1996 relates to
Continental. The information as to Continental has not been
prepared on a consistent basis of accounting with the information
as to Holdings due to Continental's adoption, effective April 27,
1993, of fresh start reporting in accordance with SOP 90-7.
15
For the years ended December 31, 1991 and 1992, for the
periods January 1, 1993 through April 27, 1993 and April 28, 1993
through December 31, 1993, and for the year ended December 31, 1994,
earnings were not sufficient to cover fixed charges. Additional
earnings of $316 million, $131 million, $979 million, $60 million
and $667 million, respectively, would have been required to
achieve ratios of earnings to fixed charges of 1.0. The ratio of
earnings to fixed charges for the year ended December 31, 1995
was 1.53. The ratio of earning to fixed charges for the nine
months ended September 30, 1995 and September 30, 1996 was
1.61 and 1.88, respectively, and for the three months ended
September 30, 1995 and September 30, 1996 was 1.81 and 1.36,
respectively. For purposes of calculating this ratio, earnings
consist of earnings before taxes and minority interest plus
interest expense (net of capitalized interest), the portion
of rental expense representative of interest expense and
amortization of previously capitalized interest. Fixed charges
consist of interest expense and the portion of rental expense
representative of interest expense.
SELECTED FINANCIAL DATA
The following tables set forth selected financial data of
(i) the Company for the three and nine months ended September 30,
1996 and 1995, the years ended December 31, 1995 and 1994 and the
period from April 28, 1993 through December 31, 1993 and (ii)
Holdings for the period from January 1, 1993 through April 27,
1993. The consolidated financial data of both the Company, for
the years ended December 31, 1995 and 1994 and for the period
from April 28, 1993 through December 31, 1993, and Holdings, for
the period from January 1, 1993 through April 27, 1993, are
derived from their respective audited consolidated financial
statements. On April 27, 1993, in connection with the
Reorganization, the Company adopted fresh start reporting in
accordance with SOP 90-7. A vertical black line is shown in the
table below to separate Continental's post-reorganized
consolidated financial data from the pre-reorganized consolidated
financial data of Holdings since they have not been prepared on a
consistent basis of accounting. The consolidated financial data
of the Company for the three and nine months ended September 30,
1996 and 1995 are derived from its unaudited consolidated
financial statements, which include all adjustments (consisting
solely of normal recurring accruals) that the Company considers
necessary for the presentation of the financial position and
results of operations for these periods. Operating results for
the three and nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1996. See the Company's consolidated
financial statements, including the notes thereto, incorporated
by reference herein.
16
Three Months Ended
September 30,
--------------------
1996 1995
------ -----
(unaudited)
Statement of Operations
Data:
Operating Revenue:
Passenger............ $1,546 $1,402
Cargo, mail and other 125 113
------ ------
1,671 1,515
------ ------
Operating Expenses:
Wages, salaries and
related costs...... 397 356
Aircraft fuel........ 201 171
Commissions.......... 135 126
Aircraft rentals..... 128 122
Maintenance,
materials and
repairs............ 118 119
Other rentals and 89 87
landing fees.........
Depreciation and 63 63
amortization.........
Nonrecurring
charge(1)............ 128 --
Other................ 335 318
------ ------
1,594 1,362
------ ------
Operating Income (Loss).. 77 153
------ ------
Nonoperating Income
(Expense):
Interest expense..... (40) (52)
Interest capitalized. 1 1
Interest income...... 11 9
Reorganization -- --
items, net...........
Other, net........... (2) 2
------ ------
(30) (40)
------ ------
Income (Loss) before
Income Taxes,
Minority Interest
and Extraordinary
Gain or Loss......... 47 113
Net Income (Loss)........ $ 18 $ 111
Earnings (Loss) per
Common and Common
Equivalent Share(6).. $ 0.25 $ 1.54
======= =======
Earnings (Loss) per
Common Share
Assuming Full $ 0.25 $ 1.34
Dilution(6).......... ======= =======
Nine Months Ended Year Ended
September 30, December 31,
-------------------- --------------------
1996 1995 1995 1994
------ ----- ------ -----
(In millions of dollars, except per share data)
(unaudited)
Statement of Operations
Data:
Operating Revenue:
Passenger............ $4,440 $3,997 $5,302 $5,036
Cargo, mail and other 359 405 523 634
------ ------ ------ ------
4,799 4,402 5,825 5,670
------ ------ ------ ------
Operating Expenses:
Wages, salaries and
related costs...... 1,139 1,079 1,432(2) 1,532
Aircraft fuel........ 558 508 681 741
Commissions.......... 398 376 489 439
Aircraft rentals..... 379 370 497 433
Maintenance,
materials and
repairs............ 349 317 429 495
Other rentals and 258 271 356 392
landing fees.........
Depreciation and 195 192 253 258
amortization.........
Nonrecurring 128 -- -- --
charge(1)............
Other................ 969 998 1,303 1,391
------ ------ ------ ------
4,373 4,111 5,440 5,681
------ ------ ------ ------
Operating Income (Loss).. 426 291 385 (11)
------ ------ ------ -------
Nonoperating Income
(Expense):
Interest expense..... (129) (162) (213) (241)
Interest capitalized. 2 5 6 17
Interest income...... 30 22 31 23
Reorganization
items, net........... -- -- -- --
Other, net........... 19 110(3) 101(3) (439)(4)
------ -------- -------- --------
(78) (25) (75) (640)
------ ------ ------ ------
Income (Loss) before
Income Taxes,
Minority Interest
and Extraordinary
Gain or Loss......... 348 266 310 (651)
Net Income (Loss)........ $ 272 $ 183 $ 224 $ (613)
Earnings (Loss) per
Common and Common
Equivalent Share(6).. $ 4.16 $ 2.93 $ 3.60 $(11.88)
======= ======= ======= =======
Earnings (Loss) per
Common Share
Assuming Full $ 3.50 $ 2.68 $ 3.15 $(11.88)
Dilution(6).......... ======= ======= ======= ========
Period from
Reorganization Period from
(April 28, 1993) January 1, 1993
through December through
31, 1993 April 27, 1993
---------------- ---------------
Statement of Operations
Data:
Operating Revenue:
Passenger............ $3,493 $1,622
Cargo, mail and other 417 235
------ ------
3,910 1,857
------ ------
Operating Expenses:
Wages, salaries and
related costs...... 1,000 502
Aircraft fuel........ 540 272
Commissions.......... 378 175
Aircraft rentals..... 261 154
Maintenance,
materials and
repairs............ 363 184
Other rentals and
landing fees......... 258 120
Depreciation and 162 77
amortization.........
Nonrecurring
charge(1)............ -- --
Other................ 853 487
------ ------
3,815 1,971
------ ------
Operating Income (Loss).. 95 (114)
------ ------
Nonoperating Income
(Expense):
Interest expense..... (165) (52)
Interest capitalized. 8 2
Interest income...... 14 --
Reorganization -- (818)
items, net...........
Other, net........... (4) 5
------ ------
(147) (863)
------ ------
Income (Loss) before
Income Taxes,
Minority Interest (52) (977)
and Extraordinary
Gain or Loss.........
Net Income (Loss)........ $ (39) $2,640(5)
Earnings (Loss) per
Common and Common
Equivalent Share(6).. $ (1.17) N.M.(7)
======= =======
Earnings (Loss) per
Common Share
Assuming Full $ (1.17) N.M.(7)
Dilution(6).......... ======== =======
As of As of
September December
30, 31,
1996 1995
--------- --------
(In millions of dollars)
(unaudited)
Balance Sheet Data:
Assets:
Cash and Cash Equivalents, including restricted
Cash and Cash Equivalents of $70 and $144,
respectively(8)................................. $ 865 $ 747
Other Current Assets.............................. 638 568
Total Property and Equipment, Net................. 1,510 1,461
Routes, Gates and Slots, Net...................... 1,488 1,531
Other Assets, Net................................. 482 514
--------- ---------
Total Assets.................................. $ 4,983 4,821
========= =========
Liabilities and Stockholders' Equity:
Current Liabilities............................... $ 2,129 $ 1,984
Long-term Debt and Capital Leases................. 1,391 1,658
Deferred Credits and Other Long-term Liabilities.. 593 564
Minority Interest................................. 16 27
Continental-Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust holding
solely Convertible Subordinated Debentures(9)... 242 242
Redeemable Warrants(10)........................... 50 --
Redeemable Preferred Stock........................ 45 41
Common Stockholders' Equity....................... 517 305
--------- ---------
Total Liabilities and Stockholders' Equity..... $ 4,983 $ 4,821
========= =========
(1) Includes a $128 million nonrecurring charge recorded in the
third quarter of 1996 associated primarily with the decision
to accelerate the replacement of its DC-9-30, DC-10-10,
727-200, 737-100, and 737-200 aircraft. In connection with its
decision to accelerate the replacement of such aircraft, the
Company wrote down its Stage 2 aircraft inventory that is not
expected to be consumed through operations to its estimated
fair value, and recorded a provision for costs associated with
the return of leased aircraft at the end of their respective
lease terms.
(2) Includes a $20 million cash payment in 1995 by the Company in
connection with a 24-month collective bargaining agreement
entered into by the Company and the Independent Association of
Continental Pilots.
(3) Includes gain on a series of transactions whereby the Company
and its subsidiary, Continental CRS Interests, Inc.
("Continental CRS"), formerly known as System One Information
Management, Inc. ("System One") and AMADEUS, a European
computerized reservation system transferred a substantial
portion of System One's assets, as well as certain
liabilities, to System One Management, L.L.C. ("LLC"), a newly
formed limited liability company.
(4) Includes a provision of $447 million recorded in the fourth
quarter of 1994 associated with the planned early retirement
of certain aircraft and closed or underutilized airport and
maintenance facilities and other assets.
(5) Reflects a $3.6 billion extraordinary gain from
extinguishment of debt.
(6) On June 26, 1996, the Company announced the Stock Split with
respect to the Company's Class A common stock and Class B
common stock. Accordingly, the earnings per share information
has been restated to give effect to the Stock Split.
(7) Historical per share data for Holdings is not meaningful
since the Company has been recapitalized and has adopted fresh
start reporting as of April 27, 1993.
(8) Restricted cash and cash equivalents agreements relate
primarily to workers' compensation claims and the terms of
certain other agreements. In addition, CMI is required by loan
agreements to maintain certain minimum consolidated net worth
and liquidity levels, which effectively restrict the amount of
cash available to Continental from CMI.
(9) The sole assets of the Trust are Convertible Subordinated
Debentures, with an aggregate principal amount of $250
million, which bear interest at the rate of 8 1/2% per annum
and mature on December 1, 2020. Upon repayment, the
Continental-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust will be mandatorily redeemed.
(10) The Company agreed to repurchase up to $50 million of
intrinsic value (the then-current Class B common stock price
minus exercise price) of Class B Warrants at the election of
Air Partners during the one-year period commencing August 15,
1996. On November 21, 1996, Air Partners exercised its right,
and the Company subsequently purchased, for $50 million,
warrants to purchase 2,614,379 shares of Class B common stock.
17
THE EXCHANGE OFFER
The summary herein of certain provisions of the
Registration Rights Agreement does not purport to be complete and
reference is made to the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration
Statement and a copy of which is available as set forth under the
heading "Available Information".
Terms of the Exchange Offer
General
In connection with the issuance of the Old Notes pursuant
to a Purchase Agreement dated as of December 4, 1996, between the
Company and the Initial Purchaser, the Initial Purchaser and its
respective assignees became entitled to the benefits of the
Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is
obligated to use its best efforts to (i) file the Registration
Statement of which this Prospectus is a part for a registered
exchange offer with respect to an issue of new Notes identical in
all material respects to the Old Notes within 45 calendar days
after December 10, 1996, the date the Old Notes were issued (the
"Issue Date"), (ii) cause the Registration Statement to become
effective within 60 days after filing of the Registration
Statement, (iii) cause the Registration Statement to remain
effective until the closing of the Exchange Offer and (iv) to
consummate the Exchange Offer within 30 calendar days after the
date the Registration Statement is declared effective by the
Commission. The Company will keep the Exchange Offer open for a
period of not less than 30 calendar days. The Exchange Offer
being made hereby, if commenced and consummated within the time
periods described in this paragraph, will satisfy those
requirements under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in
this Prospectus and in the Letter of Transmittal (which together
constitute the Exchange Offer), all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date will be accepted for exchange. New Notes of the
same class will be issued in exchange for an equal principal
amount of outstanding Old Notes accepted in the Exchange Offer.
Old Notes may be tendered only in integral multiples of $1,000.
This Prospectus, together with the Letter of Transmittal, is
being sent to all registered holders as of ,
1997. The Exchange Offer is not conditioned upon any minimum
principal amount of Old Notes being tendered for exchange.
However, the obligation to accept Old Notes for exchange pursuant
to the Exchange Offer is subject to certain conditions as set
forth herein under "--Conditions".
Old Notes shall be deemed to have been accepted as validly
tendered when, as and if the Trustee has given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering holders of Old Notes for the purposes
of receiving the New Notes and delivering New Notes to such
holders.
Based on interpretations by the staff of the Commission, as
set forth in no-action letters issued to third parties, including
the Exchange Offer No-Action Letters, the Company believes that
the New Notes issued pursuant to the Exchange Offer may be
offered for resale, resold or otherwise transferred by holders
thereof (other than a broker-dealer who acquires such New Notes
directly from the Company for resale pursuant to Rule 144A under
the Securities Act or any other available exemption under the
Securities Act or any holder that is an "affiliate" of the
Company as defined in Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes
are acquired in the ordinary course of such holders' business and
such holders are not engaged in, and do not intend to engage in,
18
a distribution of such New Notes and have no arrangement with any
person to participate in a distribution of such New Notes. By
tendering the Old Notes in exchange for New Notes, each holder,
other than a broker-dealer, will represent to the Company that:
(i) it is not an affiliate of the Company (as defined in Rule
405 under the Securities Act) or a broker-dealer tendering Old Notes
acquired directly from the Company for its own account; (ii) any
New Notes to be received by it will be acquired in the ordinary
course of its business; and (iii) it is not engaged in, and does
not intend to engage in, a distribution of such New Notes and has
no arrangement or understanding to participate in a distribution
of the New Notes. If a holder of Old Notes is engaged in or
intends to engage in a distribution of the New Notes or has any
arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable interpretations of the
staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each
Participating Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection
with resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business 180 days
after the Expiration Date, it will make this Prospectus available
to any Participating Broker-Dealer for use in connection with any
such resale. See "Plan of Distribution".
In the event that any changes in law or the applicable
interpretations of the staff of the Commission do not permit
Continental to effect the Exchange Offer, if the Registration
Statement is not declared effective within 60 calendar days after
the filing thereof with the Commission under certain
circumstances or the Exchange Offer is not consummated within 30
days after the effectiveness of the Registration Statement under
certain other circumstances, at the request of a holder not
eligible to participate in the Exchange Offer or under certain
other circumstances described in the Registration Rights
Agreement, Continental will, in lieu of effecting the
registration of the New Notes pursuant to the Registration
Statement and at no cost to the holders of Old Notes, (a) as
promptly as practicable, file with the Commission a shelf
registration statement (the "Shelf Registration Statement")
covering resales of the Old Notes, (b) use its best efforts to
cause the Shelf Registration Statement to be declared effective
under the Securities Act by the 105th calendar day after the
Issue Date and (c) use its best efforts to keep effective the
Shelf Registration Statement for a period of three years after
its effective date (or for such shorter period as shall end when
all of the Old Notes covered by the Shelf Registration Statement
have been sold pursuant thereto or may be freely sold pursuant to
Rule 144 under the Securities Act).
In the event that neither the consummation of the Exchange
Offer nor the declaration by the Commission of the Shelf
Registration Statement to be effective (each a "Registration
Event") occurs on or prior to the 105th calendar day following
the Issue Date, the interest rate per annum borne by the Old Notes
will be increased by 0.50% effective from and including such
105th day to, but excluding, the date on which a Registration
Event occurs. In the event that the Shelf Registration Statement
ceases to be effective at any time, during the period the Company
is required to keep such Shelf Registration Statement effective,
for more than 60 days, whether or not consecutive, during any
12-month period, the interest rate per annum borne by the Old
Notes will be increased by 0.50% from the 61st day of the
applicable 12-month period such Shelf Registration Statement
ceases to be effective until such time as the Shelf Registration
Statement again becomes effective.
Upon consummation of the Exchange Offer, subject to certain
exceptions, holders of Old Notes who do not exchange their Old
Notes for New Notes in the Exchange Offer will no longer be
entitled to registration rights and will not be able to offer or
sell their Old Notes, unless such Old Notes are subsequently
registered under the Securities Act (which, subject to certain
limited exceptions, the Company will have no obligation to do),
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. See "Risk Factors--Risk Factors Relating to the
Notes--Consequences of Failure to Exchange".
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean , 1997
(30 calendar days following the commencement of the Exchange
Offer), unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall
mean the latest date to which the Exchange Offer is extended.
Notwithstanding any extension of the Exchange Offer, if the
Exchange Offer is not consummated by , 1997,
the interest rate borne by the Notes is subject to increase. See
"--General".
19
In order to extend the Expiration Date, the Company will
notify the Exchange Agent of any extension by oral or written
notice and will notify the holders of the Old Notes by means of
a press release or other public announcement prior to 9:00 A.M.,
New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the
Company is extending the Exchange Offer for a specified period of
time.
The Company reserves the right (i) to delay acceptance of
any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer and not permit acceptance of Old Notes not
previously accepted if any of the conditions set forth herein
under "-- Conditions" shall have occurred and shall not have been
waived by the Company, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner deemed by it
to be advantageous to the holders of the Old Notes. Any such
delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice
thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a
manner reasonably calculated to inform the holders of the Old
Notes of such amendment.
Without limiting the manner in which the Company may choose
to make public announcement of any delay, extension, amendment or
termination of the Exchange Offer, the Company shall have no
obligation to publish, advertise, or otherwise communicate any
such public announcement, other than by making a timely release
to an appropriate news agency.
Interest on the New Notes
The New Notes will accrue interest at the applicable per
annum rate from the last date on which interest was paid on the
Old Notes surrendered in exchange therefor or, if no interest has
been paid, from the Issue Date of such Old Notes. Interest on the
New Notes is payable on June 15 and December 15 of each year
commencing June 15, 1997.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, together with any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the holder
must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION
AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL
OR OLD NOTES SHOULD BE SENT TO THE COMPANY. Delivery of all
documents must be made to the Exchange Agent at its address set
forth below. Holders may also request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect
such tender for such holders.
The tender by a holder of Old Notes will constitute an
agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
Only a holder of Old Notes may tender such Old Notes in the
Exchange Offer. The term "holder" with respect to the Exchange
Offer means any person in whose name Old Notes are registered on
the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder.
20
Any beneficial owner whose Old Notes are registered in the
name of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender should contact such registered
holder promptly and instruct such registered holder to tender on
his behalf. If such beneficial owner wishes to tender on his own
behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes,
either make appropriate arrangements to register ownership of the
Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by any member
firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial
bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the
meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution") unless the Old Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other
than the registered holder of any Old Notes listed therein, such
Old Notes must be endorsed or accompanied by bond powers and a
proxy which authorizes such person to tender the Old Notes on
behalf of the registered holder, in each case as the name of the
registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond
powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons
should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority
to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility
(including time of receipt) and withdrawal of the tendered Old
Notes will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company
reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes which, if accepted, would, in
the opinion of counsel for the Company, be unlawful. The Company
also reserves the absolute right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Neither
the Company, the Exchange Agent nor any other person shall be
under any duty to give notification of defects or irregularities
with respect to tenders of Old Notes, nor shall any of them incur
any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived
will be returned without cost to such holder by the Exchange
Agent to the tendering holders of Old Notes, unless otherwise
provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Company reserves the right in its sole
discretion, subject to the provisions of the Indenture, to (i)
purchase or make offers for any Old Notes that remain outstanding
subsequent to the Expiration Date or, as set forth under "--
Conditions", to terminate the Exchange Offer in accordance with
the terms of the Registration Rights Agreement and (ii) to the
extent permitted by applicable law, purchase Old Notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, all Old Notes properly tendered will be accepted,
promptly after the Expiration Date, and the New Notes will be
issued promptly after acceptance of the Old Notes. See "--
Conditions" below. For purposes of the Exchange Offer, Old Notes
shall be deemed to have been accepted as validly tendered for
21
exchange when, as and if the Company has given oral or written
notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Exchange Agent of certificates
for such Old Notes or a timely Book-Entry Confirmation of such
Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered
Old Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Old Notes are
submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or nonexchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in
the case of Old Notes tendered by book-entry transfer procedures
described below, such nonexchanged Old Notes will be credited to
an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of
the Exchange Offer.
Book-Entry Transfer
The Exchange Agent will make a request to establish an
account with respect to the Old Notes at the Book-Entry Transfer
Facility for purposes of the Exchange Offer within two business
days after the date of this Prospectus. Any financial institution
that is a participant in the Book-Entry Transfer Facility's
systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures
for transfer. However, although delivery of Old Notes may be
effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof with any
required signature guarantees and any other required documents
must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under "-- Exchange
Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
Guaranteed Delivery Procedures
If a registered holder of the Old Notes desires to tender
such Old Notes, and the Old Notes are not immediately available,
or time will not permit such holder's Old Notes or other required
documents to reach the Exchange Agent before the Expiration Date,
or the procedures for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the
name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the
certificates for all physically tendered Old Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may
be, and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal of Tenders
Tenders of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent prior to 5:00
p.m., New York City time on the Expiration Date at one of the
addresses set forth below under "--Exchange Agent". Any such
notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes)
22
and (where certificates for Old Notes have been transmitted)
specify the name in which such Old Notes are registered, if
different from that of the withdrawing holder. If certificates
for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates,
the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution
unless such holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name
and number of the account at the Book-Entry Transfer Facility to
be credited with the withdrawn Old Notes and otherwise comply
with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of
such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old
Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof
without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be
credited to an account maintained with such Book-Entry Transfer
Facility for the Old Notes) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by
following one of the procedures described under "-- Procedures
for Tendering" and "--Book-Entry Transfer" above at any time on
or prior to the Expiration Date.
Conditions
Notwithstanding any other term of the Exchange Offer, Old
Notes will not be required to be accepted for exchange, nor will
New Notes be issued in exchange for any Old Notes, and the
Company may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Old Notes, if because of any
change in law, or applicable interpretations thereof by the
Commission, the Company determines that it is not permitted to
effect the Exchange Offer. The Company has no obligation to, and
will not knowingly, permit acceptance of tenders of Old Notes
from affiliates of the Company (within the meaning of Rule 405
under the Securities Act) or from any other holder or holders who
are not eligible to participate in the Exchange Offer under
applicable law or interpretations thereof by the Commission, or
if the New Notes to be received by such holder or holders of Old
Notes in the Exchange Offer, upon receipt, will not be tradable
by such holder without restriction under the Securities Act and
the Exchange Act and without material restrictions under the
"blue sky" or securities laws of substantially all of the states
of the United States.
Exchange Agent
Texas Commerce Bank National Association has been
appointed as Exchange Agent for the Exchange Offer. Questions and
requests for assistance and requests for additional copies of
this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail: By Hand:
Texas Commerce Bank National Texas Commerce Bank National
Association Association
P.O. Box 2320 One Main Place
Dallas, Texas 75221-2320 1201 Main Street, 18th Floor
Attention: Frank Ivins, Registered Dallas, Texas 75202
Bond Events Attention: Frank Ivins, Registered
Bond Events
Telephone: (214) 672-5678
Facsimile: (214) 672-5746
23
Fees and Expenses
The expenses of soliciting tenders pursuant to the
Exchange Offer will be borne by the Company. The principal
solicitation for tenders pursuant to the Exchange Offer is being
made by mail; however, additional solicitations may be made by
telegraph, telephone, telecopy or in person by officers and
regular employees of the Company.
The Company will not make any payments to brokers,
dealers or other persons soliciting acceptances of the Exchange
Offer. The Company, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of
the Prospectus and related documents to the beneficial owners of
the Old Notes, and in handling or forwarding tenders for
exchange.
The expenses to be incurred in connection with the
Exchange Offer will be paid by the Company, including fees and
expenses of the Exchange Agent and Trustee and accounting, legal,
printing and related fees and expenses.
The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange
Offer. If, however, certificates representing New Notes or Old
Notes for principal amounts not tendered or accepted for exchange
are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered holder of the Old
Notes tendered, or if tendered Old Notes are registered in the
name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by
the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
24
DESCRIPTION OF THE NOTES
The Old Notes were issued, and the New Notes offered hereby
will be issued under an indenture dated as of December 10, 1996
(the "Indenture") between the Company, as issuer, and Texas
Commerce Bank National Association, as trustee (the "Trustee"), a
copy of the form of which is available from the Trustee. The
following summary of the material provisions of the Indenture
does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the Indenture,
including the definitions of certain terms contained therein. For
definitions of certain capitalized terms used in the following
summary, see "Certain Definitions".
General
The Notes will mature on December 15, 2001, will be limited
to $250 million aggregate principal amount and will be unsecured
senior obligations of the Company. Each Note will bear interest
at the rate set forth on the cover page hereof from its date of
issue or from the most recent interest payment date to which
interest has been paid or duly provided for, payable on June 15,
1997 and semiannually thereafter on June 15 and December 15 in
each year until the principal thereof is paid or duly provided
for to the Person in whose name the Note (or any predecessor
Note) is registered at the close of business on the June 1 or
December 1 next preceding such interest payment date. Interest
will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
Principal of, premium, if any, and interest on the Notes
will be payable, and the Notes will be exchangeable and
transferable, at the office or agency of the Company in The City
of New York maintained for such purposes (which initially will be
the Trustee); provided, however, that, at the option of the
Company, interest may be paid by check mailed to the address of
the Person entitled thereto as such address shall appear on the
security register. The Notes will be issued only in registered
form without coupons and only in denominations of $1,000 and any
integral multiple thereof. No service charge will be made for any
registration of transfer or exchange or redemption of Notes, but
the Company may require payment in certain circumstances of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.
Ranking
The Notes will be unsecured senior obligations of the
Company, and the indebtedness evidenced by the Notes will rank
pari passu in right of payment with all other existing and future
unsubordinated obligations of the Company and senior in right of
payment to all existing and future obligations of the Company
expressly subordinated in right of payment to the Notes. The
Notes will be effectively subordinated to secured senior
obligations of the Company with respect to the assets of the
Company securing such obligations. The Notes also will be
effectively subordinated to all existing and future liabilities
of the Company's subsidiaries. As of September 30, 1996 on a pro
forma basis after giving effect to the issuance of the Old Notes
and the use of the proceeds therefrom, consolidated indebtedness
of the Company would have been approximately $1.9 billion,
(including approximately $481 million of indebtedness of the
Company's subsidiaries), of which approximately $1.3 billion
would have been secured senior indebtedness, approximately $346
million would have been unsecured senior indebtedness (including
$250 million of the Notes) and $230 million would have been
subordinated indebtedness. The Company also has outstanding
4,997,000 8 1/2% Convertible Trust Originated Preferred
Securities (liquidation amount $50 per Preferred Security). The
Indenture contains no limitations on the ability of the Company
and its Restricted Subsidiaries to incur additional indebtedness
in the future or to mortgage or pledge any of its assets. As of
the date hereof, all of the Company's subsidiaries are Restricted
Subsidiaries.
Sinking Fund
The Notes will not be entitled to the benefit of any
sinking fund.
Redemption
The Notes will be redeemable at the option of the Company,
in whole or from time to time in part, at any time, on not less
than 20 nor more than 60 days' prior notice at a redemption price
equal to the sum of (i) the principal amount thereof, plus (ii)
25
accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on relevant record
dates to receive interest due on an interest payment date), plus
(iii) a Make-Whole Premium, if any.
"Make-Whole Premium" will be defined, with respect to a
Note, as the excess, if any, of (A) the present value of the
required interest and principal payments due on such Note on or
after the redemption date, computed using a discount rate equal
to the Treasury Rate plus 100 basis points, over (B) the sum of
the then outstanding principal amount of such Note plus the
accrued and unpaid interest paid on the redemption date.
"Treasury Rate" will be defined as the yield to maturity at
the time of computation of United States Treasury securities with
a constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to the date
fixed for prepayment (or, if such Statistical Release is no
longer published, any publicly available source of similar market
data)) most nearly equal to the then remaining Average Life of
the Notes; provided, however, that if the Average Life of the
Notes is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which
such yields are given, except that if the Average Life of the
Notes is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
If less than all the Notes are to be redeemed, the
particular Notes to be redeemed will be selected not more than 60
days prior to the redemption date by the Trustee by such method
as the Trustee will deem fair and appropriate; provided, however,
that no such partial redemption will reduce the principal amount
of a Note not redeemed to less than $1,000. Notice of redemption
will be mailed, first-class postage prepaid, at least 20 but not
more than 60 days before the redemption date to each holder of
Notes to be redeemed at its registered address. On and after the
redemption date, interest will cease to accrue on Notes or
portions thereof called for redemption and accepted for payment.
Certain Covenants
The Indenture will contain, among others, the following
covenants:
Limitation on Restricted Payments. (a) The Company will not,
and will not permit any Restricted Subsidiary to, directly or
indirectly, take any of the following actions:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Capital Stock
of the Company (other than dividends or distributions payable
solely in shares of its Qualified Capital Stock or in
options, warrants or other rights to acquire such shares of
Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, any shares of Capital Stock of
the Company or any Subsidiary, or any options, warrants or
other rights to acquire such shares of Capital Stock, held by
Persons other than the Company or a Restricted Subsidiary;
(iii) make any Investment in any Unrestricted Subsidiary or
any Affiliate (other than a Restricted Subsidiary); or
(iv) declare or pay any dividend or distribution on any
Capital Stock of any Restricted Subsidiary to any Person
(other than (a) to the Company or any of its wholly owned
Restricted Subsidiaries or (b) to all holders of Capital
Stock of any Restricted Subsidiary on a pro rata basis)
(such payments or other actions described in (but not excluded
from) clauses (i) through (iv) being collectively referred to as
"Restricted Payments"), unless (1) at the time of, and
immediately after giving effect to, the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors of the Company as
of the date thereof, whose determination shall be conclusive and
26
evidenced by a Board Resolution), no Default or Event of Default
shall have occurred and be continuing, (2) after giving effect to
the proposed Restricted Payment, the Company would have not less
than $500 million of Specified Cash and Cash Equivalents which
are not required to be shown as restricted on a balance sheet of
the Company and its Subsidiaries prepared in accordance with
GAAP, and (3) the aggregate amount of all Restricted Payments
declared or made after the date of the Indenture shall not exceed
the sum of:
(A) 50% (or, if the Notes at the time of the proposed
Restricted Payment are rated investment grade by both Moody's
and S&P, 75%) of the Consolidated Adjusted Net Income of the
Company accrued on a cumulative basis during the period
beginning on the first day of the Company's first fiscal
quarter commencing prior to the date of the Indenture and
ending on the last day of the Company's last fiscal quarter
ending prior to the date of such proposed Restricted Payment
(or, if such aggregate cumulative Consolidated Adjusted Net
Income shall be a loss, minus 100% of such loss), plus
(B) the aggregate net proceeds (including the fair value
of non-cash proceeds, as determined by the Board of
Directors) received after the date of the Indenture by the
Company as capital contributions or from the issuance or sale
of shares of Qualified Capital Stock of the Company
(including upon the exercise of options, warrants or rights)
or warrants, options or rights to purchase shares of
Qualified Capital Stock of the Company, plus
(C) the aggregate principal amount of debt securities
(including, without limitation, the debt securities issued in
connection with the 8 1/2% Convertible Trust Originated
Preferred Securities) or liquidation value of Redeemable
Capital Stock, whenever issued, that have been converted into
or exchanged for Qualified Capital Stock of the Company after
the date of the Indenture, to the extent of the net proceeds
received upon the sale or other issuance of such securities
(including the fair value of non-cash proceeds, as determined
by the Board of Directors), together with the aggregate net
cash proceeds received by the Company at the time of such
conversion or exchange, plus
(D) $250 million.
(b) Notwithstanding paragraph (a) above, the Company and
any Restricted Subsidiary may take the following actions so long
as (with respect to clauses (ii) through (v) below) no Default or
Event of Default shall have occurred and be continuing and so
long as after giving effect to the actions referred to in clause
(iii) or (iv) below, the Company would have not less than $500
million of Specified Cash and Cash Equivalents which are not
required to be shown as restricted on a balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP:
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at such date of declaration
the payment of such dividend would have complied with the
provisions of paragraph (a) above and such payment will be
deemed to have been paid on such date of declaration for
purposes of the calculation required by paragraph (a) above;
(ii) the purchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the
Company in exchange for, or out of the net cash proceeds of a
substantially concurrent issuance and sale of, shares of
Qualified Capital Stock of the Company;
(iii) the declaration and payment of any dividend or
distribution to holders of the Capital Stock of the Company
consisting of cash or property relating to, or securities
deriving their value from the Company's interest in, AMADEUS,
assets relating to the Company's reservation services
business or assets relating to the Company's catering service
business;
(iv) the purchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the
Company owned by Air Canada or any Affiliate thereof as of
the date of the Indenture; and
27
(v) the purchase, redemption or other acquisition or
retirement for value of shares of Capital Stock of the
Company issued, or any payments, awards or grants, pursuant
to employee benefits plans or agreements in the ordinary
course of business and consistent with past practice.
The actions described in this paragraph (b) shall be
Restricted Payments that shall be permitted to be taken in
accordance with this paragraph (b) but the actions described in
clause (i) and (ii) of this paragraph (b) shall reduce the amount
that would otherwise be available for Restricted Payments under
clause (3) of paragraph (a) above.
Limitation on Transactions with Affiliates. The Company
will not, and will not permit any Restricted Subsidiary to, enter
into or suffer to exist, directly or indirectly, any transaction
or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or
services) with, or for the benefit of, any Affiliate of the
Company or of any Restricted Subsidiary (other than the Company,
a wholly owned Restricted Subsidiary or Air Micronesia, Inc. or
Continental Micronesia Inc., so long as they are Restricted
Subsidiaries) unless (i) such transaction or series of
transactions are on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than
those that could have been obtained in an arm's-length
transaction with third parties that are not Affiliates, and (ii)
with respect to any transaction or series of related transactions
involving aggregate consideration equal to or greater than $25
million, the Company delivers an Officers' Certificate to the
Trustee certifying that such transaction or series of
transactions complies with clause (i) above and that either such
transaction or series of related transactions has been approved
by a majority of the Disinterested Directors of the Company or
the Company has obtained a written opinion from a nationally
recognized investment banking firm to the effect that such
transaction or series of related transactions is fair to the
Company or its Restricted Subsidiary, as the case may be, from a
financial point of view; provided, however, that this covenant
will not restrict (1) the Company from paying reasonable and
customary compensation and fees (including securities of the
Company) to directors of the Company or any Restricted Subsidiary
who are not employees of the Company or any Restricted Subsidiary
or from paying amounts or making awards or grants of cash,
securities or otherwise pursuant to employee benefit plans or
agreements in the ordinary course of business and consistent with
past practice, (2) transactions pursuant to tax sharing
agreements between the Company and any other Person with which
the Company is part of a consolidated group for tax purposes, and
(3) any Restricted Payment not prohibited by the "Limitation on
Restricted Payments" covenant.
Under Delaware law, the Disinterested Directors' fiduciary
obligations require that they act in good faith in a manner which
they reasonably believe to be in the best interests of the
Company and its stockholders, which may not necessarily be the
same as those of holders of the Notes.
Purchase of Notes upon a Change of Control Triggering
Event. If a Change of Control Triggering Event shall occur at any
time, then each holder of Notes will have the right to require
that the Company purchase such holder's Notes, in whole or in
part in integral multiples of $1,000, at a purchase price (the
"Change of Control Purchase Price") in cash in an amount equal to
101% of the principal amount thereof, plus accrued interest, if
any, to the date of purchase (the "Change of Control Purchase
Date"), pursuant to the offer described below (the "Change of
Control Offer") and the other procedures set forth in the
Indenture.
Within 15 days following any Change of Control Triggering
Event, the Company shall notify the Trustee thereof and give
written notice of such Change of Control Triggering Event to each
holder of Notes by first-class mail, postage prepaid, at the
address of such holder appearing in the security register,
stating, among other things, (i) the purchase price and the
purchase date, which shall be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed,
or such later date as is necessary to comply with requirements
under the Exchange Act or any applicable securities laws or
regulations; (ii) that any Note not tendered will continue to
accrue interest; (iii) that, unless the Company defaults in the
payment of the purchase price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date; and (iv)
certain other procedures that a holder of Notes must follow to
accept a Change of Control Offer or to withdraw such acceptance.
28
If a Change of Control Offer is made, there can be no
assurance that the Company will have available funds sufficient
to pay the Change of Control Purchase Price for all of the Notes
that might be delivered by holders of the Notes seeking to accept
the Change of Control Offer. The failure of the Company to make
or consummate the Change of Control Offer or pay the Change of
Control Purchase Price when due, as more particularly described
under "Events of Default", would result in an Event of Default
and would give the Trustee and the holders of the Notes the
rights described under "Events of Default".
One of the events that constitutes a Change of Control
under the Indenture is the disposition of "all or substantially
all" of the Company's assets. This term has not been interpreted
under New York law (which is the governing law of the Indenture)
to represent a specific quantitative test. As a consequence, in
the event holders of the Notes elect to require the Company to
purchase the Notes and the Company contests such election, there
can be no assurance as to how a court interpreting New York law
would interpret the phrase.
The existence of a holder's right to require the Company to
purchase such holder's Notes upon a Change of Control Triggering
Event may deter a third party from acquiring the Company in a
transaction that constitutes a Change of Control.
The definition of "Change of Control Triggering Event" in
the Indenture is limited in scope. The provisions of the
Indenture may not afford holders of Notes the right to require
the Company to purchase such Notes in the event of a highly
leveraged transaction or certain transactions with the Company's
management or its affiliates, including a reorganization,
restructuring, merger or similar transaction involving the
Company (including, in certain circumstances, an acquisition of
the Company by management or its affiliates) that may adversely
affect holders of the Notes, if such transaction is not a
transaction defined as a Change of Control Triggering Event.
The Company will comply with the applicable tender offer
rules, including Rule l4e-l under the Exchange Act, and any other
applicable securities laws and regulations in connection with a
Change of Control Offer.
The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than restrictions existing under Indebtedness
as in effect on the date of the Indenture) that would materially
impair the ability of the Company to make a Change of Control
Offer to purchase the Notes or, if such Change of Control Offer
is made, to pay for the Notes tendered for purchase.
Limitation on Disposition of Proceeds of Asset Sales. To
the extent that the Net Cash Proceeds of Asset Sales in any
12-month period exceed 15% of Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of the
Company and its Restricted Subsidiaries has been prepared in
conformity with GAAP), the Company will, within 12 months after
the date such Net Cash Proceeds so exceeded 15% of Consolidated
Net Tangible Assets (such amount being defined as "Excess
Proceeds"), apply all of such Excess Proceeds to one or any
combination of the following: (i) the permanent repayment of
unsubordinated Indebtedness of the Company or any Indebtedness of
any Restricted Subsidiary, (ii) the investment (or the commitment
to invest followed by the actual investment within 12 months from
such commitment date) in property or assets used in a business
related to that of the Company or any Restricted Subsidiary on
the date of the Indenture (or in a Person engaged in such a
business), or (iii) the offer to purchase Notes (an "Excess
Proceeds Offer") in an aggregate principal amount not less than
$25 million under procedures similar to those described under
"Purchase of Notes upon a Change of Control Triggering Event", at
a price equal to the principal amount thereof plus accrued
interest to the date of purchase.
Reports. The Company will file on a timely basis with the
Commission, to the extent such filings are accepted by the
Commission and whether or not the Company has a class of
securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be
required to file if it were subject to Section 13 or 15 of the
Exchange Act. The Company will also be required (a) to file with
the Trustee copies of such reports and documents within 15 days
after the date on which the Company files such reports and
documents with the Commission or the date on which the Company
would be required to file such reports and documents if the
Company were so required, and (b) if filing such reports and
29
documents with the Commission is not accepted by the Commission
or is prohibited under the Exchange Act, to supply at the
Company's cost copies of such reports and documents to any holder
of Notes promptly upon written request.
Consolidation, Merger and Sale of Assets
The Company will not, in a single transaction or through a
series of transactions, consolidate with or merge with or into
any other Person, or permit any Person to consolidate with or
merge into the Company, or sell, assign, convey, transfer, lease
or otherwise dispose of all or substantially all of its
properties and assets to any other Person or Persons if such
transaction or series of transactions, in the aggregate, would
result in the sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the properties
and assets of the Company and its Restricted Subsidiaries on a
consolidated basis to any other Person or group of affiliated
Persons, unless at the time and immediately after giving effect
thereto (i) either (a) the Company will be the continuing
corporation or (b) the Person (if other than the Company) formed
by such consolidation or into which the Company is merged or the
Person that acquires by sale, assignment, conveyance, transfer,
lease or disposition all or substantially all the properties and
assets of the Company and its Restricted Subsidiaries on a
consolidated basis (the "Surviving Entity") (1) will be a
corporation duly organized and validly existing under the laws of
the United States of America, any state thereof or the District
of Columbia and (2) will expressly assume, by a supplemental
indenture in form satisfactory to the Trustee, the Company's
obligation for the due and punctual payment of the principal of,
premium, if any, and interest on all the Notes and the
performance and observance of every covenant of the Indenture on
the part of the Company to be performed or observed; (ii)
immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating any obligation of the Company or any Restricted
Subsidiary incurred in connection with or as a result of such
transaction or series of transactions as having been incurred at
the time of such transaction), no Default or Event of Default
will have occurred and be continuing; and (iii) immediately after
giving effect to such transaction or series of transactions on a
pro forma basis (and treating any obligation of the Company or
any Restricted Subsidiary incurred in connection with or as a
result of such transaction or series of transactions as having
been incurred at the time of such transaction), the Consolidated
Net Worth of the Company (or of the Surviving Entity if the
Company is not the continuing obligor under the Indenture) is
equal to or greater than the Consolidated Net Worth of the
Company immediately prior to such transaction or series of
transactions.
In connection with any such consolidation, merger, sale,
assignment, conveyance, transfer, lease or other disposition, the
Company or the Surviving Entity shall have delivered to the
Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate demonstrating compliance with
clause (iii) above and an Opinion of Counsel, each stating that
such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture, comply with the requirements of the
Indenture and that all conditions precedent therein provided for
relating to such transaction have been complied with.
Events of Default
The following will be "Events of Default" under the
Indenture:
(i) default in the payment of any interest on any Note
when it becomes due and payable and continuance of such
default for a period of 30 days;
(ii) default in the payment of the principal of or
premium, if any, on any Note at its Maturity (upon
acceleration, optional redemption, required purchase or
otherwise);
(iii) default in the performance, or breach, of the
"Consolidation, Merger and Sale of Assets" covenant;
(iv) default in the performance, or breach, of any
covenant of the Company contained in the Indenture (other
than a default in the performance, or breach, of a covenant
which is specifically dealt with in clauses (i), (ii) or
(iii) above) and continuance of such default or breach for a
period of 60 days after written notice shall have been given
30
to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal
amount of the Notes then outstanding;
(v) Indebtedness of the Company or any Restricted
Subsidiary together aggregating $75 million or more shall
have been accelerated or otherwise declared due and payable,
or required to be prepaid or repurchased (other than by
regularly scheduled required prepayment prior to the stated
maturity thereof), and such Indebtedness has not been
discharged, and such acceleration has not been annulled,
within 30 days;
(vi) one or more final judgments or orders shall be
rendered against the Company or any Restricted Subsidiary for
the payment of money, the portion thereof not covered by
insurance either individually or in the aggregate shall be in
excess of $75 million, such judgments or orders shall not be
discharged and there shall have been a period of 30
consecutive days during which a stay of enforcement of such
judgments or orders, by reason of a pending appeal or
otherwise, was not in effect; and
(vii) the occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the Company or
any Significant Restricted Subsidiary.
If an Event of Default (other than as specified in clause
(vii) above) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the
Notes then outstanding, by written notice to the Company (and to
the Trustee if such notice is given by the holders), may, and the
Trustee upon the written request of such holders shall, declare
the principal of, premium, if any, and accrued interest on all of
the outstanding Notes immediately due and payable, and upon any
such declaration all such amounts payable in respect of the Notes
shall become immediately due and payable. If an Event of Default
specified in clause (vii) above occurs and is continuing, then
the principal of, premium, if any, and accrued interest on all of
the outstanding Notes shall ipso facto become and be immediately
due and payable without any declaration or other act on the part
of the Trustee or any holder of Notes.
At any time after a declaration of acceleration under the
Indenture, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the outstanding Notes,
by written notice to the Company and the Trustee, may rescind
such declaration and its consequences if (a) the Company has paid
or deposited with the Trustee a sum sufficient to pay (i) all
overdue interest on all Notes, (ii) all unpaid principal of and
premium, if any, on any outstanding Notes that has become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Notes, (iii) to the extent that
payment of such interest is lawful, interest upon overdue
interest and overdue principal at the rate borne by the Notes,
(iv) all sums paid or advanced by the Trustee under the Indenture
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and (b) all
Events of Default, other than the non-payment of amounts of
principal of, premium, if any, or interest on the Notes that has
become due solely by such declaration of acceleration, have been
cured or waived. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
The holders of not less than a majority in aggregate
principal amount of the outstanding Notes may, on behalf of the
holders of all the Notes, waive any past defaults under the
Indenture, except a default in the payment of the principal of,
premium, if any, or interest on any Note, or in respect of a
covenant or provision which under the Indenture cannot be
modified or amended without the consent of the holder of each
Note outstanding.
If a Default or an Event of Default occurs and is
continuing and is known to the Trustee, the Trustee will mail to
each holder of the Notes notice of the Default or Event of
Default within 30 days after the occurrence thereof. Except in
the case of a Default or an Event of Default in payment of
principal of, premium, if any, or interest on any Notes, the
Trustee may withhold the notice to the holders of such Notes if a
committee of its trust officers in good faith determines that
withholding the notice is in the interests of the holders of the
Notes.
The Company is required to furnish to the Trustee annual
and quarterly statements as to the performance by the Company of
its obligations under the Indenture and as to any default in such
performance. The Company is also required to notify the Trustee
31
within five Business Days of actual knowledge by a Responsible
Officer of the Company of an Event of Default.
Defeasance or Covenant Defeasance of Indenture
The Company may, at its option and at any time, elect to
have the obligations of the Company upon the Notes discharged
with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Company will be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding
Notes and to have satisfied all of its other obligations under
such Notes and the Indenture insofar as such Notes are concerned
except for (i) the rights of holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any,
and interest on such Notes when such payments are due, (ii) the
Company's obligations to issue temporary Notes, register the
transfer or exchange of any Notes, replace mutilated, destroyed,
lost or stolen Notes, maintain an office or agency for payments
in respect of the Notes and segregate and hold such payments in
trust, (iii) the rights, powers, trusts, duties and immunities of
the Trustee and (iv) the defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with
respect to certain covenants set forth in the Indenture, and any
omission to comply with such obligations will not constitute a
Default or an Event of Default with respect to the Notes
("covenant defeasance").
In order to exercise either defeasance or covenant
defeasance, (i) the Company must irrevocably deposit or cause to
be deposited with the Trustee, as trust funds in trust,
specifically pledged as security for, and dedicated solely to,
the benefit of the holders of the Notes, cash in United States
dollars, U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay and discharge the
principal of, premium, if any, and interest on the outstanding
Notes on the Stated Maturity (or upon redemption, if applicable)
of such principal, premium, if any, or installment of interest;
(ii) no Default or Event of Default with respect to the Notes
will have occurred and be continuing on the date of such deposit
or, insofar as an event of bankruptcy under clause (vii) of
"Events of Default" above is concerned, at any time during the
period ending on the 91st day after the date of such deposit;
(iii) such defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under, the
Indenture or any material agreement or instrument to which the
Company is a party or by which it is bound; (iv) in the case of
defeasance, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that the Company has received from, or
there has been published by, the Internal Revenue Service a
ruling, or since December 4, 1996, there has been a change in
applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the
holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred; (v) in the
case of covenant defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the holders
of the Notes outstanding will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred; and
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the
defeasance or the covenant defeasance, as the case may be, have
been complied with.
Satisfaction and Discharge
The Indenture will cease to be of further effect (except as
to surviving rights of registration of transfer or exchange of
the Notes as expressly provided for in the Indenture) and the
Trustee, at the expense of the Company, will execute proper
instruments acknowledging satisfaction and discharge of the
Indenture when (a) either (i) all the Notes theretofore
authenticated and delivered (other than destroyed, lost or stolen
Notes which have been replaced or paid and Notes for whose
payment money has been deposited in trust with the Trustee or any
Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust as
provided for in the Indenture) have been delivered to the Trustee
for cancellation or (b) all Notes not theretofore delivered to
the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable at Stated Maturity within one year or
(z) are to be called for redemption within one year under
32
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company, and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust for such
purpose an amount sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and
interest on the Notes to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be; (ii) the Company
has paid or caused to be paid all sums payable under the
Indenture by the Company; and (iii) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided in the
Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
Modifications and Amendments
Modifications and amendments of the Indenture may be made
by a supplemental indenture entered into by the Company and the
Trustee with the consent of the holders of a majority in
aggregate outstanding principal amount of the Notes then
outstanding; provided, however, that no such modification or
amendment may, without the consent of the holder of each
outstanding Note affected thereby: (i) change the Stated Maturity
of the principal of, or any installment of interest on, any Note,
or reduce the principal amount thereof (or premium, if any) or
the rate of interest thereon or change the coin or currency in
which the principal of any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date);
(ii) amend, change or modify the obligation of the Company to
make and consummate an Excess Proceeds Offer with respect to any
Asset Sale in accordance with the "Limitation on Disposition of
Proceeds of Asset Sales" covenant or the obligation of the
Company to make and consummate a Change of Control Offer in the
event of a Change of Control Triggering Event in accordance with
the "Purchase of Notes upon a Change of Control Triggering Event"
covenant, including, in each case, amending, changing or
modifying any definition relating thereto; (iii) reduce the
percentage in principal amount of outstanding Notes, the consent
of whose holders is required for any such supplemental indenture
or the consent of whose holders is required for any waiver of
compliance with certain provisions of the Indenture; (iv) modify
any of the provisions relating to supplemental indentures
requiring the consent of holders or relating to the waiver of
past defaults or relating to the waiver of certain covenants,
except to increase the percentage of outstanding Notes required
for such actions or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of
the holder of each Note affected thereby; or (v) except as
otherwise permitted under the "Consolidation, Merger and Sale of
Assets" covenant, consent to the assignment or transfer by the
Company of any of its rights or obligations under the Indenture.
Notwithstanding the foregoing, without the consent of any
holder of the Notes, the Company and the Trustee may modify or
amend the Indenture: (a) to evidence the succession of another
Person to the Company or any other obligor on the Notes, and the
assumption by any such successor of the covenants of the Company
or such obligor in the Indenture and in the Notes in accordance
with the "Consolidation, Merger and Sale of Assets" covenant; (b)
to add to the covenants of the Company or any other obligor upon
the Notes for the benefit of the holders of the Notes or to
surrender any right or power conferred upon the Company or any
other obligor upon the Notes, as applicable, in the Indenture or
in the Notes; (c) to cure any ambiguity, or to correct or
supplement any provision in the Indenture or the Notes which may
be defective or inconsistent with any other provision in the
Indenture or the Notes or make any other provisions with respect
to matters or questions arising under the Indenture or the Notes;
provided that, in each case, such provisions shall not adversely
affect the interest of the holders of the Notes; (d) to comply
with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust
Indenture Act; (e) to add a guarantor of the Notes under the
Indenture; (f) to evidence and provide the acceptance of the
appointment of a successor Trustee under the Indenture; or (g) to
mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the holders of the Notes
as additional security for the payment and performance of the
Company's and any guarantor's obligations under the Indenture, in
any property, or assets, including any of which are required to
be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to the
Indenture or otherwise.
The holders of a majority in aggregate principal amount of
the Notes outstanding may waive compliance with certain
restrictive covenants and provisions of the Indenture.
33
The Trustee
The Indenture provides that, except during the continuance
of an Event of Default, the Trustee will perform only such duties
as are specifically set forth in the Indenture. If an Event of
Default has occurred and is continuing, the Trustee will exercise
such rights and powers vested in it under the Indenture and use
the same degree of care and skill in its exercise as a prudent
Person would exercise under the circumstances in the conduct of
such Person's own affairs.
The Indenture and, upon consummation of the Exchange Offer,
the provisions of the Trust Indenture Act of 1939, as amended,
incorporated by reference therein contain limitations on the
rights of the Trustee thereunder, should it become a creditor of
the Company, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such
claims, as security or otherwise. The Trustee is permitted to
engage in other transactions; provided, however, that if it
acquires any conflicting interest (as defined) it must eliminate
such conflict or resign. Governing Law
The Indenture and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York.
Upon consummation of the Exchange Offer, the Indenture will be
subject to the provisions of the Trust Indenture Act of 1939, as
amended, that are required to be part of the Indenture and will,
to the extent applicable, be governed by such provisions.
Certain Definitions
"Affiliate" means, with respect to any specified Person,
any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person. For the purposes of this definition, "control", when used
with respect to any specified Person, means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance,
transfer, lease or other disposition (collectively, a "transfer")
by the Company or any Restricted Subsidiary, directly or
indirectly, in one or a series of related transactions, of (a)
all or any Capital Stock of any Restricted Subsidiary; (b) all or
substantially all of the properties and assets of any operating
unit or business of the Company or its Restricted Subsidiaries;
or (c) any other properties or assets of the Company or any
Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "Asset
Sale" shall not include (i) any transfer of properties or assets
that is governed by the provisions of the Indenture described
under "Consolidation, Merger and Sale of Assets", (ii) sales or
other dispositions of inventory, receivables and other current
assets, (iii) sales or other dispositions of surplus equipment,
furniture or fixtures of the Company and Restricted Subsidiaries
in an aggregate amount not to exceed $20 million in any fiscal
year, (iv) sales/leasebacks of aircraft, engines and related
equipment, and (v) transactions referred to in clause (iii) of
paragraph (b) of the "Limitation on Restricted Payments"
covenant.
"Average Life" means, as of the date of determination with
respect to any Indebtedness, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years from the
date of determination to the date or dates of each successive
scheduled principal payment (including, without limitation, any
sinking fund requirements) of such Indebtedness multiplied by
(ii) the amount of each such principal payment by (b) the sum of
all such principal payments.
"Capital Stock" means, with respect to any Person, any and
all shares, interests, partnership interests, participations,
rights in or other equivalents (however designated) of such
Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether
now outstanding or issued after the date of the Indenture.
34
"Capitalized Lease Obligation" means any obligation of the
Company or a Restricted Subsidiary under a lease of (or other
agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for
the purpose of the Indenture, the amount of such obligation at
any date shall be the capitalized amount thereof at such date,
determined in accordance with GAAP.
"Change of Control" means the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than
Air Partners, L.P. or any Person which is in control (as defined
in the definition of "Affiliate") of Air Partners, L.P. as of the
date of the Indenture, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and l3d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of
all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company; (b) the Company
consolidates with, or merges with or into, another Person or
conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any
such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company
is converted into or exchanged for at least in part Voting Stock
(other than Redeemable Capital Stock) of the surviving or
transferee corporation, and (ii) the holders of the Voting Stock
of the Company immediately prior to such transaction own not less
than a majority of the Voting Stock of the surviving or
transferee corporation immediately after such transaction; or (c)
the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which
complies with the provisions described under "Consolidation,
Merger and Sale of Assets".
"Change of Control Triggering Event" means both the
occurrence of a Change of Control and a Rating Decline.
"Consolidated Adjusted Net Income" means, for any period,
the consolidated net income (or loss) of the Company and all
Restricted Subsidiaries for such period as determined in
accordance with GAAP, adjusted by excluding, without duplication,
(a) any net after-tax extraordinary gains or losses (less all
fees and expenses relating thereto), (b) any net after-tax gains
or losses (less all fees and expenses relating thereto)
attributable to asset dispositions other than in the ordinary
course of business, (c) the portion of net income (or loss) of
any Person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any
Restricted Subsidiary has an ownership interest, except to the
extent of the amount of dividends or other distributions actually
paid to the Company or any Restricted Subsidiary in cash
dividends or distributions during such period, (d) the net income
(or loss) of any Person combined with the Company or any
Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e)
the net income of any Restricted Subsidiary to the extent (but
only to the extent) that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at
the date of determination permitted, directly or indirectly, by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary
or its stockholders, (f) any net income (or loss) from any
Restricted Subsidiary that was an Unrestricted Subsidiary at any
time during such period other than any amounts actually received
from such Restricted Subsidiary, and (g) the cumulative effect of
changes in accounting principles mandated by the Financial
Accounting Standards Board or its successor subsequent to the
date of the Indenture.
"Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation
reserves), except to the extent resulting from write-ups of
capital assets (excluding write-ups in connection with accounting
for acquisition in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its
Restricted Subsidiaries (excluding intercompany items) and (ii)
all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles (it being
understood that routes, gates and slots shall not be considered
intangibles), all as set forth on the most recently available
consolidated balance sheet of the Company and its Restricted
Subsidiaries, prepared in conformity with GAAP.
35
"Consolidated Net Worth" means, at any date, the
stockholders' equity of the Company and its Restricted
Subsidiaries less the amount of such stockholders' equity
attributable to Redeemable Capital Stock or treasury stock of the
Company and any Restricted Subsidiary and the principal amount of
any promissory notes receivable from the sale of Capital Stock of
the Company or any Restricted Subsidiary, as determined on a
consolidated basis in accordance with GAAP.
"Currency Agreements" means any spot or forward foreign
exchange agreements and currency swap, currency option or other
similar financial agreements or arrangements entered into by the
Company or any of its Restricted Subsidiaries designed to protect
against or manage exposure to fluctuations in currency exchange
rates.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Disinterested Director" means, with respect to any
transaction or series of transactions in respect of which the
Board of Directors is required to deliver a resolution of the
Board of Directors under the Indenture, a member of the Board of
Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or
series of transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, as
applied from time to time by the Company in the preparation of
its consolidated financial statements.
"Guarantee" means, as applied to any obligation, (a) a
guarantee (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), direct or
indirect, in any manner, of any part or all of such obligation
and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation,
including, without limiting the foregoing, the payment of amounts
drawn down by letters of credit.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of
business, but including, without limitation, all obligations,
contingent or otherwise, of such Person in connection with any
letters of credit and acceptances issued under letter of credit
facilities, acceptance facilities or other similar facilities,
(b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness of
such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such Person, (e) all obligations
of such Person under or in respect of Interest Rate Agreements or
Currency Agreements, (f) all Indebtedness referred to in (but not
excluded from) the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon
or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness (the amount of such obligation being deemed to
be the lesser of the value of such property or asset or the
amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition of any
other Person and (h) all Redeemable Capital Stock of such Person
valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends. For
purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such
36
Redeemable Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer
of such Redeemable Capital Stock.
"Interest Rate Agreements" means any interest rate
protection agreements and other types of interest rate hedging
agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar agreements).
"Investment" means, with respect to any Person, any direct
or indirect advance, loan or other extension of credit or capital
contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for
the account or use of others), or any purchase, acquisition or
ownership by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness
issued or owned by, any other Person and all other items that
would be classified as investments on a balance sheet prepared in
accordance with GAAP, in each case measured as of the date such
Investment is made. In addition, the fair market value of the net
assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary
shall be deemed to be an "Investment" made by the Company in such
Unrestricted Subsidiary at such time. "Investments" shall exclude
extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices.
"Lien" means any mortgage, charge, pledge, lien (statutory
or otherwise), privilege, security interest, hypothecation,
assignment for security, claim, or preference or priority or
other encumbrance upon or with respect to any property of any
kind, real or personal, movable or immovable, now owned or
hereafter acquired. A Person shall be deemed to own subject to a
Lien any property which such Person has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Maturity" means, with respect to any Note, the date on
which any principal of such Note becomes due and payable as
therein or herein provided, whether at the Stated Maturity with
respect to such principal or by declaration of acceleration, call
for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale,
the proceeds thereof in the form of cash or cash equivalents
including payments in respect of deferred payment obligations
when received in the form of, or stock or other assets when
disposed for, cash or cash equivalents (except to the extent that
such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of (i) brokerage
commissions and other fees and expenses (including fees and
expenses of legal counsel and investment banks) related to such
Asset Sale, (ii) taxes payable in cash as a result of such Asset
Sale, (iii) payments made to retire Indebtedness where payment of
such Indebtedness is secured by the assets or properties the
subject of such Asset Sale, (iv) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary)
owning a beneficial interest in the assets subject to the Asset
Sale and (v) appropriate amounts to be provided by the Company or
any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Qualified Capital Stock" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.
"Rating Decline" means the occurrence of either of the
following on or within 90 days after the date (the "Base Date")
of public notice of the occurrence of a Change of Control or the
intention of a Person to effect a Change of Control (which period
shall be extended for so long as the rating of the Notes is under
37
publicly announced consideration for possible downgrade by either
Moody's or S&P): (a) in the event the Notes were rated by either
Moody's or S&P as investment grade on the Base Date, the rating
of the Notes by both such rating agencies shall be decreased to
below investment grade or the Notes shall cease to be rated; or
(b) in the event the Notes were rated by both Moody's and S&P as
below investment grade on the Base Date, the rating of the Notes
by either rating agency shall be decreased or the Notes shall
cease to be rated.
"Redeemable Capital Stock" means any class or series of
Capital Stock that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or by
contract or otherwise, is, or upon the happening of an event or
passage of time would be, required to be redeemed prior to the
final Stated Maturity of the Notes or is redeemable at the option
of the holder thereof at any time prior to such final Stated
Maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc. and its successors.
"Significant Restricted Subsidiary" means a Restricted
Subsidiary which is a significant subsidiary of the Company under
Section 1.02 (w) of Regulation S-X of the Commission promulgated
under the Securities Act.
"Specified Cash and Cash Equivalents" means, for purposes
of computing whether or not a proposed Restricted Payment may be
made, the sum of (a) the amount of cash and cash equivalents that
would have been shown on the balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with the GAAP as
of the tenth Business Day preceding the date of such proposed
Restricted Payment, plus (b) the amount of marketable securities
that would have been reflected on such balance sheet which had on
such Business Day a maturity of less than one year and which
would have qualified to be reflected on such balance sheet as
cash equivalents but for their maturity, minus (c) the amount of
all Restricted Payments made subsequent to such Business Day, but
not including the proposed Restricted Payment (the amount of any
Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company as of the date thereof, whose
determination shall be conclusive and evidenced by a Board
Resolution).
"Stated Maturity" means, when used with respect to any Note
or any installment of interest thereon, the date specified in
such Note as the fixed date on which the principal of such Note
or such installment of interest is due and payable, and, when
used with respect to any other Indebtedness, means the date
specified in the instrument governing such Indebtedness as the
fixed date on which the principal of such Indebtedness, or any
installment of interest thereon, is due and payable.
"Subsidiary" means any Person a majority of the equity
ownership or Voting Stock of which is at the time owned, directly
or indirectly, by the Company or by one or more other
Subsidiaries or by the Company and one or more other
Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Unrestricted Subsidiary" means (a) any Subsidiary that at
the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided
below) and (b) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors of the Company may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither the Company nor
any Restricted Subsidiary is directly or indirectly liable for
any Indebtedness of such Subsidiary, (ii) no default with respect
to any Indebtedness of such Subsidiary would permit (upon notice,
lapse of time or otherwise) any holder of any other Indebtedness
of the Company or any Restricted Subsidiary to declare a default
on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity, (iii) any
Investment in such Subsidiary made as a result of designating
such Subsidiary an Unrestricted Subsidiary will not violate the
provisions of the "Limitation on Restricted Payments" covenant,
(iv) neither the Company nor any Restricted Subsidiary has a
contract, agreement, arrangement, understanding or obligation of
any kind, whether written or oral, with such Subsidiary other
than those that might be obtained at the time from persons who
38
are not Affiliates of the Company, and (v) neither the Company
nor any Restricted Subsidiary has any obligation (1) to subscribe
for additional shares of Capital Stock or other equity interest
in such Subsidiary, or (2) to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to
achieve certain levels of operating results. Any such designation
by the Board of Directors of the Company shall be evidenced to
the Trustee by filing a board resolution with the Trustee giving
effect to such designation. The Board of Directors of the Company
may designate any Unrestricted Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such
designation, there would be no Default or Event of Default under
the Indenture.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of any Person
(irrespective of whether or not, at the time, stock of any other
class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
Exchange of Old Notes for New Notes
The following summary describes the principal U.S. federal
income tax consequences to Noteholders of the exchange of the Old
Notes for New Notes. This summary is intended to address the
beneficial owners of Notes that are citizens or residents of the
United States, corporations, partnerships or other entities
created or organized in or under the laws of the United States or
any State, or estates or trusts the income of which is subject to
U.S. federal income taxation regardless of its source that will
hold the New Notes as capital assets.
The exchange of Old Notes for New Notes (the "Exchange")
pursuant to the Exchange Offer will not be a taxable event for
U.S. federal income tax purposes. As a result, a holder of an Old
Note whose Old Note is accepted in an Exchange Offer will not
recognize gain on the Exchange. A tendering holder's tax basis in
the New Notes will be the same as such holder's tax basis in its
Old Notes. A tendering holder's holding period for the New Notes
received pursuant to the Exchange Offer will include its holding
period for the Old Notes surrendered therefor.
ALL HOLDERS OF OLD NOTES ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND
OF THE OWNERSHIP AND DISPOSITION OF NEW NOTES RECEIVED IN THE
EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
New Notes. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of
business 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In
addition, until such date, all broker-dealers effecting
transactions in the New Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of
New Notes by broker-dealers. New Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the
writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of
resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it
for its own account pursuant to the Exchange Offer and any broker
39
or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and
any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
Starting on the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has
agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the
Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the New Notes
(including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes and certain United States
Federal income taxation matters will be passed upon for
Continental by Cleary, Gottlieb, Steen & Hamilton, New York, New
York.
EXPERTS
The consolidated financial statements (including schedules)
of Continental Airlines, Inc. appearing in Continental Airlines,
Inc.'s Annual Report (Form 10-K) as of December 31, 1995 and
1994, and for the two years ended December 31, 1995 and the
period April 28, 1993 through December 31, 1993, and the
consolidated statements of operations, redeemable and
non-redeemable preferred stock and common stockholders' equity
and cash flows of Continental Airlines Holdings, Inc. for the
period January 1, 1993 through April 27, 1993, incorporated by
reference in this Prospectus have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference, in
reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
40
================================ =================================
No person has been authorized
to give any information or to
make any representations other
than those contained or Continental Airlines, Inc.
incorporated by reference in
this Prospectus and the Offer to Exchange
accompanying Letter of 9 1/2% Senior Notes due 2001,
Transmittal and, if given or
made, such information or which have been registered
representations must not be under the
relied upon as having been Securities Act of 1933, as
authorized by the Company or amended,
the Exchange Agent. Neither
this Prospectus nor the for any and all outstanding
accompanying Letter of 9 1/2% Senior Notes due 2001
Transmittal, or both together,
constitute an offer to sell or
the solicitation of an offer
to buy securities in any
jurisdiction to any person to
whom it is unlawful to make
such offer or solicitation.
Neither the delivery of this
Prospectus, nor the
accompanying Letter of
Transmittal, or both together,
nor any sale made hereunder
shall, under any circumstances,
create an implication that
there has been no change in
the affairs of the Company
since the date hereof or
thereof or that the information
contained herein is correct
at any time subsequent to the
date hereof or thereof.
TABLE OF CONTENTS
Page
Available Information........ 3
Incorporation of Certain
Documents PROSPECTUS
by Reference............ 3
Prospectus Summary........... 4
Risk Factors................. 9
Recent Developments.......... 14
Use of Proceeds.............. 15 January , 1997
Ratio of Earnings to Fixed
Charges...................... 15
Selected Financial Data...... 16
The Exchange Offer........... 18
Description of the New Notes. 25
Certain U.S. Federal Income
Tax Consequences........... 39
Plan of Distribution......... 39
Legal Matters................ 40
Experts...................... 40
================================ =================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation and Bylaws
provide that the Company will indemnify each of its directors and
officers to the full extent permitted by the laws of the State of
Delaware and may indemnify certain other persons as authorized by
the Delaware General Corporation Law (the "GCL"). Section 145 of
the GCL provides as follows:
"(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of this section, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of
this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections
(a) and (b). Such determination shall be made (1) by a majority
vote of the board of directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (3)
by the stockholders.
II-1
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of undertaking by or
on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section.
Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under this
section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent for such constituent corporation, or
is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under
any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses
(including attorneys' fees)."
The Certificate of Incorporation and Bylaws also limit the
personal liability of directors to the Company and its
stockholders for monetary damages resulting from certain breaches
of the directors' fiduciary duties. The bylaws of the Company
provide as follows:
"No Director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except for liability (i)
for any breach of the Director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
II-2
knowing violation of law, (iii) under Section 174 of the. . .
GCL, or (iv) for any transaction from which the Director derived
any improper personal benefit. If the GCL is amended to authorize
corporate action further eliminating or limiting the personal
liability of Directors, then the liability of Directors of the
Corporation shall be eliminated or limited to the full extent
permitted by the GCL, as so amended."
The Company maintains directors' and officers' liability
insurance.
Item 21. Exhibits.
Exhibit
Number Exhibit Description
- ------- -------------------
Exhibit 1.1 Purchase Agreement, dated as of December 4,
1996, between Continental Airlines, Inc. and
Lehman Brothers Inc., as the Initial Purchaser
Exhibit 4.1 Form of 9 1/2% Senior Notes due 2001 (included in
Exhibit 4.2)
Exhibit 4.2 Indenture, dated as of December 10, 1996,
between Continental Airlines, Inc. and Texas
Commerce Bank National Association, as Trustee,
relating to 9 1/2% Senior Notes due 2001
Exhibit 4.3 Registration Rights Agreement, dated as of
December 10, 1996, between Continental
Airlines, Inc. and Lehman Brothers Inc., as the
Initial Purchaser
Exhibit 5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton,
counsel for Continental Airlines, Inc.,
relating to the New Notes
Exhibit 12 Computation of Ratio of Earnings to Fixed
Charges
Exhibit 23.1 Consent of Ernst & Young LLP
Exhibit 23.2 Consent of Cleary, Gottlieb, Steen & Hamilton,
counsel for Continental Airlines, Inc.
(included in Exhibit 5.1)
Exhibit 24.1 Powers of Attorney
Exhibit 25.1 Statement of Eligibility of Texas Commerce Bank
National Association, as Trustee, relating to
Senior Debt Securities, on Form T-1
Exhibit 99.1 Form of Letter of Transmittal
Exhibit 99.2 Form of Notice of Guaranteed Delivery
Exhibit 99.3 Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
Exhibit 99.4 Form of Letter to Clients
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
II-3
(i) To include any prospectus required by Section
l0(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities
offered (if the total dollar value of securities
offered would not exceed that which was registered)
and any deviation from the low or high and of the
estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than
20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and
(1)(ii) shall not apply if the information required
to be included in a post-effective amendment by
those paragraphs is contained in periodic reports
filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plans
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant, pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by any such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether or not such indemnification is against public policy as
expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or
13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
II-4
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request.
The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule
424(b))(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-4 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Houston, State of Texas, on January , 1997.
CONTINENTAL AIRLINES, INC.
By: /s/ Michael P. Bonds
-------------------------------
Michael P. Bonds
Vice President
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated, on January , 1997.
Signature Title
* Chairman of the Board and Chief
- ------------------------------- Executive Officer (Principal
Gordon M. Bethune Executive Officer)
* Executive Vice President and Chief
- ------------------------------- Financial Officer
Lawrence W. Kellner (Principal Financial Officer)
Vice President and Controller
- ------------------------------- (Principal Accounting Officer)
Michael P. Bonds
Director
- -------------------------------
Thomas J. Barrack, Jr.
* Director
- -------------------------------
Lloyd M. Bentsen, Jr.
* Director
- -------------------------------
David Bonderman
* Director
- -------------------------------
Gregory D. Brenneman
* Director
- -------------------------------
Patrick Foley
* Director
- -------------------------------
Douglas H. McCorkindale
* Director
- -------------------------------
George G.C. Parker
* Director
- -------------------------------
Richard W. Pogue
* Director
- -------------------------------
William S. Price III
* Director
- -------------------------------
Donald L. Sturm
* Director
- -------------------------------
Karen Hastie Williams
* Director
- -------------------------------
Charles A. Yamarone
*By: /s/ Scott R. Peterson
-------------------------------
Scott R. Peterson,
Attorney-in-fact
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------- -------------------
Exhibit 1.1 Purchase Agreement, dated as of December 4,
1996, between Continental Airlines, Inc. and
Lehman Brothers Inc., as the Initial Purchaser
Exhibit 4.1 Form of 9 1/2% Senior Notes due 2001 (included in
Exhibit 4.2)
Exhibit 4.2 Indenture, dated as of December 10, 1996,
between Continental Airlines, Inc. and Texas
Commerce Bank National Association, as Trustee,
relating to 9 1/2% Senior Notes due 2001
Exhibit 4.3 Registration Rights Agreement, dated as of
December 10, 1996, between Continental
Airlines, Inc. and Lehman Brothers Inc., as the
Initial Purchaser
Exhibit 5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton,
counsel for Continental Airlines, Inc.,
relating to the New Notes
Exhibit 12 Computation of Ratio of Earnings to Fixed
Charges
Exhibit 23.1 Consent of Ernst & Young LLP
Exhibit 23.2 Consent of Cleary, Gottlieb, Steen & Hamilton,
counsel for Continental Airlines, Inc.
(included in Exhibit 5.1)
Exhibit 24.1 Powers of Attorney
Exhibit 25.1 Statement of Eligibility of Texas Commerce Bank
National Association, as Trustee, relating to
Senior Debt Securities, on Form T-1
Exhibit 99.1 Form of Letter of Transmittal
Exhibit 99.2 Form of Notice of Guaranteed Delivery
Exhibit 99.3 Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
Exhibit 99.4 Form of Letter to Clients
CONTINENTAL AIRLINES, INC.
$250,000,000
9 1/2 % Senior Notes due 2001
PURCHASE AGREEMENT
December 4, 1996
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
1. Introductory. Continental Airlines, Inc., a
Delaware corporation (the "Company"), proposes to issue and sell
to Lehman Brothers Inc. (the "Initial Purchaser") $250,000,000
aggregate principal amount of its 9 1/2 % Senior Notes due 2001
(the "Notes") on the terms and conditions stated herein. The
Notes are to be issued pursuant to an indenture to be dated as of
December 10, 1996 (the "Indenture") between the Company and the
trustee named therein (the "Trustee").
Capitalized terms used but not defined herein have the
meanings to be assigned to them in the Offering Memorandum (as
defined below) or the Indenture.
The Company understands that the Initial Purchaser
proposes to make an offering of the Notes on the terms, subject
to the conditions and in the manner to be set forth in the
Offering Memorandum and Section 4 hereof, as soon as the Initial
Purchaser deems advisable after this Agreement has been executed
and delivered.
The holders of the Notes will be entitled to the
benefits of a Registration Rights Agreement, in a form reasonably
satisfactory to the Initial Purchaser (the "Registration Rights
Agreement"), pursuant to which the Company will file a
registration statement (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering
the Exchange Notes referred to in such Registration Rights
Agreement (the "Exchange Notes") or the Notes under the
Securities Act.
The Company hereby agrees with the Initial Purchaser
as follows:
2. Representations and Warranties. The Company
represents and warrants to, and agrees with, the Initial Purchaser
that:
(a) In connection with the sale of the Notes, the
Company will prepare a final offering memorandum dated the
date of this Agreement which will contain a description of
the Notes substantially in the form of Annex A hereto and
be in a form reasonably satisfactory to the Initial Purchaser
(such final offering memorandum, in the form first
furnished to the Initial Purchasers for use in connection
with the offering of the Notes, the "Offering Memorandum").
The Company hereby confirms that it has authorized the use
of the Offering Memorandum in connection with the offer and
resale of the Notes by the Initial Purchaser. As of its
date, the Offering Memorandum will not include any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Memorandum
based upon written information furnished to the Company by
the Initial Purchaser.
(b) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and
other) to own, lease and operate its property and to
conduct its business as will be described in the Offering
Memorandum; and the Company is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the condition
(financial or otherwise), business, properties or results
of operations of the Company and its consolidated
subsidiaries taken as a whole (a "Material Adverse
Effect").
(c) Each of Continental Micronesia, Inc., Air
Micronesia Inc. and Continental Express, Inc. (together,
the "Subsidiaries") has been duly incorporated and is an
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its
business as will be described in the Offering Memorandum;
and each Subsidiary is duly qualified to do business as a
foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have
a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued and is fully paid and
nonassessable; and except as will be described in the
Offering Memorandum, each Subsidiary's capital stock owned
by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(d) Except as will be described in the Offering
Memorandum, the Company is not in default in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it may be bound or to
which any of its properties may be subject, except for such
defaults that would not have a Material Adverse Effect. The
execution, delivery and performance of this Agreement and
the Registration Rights Agreement and the consummation of
the transactions contemplated herein and therein have been
duly authorized by all necessary corporate action of the
Company and will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company pursuant to any indenture, loan agreement, con-
tract or other instrument to which the Company is a
party or by which the Company may be bound or to which
any of the property or assets of the Company is
subject which breach, default, lien, charge or encumbrance,
individually or in the aggregate, would have a Material
Adverse Effect, nor will any such execution, delivery or
performance result in any violation of the provisions of
the charter or by-laws of the Company or any statute, any
rule, regulation or order of any governmental agency or
body or any court having jurisdiction over the Company.
(e) No consent, approval, authorization, or order of,
or filing with, any governmental agency or body or any
court is required for the valid authorization execution and
delivery by the Company of this Agreement and the
Registration Rights Agreement and for the consummation of
the transactions contemplated herein and therein, except
such as may be required (i) under the securities or Blue
Sky laws of the various states and (ii) under the
Securities Act of 1933, as amended (the "Securities Act"),
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") or rules of the National Association of
Securities Dealers in connection with the registration of
the Notes or the Exchange Notes under the Securities Act
pursuant to the Registration Rights Agreement.
(f) This Agreement has been duly authorized, executed
and delivered by the Company.
(g) The Registration Rights Agreement will constitute,
when duly executed and delivered by the Company, assuming
that such Registration Rights Agreement has been duly
authorized, executed and delivered by, and constitutes the
legal, valid and binding obligation of, each other party
thereto, the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except
(i) as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereinafter in
effect relating to creditors' rights generally and (ii) as
enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(h) The consolidated financial statements to be
included in the Offering Memorandum, together with the
related notes thereto, present fairly in all material
respects the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the
consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods
specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods
involved, except as otherwise to be stated in the Offering
Memorandum.
(i) The Company is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of Title 49 of
the United States Code, as amended, holding an air carrier
operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the
United States Code, as amended, for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more
cargo. All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued
and are fully paid and non-assessable.
(j) The Notes have been duly authorized by the Company;
when executed, authenticated, issued and delivered in the
manner provided for in the Indenture and sold and paid for
as provided in this Agreement, the Notes will constitute
valid and binding obligations of the Company entitled to
the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and except as
enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in
a proceeding in equity or at law); and the Notes will
conform in all material respects to the description thereof
to be contained in the Offering Memorandum.
(k) Except as will be disclosed in the Offering
Memorandum, the Company and the Subsidiaries have good and
marketable title to all real properties and all other
properties and assets owned by them, in each case free from
liens, encumbrances and defects except where the failure to
have such title would not have a Material Adverse Effect;
and except as will be disclosed in the Offering Memorandum,
the Company and the Subsidiaries hold any leased real or
personal property under valid and enforceable leases with
no exceptions that would have a Material Adverse Effect.
(l) Except as will be disclosed in the Offering
Memorandum, there is no action, suit or proceeding before
or by any governmental agency or body or court, domestic or
foreign, now pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries
or any of their respective properties that could reasonably
be expected to result in a Material Adverse Effect or that
could reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated by
this Agreement or the Registration Rights Agreement; all
pending legal or governmental proceedings to which the
Company is a party or which affect any of its properties
that will not be described in the Offering Memorandum,
including ordinary routine litigation incidental to its
business, are not in the aggregate reasonably expected to
have a Material Adverse Effect.
(m) Except as will be disclosed in the Offering
Memorandum, no labor dispute with the employees of the
Company or any subsidiary exists or to the knowledge of the
Company is imminent that might have a Material Adverse
Effect.
(n) Each of the Company and the Subsidiaries has all
necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all
declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to
conduct its business in the manner to be described in the
Offering Memorandum, except to the extent that the failure
to so obtain or file would not have a Material Adverse
Effect.
(o) The Registration Rights Agreement and the Indenture
conform in all material respects to the descriptions
thereof that will be contained in the Offering Memorandum.
(p) Except as will be disclosed in the Offering
Memorandum, neither the Company nor any of the Subsidiaries
is in violation of any statute, rule, regulation, decision
or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any
environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination,
liability or claim individually or in the aggregate is
reasonably expected to have a Material Adverse Effect; and
the Company is not aware of any pending investigation which
might lead to such a claim.
(q) The accountants that examined and issued an
auditors report with respect to the consolidated financial
statements of the Company to be included in the Offering
Memorandum are independent public accountants within the
meaning of the Securities Act and the regulations
thereunder.
(r) The Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(s) Assuming the accuracy of the representations and
warranties and compliance with the agreements made by the
Initial Purchaser in this Agreement, the offer and sale of
the Notes to the Initial Purchaser in the manner
contemplated by this Agreement will be exempt from the
registration requirement of the Securities Act by reason of
Section 4(2) thereof and Regulation S thereunder; and it is
not necessary to qualify the Indenture under the Trust
Indenture Act in respect of any such offer or sale.
(t) Neither the Company, nor any of its affiliates,
nor any person acting on its behalf (i) has, within the
six-month period prior to the date hereof, offered or sold
in the United States or to any U.S. Person (as such terms
are defined in Regulation S under the Securities Act) the
Notes or any security of the same class or series as the
Notes or (ii) has offered or will offer or sell the Notes
(A) in the United States by means of any form of "general
solicitation" or "general advertising" within the meaning
of Rule 502(c) under the Securities Act or (B) with respect
to any securities sold in reliance on Rule 903 of
Regulation S under the Securities Act, by means of any
"directed selling efforts" within the meaning of Rule
902(b) of Regulation S. The Company has not entered and
will not enter into any contractual arrangement with
respect to the distribution of the Notes except for this
Agreement.
3. Purchase, Sale and Delivery of Notes. On the basis
of the representations, warranties and agreements herein
contained, but subject to the terms and the conditions herein set
forth, the Company agrees to sell to the Initial Purchaser, and
the Initial Purchaser agrees to purchase from the Company,
$250,000,000 aggregate principal amount of Notes, at a purchase
price of 97.50% of the principal amount thereof.
The Company will issue and deliver against payment of
the purchase price the Notes purchased by the Initial Purchaser
hereunder and to be offered and sold by the Initial Purchaser in
reliance on Regulation S (the "Regulation S Notes") in the form
of one or more temporary global securities in registered form
without interest coupons (the "Temporary Regulation S Notes")
which will be deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") for the respective accounts of
the DTC participants for Morgan Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System
("Euroclear"), and Cedel Bank societe anonyme ("Cedel") and
registered in the name of Cede & Co., as nominee for DTC. The
Company will issue and deliver against payment of the purchase
price the Notes to be purchased by the Initial Purchaser
hereunder and to be offered and sold by the Initial Purchaser in
reliance on Rule 144A under the Securities Act (the "144A Notes")
in the form of one or more permanent global securities in
definitive form without interest coupons (the "Restricted Global
Notes") deposited with the Trustee as custodian for DTC and
registered in the name of Cede & Co., as nominee for DTC. The
Regulation S Notes and the 144A Notes shall be assigned separate
CUSIP numbers. Each Restricted Global Note shall include the
legend regarding restrictions on transfer to be set forth under
"Transfer Restrictions" in the Offering Memorandum. Until the
termination of the restricted period (as defined in Regulation S)
with respect to the offering of the Notes, interests in the
Regulation S Notes may only be held by the DTC participants for
Euroclear and Cedel. Interests in any permanent global Notes will
be held only in book entry form through Euroclear, Cedel or DTC,
as the case may be, except in the limited circumstances to be
described in the Offering Memorandum.
Payment for the Notes shall be made by the Initial
Purchaser in federal (same day) funds by official check or checks
or wire transfer to an account previously designated to the
Initial Purchaser by the Company at a bank acceptable to the
Initial Purchaser drawn to the order of the Company at the office
of Shearman & Sterling, 599 Lexington Avenue, New York, New York,
at 10:00 A.M. (New York time), on December 10, 1996, or at such
other time not later than seven full business days thereafter as
the Initial Purchaser and the Company determine, such time being
herein referred to as the "Closing Date", against delivery to the
Trustee as custodian for DTC of (i) the Temporary Regulation S
Note representing all of the Regulation S Notes for the
respective accounts of the DTC participants for Euroclear and
Cedel and (ii) the Restricted Global Note representing all of the
144A Notes. The Temporary Regulation S Notes and the Restricted
Global Notes will be made available for checking at the above
office of Shearman & Sterling at least 24 hours prior to the
Closing Date.
Notwithstanding the foregoing, any Notes sold by the
Initial Purchaser to Institutional Accredited Investors (as
hereinafter defined) pursuant to Section 4(c) shall be issued in
definitive, fully registered form ("Definitive Notes") and shall
bear the legend relating thereto to be set forth under "Transfer
Restrictions" in the Offering Memorandum, but shall be paid for
in the manner set forth in the preceding paragraph. Definitive
Notes shall be registered in such names and in such denominations
as the Initial Purchaser may request not less than two full
business days in advance of the Closing Date.
4. Representations by the Initial Purchasers: Resale
by the Initial Purchasers. (a) The Initial Purchaser represents and
warrants to the Company that it is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(b) The Initial Purchaser acknowledges that the Notes
have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. The Initial Purchaser
represents and agrees that it has offered and sold the Notes and
will offer and sell the Notes (i) as part of their distribution
at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date only (x) to
Qualified Institutional Buyers as defined in Rule 144A ("QIBs")
in compliance with Rule 144A, (y) to a limited number of
Institutional Accredited Investors in accordance with subsection
(c) of this Section 4 and (z) outside the United States to
persons other than U.S. persons ("foreign purchasers"), in
accordance with Rule 903 of Regulation S under the Securities Act
thereof. Accordingly, neither the Initial Purchaser nor its
affiliates, nor any persons acting on its or their behalf, have
engaged or will engage in any directed selling efforts with
respect to the Notes, and the Initial Purchaser, its affiliates
and all persons acting on its or their behalf have complied and
will comply with the offering restrictions requirements of
Regulation S. The Initial Purchaser agrees that, at or prior to
confirmation of sale of the Notes, other than a sale pursuant to
Rule 144A or to an Institutional Accredited Investor, the Initial
Purchaser will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that
purchases the Notes from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered or sold
within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their
distribution at any time and (ii) otherwise until 40
days after the later of the commencement of the
offering and the Closing Date except in either case in
accordance with Regulation S (or Rule 144A, if
available) under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings
given to them by Regulation S.
(c) The Initial Purchaser may offer and sell Notes in
definitive, fully registered form to a limited number of
institutions, each of which is reasonably believed by the Initial
Purchaser to be an "accredited investor" within the meaning of
Rule 501(a)(1), (2), or (3) or (7) under the Securities Act or an
entity in which all of the equity owners are accredited investors
within the meaning of Rule 501(a)(1), (2) or (3) under the
Securities Act (each, an "Institutional Accredited Investor");
provided that each such Institutional Accredited Investor
executes and delivers to the Initial Purchaser and the Company,
prior to the consummation of any sale of Notes to such
Institutional Accredited Investor, an Accredited Investor Letter
in substantially the form to be attached as Appendix III to the
Offering Memorandum (an "Accredited Investor Letter").
(d) The Initial Purchaser represents and agrees that (i)
it has not offered or sold and will not offer or sell any Notes to
persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the Notes in,
from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on, and will only issue or pass on, in the
United Kingdom any document received by it in connection with the
issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investments
Advertisements) (Exemptions) Order 1996 or is person to whom such
document may otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that it and each of
its affiliates has not entered and will not enter into any
contractual arrangement with any distributor (as that term is
defined for purposes of Regulation S) with respect to the
distribution of the Notes except with the prior written consent
of the Company.
(f) The Initial Purchaser represents and agrees that
neither it nor any person acting on its behalf has engaged or
will engage in any form of "general solicitation" or "general
advertising," within the meaning of Rule 502(c) under the
Securities Act in connection with any offer or sale of Notes in
the United States. The Initial Purchaser agrees, with respect to
resales made in reliance on Rule 144A of any of the Notes, to
deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that
the resale of such Notes has been made in reliance upon the
exemption from the registration requirements of the Securities
Act provided by Rule 144A.
5. Certain Agreements of the Company. The Company
agrees with the Initial Purchaser that:
(a) The Company will advise the Initial Purchaser
promptly of any proposal to amend or supplement the
Offering Memorandum and will not effect such amendment or
supplementation without the Initial Purchaser's consent,
which consent will not be unreasonably withheld. If, at any
time prior to the completion of the resale of the Notes by
the Initial Purchaser any event occurs as a result of which
the Offering Memorandum as then amended or supplemented
would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading, the Company promptly
will notify the Initial Purchaser of each event and
promptly will prepare, at its own expense, an amendment or
supplement which will correct such statement or omission.
Neither the Initial Purchaser's consent to, nor the Initial
Purchaser's delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of
the conditions set forth in Section 6.
(b) Notwithstanding any provision of paragraph (a) to
the contrary, the Company's obligations under paragraph (a)
shall terminate on the earlier to occur of (i) the
effective date of an exchange offer registration statement
or shelf registration statement with respect to the Notes
filed pursuant to the Registration Rights Agreement and
(ii) the date upon which the Initial Purchaser and its
affiliates cease to hold Notes acquired as part of their
initial distributions, provided that the costs and expenses
of performing such obligations at any time after one year
from the Closing Date shall be paid by the Initial
Purchaser.
(c) The Company will furnish to the Initial Purchaser
copies of the Offering Memorandum and all amendments and
supplements thereto, in each case as soon as available and
in such quantities as the Initial Purchaser reasonably
requests. So long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the
Securities Act, at any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Company will
provide to any holder of such restricted securities, or to
any prospective purchaser of such restricted securities
designated by a holder, upon the request of such holder or
prospective purchaser, any information required to be
delivered to holders and prospective purchasers of the
Notes pursuant to Rule 144A(d)(4) under the Securities Act.
This covenant is intended to be for the benefit of the
holders, and prospective purchasers designated by such
holders, from time to time of such restricted securities.
(d) The Company will arrange for the qualification of
the Notes for sale under the applicable securities or "blue
sky" laws of such jurisdictions in the United States as the
Initial Purchaser reasonably designates and will continue
such qualifications in effect so long as required for the
resale of the Notes by the Initial Purchaser; provided that
the Company will not be required to (i) qualify as a
foreign corporation or as a dealer in securities, (ii) file
a general consent to service of process or (iii) subject
itself to taxation in any such state.
(e) During the period of five years hereafter, the
Company will promptly furnish to the Initial Purchaser upon
request, a copy of its Annual Report on Form 10-K and any
definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to
stockholders.
(f) During the period of three years after the Closing
Date, the Company will, upon request, furnish to the
Initial Purchaser and any holder of Notes a copy of the
restrictions on transfer applicable to the Notes.
(g) During the period of three years after the Closing
Date, the Company will not, and will not permit any of its
affiliates (as defined in Rule 144 under the Securities
Act) to, resell any of the Notes that have been reacquired
by any of them.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including
(i) the preparation, printing and distribution of the Offering
Memorandum and any amendments thereof or supplements thereto,
(ii) the preparation, printing and distribution of this Agree-
ment, the Registration Rights Agreement, the Notes and any Blue
Sky Memorandum or Legal Investment Survey by the Initial
Purchaser's counsel, (iii) the delivery of the Notes, (iv)
the reasonable fees and disbursements of the counsel and
accountants for the Company, (v) the expenses of qualifying
the Notes under state securities laws in accordance with
the provisions of paragraph (d) of this Section, including
filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchaser in connection therewith,
(vi) the fees and expenses of the Trustee and the
reasonable fees and disbursements of its counsel, (vii) any
fees charged by rating agencies for rating the Notes,
(viii) any fees of the National Association of Securities
Dealers, Inc. with respect to admitting the Notes for
trading in the PORTAL market, (ix) all reasonable travel,
lodging and other expenses of the Initial Purchaser and the
Company's officers and employees and any other expenses in
connection with attending or hosting meetings with
prospective purchasers of Notes and (xi) all other expenses
incurred by the Initial Purchaser in connection with the
transactions contemplated by this Agreement.
(i) In connection with the offering, until the Initial
Purchaser shall have notified the Company of the completion
of the resale of the Notes, neither the Company nor any of
its affiliates has bid for or purchased or will bid for or
purchase, either alone or with one or more other persons,
for any account in which it or any of its affiliates has a
beneficial interest any Notes; and neither it nor any of
its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of
raising the price of, the Notes.
6. Conditions of the Obligations of the Initial
Purchaser. The obligations of the Initial Purchaser to purchase
and pay for the Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein
to the accuracy, as of the Closing Date, of the statements of
officers of the Company made in writing pursuant to the
provisions of this Agreement, to the performance by the Company
of its obligations hereunder and to the following additional
conditions precedent:
(a) Subsequent to the date of this Agreement and prior
to the Closing Date,
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review
for a possible change that does not indicate the
direction of the possible change, in the rating
accorded any of the Company's securities (except for
any pass through certificates) by any "nationally
recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under
the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition (financial or otherwise) business, properties
or results of operations, of the Company and its consol-
idated subsidiaries, taken as a whole, from that to be
set forth in the Offering Memorandum that, in your
judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Notes on
the terms and in the manner to be contemplated in the
Offering Memorandum.
(b) The Initial Purchaser shall have received a
letter, dated the Closing Date, of Ernst & Young LLP in
form and substance satisfactory to the Initial Purchaser,
containing statements and information of the type
ordinarily included in accountants "comfort letters".
(c) On the Closing Date, the Initial Purchaser shall
have received:
(1) The favorable opinion, dated as of the
Closing Date, of Cleary, Gottlieb, Steen and Hamilton,
counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Initial
Purchaser.
(2) The favorable opinion, dated as of the
Closing Date from Jeffery A. Smisek, Executive Vice
President and General Counsel of the Company, in form
and substance reasonably satisfactory to the Initial
Purchaser.
(3) The favorable opinion, dated as of the
Closing Date, of Shearman & Sterling, counsel for the
Initial Purchaser, with respect to the validity of the
Notes, the Offering Memorandum, the exemption from
registration for the offer and sale of the Notes to
the Initial Purchaser and the resales by the Initial
Purchaser as contemplated hereby and other related
matters as the Initial Purchaser may require, and the
Company shall have furnished to such counsel such
documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(d) The Initial Purchaser shall have received a
certificate, dated the Closing Date, of the President or
any Vice President and a principal financial or accounting
officer of the Company in which such officers shall state
that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the
Company in this Agreement are true and correct on and as of
the Closing Date as if made on the Closing Date, that the
Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and that,
subsequent to the dates of the Company's most recent
audited financial statements, there has been no material
adverse change, nor any development or event involving a
prospective material adverse change, in the condition
(financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a
whole, except as will be set forth in or contemplated by
the Offering Memorandum.
(e) At the Closing Date, the Registration Rights
Agreement shall have been duly executed, delivered and be
in full force and effect.
(f) On the Closing Date, the Notes shall be rated not
lower than Ba3 by Moody's Investors Service, Inc., B by
Standard & Poor's Rating Group and BB- by Duff & Phelps.
The Company will furnish the Initial Purchaser with
such conformed copies of such opinions, certificates, letters and
documents as the Initial Purchaser reasonably requests.
7. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless the Initial Purchaser, and
each Person, if any, who controls such Initial Purchaser within
the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, or is under common control with the
Initial Purchaser, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred by the Initial Purchaser or
any such controlling or affiliated person in connection with
defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material
fact contained in the Offering Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use
therein.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from
the Company to the Initial Purchaser but only with reference to
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use in
the Offering Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) above, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may
be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party
to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay
the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by
the Initial Purchaser in the case of parties indemnified pursuant
to paragraph (a) above and by the Company in the case of parties
indemnified pursuant to paragraph (1)) above. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered
into more than 90 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement, unless such fees
and expenses are being disputed in good faith. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 7 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the
one hand, and the Initial Purchaser, on the other hand, from the
offering of such Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Initial Purchaser on
the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Initial
Purchaser on the other hand in connection with the offering of
such Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Notes
(before deducting expenses) received by the Company and the total
discounts and commissions received by the Initial Purchaser in
respect thereof bear to the aggregate offering price of such
Notes. The relative fault of the Company on the one hand and of
the Initial Purchaser on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or by the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that
it would not be just or equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, the
Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the
Notes resold by it in the initial placement of such Notes were
offered to investors exceeds the amount of any damages that such
Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The indemnity and contribution
provisions contained in this Section 7 and the representations
and warranties of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by
or on behalf of the Initial Purchaser or any person controlling
the Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Notes. The
remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
8. Survival of Certain Representations and
Obligations. The respective indemnities, agreements,
representations, warranties and other statements of the Company
or its officers and of the Initial Purchaser set forth in or made
pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Initial Purchaser, the
Company or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of
and payment for the Notes. If for any reason the purchase of the
Notes by the Initial Purchaser is not consummated, the Company
shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Initial Purchaser pursuant to
Section 7 shall remain in effect. If the purchase of the Notes by
the Initial Purchaser is not consummated for any reason other
than solely because of the occurrence of the termination of the
Agreement pursuant to Section 9 the Company will reimburse the
Initial Purchaser for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) reasonably incurred
by them in connection with the offering of such Notes and comply
with its obligations under Section 5(h).
9. Termination. This Agreement shall be subject to
termination by notice given by the Initial Purchaser to the
Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers,
Inc., (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in
New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak
or escalation of hostilities or any change in financial markets
or any calamity or crisis that, in the Initial Purchaser's
judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event
singly or together with any other such event makes it, in the
Initial Purchaser's judgment, impracticable to market the Notes
on the terms and in the manner to be contemplated in the Offering
Memorandum.
10. Notices. All communications hereunder will be in
writing and, if sent to the Initial Purchaser, will be mailed,
delivered or sent by facsimile transmission to (212) 526-3738 and
confirmed to the Initial Purchaser, at Lehman Brothers Inc.,
Three World Financial Center, New York, N.Y. 10285, Attention:
David Coquillette, or, if sent to the Company, will be mailed,
delivered or sent by facsimile transmission and confirmed to it
at 2929 Allen Parkway, Houston, TX 77019, Attention: Chief
Financial Officer and General Counsel, facsimile number (713)
834- 2687; provided, however, that any notice to the Initial
Purchaser pursuant to Section 7 will be sent by facsimile
transmission, delivered or telegraphed and confirmed to the
Initial Purchaser.
11. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the controlling persons referred to in
Section 7, and no other person will have any right or obligation
hereunder, except as expressly set forth in Section 5(c) hereof
against the Company as if such holders were parties hereto.
12. Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement.
13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company hereby submits to the non-exclusive
jurisdiction of the federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Initial
Purchaser's understanding of our agreement, kindly sign and return
to the Company one of the counterparts hereof, whereupon it will become
a binding agreement between the Initial Purchaser and the Company
in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By: /s/ Lawrence W. Kellner
--------------------------------
Name: Lawrence W. Kellner
Title: Executive Vice President and
Chief Financial Officer
The foregoing Purchase
Agreement is hereby confirmed
and accepted as of the date
first above written.
LEHMAN BROTHERS INC.
By:__________________________
Name:
Title:
If the foregoing is in accordance with the Initial
Purchaser's understanding of our agreement, kindly sign and return to
the Company one of the counterparts hereof, whereupon it will become
a binding agreement between the Initial Purchaser and the Company
in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By:____________________________
Name:
Title:
The foregoing Purchase
Agreement is hereby confirmed
and accepted as of the date
first above written.
LEHMAN BROTHERS INC.
By: /s/ Peter Wexler
--------------------------
Name: Peter Wexler
Title: Managing Director
CONTINENTAL AIRLINES, INC.,
as Issuer
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
Senior Notes Indenture
Dated as of December 10, 1996
9 1/2 % Senior Notes due December 15, 2001
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
ss.310(a)(1).................... 7.10
(a)(2).................... 7.10
(b)....................... 7.08
ss.313(c)....................... 7.06; 10.02
ss.314(a)....................... 4.12; 10.02
(a)(4).................... 4.11; 10.02
(c)(1).................... 10.03
(c)(2).................... 10.03
(e)....................... 10.04
ss.315(b)....................... 7.05; 10.02
ss.316(a)(1)(A)................. 6.05
(a)(1)(B)................. 6.04
(b)....................... 6.07
ss.317(a)(1).................... 6.08
(a)(2).................... 6.09
ss.318(a)....................... 10.01
(c)....................... 10.01
Note: The Cross-Reference Table shall not for any purpose be deemed
to be a part of the Indenture.
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...............................
SECTION 1.02. Incorporation by Reference of Trust Indenture Act
SECTION 1.03. Rules of Construction.....................
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating...........................
SECTION 2.02. Restrictive Legends.......................
SECTION 2.03. Execution, Authentication and
Denominations.............................
SECTION 2.04. Registrar and Paying Agent................
SECTION 2.05. Paying Agent to Hold Money in Trust.......
SECTION 2.06. Transfer and Exchange.....................
SECTION 2.07. Book-Entry Provisions for Global
Securities................................
SECTION 2.08. Special Transfer Provisions...............
SECTION 2.09. Replacement Securities....................
SECTION 2.10. Outstanding Securities....................
SECTION 2.11. Temporary Securities......................
SECTION 2.12. Cancellation..............................
SECTION 2.13. CUSIP, CINS and ISIN Numbers..............
SECTION 2.14. Defaulted Interest........................
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption.......................
SECTION 3.02. Notices to Trustee........................
SECTION 3.03. Selection of Securities to Be Redeemed....
SECTION 3.04. Notice of Redemption......................
SECTION 3.05. Effect of Notice of Redemption............
SECTION 3.06. Deposit of Redemption Price...............
SECTION 3.07. Payment of Securities Called for
Redemption................................
SECTION 3.08. Securities Redeemed in Part...............
Note: The Table of Contents shall not for any purposes be deemed to be
a part of the Indenture.
SECTION 7.03. Individual Rights of Trustee..............
SECTION 7.04. Trustee's Disclaimer......................
SECTION 7.05. Notice of Default.........................
SECTION 7.06. Reports by Trustee to Holders.............
SECTION 7.07. Compensation and Indemnity................
SECTION 7.08. Replacement of Trustee....................
SECTION 7.09. Successor Trustee by Merger, Etc..........
SECTION 7.10. Eligibility...............................
SECTION 7.11. Money Held in Trust.......................
SECTION 7.12. Withholding Taxes.........................
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations......
SECTION 8.02. Company's Option to Effect Defeasance or
Covenant Defeasance.......................
SECTION 8.03 Defeasance and Discharge of Indenture.....
SECTION 8.04 Defeasance of Certain Obligations.........
SECTION 8.05 Conditions to Defeasance or Covenant
Defeasance................................
SECTION 8.06 Application of Trust Money................
SECTION 8.07 Repayment to Company......................
SECTION 8.08 Reinstatement.............................
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders................
SECTION 9.02. With Consent of Holders...................
SECTION 9.03. Revocation and Effect of Consent..........
SECTION 9.04. Notation on or Exchange of Securities.....
SECTION 9.05. Trustee to Sign Amendments, Etc...........
SECTION 9.06. Conformity with Trust Indenture Act.......
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939...............
SECTION 10.02. Notices...................................
SECTION 10.03. Certificate and Opinion as to
Conditions Precedent......................
SECTION 10.04. Statements Required in Certificate or
Opinion...................................
SECTION 10.05. Rules by Trustee, Paying Agent or
Registrar.................................
SECTION 10.06. Payment Date Other Than a Business Day....
SECTION 10.07. Governing Law.............................
SECTION 10.08. No Adverse Interpretation of Other
Agreements................................
SECTION 10.09. No Recourse Against Others................
SECTION 10.10. Successors................................
SECTION 10.11. Duplicate Originals.......................
SECTION 10.12. Table of Contents, Headings, Etc..........
EXHIBIT A Form of Security
EXHIBIT B Form of Certificate
EXHIBIT C Form of Certificate to be Delivered in
Connection with Transfers Pursuant to
Regulation S
EXHIBIT D Form of Certificate to be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
INDENTURE, dated as of December 10, 1996, between
CONTINENTAL AIRLINES, INC., a Delaware corporation, as issuer
(the "Company"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as
trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of up to
$250,000,000 aggregate principal amount of the Company's 9 1/2%
Senior Notes due December 15, 2001 (the "Securities") issuable as
provided in this Indenture. All things necessary to make this
Indenture a valid agreement of the Company, in accordance with
its terms, have been done, and the Company has done all things
necessary to make the Securities, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly
issued by the Company, the valid obligations of the Company as
hereinafter provided.
This Indenture is subject to, and shall be governed
by, the provisions of the Trust Indenture Act of 1939, as
amended, that are required to be a part of and to govern
indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Affiliate" means, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent, authenticating
agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Sale" means any sale, issuance, conveyance,
transfer, lease or other disposition (collectively, a "transfer")
by the Company or any Restricted Subsidiary, directly or
indirectly, in one or a series of related transactions, of (a)
all or any Capital Stock of any Restricted Subsidiary; (b) all or
substantially all of the properties and assets of any operating
unit or business of the Company or its Restricted Subsidiaries;
or (c) any other properties or assets of
2
the Company or any Restricted Subsidiary, other than in the
ordinary course of business. For the purposes of this definition,
the term "Asset Sale" shall not include (i) any transfer of
properties or assets that is governed by Section 5.01, (ii) sales
or other dispositions of inventory, receivables and other current
assets, (iii) sales or other dispositions of surplus equipment,
furniture or fixtures of the Company and Restricted Subsidiaries
in an aggregate amount not to exceed $20 million in any fiscal
year, (iv) sales/leasebacks of aircraft, engines and related
equipment, and (v) transactions referred to in Section
4.03(b)(iii).
"Average Life" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by
dividing (a) the sum of the products of (i) the number of years
from the date of determination to the date or dates of each
successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness
multiplied by (ii) the amount of each such principal payment by
(b) the sum of all such principal payments.
"Board of Directors" means, with respect to any
Person, the Board of Directors of such Person or any committee of
such Board of Directors duly authorized to act with respect to
this Indenture.
"Board Resolution" means, with respect to any Person,
a copy of a resolution, certified by the Secretary or Assistant
Secretary of such Person to have been duly adopted by the Board
of Directors of such Person and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in The City of New York,
or in the city of the Corporate Trust Office of the Trustee, are
authorized by law to close.
"Capital Stock" means, with respect to any Person, any
and all shares, interests, partnership interests, participations,
rights in or other equivalents (however designated) of such
Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether
now outstanding or issued after the date of this Indenture.
"Capitalized Lease Obligation" means any obligation of
the Company or a Restricted Subsidiary under a lease of (or other
agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for
the purpose of this Indenture, the amount of such obligation at
any date shall be the capitalized amount thereof at such date,
determined in accordance with GAAP.
"Change of Control" means the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than
Air Partners, L.P. or any Person which is in control (as defined
in the definition of "Affiliate") of Air Partners, L.P. as of the
date of this Indenture, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall
3
be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total outstanding
Voting Stock of the Company; (b) the Company consolidates with,
or merges with or into another Person or conveys, transfers,
leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges
with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or
exchanged for at least in part Voting Stock (other than
Redeemable Capital Stock) of the surviving or transferee
corporation, and (ii) the holders of the Voting Stock of the
Company immediately prior to such transaction own not less than a
majority of the Voting Stock of the surviving or transferee
corporation immediately after such transaction; or (c) the
Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which
complies with Section 5.01.
"Change of Control Offer" has the meaning provided in Section 4.06.
"Change of Control Purchase Date" has the meaning provided in
Section 4.06.
"Change of Control Purchase Price" has the meaning provided in
Section 4.06.
"Change of Control Triggering Event" means both the
occurrence of a Change of Control and a Rating Decline.
"Closing Date" means the date on which the Securities
are originally issued under this Indenture.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Company" means the party named as such in the first
paragraph of this Indenture until a successor replaces it
pursuant to Article Five of this Indenture and thereafter means
the successor.
"Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice
Chairman, its President, its Chief Financial Officer or a Vice
President and (ii) by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary and delivered to the Trustee;
provided, however, that such written request or order may be
signed by any two of the officers or directors listed in clause
(i) above in lieu of being signed by one of such officers or
directors listed in such clause (i) and one of the officers
listed in clause (ii) above.
"Consolidated Adjusted Net Income" means, for any
period, the consolidated net income (or loss) of the Company and
all Restricted Subsidiaries for such period as determined in
4
accordance with GAAP, adjusted by excluding, without duplication,
(a) any net after-tax extraordinary gains or losses (less all
fees and expenses relating thereto), (b) any net after-tax gains
or losses (less all fees and expenses relating thereto)
attributable to asset dispositions other than in the ordinary
course of business, (c) the portion of net income (or loss) of
any Person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any
Restricted Subsidiary has an ownership interest, except to the
extent of the amount of dividends or other distributions actually
paid to the Company or any Restricted Subsidiary in cash
dividends or distributions during such period, (d) the net income
(or loss) of any Person combined with the Company or any
Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e)
the net income of any Restricted Subsidiary to the extent (but
only to the extent) that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at
the date of determination permitted, directly or indirectly, by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary
or its stockholders, (f) any net income (or loss) from any
Restricted Subsidiary that was an Unrestricted Subsidiary at any
time during such period other than any amounts actually received
from such Restricted Subsidiary, and (g) the cumulative effects
of any changes in accounting policy mandated by the Financial
Accounting Standards Board or its successor subsequent to the
date of this Indenture.
"Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted Subsidiaries
(less applicable depreciation, amortization and other valuation
reserves), except to the extent resulting from write-ups of
capital assets (excluding write-ups in connection with accounting
for acquisition in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its
Restricted Subsidiaries (excluding intercompany items) and (ii)
all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles (it being
understood that routes, gates and slots shall not be considered
intangibles), all as set forth on the most recently available
consolidated balance sheet of the Company and its Restricted
Subsidiaries, prepared in conformity with GAAP.
"Consolidated Net Worth" means, at any date, the
stockholders' equity of the Company and its Restricted
Subsidiaries less the amount of such stockholders' equity
attributable to Redeemable Capital Stock or treasury stock of the
Company and any Restricted Subsidiary and the principal amount of
any promissory notes receivable from the sale of Capital Stock of
the Company or any Restricted Subsidiary, as determined on a
consolidated basis in accordance with GAAP.
"Corporate Trust Office" means the office of the
Trustee at which the corporate trust business of the Trustee
shall, at any particular time, be principally administered, which
office is, at the date of this Indenture, located at 600 Travis
Street, Suite 1150, Houston, Texas 77002.
"Currency Agreements" means any spot or forward
foreign exchange agreements and currency swap, currency option or
other similar financial agreements or arrangements entered
5
into by the Company or any of its Restricted Subsidiaries
designed to protect against or manage exposure to fluctuations in
currency exchange rates.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its
nominees, and their respective successors.
"Disinterested Director" means, with respect to any
transaction or series of transactions in respect of which the
Board of Directors is required to deliver a resolution of the
Board of Directors under this Indenture, a member of the Board of
Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or
series of transactions.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.05.
"Excess Proceeds Offer" has the meaning provided in Section 4.05.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means any securities of the
Company containing terms identical to the Securities (except that
such Exchange Securities (i) shall be registered under the
Securities Act, (ii) will not provide for an increase in the rate
of interest (other than with respect to overdue amounts) and
(iii) will not contain terms with respect to transfer
restrictions) that are issued and exchanged for the Securities
pursuant to the Registration Rights Agreement and this Indenture.
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, as applied from time to time by the Company in the
preparation of its consolidated financial statements.
"Global Securities" has the meaning provided in Section 2.01.
"guarantee" means, as applied to any obligation, (a) a
guarantee (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), direct or
indirect, in any manner, of any part or all of such obligation
and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation,
including, without limiting the foregoing, the payment of amounts
drawn down by letters of credit.
"Holder" or "Securityholder" means the then registered holder
of any Security.
6
"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of
business, but including, without limitation, all obligations,
contingent or otherwise, of such Person in connection with any
letters of credit and acceptances issued under letter of credit
facilities, acceptance facilities or other similar facilities,
(b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness of
such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such Person, (e) all obligations
of such Person under or in respect of Interest Rate Agreements or
Currency Agreements, (f) all Indebtedness referred to in (but not
excluded from) the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon
or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness (the amount of such obligation being deemed to
be the lesser of the value of such property or asset or the
amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition of any
other Person and (h) all Redeemable Capital Stock of such Person
valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends. For
purposes hereof, the maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined, and if such price is based upon, or measured by,
the fair market value of such Redeemable Capital Stock, such fair
market value shall be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock.
"Indenture" means this Indenture as originally
executed or as it may be amended or supplemented from time to
time by one or more indentures supplemental to this Indenture
entered into pursuant to the applicable provisions of this
Indenture.
"Institutional Accredited Investor" means an
institution that is an "accredited investor" as that term is
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act.
"Interest Payment Date" means each semiannual interest
payment date on June 15 and December 15 of each year, commencing
June 15, 1997.
"Interest Rate Agreements" means any interest rate
protection agreements and other types of interest rate hedging
agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar agreements).
7
"Investment" means, with respect to any Person, any direct or
indirect advance, loan or other extension of credit or capital
contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for
the account or use of others), or any purchase, acquisition or
ownership by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness
issued or owned by, any other Person and all other items that
would be classified as investments on a balance sheet prepared in
accordance with GAAP, in each case measured as of the date such
Investment is made. In addition, the fair market value of the net
assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary
shall be deemed to be an "Investment" made by the Company in such
Unrestricted Subsidiary at such time. "Investments" shall exclude
extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices.
"Lien" means any mortgage, charge, pledge, lien
(statutory or otherwise), privilege, security interest,
hypothecation, assignment for security, claim, or preference or
priority or other encumbrance upon or with respect to any
property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired. A Person shall be deemed to own
subject to a Lien any property which such Person has acquired or
holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement.
"Maturity" means, with respect to any Security, the
date on which any principal of such Security becomes due and
payable as therein or herein provided, whether at the Stated
Maturity with respect to such principal or by declaration of
acceleration, call for redemption or purchase or otherwise.
"Make-Whole Premium" has the meaning provided in Section 3.01.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset
Sale, the proceeds thereof in the form of cash or cash
equivalents including payments in respect of deferred payment
obligations when received in the form of, or stock or other
assets when disposed for, cash or cash equivalents (except to the
extent that such obligations are financed or sold with recourse
to the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees
and expenses of legal counsel and investment banks) related to
such Asset Sale, (ii) taxes payable in cash as a result of such
Asset Sale, (iii) payments made to retire Indebtedness where
payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (iv) amounts required
to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the assets
subject to the Asset Sale and (v) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
8
obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee.
"Non-U.S. Person" means a person who is not a U.S. person,
as defined in Regulation S.
"Officer" means (i) the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President,
the Chief Financial Officer, and (ii) the Treasurer or any
Assistant Treasurer, or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by
one Officer listed in clause (i) of the definition thereof and
one Officer listed in clause (ii) of the definition thereof;
provided, however, that any such certificate may be signed by any
two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause
(i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof. Each Officers' Certificate (other
than certificates provided pursuant to TIA Section 314(a)(4))
shall include the statements provided for in TIA Section 314(e).
"Offshore Global Security" has the meaning provided in Section 2.01.
"Offshore Physical Securities" has the meaning provided in
Section 2.01.
"Offshore Securities Exchange Date" has the meaning provided
in Section 2.01.
"Opinion of Counsel" means a written opinion signed by
legal counsel who may be an employee of or counsel to the
Company. Each such Opinion of Counsel shall include the
statements provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section
2.04, except that, for the purposes of Article Eight, the Paying
Agent shall not be the Company or a Subsidiary of the Company or
an Affiliate of any of them. The term "Paying Agent" includes any
additional Paying Agent.
"Permanent Offshore Global Security" has the meaning provided
in Section 2.01.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Physical Securities" has the meaning provided in Section 2.01.
"Principal" of a debt security, including the
Securities, means the principal amount due on the Stated Maturity
as shown on such debt security.
"Private Placement Legend" means the legend initially
set forth on the Securities in the form set forth in Section
2.02(a).
9
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Rating Decline" means the occurrence of either of the
following on or within 90 days after the date (the "Base Date")
of public notice of the occurrence of a Change of Control or the
intention of a Person to effect a Change of Control (which period
shall be extended for so long as the rating of the Securities is
under publicly announced consideration for possible downgrade by
either Moody's or S&P): (a) in the event the Securities were
rated by either Moody's or S&P as investment grade on the Base
Date, the rating of the Securities by both such rating agencies
shall be decreased to below investment grade or the Securities
shall cease to be rated; or (b) in the event the Securities were
rated by both Moody's and S&P as below investment grade on the
Base Date, the rating of the Securities by either rating agency
shall be decreased or the Securities shall cease to be rated.
"Redeemable Capital Stock" means any class or series
of Capital Stock that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or by
contract or otherwise, is, or upon the happening of an event or
passage of time would be, required to be redeemed prior to the
final Stated Maturity of the Securities or is redeemable at the
option of the holder thereof at any time prior to such final
Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity.
"Redemption Date" means, when used with respect to any
Security to be redeemed, the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, has the meaning provided in Section
3.01.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated December 10, 1996, between the Company
and Lehman Brothers Inc.
"Registration Statement" means the Registration
Statement as defined and described in the Registration Rights
Agreement.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 1 or December 1 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", (i) when used with respect to
any Person other than the Trustee, means any vice president, any
assistant vice president, any assistant secretary and any
assistant treasurer and (ii) when used with respect to the
Trustee, means any vice president, any assistant vice president,
10
any assistant secretary, any assistant treasurer and any trust
officer or assistant trust officer employed in the conduct of the
Trustee's corporate trust business, or any other officer of the
Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.03.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Group, a
division of McGraw-Hill, Inc., and its successors.
"Securities" means any of the securities, as defined
in the first paragraph of the recitals hereof, that are
authenticated and delivered under this Indenture. For all
purposes of this Indenture, the term "Securities" shall include
any Exchange Securities to be issued and exchanged for any
Securities pursuant to the Registration Rights Agreement and this
Indenture and, for purposes of this Indenture, all Securities and
Exchange Securities shall vote together as one series of
Securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
"Shelf Registration Statement" means the Shelf
Registration Statement as defined and described in the
Registration Rights Agreement.
"Significant Restricted Subsidiary" means a Restricted
Subsidiary which is a significant subsidiary of the Company under
Section 1.02(w) of Regulation S-X of the Commission promulgated
under the Securities Act.
"Specified Cash and Cash Equivalents" means, for
purposes of computing whether or not a proposed Restricted
Payment may be made, the sum of (a) the amount of cash and cash
equivalents that would have been shown on the balance sheet of
the Company and its Restricted Subsidiaries prepared in
accordance with GAAP as of the tenth Business Day preceding the
date of such proposed Restricted Payment, plus (b) the amount of
marketable securities that would have been reflected on such
balance sheet which had on such Business Day a maturity of less
than one year and which would have qualified to be reflected on
such balance sheet as cash equivalents but for their maturity,
minus (c) the amount of all Restricted Payments made subsequent
to such Business Day, but not including the proposed Restricted
Payment (the amount of any Restricted Payment, if other than
cash, as determined by the Board of Directors of the Company as
of the date thereof, whose determination shall be conclusive and
evidenced by a Board Resolution).
11
"Stated Maturity" means, when used with respect to any
Security or any installment of interest thereon, the date specified
in such Security as the fixed date on which the principal of such
Security or such installment of interest is due and payable, and,
when used with respect to any other Indebtedness, means the date
specified in the instrument governing such Indebtedness as the
fixed date on which the principal of such Indebtedness, or any
installment of interest thereon, is due and payable.
"Subsidiary" means any Person a majority of the equity
ownership or Voting Stock of which is at the time owned, directly
or indirectly, by the Company or by one or more other
Subsidiaries or by the Company and one or more other
Subsidiaries.
"Temporary Offshore Global Security" has the meaning provided
in Section 2.01.
"TIA" or "Trust Indenture Act" means the Trust
Indenture Act of 1939, as amended.
"Treasury Rate" has the meaning provided in Section 3.01.
"Trustee" means the party named as such in the first
paragraph of this Indenture until a successor replaces it in
accordance with the provisions of Article Seven of this Indenture
and thereafter means such successor.
"Unrestricted Subsidiary" means (a) any Subsidiary
that at the time of determination shall be an Unrestricted
Subsidiary (as designated by the Board of Directors of the
Company, as provided below) and (b) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary so long
as (i) neither the Company nor any Restricted Subsidiary is
directly or indirectly liable for any Indebtedness of such
Subsidiary, (ii) no default with respect to any Indebtedness of
such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or
any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in
such Subsidiary made as a result of designating such Subsidiary
an Unrestricted Subsidiary will not violate Section 4.03, (iv)
neither the Company nor any Restricted Subsidiary has a contract,
agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than those
that might be obtained at the time from persons who are not
Affiliates of the Company, and (v) neither the Company nor any
Restricted Subsidiary has any obligation (1) to subscribe for
additional shares of Capital Stock or other equity interest in
such Subsidiary, or (2) to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Any such designation by the
Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving
effect to such designation. The Board of Directors of the Company
may designate any Unrestricted Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such
designation, there would be no Default or Event of Default.
12
"United States Bankruptcy Code" means the Bankruptcy Reform Act
of 1978, as amended and as codified in Title 11 of the United
States Code, as amended from time to time hereafter, or any
successor federal bankruptcy law.
"U.S. Global Security" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that
are (i) direct obligations of the United States of America for
the payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the
issuer thereof at any time prior to the Stated Maturity of the
Securities, and shall also include a depository receipt issued by
a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on
or principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Person" has the meaning ascribed thereto in Rule 902
under the Securities Act.
"U.S. Physical Securities" has the meaning provided in Section 2.01.
"Voting Stock" means any class or classes of Capital
Stock pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of any
Person (irrespective of whether or not, at the time, stock of any
other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
"Wholly Owned" means, with respect to any Subsidiary
of any Person, such Subsidiary if all of the outstanding Capital
Stock in such Subsidiary (other than any director's qualifying
shares or Investments by foreign nationals mandated by applicable
law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision of
the TIA, the provision is incorporated by reference in and made a
part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a Securityholder;
13
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by a rule of the Commission and not otherwise defined
herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP:
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(vii) all references to Sections or Articles refer to
Sections or Articles of this Indenture unless otherwise
indicated.
14
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in
the form annexed hereto as Exhibit A. The Securities may have
notations, legends or endorsements required by law, stock
exchange agreements to which the Company is subject or usage. The
Company shall approve the form of the Securities and any
notation, legend or endorsement on the Securities. Each Security
shall be dated the date of its authentication.
The terms and provisions contained in the form of the
Securities annexed hereto as Exhibit A shall constitute, and are
hereby expressly made, a part of this Indenture. Each of the
Company and the Trustee, by its execution and delivery of this
Indenture, expressly agrees to the terms and provisions of the
Securities applicable to it and to be bound thereby.
15
Securities offered and sold in reliance on Rule 144A shall be
issued in the form of permanent global Securities in registered
form, substantially in the form set forth in Exhibit A (the "U.S.
Global Security"), deposited with the Trustee, as custodian for
the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Security may from time to time be
increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Securities offered and sold in offshore transactions
in reliance on Regulation S shall be issued in the form of a
single temporary global Security in registered form substantially
in the form set forth in Exhibit A (the "Temporary Offshore
Global Security") deposited with the Trustee, as custodian for
the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. At any time following
January 19, 1997 (the "Offshore Securities Exchange Date"), upon
receipt by the Trustee and the Company of a certificate
substantially in the form of Exhibit B hereto, a single permanent
global Security in registered form substantially in the form set
forth in Exhibit A (the "Permanent Offshore Global Security"; and
together with the Temporary Offshore Global Security, the
"Offshore Global Securities") duly executed by the Company and
authenticated by the Trustee as hereinafter provided shall be
deposited with the Trustee, as custodian for the Depositary, and
the Registrar shall reflect on its books and records the date and
a decrease in the principal amount of the Temporary Offshore
Global Security transferred.
Securities which are offered and sold to Institutional
Accredited Investors which are not QIBs (excluding Non-U.S.
Persons) shall be issued in the form of permanent certificated
Securities in registered form in substantially the form set forth
in Exhibit A (the "U.S. Physical Securities"). Securities issued
pursuant to Section 2.07 in exchange for interests in the
Offshore Global Securities shall be in the form of permanent
certificated Securities in registered form substantially in the
form set forth in Exhibit A (the "Offshore Physical Securities").
The Offshore Physical Securities and U.S. Physical
Securities are sometimes collectively herein referred to as the
"Physical Securities". The U.S. Global Security and the Offshore
Global Securities are sometimes referred to as the "Global
Securities".
The definitive Securities shall be typed, printed,
lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be
listed, all as determined by the Officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 2.02. Restrictive Legends. (a) Unless and
until a Security is exchanged for an Exchange Security in
connection with an effective Registration Statement pursuant to
the Registration Rights Agreement, (i) the U.S. Global Security
and each U.S. Physical Security shall bear the legend set forth
below on the face thereof and (ii) the Offshore Physical
Securities and the Offshore Global Security shall bear the legend
16
set forth below on the face thereof until at least 41 days after
the Closing Date and receipt by the Company and the Trustee of a
certificate substantially in the form of Exhibit B hereto:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
17
ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
(b) Each Global Security, whether or not an Exchange
Security, shall also bear the following legend on the face
thereof:
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
COMPANY 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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE 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 THE DEPOSITORY
TRUST COMPANY OR NOMINEES OF THE DEPOSITORY TRUST
COMPANY 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 SECTION
2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations.
Two Officers shall execute the Securities for the Company by
facsimile or manual signature in the name and on behalf of the
Company.
If an Officer whose signature is on a Security no
longer holds that office at the time the Trustee or
authenticating agent authenticates the Security, the Security
shall be valid nevertheless.
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A Security shall not be valid until an authorized signatory
of the Trustee or authenticating agent manually signs the
certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee or an authenticating agent shall upon
receipt of a Company Order authenticate for original issue
Securities in the aggregate principal amount of up to $250,00,000
plus any Exchange Securities that may be issued pursuant to the
Registration Rights Agreement; provided that the Trustee shall
receive an Officers' Certificate and an Opinion of Counsel of the
Company in connection with such authentication of Securities. The
Opinion of Counsel shall be to the effect that:
(a) the form and terms of such Securities have been
established by or pursuant to a Board Resolution or, if
applicable, an indenture supplemental hereto in conformity
with the provisions of this Indenture;
(b) such supplemental indenture, if any, when executed
and delivered by the Company and the Trustee, will
constitute a valid and binding obligation of the Company;
(c) such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute valid and binding obligations of
the Company in accordance with their terms and will be
entitled to the benefits of this Indenture, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights
and to general equitable principles; and
(d) that the Company has been duly incorporated in,
and is a validly existing corporation in good standing
under the laws of, the State of Delaware.
Such Company Order shall specify the amount of Securities
to be authenticated and the date on which the original
issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not
exceed the amount set forth above except for Securities
authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to
Section 2.06, 2.09 or 2.11.
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating
agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
The Securities shall be issuable only in registered
form without coupons and only in denominations of $1,000 in
principal amount and any integral multiple of $1,000 in excess
thereof.
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SECTION 2.04. Registrar and Paving Agent. The Company shall
maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the "Registrar"),
an office or agency where Securities may be presented for payment
(the "Paying Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities and
this Indenture may be served, which shall be in the Borough of
Manhattan, The City of New York. The Company shall cause the
Registrar to keep a register of the Securities and of their
transfer and exchange (the "Security Register"). The Company may
have one or more co-Registrars and one or more additional Paying
Agents.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall give prompt written
notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails
to maintain a Registrar, Paying Agent and/or agent for service of
notices and demands, the Trustee shall act as such Registrar,
Paying Agent and/or agent for service of notices and demands for
so long as such failure shall continue and shall be entitled to
compensation therefor pursuant to Section 7.07. The Company may
remove any Agent upon written notice to such Agent and the
Trustee; provided that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent
to such Agent as evidenced by an appropriate agency agreement
entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that
the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso.
The Company, any Subsidiary of the Company, or any Affiliate of
any of them may act as Paying Agent, Registrar or co-Registrar,
and/or agent for service of notice and demands; provided,
however, that neither the Company, a Subsidiary of the Company
nor an Affiliate of any of them shall act as Paying Agent in
connection with the defeasance of the Securities or the discharge
of this Indenture under Article Eight.
The Company initially appoints the Trustee as
Registrar, Paying Agent, authenticating agent and agent for
service of notice and demands. If, at any time, the Trustee is
not the Registrar, the Registrar shall make available to the
Trustee before each Interest Payment Date and at such other times
as the Trustee may reasonably request, the names and addresses of
the Holders as they appear in the Security Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not
later than 11:00 a.m. New York City time on each due date of the
principal, premium, if any, and interest on any Securities, the
Company shall deposit with the Paying Agent money in immediately
available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Company shall require each
Paying Agent, if any, other than the Trustee to agree in writing
that such Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, and interest on the
Securities (whether such money has been paid to it by the Company
or any other obligor on the Securities), and that such Paying
Agent shall promptly notify the Trustee in writing of any default
by the Company (or any other obligor on the Securities) in making
any such payment. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and account for
20
any funds disbursed, and the Trustee may at any time during the continuance
of any payment default, upon written request to a Paying Agent,
require such Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. Upon doing so,
the Paying Agent shall have no further liability for the money so
paid over to the Trustee. If the Company or any Subsidiary of the
Company or any Affiliate of any of them acts as Paying Agent, it
will, on or before each due date of any principal of, premium, if
any, or interest on the Securities, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money
sufficient to pay such principal, premium, if any, or interest so
becoming due until such sum of money shall be paid to such
Holders or otherwise disposed of as provided in this Indenture,
and will promptly notify the Trustee in writing of its action or
failure to act as required by this Section 2.05.
SECTION 2.06. Transfer and Exchange. The Securities
are issuable only in registered form. A Holder may transfer a
Security by written application to the Registrar stating the name
of the proposed transferee and otherwise complying with the terms
of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only
upon, registration of the transfer by the Registrar in the
Security Register. Prior to the registration of any transfer by a
Holder as provided herein, the Company, the Trustee, and any
agent of the Company or the Trustee shall treat the person in
whose name the Security is registered as the owner thereof for
all purposes whether or not the Security shall be overdue, and
neither the Company, the Trustee, nor any such agent shall be
affected by notice to the contrary. Furthermore, any Holder of or
beneficial owner of an interest in a Global Security shall, by
acceptance of such Global Security, be deemed to have agreed that
transfers of beneficial interests in such Global Security may be
effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial
interest in the Security shall be required to be reflected in a
book entry. When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations (including on exchange of
Securities for Exchange Securities), the Registrar shall register
the transfer or make the exchange as requested if its
requirements for such transactions are met; provided that no
exchanges of Securities for Exchange Securities shall occur until
a Registration Statement shall have been declared effective by
the Commission and that any Securities that are exchanged for
Exchange Securities shall be cancelled by the Trustee. To permit
registrations of transfers and exchanges in accordance with the
terms, conditions and restrictions hereof, the Company shall
execute and the Trustee shall authenticate Securities at the
Registrar's request. No service charge shall be made to any
Holder for any registration of transfer or exchange or redemption
of the Securities, but the Company may require payment by the
Holder of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than
any such transfer taxes or other similar governmental charge
payable upon transfers, exchanges or redemptions pursuant to
Section 2.11, 3.08, 4.06 or 9.04).
The Registrar shall not be required (i) to issue,
register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Securities selected for
redemption under Section 3.03 or Section 3.08 and ending at the
close of business on the day of such mailing, or (ii) to register
21
the transfer of or exchange any Security so selected for redemption
in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global
Securities. (a) The U.S. Global Security and Offshore Global
Security initially shall (i) be registered in the name of the
Depositary for such Global Securities or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for
such Depositary and (iii) bear legends as set forth in Section
2.02. Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depositary, or
the Trustee as its custodian, or under any Global Security, and
the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee
or any agent of the Company or the Trustee, from giving effect to
any written certification, proxy or other authorization furnished
by the Depositary or impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a beneficial owner of any Security.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in
part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in a Global
Security may be transferred in accordance with the
applicable rules and procedures of the Depositary and the
provisions of Section 2.08. In addition, Physical
Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in the U.S. Global
Security or the Offshore Global Security, respectively, if
(i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S.
Global Security or the Offshore Global Security, as the
case may be, and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) an Event
of Default has occurred and is continuing and the Registrar
has received a request to the foregoing effect from the
Depositary.
(c) Any beneficial interest in one of the Global
Securities that is transferred to a person who takes
delivery in the form of an interest in the other Global
Security will, upon transfer, cease to be an interest in
such Global Security and become an interest in the other
Global Security and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other
procedures applicable to beneficial interests in such other
Global Security for as long as it remains such an interest.
(d) In connection with any transfer pursuant to
paragraph (b) of this Section 2.07 of a portion of the
beneficial interests in a Global Security to beneficial
owners who are required to hold Physical Securities, the
Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the Global
Security in an amount equal to the principal amount of the
beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Physical
Securities of like tenor and amount.
22
(e) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Global Security shall be deemed to
be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in the
Global Security an equal aggregate principal amount of
Physical Securities of authorized denominations.
(f) Any Physical Security delivered in exchange for an
interest in the U.S. Global Security pursuant to paragraph
(b) or (d) of this Section 2.07 shall, except as otherwise
provided by paragraph (f)(i)(A) or paragraph (d) of Section
2.08, bear the legend regarding transfer restrictions
applicable to the U.S. Physical Security set forth in
Section 2.02.
(g) The registered holder of a Global Security may
grant proxies and otherwise authorize any person, including
Agent Members and persons that may hold interests through
Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(h) QIBs that are beneficial owners of interests in a
Global Security may receive Physical Securities (which
shall bear the Private Placement Legend if required by
Section 2.02) in accordance with the procedures of the Depositary.
In connection with the execution, authentication and
delivery of such Physical Securities, the Registrar shall
reflect on its books and records a decrease in the
principal amount of the relevant Global Security equal to
the principal amount of such Physical Securities and the
Company shall execute and the Trustee shall authenticate
and deliver one or more Physical Securities having an equal
aggregate principal amount.
SECTION 2.08. Special Transfer Provisions. Unless and
until a Security is exchanged for an Exchange Security in
connection with an effective Registration Statement pursuant to
the Registration Rights Agreement, transfers of a Security or of
Securities shall only be permitted as specified below:
(a) Transfers to QIBs. The following provisions shall apply
with respect to the registration of proposed transfer of a U.S.
Physical Security or an interest in the U.S. Global Security to a
QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of (A)
U.S. Physical Securities, the Registrar shall register the
transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form
of Security stating, or has otherwise advised the Company
and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on
the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing
the Security for its own account or an account with respect
to which it exercises sole investment discretion and that
it and any such account is a QIB within the meaning of Rule
144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
23
such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A
or (B) an interest in the U.S. Global Security, the
transfer of such interest may be effected only through the
book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member,
and the Security to be transferred consists of U.S.
Physical Securities, upon receipt by the Registrar of the
documents referred to in clause (i) and instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of
the U.S. Global Security in an amount equal to the
principal amount of the U.S. Physical Securities to be
transferred, and the Trustee shall cancel the U.S. Physical
Securities so transferred.
(b) Transfers of Interests in the Offshore Global Security
or Offshore Physical Securities to U.S. Persons. The following
provisions shall apply with respect to any transfer of interests
in the Offshore Global Security or Offshore Physical Securities
to U.S. Persons:
(i) prior to the removal of the Private Placement
Legend from the Offshore Global Security or Offshore
Physical Securities pursuant to Section 2.02, the Registrar
shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register
the transfer of any such Security without requiring any
additional certification.
(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Security to a
Non-U.S. Person:
(i) The Registrar shall register any proposed transfer
to any Non-U.S. Person if the Security to be transferred is
a U.S. Physical Security or an interest in the U.S. Global
Security only upon receipt of a certificate substantially
in the form of Exhibit C from the proposed transferor.
(ii) (A) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security,
upon receipt by the Registrar of (1) the documents required
by paragraph (i) and (2) instructions in accordance with
the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be
transferred, and (B) if the proposed transferee is an Agent
Member, upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of
the Offshore Global Security in an amount equal to the
principal amount of the U.S. Physical Securities or the
24
U.S. Global Security, as the case may be, to be
transferred, and the Trustee shall cancel the Physical
Security, if any, so transferred or decrease the amount of
the U.S. Global Security.
(d) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private
Placement Legend, the Registrar shall deliver Securities that do
not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Securities bearing the Private
Placement Legend, the Registrar shall deliver only Securities
that bear the Private Placement Legend unless either (i) the
Private Placement Legend is no longer required by Section 2.02 or
(ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company to the effect that neither
such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the
Securities Act.
(e) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of, or beneficial owner
of an interest in, such Security acknowledges the restrictions on
transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such
Security only as provided in this Indenture. The Registrar shall
not register a transfer of any Security unless such transfer
complies with the restrictions on transfer of such Security set
forth in this Indenture. In connection with any transfer of
Securities to an Institutional Accredited Investor, each such
Holder or beneficial owner agrees by its acceptance of Securities
to furnish to the Registrar and the Company such certifications,
legal opinions or other information as the Company may reasonably
require to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act; provided that
the Registrar shall not be required to determine (but may rely on
a determination made by the Company with respect to) the
sufficiency of any such certifications, legal opinions or other
information.
(f) Transfers to Non-QIB Institutional Accredited Investors.
The following provisions shall apply with respect to the
registration of any proposed transfer of a Security to any
Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Security, whether or not such Security bears the Private
Placement Legend, if (A) the requested transfer is after
three years after the Closing Date or such other time that
the Commission determines to apply pursuant to Rule 144(k)
under the Securities Act or any successor provision at the
time of such transfer or (B) the proposed transferee has
delivered to the Registrar (1) a certificate substantially
in the form of Exhibit D hereto and (2) if such transfer is
in respect of an aggregate principal amount of Securities
at the time of transfer of less than $250,000, an Opinion
of Counsel acceptable to the Company that such transfer is
in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security,
upon receipt by the Registrar of (A) the documents, if any,
required by paragraph (i) and (B) instructions given in
accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of
the U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S.
25
Global Security to be transferred, and the Company
shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Securities of like tenor
and amount.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.07 or this Section 2.08. The Company shall have the
right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Securities. If a mutilated
Security is surrendered to the Trustee or if the Holder claims
that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a
replacement Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding; provided that
the requirements of the second paragraph of Section 2.10 are met.
If required by the Trustee or the Company, an indemnity bond must
be furnished that is sufficient in the judgment of the Trustee to
protect the Company, the Trustee or any Agent from any loss that
any of them may suffer if a Security is replaced. The Company may
charge such Holder for its expenses and the expenses of the
Trustee in replacing a Security. In case any such mutilated,
lost, destroyed or wrongfully taken Security has become or is
about to become due and payable, the Company in its discretion
may pay the principal of, premium, if any, and interest accrued
on such Security instead of issuing a new Security in replacement
thereof.
If, after the delivery of such replacement Security, a
bona fide purchaser of the original Security in lieu of which
such replacement Security was issued presents for payment or
registration such original Security, the Trustee shall be
entitled to recover such replacement Security from the person to
whom it was delivered or any person taking therefrom, except a
bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Trustee, the
Company or any Agent in connection therewith.
Every replacement Security is an additional obligation
of the Company and shall be entitled to the benefits of this
Indenture.
SECTION 2.10. Outstanding Securities. Securities
outstanding at any time are all Securities that have been
authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation and those described in
this Section 2.10 as not outstanding.
If a Security is replaced pursuant to Section 2.09, it
ceases to be outstanding unless and until the Trustee and the
Company receive proof satisfactory to them that the replaced a
bona fide purchaser.
If the Paying Agent (other than the Company or an
Affiliate of the Company) holds on the maturity date money
sufficient to pay the principal of, premium, if any, and interest
accrued on Securities payable on that date, then on and after
that date such Securities cease to be outstanding and interest on
them shall cease to accrue.
26
A Security does not cease to be outstanding because the Company
or one of its Affiliates holds such Security, provided, however, that, in
determining whether the Holders of the requisite principal amount
of the outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor.
SECTION 2.11. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive
Securities but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the Officers
executing the temporary Securities, as evidenced by their
execution of such temporary Securities. If temporary Securities
are issued, the Company will cause definitive Securities to be
prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company
designated for such purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall
be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 2.12. Cancellation. The Company at any time
may deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Securities previously
authenticated hereunder which the Company has not issued and
sold. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange
or payment. The Trustee shall cancel all Securities surrendered
for transfer, exchange, payment or cancellation and shall dispose
of them in accordance with its normal procedure. The Company
shall not issue new Securities to replace Securities it has paid
in full or delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP, CINS and ISIN Numbers. The
Company in issuing the Securities may use "CUSIP", "CINS", "ISIN"
or other identification numbers (if then generally in use), and,
if so, the Trustee shall use CUSIP numbers, CINS numbers, ISIN
numbers or other identification numbers, as the case may be, in
notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation
is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other
27
identification numbers printed on the Securities; provided
further that failure to use "CUSIP", "CINS", "ISIN" or other
identification numbers in any notice of redemption or exchange
shall not effect the validity or sufficiency of such notice.
SECTION 2.14. Defaulted Interest. If the Company
defaults in a payment of interest on the Securities, it shall
pay, or shall deposit with the Paying Agent money in immediately
available funds sufficient to pay the defaulted interest, plus
(to the extent lawful) any interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special
record date. A special record date, as used in this Section 2.14
with respect to the payment of any defaulted interest, shall mean
the 15th day next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special
record date, the Company shall mail to each Holder and to the
Trustee a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest to be paid.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. The Company may, at
its option at any time and from time to time, redeem Securities,
in whole or in part, at a redemption price equal to the sum of
(i) the principal amount thereof on the Redemption Date, plus
(ii) accrued and unpaid interest thereon, if any, to the
Redemption Date, plus (iii) the Make-Whole Premium, if any, with
respect thereto (the "Redemption Price"). "Make-Whole Premium"
means, with respect to any Security, the excess, if any, of (A)
the present value of the required interest and principal payments
due on such Security on or after the Redemption Date, computed
using a discount rate equal to the Treasury Rate plus 100 basis
points, over (B) the sum of the then outstanding principal amount
of such Security plus the accrued and unpaid interest thereon, if
any, paid on the Redemption Date. "Treasury Rate" means the yield
to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two Business Days
prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar
market data)) most nearly equal to the then remaining Average
Life of the Securities; provided, however, that if the Average
Life of the Securities is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
Average Life of the Securities is less than one year, the weekly
average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be
used.
SECTION 3.02. Notices to Trustee. If the Company
elects to redeem Securities pursuant to Section 3.01, it shall
notify the Trustee in writing of the Redemption Date and the
amount of Securities to be redeemed.
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The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least ten days before mailing the notice
to Holders required pursuant to Section 3.04 (unless a shorter
period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Securities to Be Redeemed.
In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee not more
than 60 days prior to the Redemption Date in compliance with the
requirements of the principal national securities exchange, if
any, on which the Securities are listed or, if the Securities are
not listed on a national securities exchange, by lot or by such
other method as the Trustee shall deem fair and appropriate;
provided that no Security of $1,000 in principal amount or less
shall be redeemed in part.
The Trustee shall make the selection from the
Securities outstanding and not previously called for redemption.
Securities in denominations of $1,000 in principal amount may
only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral
multiple thereof) of Securities that have denominations larger
than $1,000 in principal amount . Provisions of this Indenture
that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall
notify the Company and the Registrar promptly in writing of the
Securities or portions of Securities to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to
any redemption of Securities pursuant to Section 3.01, at least
20 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first class mail to
each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be
redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be
surrendered to the Paying Agent in order to collect the Redemption Price;
(e) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the Redemption Date and the only
remaining right of the Holders is to receive payment of the
Redemption Price upon surrender of the Securities to the Paying
Agent;
(f) if any Security is being redeemed in part, the
portion of the principal amount (equal to $1,000 in principal
amount or any integral multiple thereof) of such Security to be
redeemed and that, on and after the Redemption Date, upon
29
surrender of such Security, a new Security or Securities in
principal amount equal to the unredeemed portion thereof will be
reissued; and
(g) that, if any Security contains a CUSIP, CINS, ISIN
or other identification number as provided in Section 2.13, no
representation is being made as to the correctness of the CUSIP,
CINS, ISIN or other identification number either as printed on
the Securities or as contained in the notice of redemption and
that reliance may be placed only on the other identification
numbers printed on the Securities.
At the Company's request (which request may be revoked
by the Company at any time prior to the time at which the Trustee
shall have given such notice to the Holders), made in writing to
the Trustee at least ten days before it is required to mail the
notice to Holders required by this Section 3.04, the Trustee
shall give such notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such
notice to the Holders, the Company shall concurrently deliver to
the Trustee an Officers' Certificate stating that such notice has
been given.
SECTION 3.05. Effect of Notice of Redemption. Once
notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the
Redemption Price. Upon surrender of any Securities to the Paying
Agent, such Securities shall be paid at the Redemption Price.
Notice of redemption shall be deemed to be given when
mailed, whether or not the Holder receives the notice. In any
event, failure to give such notice, or any defect herein, shall
not affect the validity of the proceedings for the redemption to
whom such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior
to 10:00 A.M. New York City time on any Redemption Date, the
Company shall deposit with the Paying Agent (or, if the Company
is acting as its own Paying Agent, shall segregate and hold in
trust as provided in Section 2.05) money sufficient to pay the
Redemption Price of all Securities to be redeemed on that date
other than Securities or portions thereof called for redemption
on that date that have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.07. Payment of Securities Called for
Redemption. If notice of redemption has been given in the manner
provided above, the Securities or portion of Securities specified
in such notice to be redeemed shall become due and payable on the
Redemption Date at the Redemption Price stated therein, and on
and after such date (unless the Company shall default in the
payment of such Securities at the Redemption Price, in which case
the principal, until paid, shall bear interest from the
Redemption Date at the rate prescribed in the Securities), such
Securities shall cease to accrue interest. Upon surrender of any
Security for redemption in accordance with a notice of
redemption, such Security shall be paid and redeemed by the
Company at the Redemption Price; provided that installments of
interest shall be payable to the Holders registered as such at
the close of business on the relevant Regular Record Date that is
on or prior to the Redemption Date.
30
SECTION 3.08. Securities Redeemed in Part. Upon surrender of
any Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder a new
Security equal in principal amount to the unredeemed portion of
such surrendered Security.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall
pay the principal of, premium, if any, and interest on the
Securities on the dates and in the manner provided in the
Securities and this Indenture. An installment of principal,
premium, if any, or interest shall be considered paid on the date
due if the Trustee or Paying Agent (other than the Company, a
Subsidiary of the Company, or any Affiliate of any of them) holds
on that date money designated for and sufficient to pay the
installment. If the Company or any Subsidiary of the Company or
any Affiliate of any of them, acts as Paying Agent, an
installment of principal, premium, if any, or interest shall be
considered paid on the due date if the entity acting as Paying
Agent complies with the last sentence of Section 2.05. As
provided in Section 6.09, upon any bankruptcy or reorganization
procedure relative to the Company, the Trustee shall serve as the
Paying Agent for the Securities.
The Company shall pay interest on overdue principal,
premium, if any, and interest on overdue installments of
interest, to the extent lawful, at the rate per annum specified
in the Securities.
SECTION 4.02. Maintenance of Office or Agency. The
Company will maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the
Trustee, Registrar or co-Registrar or any Affiliate of any of
them) where Securities may be surrendered for registration of
transfer or exchange or for presentation for payment and where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the address of the Trustee set forth in
Section 10.02.
The Company may also from time to time designate one
or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designation. The Company will give
prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee,
acting by and through its agent in New York City, Texas Commerce
Trust Company of New York, located in the Borough of Manhattan,
The City of New York, as such office of the Company in accordance
with Section 2.04.
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SECTION 4.03. Limitation on Restricted Payments. (a) The
Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, take any of the following actions:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Capital Stock
of the Company (other than dividends or distributions
payable solely in shares of its Qualified Capital Stock or
in options, warrants or other rights to acquire such shares
of Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire
for value, directly or indirectly, any shares of Capital
Stock of the Company or any Subsidiary, or any options,
warrants or other rights to acquire such shares of Capital
Stock, held by Persons other than the Company or a
Restricted Subsidiary;
(iii) make any Investment in any Unrestricted Subsidiary
or any Affiliate (other than a Restricted Subsidiary); or
(iv) declare or pay any dividend or distribution on
any Capital Stock of any Restricted Subsidiary to any
Person (other than (a) to the Company or any of its Wholly
Owned Restricted Subsidiaries or (b) to all holders of
Capital Stock of any Restricted Subsidiary on a pro rata
basis)
(such being payments or other actions described in (but not
excluded from) clauses (i) through (iv) collectively referred to
as "Restricted Payments"), unless (1) at the time of, and
immediately after giving effect to, the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors of the Company as
of the date thereof, whose determination shall be conclusive and
evidenced by a Board Resolution), no Default or Event of Default
shall have occurred and be continuing, (2) after giving effect to
the proposed Restricted Payment, the Company would have not less
than $500 million of Specified Cash and Cash Equivalents which
are not required to be shown as restricted on a balance sheet of
the Company and its Subsidiaries prepared in accordance with
GAAP, and (3) the aggregate amount of all Restricted Payments
declared or made after the date of this Indenture shall not
exceed the sum of:
(A) 50% (or, if the Securities at the time of the
proposed Restricted Payment are rated investment grade by
both Moody's and S&P, 75%) of the Consolidated Adjusted Net
Income of the Company accrued on a cumulative basis during
the period beginning on the first day of the Company's
first fiscal quarter commencing prior to the date of this
Indenture and ending on the last day of the Company's last
fiscal quarter ending prior to the date of such proposed
Restricted Payment (or, if such aggregate cumulative
Consolidated Adjusted Net Income shall be a loss, minus
100% of such loss), plus
(B) the aggregate net proceeds (including the fair
value of non-cash proceeds, as determined by the Board of
Directors) received after the date of this Indenture by the
Company as capital contributions or from the issuance or
sale of shares of Qualified Capital Stock of the Company
(including upon the exercise of options, warrants or
32
rights) or warrants, options or rights to purchase shares of
Qualified Capital Stock of the Company, plus
(C) the aggregate principal amount of debt securities
(including, without limitation, the debt securities issued
in connection with the 8 1/2 % Convertible Trust Originated
Preferred Securities of the Continental Airlines Finance
Trust) or liquidation value of Redeemable Capital Stock,
whenever issued, that has been converted into or exchanged
for Qualified Capital Stock of the Company after the date
of this Indenture, to the extent of the net proceeds
received upon the sale or other issuance of such securities
(including the fair value of non-cash proceeds, as
determined by the Board of Directors of the Company),
together with the aggregate net cash proceeds received by
the Company at the time of such conversion or exchange,
plus
(D) $250 million.
(b) Notwithstanding paragraph (a) of this Section
4.03, the Company and any Restricted Subsidiary may take the
following actions so long as (with respect to clauses (ii)
through (v) below) no Default or Event of Default shall have
occurred and be continuing and so long as after giving effect to
the actions referred to in clause (iii) or (iv) below, the
Company would have not less than $500 million of Specified Cash
and Cash Equivalents which are not required to be shown as
restricted on a balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at such date of
declaration the payment of such dividend would have
complied with the provisions of paragraph (a) above and
such payment will be deemed to have been paid on such date
of declaration for purposes of the calculation required by
paragraph (a) above;
(ii) the purchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the
Company in exchange for, or out of the net cash proceeds of
a substantially concurrent issuance and sale of, shares of
Qualified Capital Stock of the Company;
(iii) the declaration and payment of any dividend or
distribution to holders of the Capital Stock of the Company
consisting of cash or property relating to, or securities
deriving their value from the Company's interest in,
AMADEUS, assets relating to the Company's reservation
services business or assets relating to the Company's
catering service business;
(iv) the purchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the
Company owned by Air Canada or any Affiliate thereof as of
the date of this Indenture; and
(v) the purchase, redemption or other acquisition or
retirement for value of shares of Capital Stock of the
Company issued, or any payments, awards or grants,
33
pursuant to employee benefits plans or agreements in the
ordinary course of business and consistent with past
practice.
The actions described in this paragraph (b) shall be Restricted
Payments that shall be permitted to be taken in accordance with
this paragraph (b) but the actions described in clauses (i) and
(ii) of this paragraph (b) shall reduce the amount that would
otherwise be available for Restricted Payments under Section
4.03(a)(3).
SECTION 4.04. Limitation on Transactions with
Affiliates. The Company will not, and will not permit any
Restricted Subsidiary to enter into or suffer to exist, directly
or indirectly, any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with, or for the benefit
of, any Affiliate of the Company or of any Restricted Subsidiary
(other than the Company, a Wholly Owned Restricted Subsidiary or
Air Micronesia, Inc. or Continental Micronesia Inc., so long as
they are Restricted Subsidiaries) unless (i) such transaction or
series of transactions are on terms that are no less favorable to
the Company or such Restricted Subsidiary, as the case may be,
than those that could have been obtained in an arm's-length
transaction with third parties that are not Affiliates, and (ii)
with respect to any transaction or series of related transactions
involving aggregate consideration equal to or greater than $25
million, the Company delivers an Officers' Certificate to the
Trustee certifying that such transaction or series of
transactions complies with clause (i) above and that either such
transaction or series of related transactions has been approved
by a majority of the Disinterested Directors of the Company or
the Company has obtained a written opinion from a nationally
recognized investment banking firm to the effect that such
transaction or series of related transactions is fair to the
Company or its Restricted Subsidiary, as the case may be, from a
financial point of view; provided, however, that this Section
4.04 will not restrict (1) the Company from paying reasonable and
customary compensation and fees (including securities of the
Company) to directors of the Company or any Restricted Subsidiary
who are not employees of the Company or any Restricted Subsidiary
or from paying amounts or making awards or grants of cash,
securities or otherwise pursuant to employee benefit plans or
agreements in the ordinary course of business and consistent with
past practice, (2) transactions pursuant to tax sharing
agreements between the Company and any other Person with which
the Company is part of a consolidated group for tax purposes, and
(3) any Restricted Payment not prohibited by Section 4.03.
SECTION 4.05. Limitation on Disposition of Proceeds of
Asset Sales. To the extent that the Net Cash Proceeds of Asset
Sales in any 12-month period exceed 15% of Consolidated Net
Tangible Assets (determined as of the date closest to the
commencement of such 12-month period for which a consolidated
balance sheet of the Company and its Restricted Subsidiaries has
been prepared in conformity with GAAP), the Company will, within
12 months after the date such Net Cash Proceeds so exceeded 15%
of Consolidated Net Tangible Assets (such amount being defined as
"Excess Proceeds"), apply all of such Excess Proceeds to one or
any combination of the following: (i) the permanent repayment of
unsubordinated Indebtedness of the Company or any Indebtedness of
any Restricted Subsidiary, (ii) the investment (or the commitment
to invest followed by the actual investment within 12 months from
such commitment date) in property or assets used in a business
related to that of the Company or any Restricted Subsidiary on
the date of this Indenture (or in a Person engaged in such a
34
business), or (iii) the offer to purchase Securities (an "Excess
Proceeds Offer") in an aggregate principal amount of not less
than $25,000,000 under procedures similar to those described in
paragraphs (b) and (c) of Section 4.06, at a price equal to the
principal amount thereof plus accrued interest, if any, to the
date of purchase.
SECTION 4.06. Purchase of Securities upon a Change of
Control Triggering Event. (a) If a Change of Control Triggering
Event shall occur at any time, then each Holder of Securities
shall have the right to require that the Company purchase such
Holder's Securities, in whole or in part, at a purchase price
(the "Change of Control Purchase Price") in cash in an amount
equal to 101 % of the principal amount thereof, plus accrued
interest, if any, to the date of purchase (the "Change of Control
Purchase Date"), in accordance with the procedures set forth in
paragraphs (b) and (c) of this Section 4.06 (the "Change of
Control Offer").
(b) Within 15 days following any Change of Control
Triggering Event, the Company shall notify the Trustee thereof
and give written notice of such Change of Control Triggering
Event to each Holder of Securities in the manner provided in
Section 10.02, stating (i) that a Change of Control Triggering
Event has occurred and that such Holder has the right to require
the Company to repurchase such Holder's Securities at the Change
of Control Purchase Price; (ii) the Change of Control Purchase
Price and the Change of Control Purchase Date, which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act or
any applicable securities laws or regulations; (iii) that any
Security not tendered will continue to accrue interest; (iv)
that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Securities accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date; (v) that
Holders electing to have any Security purchased pursuant to the
Change of Control Offer will be required to surrender such
Security, together with the form entitled "Option of Holder to
Elect Purchase" on the reverse side of such Security completed,
to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day immediately
preceding the Change of Control Purchase Date; (vi) that Holders
will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third
Business Day immediately preceding the Change of Control Purchase
Date, a facsimile transmission or letter setting forth the name
of such Holder, the principal amount of Securities delivered for
purchase and a statement that such Holder is withdrawing his
election to have such Securities purchased; and (vii) that
Holders whose Securities are being purchased only in part will be
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided that
each Security purchased and each new Security issued shall be in
a principal amount at maturity of $1,000 or integral multiples
thereof.
(c) On the Change of Control Purchase Date, the Company shall:
(i) accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer; (ii) deposit with the
Paying Agent money sufficient to pay the Change of Control
Purchase Price of all Securities or portions thereof so accepted;
and (iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for payment by the Company. The Paying
35
Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price, and
the Trustee shall promptly authenticate and mail to such Holders
a new Security equal in principal amount to the unpurchased
portion of the Securities surrendered; provided that each
Security purchased and each new Security issued shall be in a
principal amount at maturity of $1,000 or integral multiples
thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
(d) The Company will comply with the applicable tender
offer rules, including Rule 14e-l under the Exchange Act, and any
other applicable securities laws and regulations in connection
with a Change of Control Offer. The Company will not, and will
not permit any Restricted Subsidiary to, create or permit to
exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on the date
of this Indenture or any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, provided that
the restrictions contained in the agreements governing such
Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced) that
would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Securities or, if such
Change of Control Offer is made, to pay for the Securities
tendered for purchase.
SECTION 4.07. Existence. Subject to Articles Four and
Five of this Indenture, the Company will do or cause to be done
all things necessary to preserve and keep in full force and
effect its existence and the existence of each of its Restricted
Subsidiaries in accordance with the respective organizational
documents of the Company and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), material licenses and franchises of the
Company and each such Restricted Subsidiary; provided that the
Company shall not be required to preserve any such right, license
or franchise, or the existence of any Restricted Subsidiary
(other than itself), if the maintenance or preservation thereof,
in the judgment of the Company, is no longer desirable in the
conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.08. Payment of Taxes and Other Claims. The
Company shall pay or discharge and shall cause each of its
Subsidiaries to pay or discharge, or cause to be paid or
discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or
imposed upon (a) the Company or any such Subsidiary, (b) the
income or profits of any such Subsidiary which is a corporation
or (c) the property of the Company or any such Subsidiary and
(ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of
the Company or any such Subsidiary; provided that the Company
shall not be required to pay or discharge, or cause to be paid or
discharged, any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good
faith by appropriate proceedings and for which adequate reserves
have been established.
SECTION 4.09. Maintenance of Properties and Insurance. The
Company shall cause all properties used or useful in the conduct
of its business or the business of any of its Restricted Subsidiaries,
36
to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times; provided that nothing in this Section 4.09 shall
prevent the Company or any such Subsidiary from discontinuing the
use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the
business of the Company or such Subsidiary.
The Company shall provide or cause to be provided, for
itself and its Restricted Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds
customarily insured against by corporations similarly situated
and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with
reputable insurers or with the government of the United States of
America, or an agency or instrumentality thereof, in such
amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in
which the Company or such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.10. Notice of Defaults. The Company shall
give written notice to the Trustee within five Business Days of
actual knowledge by a Responsible Officer of the Company of any
Event of Default.
SECTION 4.11. Compliance Certificates. (a) The Company
shall deliver to the Trustee, within 90 days after the end of the
Company's fiscal year and after the end of each fiscal quarter,
an Officers' Certificate stating whether or not the signers know
of any Default or Event of Default that occurred during such
fiscal year. Such certificates shall contain a certification from
the principal executive officer, principal financial officer or
principal accounting officer of the Company that a review has
been conducted of the activities of the Company and the
Restricted Subsidiaries and the Company's and the Restricted
Subsidiaries' performance under this Indenture and that, to the
best knowledge of such officer, the Company has complied with all
conditions and covenants under this Indenture. For purposes of
this Section 4.11, such compliance shall be determined without
regard to any period of grace or requirement of notice provided
under this Indenture. If any such officer knows of such a Default
or Event of Default, the certificate shall describe any such
Default or Event of Default and its status.
(b) The Company shall deliver to the Trustee, within
90 days after the end of its fiscal year, a certificate signed by
the Company's independent certified public accountants stating
(i) that their audit examination has included a review of the
terms of this Indenture and the Securities as they relate to
accounting matters, (ii) that they have read the most recent
Officers' Certificate delivered to the Trustee pursuant to
paragraph (a) of this Section 4.11 and (iii) whether, in
connection with their audit examination, anything came to their
attention that caused them to believe that the Company was not in
compliance with any of the terms, covenants, provisions or
conditions of Article Four and Section 5.01 of this Indenture as
they pertain to accounting matters and, if any Default or Event
of Default related thereto has come to their attention,
specifying the nature and period of existence thereof; provided
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that such independent certified public accountants shall not be
liable in respect of such statement by reason of any failure to
obtain knowledge of any such Default or Event of Default that
would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing
standards in effect at the date of such examination.
(c) Within 90 days of the end of each of the Company's
fiscal years, the Company shall deliver to the Trustee a list of
all Restricted Subsidiaries. The Trustee shall have no duty with
respect to any such list except to keep it on file and available
for inspection by the Holders.
SECTION 4.12. Reports. The Company will file on a
timely basis with the Commission, to the extent such filings are
accepted by the Commission and whether or not the Company has a
class of securities registered under the Exchange Act, the annual
reports, quarterly reports and other documents that the Company
would be required to file if it were subject to Section 13 or 15
of the Exchange Act. The Company will also be required (a) to
file with the Trustee copies of such reports and documents within
15 days after the date on which the Company files such reports
and documents with the Commission or the date on which the
Company would be required to file such reports and documents if
the Company were so required, and (b) if filing such reports and
documents with the Commission is not accepted by the Commission
or is prohibited under the Exchange Act, to supply at the
Company's cost copies of such reports and documents to any Holder
of Securities promptly upon written request.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Consolidation, Merger and Sale of
Assets. The Company will not, in a single transaction or through
a series of transactions, consolidate with or merge with or into
any other Person, or permit any Person to consolidate with or
merge into the Company, or sell, assign, convey, transfer, lease
or otherwise dispose of all or substantially all of its
properties and assets to any other Person or Persons if such
transaction or series of transactions, in the aggregate, would
result in the sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the properties
and assets of the Company and its Restricted Subsidiaries on a
consolidated basis to any other Person or group of affiliated
Persons, unless at the time and immediately after giving effect
thereto (i) either (a) the Company will be the continuing
corporation or (b) the Person (if other than the Company) formed
by such consolidation or into which the Company is merged or the
Person that acquires by sale, assignment, conveyance, transfer,
lease or disposition all or substantially all the properties and
assets of the Company and its Restricted Subsidiaries on a
consolidated basis (the "Surviving Entity") (1) will be a
corporation duly organized and validly existing under the laws of
the United States of America, any state thereof or the District
of Columbia and (2) will expressly assume, by a supplemental
indenture in form satisfactory to the Trustee, the Company's
obligation for the due and punctual payment of the principal of,
premium, if any, and interest on all the Securities and the
performance and observance of every covenant of this Indenture on
the part of the Company to be performed or observed; (ii)
immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and
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treating any obligation of the Company or any Restricted
Subsidiary incurred in connection with or as a result of such
transaction or series of transactions as having been incurred at
the time of such transaction), no Default or Event of Default
will have occurred and be continuing; and (iii) immediately after
giving effect to such transaction or series of transactions on a
pro forma basis (and treating any obligation of the Company or
any Restricted Subsidiary incurred in connection with or as a
result of such transaction or series of transactions as having
been incurred at the time of such transaction), the Consolidated
Net Worth of the Company (or of the Surviving Entity if the
Company is not the continuing obligor under this Indenture) is
equal to or greater than the Consolidated Net Worth of the
Company immediately prior to such transaction or series of
transactions.
In connection with any such consolidation, merger,
sale, assignment, conveyance, transfer, lease or other
disposition, the Company or the Surviving Entity shall deliver to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate demonstrating compliance with
clause (iii) above and an Opinion of Counsel, each stating that
such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture, comply with the requirements of this
Indenture and that all conditions precedent therein provided for
relating to such transaction have been complied with.
SECTION 5.02. Successor Substituted. Upon any
consolidation or merger, or any sale, conveyance, transfer or
other disposition of all or substantially all of the property and
assets of the Company in accordance with Section 5.01 of this
Indenture, the successor Person formed by such consolidation or
merger or to which such sale, conveyance, transfer or other
disposition is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had
been named as the Company herein; provided that the Company shall
not be released from its obligations to pay the principal of,
premium, if any, or interest on the Securities in the case of a
lease of all or substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall
occur with respect to the Securities if any of the following
shall occur:
(a) default in the payment of any installment of
interest on any Security when it becomes due and payable
and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of or
premium, if any, on any Security at its Maturity (upon
acceleration, optional redemption, required purchase or
otherwise);
(c) default in the performance, or breach, of the provisions
of Section 5.01;
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(d) default in the performance, or breach, of any covenant
of the Company contained in this Indenture (other than a
default in the performance, or breach, of a covenant which
is specifically dealt with in clause (a), (b) or (c) above)
and continuance of such default or breach for a period of
60 days after written notice shall have been given to the
Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25 % in aggregate principal amount
of the Securities then outstanding;
(e) Indebtedness of the Company or any Restricted
Subsidiary together aggregating $75 million or more shall
have been accelerated or otherwise declared due and
payable, or required to be prepaid or repurchased (other
than by regularly scheduled required prepayment prior to
the stated maturity thereof), and such Indebtedness shall
not have been discharged, and such acceleration shall not
have been annulled, within 30 days;
(f) one or more final judgments or orders shall be
rendered against the Company or any Restricted Subsidiary
for the payment of money, the portion thereof not covered
by insurance either individually or in the aggregate shall
be in excess of $75 million, such judgments or orders shall
not have been discharged and there shall have been a period
of 30 consecutive days during which a stay of enforcement
of such judgments or orders, by reason of a pending appeal
or otherwise, was not in effect;
(g) a court having jurisdiction in the premises enters
a decree or order for (A) relief in respect of the Company
or any Significant Restricted Subsidiary in an involuntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any
Significant Restricted Subsidiary or for all or
substantially all of the property and assets of the Company
or any Significant Restricted Subsidiary or (C) the winding
up or liquidation of the affairs of the Company or any
Significant Restricted Subsidiary and, in each case, such
decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(h) the Company or any Significant Restricted
Subsidiary (A) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law,
(B) consents to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any
Significant Restricted Subsidiary or for all or
substantially all of the property and assets of the Company
or any Significant Restricted Subsidiary or (C) effects any
general assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default
(other than an Event of Default specified in clause (g) or (h) of
Section 6.01 that occurs with respect to the Company) occurs and
is continuing under this Indenture, the Trustee or the Holders of
at least 25 % in aggregate principal amount of the Securities
then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued interest on the
Securities to be immediately due and payable. Upon a declaration
of acceleration, such principal of,
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premium, if any, and accrued interest shall be immediately due
and payable. In the event of a declaration of acceleration
because an Event of Default set forth in clause (e) of Section
6.01 has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the
event of default triggering such Event of Default pursuant to
clause (e) of Section 6.01 shall be remedied or cured by the
Company or the relevant Restricted Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto, and no other
Defaults under this Indenture have occurred and are continuing
after giving pro forma effect to such remedy, cure or waiver. If
an Event of Default specified in clause (g) or (h) of Section
6.01 occurs and is continuing with respect to the Company, the
principal of, premium, if any, and accrued interest on the
Securities then outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration,
but before a judgment or decree for the payment of the money due
has been obtained by the Trustee, the Holders of at least a
majority in aggregate principal amount of the outstanding
Securities, by written notice to the Company and to the Trustee,
may rescind such declaration and its consequences if (a) the
Company has paid or deposited with the Trustee a sum sufficient
to pay (i) all overdue interest on all Securities, (ii) all
unpaid principal of and premium, if any, on any outstanding
Securities that has become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the
Securities, (iii) to the extent that payment of such interest is
lawful, interest upon overdue interest and overdue principal at
the rate prescribed therefor by such Securities, (iv) all sums
paid or advanced by the Trustee under this Indenture and the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel; (b) all Events of Default,
other than the non-payment of amounts of principal of, premium,
if any, or interest on the Securities that has become due solely
by such declaration of acceleration, have been cured or waived;
and (c) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction. No such rescission
shall affect any subsequent default or impair any right
consequent thereon.
SECTION 6.03. Other Remedies. If an Event of Default
occurs and is continuing, the Trustee may pursue any available
remedy by proceeding at law or in equity to collect the payment
of principal of, premium, if any, or interest on the Securities,
to enforce the performance of any provision of the Securities or
this Indenture or to bring actions on behalf of the Holders of
the Securities against third parties.
The Trustee may maintain a proceeding even if it does
not possess any of the Securities or does not produce any of them
in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to
Sections 6.02, 6.07 and 9.02, the Holders of at least a majority
in principal amount of the outstanding Securities, by notice to
the Trustee, may waive all past Defaults and Events of Default
and their consequences (except a Default in the payment of
principal of, premium, if any, or interest on any Security as
specified in clause (a) or (b) of Section 6.01 or in respect of a
covenant or provision of this Indenture which cannot be modified
or amended without the consent of the Holder of each outstanding
41
Security affected) if (i) all existing Events of Default, other
than the nonpayment of principal of, premium, if any, or interest
on the Securities that have become due solely by such declaration
of acceleration, have been cured or waived and (ii) the
rescission would not conflict with any judgment or decree of a
court of competent jurisdiction. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at
least a majority in aggregate principal amount of the outstanding
Securities may, subject to Section 7.02(iv), direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture,
that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the
rights of Holders of Securities not joining in the giving of such
direction and may take any other action it deems proper that is
not inconsistent with any direction received from Holders of
Securities pursuant to this Section 6.05.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate
principal amount of outstanding Securities make a written
request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer the Trustee
indemnity satisfactory to the Trustee against any costs,
liabilities or expenses which may be incurred in compliance
with such request;
(iv) the Trustee does not comply with the request
within 60 days after receipt of the written request and the
offer of indemnity; and
(v) during such 60-day period, the Holders of a
majority in aggregate principal amount of the outstanding
Securities do not give the Trustee a direction that is
inconsistent with the request.
For purposes of Section 6.05 and this Section 6.06,
the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate
principal amount of outstanding Securities have concurred in any
request or direction of the Trustee to pursue any remedy
available to the Trustee or the Holders with respect to this
Indenture or the Securities or otherwise under the law.
A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority
over such other Holder.
42
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right
of any Holder of a Security to receive payment of the principal
of, premium, if any, or interest on such Security, or to bring
suit for the enforcement of any such payment, on or after the due
date expressed in such Security, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event
of Default in payment of principal, premium or interest specified
in clause (a) or (b) of Section 6.01 occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or any other obligor of
the Securities for the whole amount of principal, premium, if
any, and accrued interest remaining unpaid, together with
interest on overdue principal, premium, if any, and, to the
extent that payment of such interest is lawful, interest on
overdue installments of interest, in each case at the rate
specified in the Securities, and such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07) and the Holders allowed in any
judicial proceedings relative to the Company (or any other
obligor of the Securities), its creditors or its property and
shall be entitled and empowered to collect and receive any
monies, securities or other property payable or deliverable upon
conversion or exchange of the Securities or upon any such claims
and to distribute the same, and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel,
and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to empower the Trustee to
authorize or consent to, or accept or adopt on behalf of any
Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money
pursuant to this Article Six, it shall pay out the money in the
following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to the Holders for amounts then due and unpaid
for principal of, premium, if any, and interest on the
Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference
43
or priority of any kind, according to the amounts due
and payable on such Securities for principal, premium, if
any, and interest, respectively; and
Third: to the Company or any other obligors of the
Securities, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company,
may fix a record date and payment date for any payment to Holders
pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for
the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of the suit, and the
court may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07,
or a suit by Holders of more than 10% in principal amount of the
outstanding Securities.
SECTION 6.12. Restoration of Rights and Remedies. If
the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or
has been determined adversely to the Trustee or to such Holder,
then, and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Company,
Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except
as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or wrongfully taken Securities in
Section 2.09, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay
or omission of the Trustee or of any Holder to exercise any right
or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
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SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein.
Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the
provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA
Sections 315(a) through (d):
(i) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the
document and may in good faith conclusively rely as to the
truth of the statements and the correctness of the opinions
therein:
(ii) before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of
Counsel. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such
certificate, opinion and/or an accountants' certificate;
(iii) the Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any attorney or agent appointed with due care;
(iv) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to it
against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or
direction;
(v) the Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be
authorized or within its rights or powers or for any action
it takes or omits to take in accordance with the direction
of the Holders of a majority in principal amount of the
outstanding Securities relating to the time, method and
place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; provided that the
Trustee's conduct does not constitute negligence or bad
faith;
(vi) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
45
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company
personally or by agent or attorney; and
(viii) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Order and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution.
SECTION 7.03 Individual Rights of Trustee. The
Trustee, in its commercial banking or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Agent may do the same with
like rights. However, the Trustee is subject to TIA Sections
310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i)
makes no representation as to the validity or adequacy of this
Indenture or the Securities, (ii) shall not be accountable for
the Company's use or application of the proceeds from the
Securities and (iii) shall not be responsible for any statement
in the Securities other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any
Event of Default occurs and is continuing and if such Default or
Event of Default is known to an officer assigned to administer
corporate trust matters of the Trustee, the Trustee shall mail to
each Holder in the manner and to the extent provided in TIA
Section 313(c) notice of the Default or Event of Default within
30 days after it occurs, unless such Default or Event of Default
has been cured; provided, however, that, except in the case of a
default in the payment of the principal of, premium, if any, or
interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60
days after each May 15, beginning with May 15, 1997, the Trustee
shall mail to each Holder as provided in TIA Section 313(c) a
brief report that complies with TIA Section 313(a) dated as of
such May 15, if required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Company
shall pay to the Trustee from time to time such compensation as
shall be agreed upon in writing for its services. The
compensation of the Trustee shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
out-of-pocket expenses (including costs of collection) and
advances incurred or made by the Trustee. Such expenses shall
include the reasonable compensation and expenses of the Trustee's
agents and counsel.
46
The Company shall indemnify the Trustee for, and hold it
harmless against, any loss or liability or expense incurred by it
without negligence or bad faith on its part in connection with
the acceptance or administration of this Indenture and its duties
under this Indenture and the Securities, including, without
limitation, the costs and expenses of investigating or defending
itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with
the exercise or performance of any of its powers or duties under
this Indenture and the Securities.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the
Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, premium, if any, and interest
on particular Securities.
If the Trustee incurs expenses or renders services
after the occurrence of an Event of Default specified in clause
(g) or (h) of Section 6.01, the expenses and the compensation for
the services will be intended to constitute expenses of
administration under the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
SECTION 7.08. Replacement of Trustee. A resignation or
removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign at any time by so notifying the
Company in writing at least 30 days prior to the date of the
proposed resignation. The Holders of a majority in principal
amount of the outstanding Securities may remove the Trustee by so
notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may at any
time remove the Trustee, by Company Order given at least 30 days
prior to the date of the proposed removal if: (i) the Trustee is
no longer eligible under Section 7.10; (ii) the Trustee is
adjudged a bankrupt or an insolvent; (iii) a receiver or other
public officer takes charge of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy
exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in
principal amount of the outstanding Securities may appoint a
successor Trustee to replace the successor Trustee appointed by
the Company. If the successor Trustee does not deliver its
written acceptance required by the next succeeding paragraph of
this Section 7.08 within 30 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Immediately after the delivery of such written acceptance,
subject to the lien provided in Section 7.07, (i) the retiring
Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the
retiring Trustee shall become effective and (iii) the successor
Trustee shall have all the rights, powers and duties of the Trustee
47
under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If the Trustee is no longer eligible under Section
7.10, any Holder who satisfies the requirements of TIA Section
310(b) may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
The Company shall give notice of any resignation and
any removal of the Trustee and each appointment of a successor
Trustee to all Holders. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07
shall continue indefinitely for the benefit of the retiring
Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the
Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to,
another corporation or national banking association, the
resulting, surviving or transferee corporation or national
banking association without any further act shall be the
successor Trustee with the same effect as if the successor
Trustee had been named as the Trustee herein.
SECTION 7.10. Eligibility. This Indenture shall always
have a Trustee who satisfies requirements of TIA Section
310(a)(1). The Trustee shall have a combined capital and surplus
of at least $25,000,000 as set forth in its most recent published
annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall
not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds
except to the extent required by law and except for money held in
trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent
for the Company, shall exclude and withhold from each payment of
principal and interest and other amounts due hereunder or under
the Securities any and all withholding taxes applicable thereto
as required by the federal law of the United States or the law of
the State of New York or any political subdivision thereof ("U.S.
Taxes"). The Trustee agrees to act as such withholding agent and,
in connection therewith, whenever any present or future U.S.
Taxes or similar charges are required to be withheld with respect
to any amounts payable in respect of the Securities, to withhold
such amounts and timely pay the same to the appropriate authority
in the name of and on behalf of the holders of the Securities,
that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each holder of a Security
appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such holders may
reasonably request from time to time.
ARTICLE EIGHT
48
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
Except as otherwise provided in this Section 8.01, the Company
may terminate its obligations under the Securities and this
Indenture if:
(i) all Securities previously authenticated and
delivered (other than destroyed, lost or stolen Securities
that have been replaced or Securities that are paid
pursuant to Section 4.01 or Securities for whose payment
money or securities have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section
8.07) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable by it hereunder;
or
(ii) (A) the Securities mature within one year or all
of them are to be called for redemption within one year
under arrangements satisfactory to the Trustee for giving
the notice of redemption, (B) the Company irrevocably deposits
in trust with the Trustee during such one-year period,
under the terms of an irrevocable trust agreement in form
and substance satisfactory to the Trustee, as trust funds
solely for the benefit of the Holders for that purpose,
money or U.S. Government Obligations sufficient (in the
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee), without consideration of
any reinvestment of any interest thereon, to pay principal,
premium, if, any, and interest on the Securities to
maturity or redemption, as the case may be, and to pay all
other sums payable by it hereunder, (C) no Default or Event
of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or
by which it is bound and (E) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of
Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with.
With respect to the foregoing clause (i), the
Company's obligations under Section 7.07 shall survive. With
respect to the foregoing clause (ii), the Company's obligations
in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14,
4.01, 4.02, 7.07, 7.08, 8.06, 8.07 and 8.08 shall survive until
the Securities are no longer outstanding. Thereafter, only the
Company's obligations in Sections 7.07, 8.07 and 8.08 shall
survive. After any such irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the
Company's obligations under the Securities and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may, at its option and at any time, with
respect to the Securities, elect to have either Section 8.03 or
Section 8.04 applied to all outstanding Securities upon
compliance with the conditions set forth below in this Article
Eight.
SECTION 8.03. Defeasance and Discharge of Indenture. Upon
the Company's exercise under Section 8.02 of the option applicable
49
to this Section 8.03, the Company will be deemed to have paid and
will be discharged from any and all obligations in respect of the
Securities on the date the conditions set forth in Section 8.05
are satisfied (hereinafter, a "defeasance"). For this purpose,
such defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the
outstanding Securities, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of
Holders of outstanding Securities to receive, solely from the
trust fund described in Section 8.05 and as more fully set forth
in such Section, payments in respect of the principal of (and
premium, if any, on) and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to
such Securities under Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.09, 2.14, 4.02, 7.07 and 7.08, (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder
and (D) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this
Section 8.03 notwithstanding the prior exercise of its option
under Section 8.04 with respect to the Securities.
SECTION 8.04. Defeasance of Certain Obligations. Upon
the Company's exercise under Section 8.02 of the option
applicable to this Section 8.04, the Company may omit to comply
with any term, provision or condition set forth in Sections 4.03
through 4.12, and clauses (e) and (f) of Section 6.01 shall be
deemed not to be Events of Default, in each case with respect to
the outstanding Securities, on and after the date the conditions
set forth in Section 8.05 are satisfied (hereinafter, a "covenant
defeasance"). For this purpose, such covenant defeasance means
that, with respect to the outstanding Securities, the Company may
omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or
in any other document, and such omission to comply shall not
constitute a Default or an Event of Default under Section
6.01(d), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
SECTION 8.05. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application
of either Section 8.03 or Section 8.04 to the outstanding
Securities:
(a) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 7.10 who shall agree
to comply with the provisions of this Article Eight
applicable to it), under the terms of an irrevocable trust
agreement in form and substance satisfactory to the
Trustee, as trust funds in trust for the purpose of making
the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of
such Securities, (A) cash in United States dollars, or (B)
U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than
one day before the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the
50
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of (and
premium, if any) and interest on the outstanding Securities
on the Stated Maturity (or Redemption Date, if applicable)
of such principal (and premium, if any) or installment of
interest; provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds
of such U.S. Government Obligations to said payments with
respect to the Securities:
(b) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit or, insofar as paragraphs (g) and
(h) of Section 6.01 hereof are concerned, at any time
during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such
period);
(c) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default
under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it
is bound;
(d) In the case of an election under Section 8.03, the
Company shall have delivered to the Trustee an Opinion of
Counsel stating that (x) the Company has received from, or
there has been published by, the Internal Revenue Service a
ruling, or (y) since December 4, 1996, there has been a
change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance
and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(e) In the case of an election under Section 8.04, the
Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of the outstanding
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had
not occurred; and
(f) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating
to either the defeasance under Section 8.03 or the covenant
defeasance under Section 8.04 (as the case may be) have
been complied with.
SECTION 8.06. Application of Trust Money. Subject to
Section 8.08, the Trustee or Paying Agent shall hold in trust
money or U.S. Government Obligations deposited with it pursuant
to Section 8.01, 8.03 or 8.04, as the case may be, and shall
apply the deposited money and the money from U.S. Government
Obligations in accordance with the Securities and this Indenture
to the payment of principal of, premium, if any, and interest on
the Securities; but such money need not be segregated from other
funds except to the extent required by law.
51
SECTION 8.07. Repayment to Company. Subject to Sections 7.07,
8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess money held by
them at any time and thereupon shall be relieved from all
liability with respect to such money. The Trustee and the Paying
Agent shall pay to the Company any money held by them for the
payment of principal, premium, if any, or interest that remains
unclaimed for two years; provided that the Trustee or such Paying
Agent before being required to make any payment may cause to be
published at the expense of the Company once in a newspaper of
general circulation in the City of New York or mail to each
Holder entitled to such money at such Holder's address (as set
forth in the Security Register) notice that such money remains
unclaimed and that after a date specified therein (which shall be
at least 30 days from the date of such publication or mailing)
any unclaimed balance of such money then remaining will be repaid
to the Company. After payment to the Company, Holders entitled to
such money must look to the Company for payment as general
creditors unless an applicable law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
SECTION 8.08. Reinstatement. If the Trustee or Paying
Agent is unable to apply any money or U.S. Government Obligations
in accordance with Section 8.01, 8.03 or 8.04, as the case may
be, by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01, 8.03 or 8.04, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with
Section 8.01, 8.03 or 8.04, as the case may be; provided that, if
the Company has made any payment of principal of, premium, if
any, or interest on any Securities because of the reinstatement
of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from
the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company,
when authorized by resolutions of its Board of Directors, and the
Trustee may amend or supplement this Indenture or the Securities
without notice to or the consent of any Holder:
(a) to cure any ambiguity, or to correct or supplement
any provision in this Indenture or the Securities which may
be defective or inconsistent with any other provision in
this Indenture or the Securities or make any other
provisions with respect to matters or questions arising
under this Indenture or the Securities; provided that, in
each case, such provisions shall not adversely affect the
interests of the Holders;
(b) to comply with Article Five;
52
(c) to add to the covenants of the Company or any other
obligor upon the Securities for the benefit of the Holders
of the Securities or to surrender any right or power
conferred upon the Company or any other obligor upon the
Securities, as applicable, under this Indenture or the
Securities;
(d) to comply with any requirements of the Commission
in connection with the qualification of this Indenture
under the TIA:
(e) to add a guarantor of the Securities;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(g) to mortgage, pledge, hypothecate or grant a
security interest in favor of the Trustee for the benefit
of the Holders as additional security for the payment and
performance of the Company's and any guarantor's
obligations hereunder, in any property or assets, including
any of which are required to be mortgaged, pledged or
hypothecated, or in which a security interest is required
to be granted to the Trustee pursuant to this Indenture or
otherwise.
SECTION 9.02. With Consent of Holders. Subject to
Sections 6.04 and 6.07 and without prior notice to the Holders,
the Company, when authorized by its Board of Directors (as
evidenced by a Board Resolution), and the Trustee may amend this
Indenture and the Securities with the written consent of the
Holders of a majority in principal amount of the Securities then
outstanding, and the Holders of a majority in principal amount of
the Securities then outstanding by written notice to the Trustee
may waive future compliance by the Company with any provision of
this Indenture or the Securities.
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or
any installment of interest on, any Security, or reduce the
principal amount of, or premium, if any, or interest on,
any Security, or adversely affect any right of repayment at
the option of any Holder of any Security, or change the
place or currency of payment of principal of, or premium,
if any, or interest on, any Security, or impair the right
to institute suit for the enforcement of any payment on or
after the Stated Maturity (or, in the case of a redemption
on or after the Redemption Date) of any Security;
(ii) amend, change or modify the obligation of the
Company to make and consummate an Excess Proceeds Offer
with respect to any Asset Sale in accordance with Section
4.05 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a
Change of Control Triggering Event in accordance with
Section 4.06, including, in each case, amending, changing
or modifying any definition relating thereto;
53
(iii) reduce the percentage of outstanding Securities the
consent of whose Holders is required for any supplemental
indenture, for any waiver of compliance with certain
provisions of this Indenture or for waiver of certain
Defaults and their consequences provided for in this
Indenture;
(iv) waive a default in the payment of principal of, premium,
if any, or interest on the Securities;
(v) modify any of the provisions of this Section 9.02,
except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of
each outstanding Security affected thereby; or
(vi) except as otherwise permitted under Section 5.01,
consent to the assignment or transfer by the Company of any
of its rights or obligations under this Indenture.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of
any proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. The Company will mail
supplemental indentures to Holders upon request. Any failure of
the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until
an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the
same debt as the Security of the consenting Holder, even if
notation of the consent is not made on any Security. However, any
such Holder or subsequent Holder may revoke the consent as to its
Security or portion of its Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become
effective on receipt by the Trustee of written consents from the
Holders of the requisite percentage in principal amount of the
outstanding Securities.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then, notwithstanding the last two sentences of
the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies)
and only those persons shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent
previously given, whether or not such persons continue to be
Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
54
SECTION 9.04. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder to deliver such Security to
the Trustee. At the Company's expense the Trustee may place an
appropriate notation on the Security about the changed terms and
return it to the Holder and the Trustee may place an appropriate
notation on any Security thereafter authenticated. Alternatively,
if the Company or the Trustee so determines the Company in
exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms.
SECTION 9.05. Trustee to Sign Amendments, Etc. The
Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article Nine is authorized or permitted by this
Indenture. Subject to the preceding sentence, the Trustee shall
sign such amendment, supplement or waiver if the same does not
adversely affect the rights, duties or immunities of the Trustee
under this Indenture or otherwise. The Trustee may, but shall not
be obligated to, execute any such amendment, supplement or waiver
that affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the TIA as then in
effect.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939. Prior to
the effectiveness of the Registration Statement, this Indenture
shall incorporate and be governed by the provisions of the TIA
that are required to be part of and to govern indentures
qualified under the TIA. Upon effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of
the TIA that are required to be a part of this Indenture and
shall, to the extent applicable, be governed by such provisions.
SECTION 10.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or
mailed by first class mail addressed as follows:
if to the Company:
-----------------
Continental Airlines, Inc.
2929 Allen Parkway
Suite 2010
Houston, TX 77019
Attention: Chief Financial Officer General Counsel
Telephone: (713) 834-2950
Telecopy: (713) 834-2687
55
if to the Trustee:
------------------
For payment, registration, transfer, exchange and
tender of the Securities:
Texas Commerce Bank National Association
Attention: Registered Bond Events
Telephone: (214) 871-9393 or (800) 275-2048
By Hand By Mail
------- -------
One Main Place P.O. Box 2320
1201 Main Street, Dallas, Texas 75221-2320
18th Floor
Dallas, Texas 75202
Address of the Agent of the Trustee in New York City
----------------------------------------------------
Texas Commerce Bank National Association
c/o Texas Commerce Trust Company of New York
55 Water Street, North Building
Room 234, Windows 20 and 21
New York, New York 10041
Telephone: (212) 638-4020 or (212) 638-4021
Telecopy: (212) 638-7267
For all other communications regarding the Securities:
Texas Commerce Bank National Association
600 Travis Street, Suite 1150
Houston, Texas 77002
Attention: Global Trust Services
Attention: Global Trust Services
Telephone: (713) 216-4808
Telecopy: (713) 216-5476
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent
notices or communications. Notices to the Company or the Trustee
shall be effective only upon receipt.
Any notice or communication mailed to a Holder shall
be mailed to him at his address as it appears on the Security
Register by first class mail and shall be sufficiently given to
him if so mailed within the time prescribed. Copies of any such
communication or notice to a Holder shall also be mailed to the
Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect
to other Holders. Except for a notice to the Trustee, which is
deemed given only when received, and except as otherwise provided
56
in this Indenture, if a notice or communication is mailed in the
manner provided in this Section 10.02, it is duly given, whether
or not the addressee receives it.
Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a
sufficient notification for every purpose hereunder.
SECTION 10.03. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by the
Company to the Trustee to take any action under this Indenture,
the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
(ii) an Opinion of Counsel stating that, in the
opinion of such Counsel, all such conditions precedent have
been complied with.
SECTION 10.04. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(i) a statement that each person signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statement
or opinion contained in such certificate or opinion is
based;
(iii) a statement that, in the opinion of each such
person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether or not, in the opinion
of each such person, such condition or covenant has been
complied with; provided, however, that, with respect to
matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
57
SECTION 10.05. Rules by Trustee Paying Agent or Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Paying Agent or Registrar may make
reasonable rules for its functions.
SECTION 10.06. Payment Date Other Than a Business Day.
If an Interest Payment Date, Redemption Date, Payment Date,
Stated Maturity or date of maturity of any Security shall not be
a Business Day, then payment of principal of, premium, if any, or
interest on such Security, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the Interest Payment
Date, Payment Date, Redemption Date, or at the Stated Maturity or
date of maturity of such Security; provided that no interest
shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 10.07. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. No Adverse Interpretation of Other
Agreements. This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any
Subsidiary of the Company. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.09. No Recourse Against Others. No recourse
for the payment of the principal of, premium, if any, or interest
on any of the Securities, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Securities, or because of the
creation of any Indebtedness represented thereby, shall be had
against any incorporator or against any past, present or future
partner, shareholder, other equity holder, officer, director,
employee or controlling person, as such, of the Company or of any
successor Person, either directly or through the Company or any
successor Person, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture
and the issue of the Securities.
SECTION 10.10. Successors. All agreements of the Company in
this Indenture and the Securities shall bind their respective
successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 10.11. Duplicate Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
SECTION 10.12. Table of Contents, Headings, Etc. The Table
of Contents, Cross-Reference Table and headings of the Articles
58
and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms and
provisions hereof.
59
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, as of the date first written
above.
CONTINENTAL AIRLINES, INC.
By: ___________________________
Jeffery A. Smisek
Executive Vice President and
General Counsel
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By: ___________________________
Name:
Title:
60
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, as of the date first written
above.
CONTINENTAL AIRLINES, INC.
By: ___________________________
Name:
Title:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: ___________________________
Ronda L. Parman
Corporate Trust Officer
EXHIBIT A
[FACE OF NOTE]
CONTINENTAL AIRLINES, INC.
9 1/2 % Senior Note Due December 15, 2001
[CUSIP ______] [CINS ______]
No. $___________
CONTINENTAL AIRLINES, INC., a Delaware corporation (the "Company",
which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to ___________,
or its registered assigns, the principal sum of two hundred fifty
million dollars ($250,000,000) on December 15, 2001.
Interest Payment Dates: June 15 and December 15, commencing
June 15, 1997.
Regular Record Dates: June 1 and December 1.
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.
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IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
CONTINENTAL AIRLINES, INC.
By: ___________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.
By: ___________________________
Name:
Title:
(Form of Trustee's Certificate of Authentication)
This is one of the 9 1/2 % Senior Notes due December
15, 2001 referred to in the within-mentioned Indenture.
Date: December 10, 1996 TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By: _________________________________
Authorized Signatory
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[REVERSE SIDE OF NOTE]
CONTINENTAL AIRLINES, INC.
91/2 % Senior Note due December 15, 2001
1. Principal and Interest.
The Company will pay the principal of this Note on
December 15, 2001.
The Company promises to pay interest on the principal
amount of this Note on each Interest Payment Date, as set forth
below, at the rate per annum shown above.
Interest will be payable semiannually (to the holders
of record of the Notes at the close of business on the June 1 or
December 1 immediately preceding the Interest Payment Date) on
each Interest Payment Date, commencing June 15, 1997.
If an exchange offer registered under the Securities
Act is not consummated, and a shelf registration statement under
the Securities Act with respect to resales of the Notes is not
declared effective by the Commission, on or before the date that
is 105 days after the Closing Date in accordance with the terms
of the Registration Rights Agreement dated December 10, 1996 (the
"Registration Rights Agreement") between the Company and Lehman
Brothers Inc., the rate of interest borne by the Notes will
increase by 0.50% per annum to 10% per annum, effective from and
including such 105th day, to but excluding the date on which (i)
an exchange offer registered under the Securities Act is
consummated or (ii) a shelf registration statement under the
Securities Act with respect to resales of the Notes is declared
effective by the Commission. Notwithstanding the preceding
sentence, the failure to cause such exchange offer to be
consummated or such shelf registration statement to be declared
effective shall be deemed not to be a default or breach of a
covenant for purposes of Section 6.01(d) or any other provision
of the Indenture. Upon consummation of the exchange offer or the
effectiveness of the shelf registration statement, as the case
may be, the rate of interest will decrease to the original rate
of interest as set forth on the face of this Note. In the event
that a shelf registration statement with respect to resales of
the Notes ceases to be effective at any time during the period
specified in Section 2(b) of the Registration Rights Agreement
for more than 60 days, whether or not consecutive, during any
12-month period, the rate of interest borne by the Notes will
increase by 0.50% per annum from the 61st day of the applicable
12-month period such shelf registration statement ceases to be
effective until such time as such shelf registration statement
again becomes effective. The Holder of this Note is entitled to
the benefits of such Registration Rights Agreement. To the extent
there is a conflict between this Note and such Registration
Rights Agreement, such Registration Rights Agreement shall
control to the extent permitted by applicable law.
Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been
paid, from December 10, 1996; provided that, if there is no
existing default in the payment of interest and this Note is
authenticated between a Regular Record Date referred to on the
face hereof and the next succeeding Interest Payment Date,
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interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
The Company shall pay interest on overdue principal
and premium, if any, and (to the extent lawful) interest on
overdue installments of interest at the rate per annum borne by
the Notes.
2. Method of Payment.
The Company will pay principal as provided above and
interest (except defaulted interest) on the principal amount of
the Notes as provided above on each June 15 and December 15 to
the persons who are Holders (as reflected in the Security
Register at the close of business on the June 1 and December 1
immediately preceding the Interest Payment Date), in each case,
even if the Note is cancelled on registration of transfer or
registration of exchange after such record date; provided that,
with respect to the payment of principal, the Company will not
make payment to the Holder unless this Note is surrendered to a
Paying Agent.
The Company will pay principal, premium, if any, and
as provided above, interest in money of the United States of
America that at the time of payment is legal tender for payment
of public and private debts. If a payment date is a date other
than a Business Day at a place of payment, payment may be made at
that place on the next succeeding day that is a Business Day and
no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating
agent, Paying Agent and Registrar. The Company may change any
authenticating agent, Paying Agent or Registrar without notice.
The Company, any Subsidiary or any Affiliate of any of them may
act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated
as of December 10, 1996 (the "Indenture"), among the Company, as
issuer, and Texas Commerce Bank National Association, as trustee
(the "Trustee"). Capitalized terms herein are used as defined in
the Indenture unless otherwise indicated. The terms of the Notes
include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act. The Notes are
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 general unsecured, unsubordinated
indebtedness of the Company, rank pari passu in right of payment
with all existing and future unsecured, unsubordinated
indebtedness of the Company and will be senior in right of
payment to all existing and future subordinated indebtedness of
the Company. The Indenture limits the original aggregate principal
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amount of the Notes to $250,000,000 plus any Exchange Securities
that may be issued pursuant to the Registration Rights Agreement.
5. Redemption.
The Company may, at its option at any time and from
time to time, redeem Securities, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount
thereof on the Redemption Date, plus (ii) accrued and unpaid
interest thereon, if any, to the Redemption Date, plus (iii) the
Make-Whole Premium, if any, with respect thereto.
"Make-Whole Premium" means, with respect to any
Security, the excess, if any, of (A) the present value of the
required interest and principal payments due on such Security on
or after the Redemption Date, computed using a discount rate
equal to the Treasury Rate plus 100 basis points, over (B) the
sum of the then outstanding principal amount of such Security
plus the accrued and unpaid interest thereon, if any, paid on the
Redemption Date.
"Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to the
Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data))
most nearly equal to the then remaining Average Life of the
Securities; provided, however, that if the Average Life of the
Securities is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
Average Life of the Securities is less than one year, the weekly
average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be
used.
If less than all the Notes are to be redeemed, the
particular Notes to be redeemed will be selected not more than 60
days prior to the Redemption Date by the Trustee by lot or by
such other method as the Trustee will deem fair and appropriate;
provided, however, that no such partial redemption will reduce
the principal amount of a Note not redeemed to less than $1,000.
Notice of redemption will be mailed, first-class postage prepaid,
at least 20 but not more than 60 days before the Redemption Date
to each holder of Notes to be redeemed at its registered address.
On and after the Redemption Date, interest will cease to accrue
on Notes or portions thereof called for redemption and accepted
for payment.
6. Notice of Redemption.
Notice of redemption will be mailed at least 20 days
but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's last address as
it appears in the Security Register. Notes in original
denominations larger than $1,000 may be redeemed in part;
provided that Notes will only be issued in denominations
of $1,000 principal amount or integral multiples thereof.
On and after the Redemption Date, interest will
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cease to accrue on Notes or portions of Notes called for
redemption, unless the Company defaults in the payment of the
Redemption Price.
7. Repurchase upon Change in Control Triggering Event.
Upon the occurrence of any Change of Control
Triggering Event, each Holder shall have the right to require the
repurchase of its Notes by the Company in cash pursuant to the
offer described in the Indenture at a purchase price equal to 101
% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control
Purchase Price").
A notice of such Change of Control Triggering Event
will be mailed within 15 days after any Change of Control
Triggering Event occurs to each Holder at his last address as it
appears in the Security Register. Notes in original denominations
larger than $1,000 may be sold to the Company in part; provided
that Notes will only be issued in denominations of $1,000
principal amount or integral multiples thereof. On and after the
Change of Control Payment Date, interest will cease to accrue on
Notes or portions of Notes surrendered for purchase by the
Company, unless the Company defaults in the payment of the Change
of Control Purchase Price.
8. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and integral
multiples thereof. A Holder may register the transfer or exchange
of 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 register the transfer or exchange of any Notes selected for
redemption. Also, it need not register the transfer or exchange
of any Notes for a period of 15 days before a selection of Notes
to be redeemed is made.
9. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for
all purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if
any, or interest remains unclaimed for two years, the Trustee and
the Paying Agent will pay the money back to the Company. After
that, Holders entitled to the money must look to the Company for
payment, unless an applicable law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money or
U.S. Government Obligations sufficient to pay the then out-
standing principal of, premium, if any, and accrued interest
on the Notes to the Stated Maturity (or Redemption Date,
if applicable), the Company will be discharged
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from certain covenants set forth in the Indenture and, in certain
circumstances, will be discharged from the Indenture and the
Notes, except for certain sections thereof.
12. Amendment: Supplement: Waiver.
Subject to certain exceptions, the Indenture or the
Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes
then outstanding, and any existing default or compliance with any
provision may be waived with the consent of the Holders of at
least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the
parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or
inconsistency and make any change that does not adversely affect
the rights of any Holder.
13. Restrictive Covenants.
The Indenture imposes certain limitations on the
ability of the Company and its Restricted Subsidiaries, among
other things, to pay dividends or make distributions in respect
of their capital stock; purchase, redeem or otherwise acquire for
value shares of their capital stock; make certain other
restricted payments; dispose of the proceeds of asset sales;
enter into transactions with their affiliates; or, with respect
to the Company, consolidate, merge or sell all or substantially
all of its assets. Within 90 days after the end of the last
fiscal quarter of each year, the Company must report to the
Trustee on compliance with such limitations.
14. Successor Persons.
Generally, when a successor person or other entity
assumes all the obligations of its predecessor under the Notes
and the Indenture, the predecessor person will be released from
those obligations.
15. Defaults and Remedies.
The following events constitute "Events of Default"
under the Indenture: (a) default in the payment of any
installment of interest on any Security when it becomes due and
payable and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of or premium, if
any, on any Security at its Maturity (upon acceleration, optional
redemption, required purchase or otherwise); (c) default in the
performance, or breach, of the provisions of Section 5.01; (d)
default in the performance, or breach, of any covenant of the
Company contained in this Indenture (other than a default in the
performance, or breach, of a covenant which is specifically dealt
with in clause (a), (b) or (c) above) and continuance of such
default or breach for a period of 60 days after written notice
shall have been given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25 % in
aggregate principal amount of the Securities then outstanding;
(e) Indebtedness of the Company or any Restricted Subsidiary
together aggregating $75 million or more shall have been
accelerated or otherwise declared due and payable, or required
to be prepaid or repurchased (other than by regularly scheduled
required prepayment prior to the stated maturity thereof)
and such Indebtedness shall not have been discharged, and
such acceleration shall not have been annulled,
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within 30 days; (f) one or more final judgments or orders shall
be rendered against the Company or any Restricted Subsidiary for
the payment of money, the portion thereof not covered by
insurance either individually or in the aggregate shall be in
excess of $75 million, such judgments or orders shall not have
been discharged and there shall have been a period of 30
consecutive days during which a stay of enforcement of such
judgments or orders, by reason of a pending appeal or otherwise,
was not in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of
the Company or any Significant Restricted Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, (B) appointment of
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any
Significant Restricted Subsidiary or for all or substantially all
of the property and assets of the Company or any Significant
Restricted Subsidiary or (C) the winding up or liquidation of the
affairs of the Company or any Significant Restricted Subsidiary
and, in each case, such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or (h) the Company
or any Significant Restricted Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any
such law, (B) consents to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any
Significant Restricted Subsidiary or for all or substantially all
of the property and assets of the Company or any Significant
Restricted Subsidiary or (C) effects any general assignment for
the benefit of creditors.
If an Event of Default (other than an Event of Default
specified in clause (g) or (h) above that occurs with respect to
the Company) occurs and is continuing under the Indenture, the
Trustee or the Holders of at least 25 % in aggregate principal
amount of the Notes then outstanding, by written notice to the
Company (and to the Trustee if such notice is given by the
Holders), may, and the Trustee at the request of such Holders
shall, declare the principal, premium, if any, and accrued
interest on the Notes to be immediately due and payable. If a
bankruptcy or insolvency default with respect to the Company
occurs and is continuing, the principal of, premium, if any, and
accrued interest on the Notes automatically becomes due and
payable without any declaration or other act on the part of the
Trustee or any Holder. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders
of at least a majority in principal amount of the Notes then
outstanding may direct the Trustee in its exercise of any trust
or power.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its commercial
banking or any other capacity, may make loans to, accept deposits
from and perform services for the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates as if it
were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future
partner, shareholder, other equity holder, officer, director,
employee or controlling person as such, of the Company or of any
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successor Person shall have any liability for any obligations of
the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on
the other side of this Note.
19. 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 Gifts to Minors Act).
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests may
be made to Continental Airlines, Inc., 2929 Allen Parkway, Suite
2010, Houston, Texas 77019, Attention: Corporate Secretary.
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[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder
hereby sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________
Please print or typewrite name and address including zip code
of assignee
_________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing_________________________ attorney to
transfer said Note on the books of the Company with full power of
substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES,
OFFSHORE GLOBAL SECURITIES AND OFFSHORE PHYSICAL SECURITIES]
In connection with any transfer of this Note occurring
prior to the date which is the earlier of (i) the date of an
effective Registration Statement or (ii) the end of the period
referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance
with the exemption from registration under the
Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ](b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee
or other Registrar shall not be obligated to register this Note
in the name of any Person other than the Holder hereof unless and
until the conditions to any such transfer of registration set
forth herein and in Section 2.08 of the Indenture shall have been
satisfied.
Date: _____________ ____________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the
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within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
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TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with
respect to which it exercises sole investment discretion and that
it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933,
as amended, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: _____________ _____________________________________
NOTICE: To be executed by an
executive officer
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company
pursuant to Section 4.06 of the Indenture, check the Box: /_/
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 4.06 of the Indenture, state
the amount (in principal amount ): $____________.
Date: ____________________
Your Signature: _______________________________________________
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee: ______________________________________
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EXHIBIT B
Form of Certificate
__________ ___, ____
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
[Address]
Attention:
Re: Continental Airlines, Inc. (the "Company")
9 1/2 % Senior Notes due December 15, 2001 (the "Securities")
Ladies and Gentlemen:
This letter relates to U.S. $__________ principal
amount of Securities represented by a Note (the "Legended Note")
which bears a legend outlining restrictions upon transfer of such
Legended Note. Pursuant to Section 2.02 of the Indenture (the
"Indenture") dated as of December 10, 1996 relating to the
Securities, we hereby certify that we are (or we will hold such
Securities on behalf of) a person outside the United States to
whom the Securities could be transferred in accordance with Rule
904 of Regulation S promulgated under the U.S. Securities Act of
1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate
representing an identical principal amount of Securities, all in
the manner provided for in the Indenture.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ______________________
Authorized Signature
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EXHIBIT C
Form of Certificate to be Delivered
in Connection with Transfers
Pursuant to Regulation S
__________ ___, ____
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
[Address]
Attention:
Re: Continental Airlines, Inc. (the "Company")
9 1/2 % Senior Notes due December 15, 2001 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of U.S.
$__________ aggregate principal amount of the Securities, we
confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as
amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) at the time the buy order was originated, the
transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States;
(3) no directed selling efforts have been made by us,
any affiliate of ours, or any Person acting on our or their
behalf, in the United States in contravention of the requirements
of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act of
1933.
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You and the Company are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By: _____________________
Authorized Signature
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EXHIBIT D
Form of Certificate to be Delivered
in Connection with Transfers
to Non-QIB Accredited Investors
__________ ___, ____
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
[Address]
Attention:
Re: Continental Airlines, Inc. (the "Company")
9 1/2 % Senior Notes due December 15, 2001 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of
$__________ aggregate principal amount of the Securities, we
confirm that:
1. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and
conditions set forth in the Indenture dated as of December
10, 1996 relating to the Securities (the "Indenture") and
the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the
Securities have not been registered under the Securities
Act, and that the Securities may not be offered or sold
except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell
any Securities, we will do so only (A) to the Company or
any subsidiary thereof, (B) in accordance with Rule 144A
under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by
a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D)
outside the United States in an offshore transaction in
accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act,
if available or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to
provide to each person purchasing any of the Securities
from us a notice advising such purchaser that resales of
the Securities are restricted as stated herein.
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3. We understand that, on any proposed resale of any
Securities, we will be required to furnish to you and the
Company such certifications, legal opinions and other
information as you and the Company may reasonably require
to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the
Securities purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) and have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Securities purchased by us for
our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby.
Very truly yours,
[Name of Transferee]
By: ____________________
Authorized Signature
==============================================================================
Registration Rights Agreement
Dated as of December 10, 1996
between
Continental Airlines, Inc.
and
Lehman Brothers Inc.
- ---------------------------------------------------------------------------
- ----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is made and entered into as of December 10, 1996, between
Continental Airlines, Inc., a Delaware corporation (the
"Company"), and Lehman Brothers Inc. (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase
Agreement dated December 4, 1996 between the Company and the
Initial Purchaser (the "Purchase Agreement"), which provides that
the Company will issue and sell $250,000,000 aggregate principal
amount of 9 1/2 % Senior Notes due 2001 (the "Initial Notes"). In
order to induce the Initial Purchaser to enter into the Purchase
Agreement the Company has agreed to provide to the Initial
Purchaser and its successors, assigns and direct and indirect
transferees the registration rights set forth in this Agreement.
The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"1933 Act" shall mean the Securities Act of 1933, as
amended from time to time.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Closing Date" shall mean the Closing Date as defined
in the Purchase Agreement.
"Company" shall have the meaning set forth in the
preamble of this Agreement and shall include the Company's
successors.
"Depositary" shall mean the Depository Trust Company,
or any other depositary appointed by the Company; provided,
however; that any such depositary must have an address in the
Borough of Manhattan, in the City of New York.
"Exchange Notes" shall mean the notes issued by the
Company containing terms identical to the Initial Notes (except
that, with respect to the Exchange Notes, (i) interest thereon
shall accrue from the last date on which interest was paid on the
Initial Notes, or, if no such interest has been paid, from the
Closing Date, (ii) the transfer restrictions thereon shall be
eliminated and (iii) certain provisions relating to an increase
in the stated rate of interest thereon shall be eliminated) to be
offered to Holders of Initial Notes in exchange for Initial Notes
pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the
Company of Exchange Notes for Registrable Notes pursuant to
Section 2(a) hereof.
"Exchange Offer Registration" shall mean a
registration under the 1933 Act effected pursuant to Section 2(a)
hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all amendments and
supplements to such registration statement, in each case
including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Holders" shall mean the Initial Purchaser, for so
long as it owns any Registrable Notes, and each of its
successors, assigns and direct and indirect transferees who
become registered owners of Registrable Notes.
"Indenture" shall mean the indenture dated as of
December 10, 1996 between the Company and Texas Commerce Bank
National Association pursuant to which the Initial Notes and the
Exchange Notes will be issued.
"Initial Notes" has the meaning set forth in the
preamble of this Agreement.
"Initial Purchaser" shall have the meaning set forth in
the preamble of this Agreement.
"Majority Holders" shall mean the Holders of a
majority of the aggregate principal amount of outstanding
Registrable Notes; provided that whenever the consent or approval
of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or any
of its affiliates (as such term is defined in Rule 405 under the
1933 Act) (other than the Initial Purchaser or subsequent holders
of Registrable Notes if such subsequent holders are deemed to be
affiliates solely by reason of their holding of such Registrable
Notes) shall be disregarded in determining whether such consent
or approval was given by the Holders of such required percentage
or amount.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and
any such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Notes
covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth
in the preamble of this Agreement.
"Registrable Notes" shall mean the Initial Notes;
provided, however, that the Initial Notes shall cease to be
Registrable Notes when (i) a Shelf Registration Statement with
respect to such Initial Notes shall have been declared effective
under the 1933 Act and such Initial Notes shall have been
disposed of pursuant to such Shelf Registration Statement, (ii)
such Initial Notes shall have been sold to the public pursuant to
Rule 144 (or any similar provision then in force, but not Rule
144A) under the 1933 Act, (iii) such Initial Notes shall have
ceased to be outstanding or (iv) such Initial Notes have been
exchanged for Exchange Notes upon consummation of the Exchange
Offer.
"Registration Expenses" shall mean any and all
expenses incident to performance of or compliance by the Company
with this Agreement, including without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers,
Inc. ("NASD") registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state or
other securities or blue sky laws and compliance with the rules
of the NASD (including reasonable fees and disbursements of
counsel for any underwriters or Holders in connection with state
or other securities or blue sky qualification of any of the
Exchange Notes or Registrable Notes), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other
documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and expenses
incurred in connection with the listing, if any, of any of the
Registrable Notes on any securities exchange or exchanges, (vi)
all fees and disbursements relating to the qualification of the
Indenture under applicable securities laws, (vii) the fees and
disbursements of counsel for the Company and of the independent
public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident
to such performance and compliance, (viii) the fees and expenses
of the Trustee, including its counsel, and (ix) any reasonable
fees and disbursements of the underwriters, if any, and the
reasonable fees and expenses of any special experts retained by
the Company in connection with any Registration Statement, in
each case as are customarily required to be paid by issuers or
sellers of securities, but excluding fees of counsel to the
underwriters or the Holders and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Notes by a Holder.
"Registration Statement" shall mean any registration
statement of the Company which covers any of the Exchange Notes
or Registrable Notes pursuant to the provisions of this
Agreement, and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions
of Section 2(b) of this Agreement which covers some or all of the
Registrable Notes on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the
Initial Notes and the Exchange Notes under the Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
Registration. To the extent not prohibited by any applicable law
or applicable interpretation of the Staff of the SEC, the Company
shall use its best efforts (A) to file with the SEC within 45
days after the Closing Date an Exchange Offer Registration
Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Notes for Exchange Notes, (B) to
cause such Exchange Offer Registration Statement to be declared
effective by the SEC within 60 days after the date of filing of
such Exchange Offer Registration Statement, (C) to cause such
Registration Statement to remain effective until the closing of
the Exchange Offer and (D) to consummate the Exchange Offer
within 30 days after the date such Exchange Offer Registration
Statement is declared effective. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly
commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder (other than Participating
Broker-Dealers (as defined in Section 3(f) hereof)) eligible and
electing to exchange Registrable Notes for Exchange Notes
(assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, acquires the
Exchange Notes in the ordinary course of such Holder's business
and has no arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing
the Exchange Notes) to trade such Exchange Notes from and after
their receipt without any limitations or restrictions under the
1933 Act and without material restrictions under the securities
laws of a substantial proportion of the several states of the
United States.
In connection with the Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(ii) keep the Exchange Offer open for not less than 30
days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law);
(iii) use the services of the Depositary for the
Exchange Offer with respect to Initial Notes evidenced by
global certificates;
(iv) permit Holders to withdraw tendered Registrable
Notes at any time prior to the close of business, New York
City time, on the last business day on which the Exchange
Offer shall remain open, by sending to the institution
specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Notes delivered
for exchange, and a statement that such Holder is
withdrawing his election to have such Registrable Notes
exchanged;
(v) use its best efforts to ensure that (i) any
Exchange Offer Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with
the 1933 Act and the rules and regulations thereunder, (ii)
any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any
Prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements, in light of the circumstances under which they
were made, not misleading; and
(vi) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange
Offer, the Company shall:
(i) accept for exchange Registrable Notes duly
tendered and not validly withdrawn pursuant to the Exchange
Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which
is an exhibit thereto;
(ii) cancel or cause to be cancelled all Registrable
Notes so accepted for exchange by the Company; and
(iii) promptly cause to be authenticated and delivered
Exchange Notes to each Holder of Registrable Notes equal in
amount to the Registrable Notes of such Holder so accepted
for exchange.
Interest on each Exchange Note will accrue from the
last date on which interest was paid on the Registrable Notes
surrendered in exchange therefor or, if no interest has been paid
on the Registrable Notes, from the Closing Date. The Exchange
Offer shall not be subject to any conditions, other than that the
Exchange Offer, or the making of any exchange by a Holder, does
not violate applicable law or any applicable interpretation of
the Staff of the SEC. Each Holder of Registrable Notes (other
than Participating Broker-Dealers, as hereinafter defined) who
wishes to exchange such Registrable Notes for Exchange Notes in
the Exchange Offer shall represent that (i) it is not an
affiliate of the Company within the meaning of Rule 405 under the
1933 Act, (ii) any Exchange Notes to be received by it were
acquired in the ordinary course of business and (iii) it has no
arrangement with any Person to participate in the distribution
(within the meaning of the 1933 Act) of the Exchange Notes.
(b) Shelf Registration. (i) If, because of any change
in law or applicable interpretations thereof by the Staff of the
SEC, the Company is not permitted to effect the Exchange Offer as
contemplated by Section 2(a) hereof, or (ii) if for any other
reason the Exchange Offer Registration Statement is not declared
effective within 60 days following the date such Exchange Offer
Registration Statement is filed or the Exchange Offer is not
consummated within 30 days following the date such Exchange Offer
Registration Statement is declared effective, or (iii) if any
Holder (other than the Initial Purchaser) is not eligible to
participate in the Exchange Offer, or (iv) upon the request of
the Initial Purchaser (with respect to any Registrable Notes
which it acquired directly from the Company) following the
consummation of the Exchange Offer if the Initial Purchaser shall
hold Registrable Notes which it acquired directly from the
Company and if such Initial Purchaser is not permitted, in the
opinion of counsel to such Initial Purchaser, pursuant to
applicable law or applicable interpretation of the Staff of the
SEC to participate in the Exchange Offer, the Company shall, at
its cost:
(A) as promptly as practicable, file with the SEC a
Shelf Registration Statement relating to the offer and sale
of the Registrable Notes by the Holders from time to time
in accordance with the methods of distribution elected by
the Majority Holders of such Registrable Notes and set
forth in such Shelf Registration Statement, and use its
best efforts to cause such Shelf Registration Statement to
be declared effective by the SEC by the 105th day after the
Closing Date (or promptly in the event of a request by any
Holder pursuant to clause (iii) above or any Initial
Purchaser pursuant to clause (iv) above). In the event that
the Company is required to file a Shelf Registration
Statement upon the request of any Holder (other than the
Initial Purchaser) not eligible to participate in the
Exchange Offer pursuant to clause (iii) above or upon the
request of the Initial Purchaser pursuant to clause (iv)
above, the Company shall file and have declared effective
by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable
Notes and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer
Registration Statement) with respect to offers and sales of
Registrable Notes held by such Holder or such Initial
Purchaser after completion of the Exchange Offer. If the
Company files a Shelf Registration Statement pursuant to
Section 2(b)(ii) hereof; the Company will no longer be
required to effect the Exchange Offer;
(B) use its best efforts to keep the Shelf
Registration Statement continuously effective, in order to
permit the Prospectus forming part thereof to be usable by
Holders, until the end of the period referred to in Rule
144(k) (or one year from the Closing Date if such Shelf
Registration Statement is filed upon the request of any
Initial Purchaser pursuant to clause (iv) above) or such
shorter period as shall end when all of the Registrable
Notes covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement; and
(C) notwithstanding any other provisions hereof, use
its best efforts to ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus
forming part thereof and any supplement thereto complies in
all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming
part of any Shelf Registration Statement, and any
supplement to such Prospectus (as amended or supplemented
from time to time), does not include an untrue statement of
a material fact or omit to state a material fact necessary
in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to
supplement or amend the Shelf Registration Statement if
reasonably requested by the Majority Holders with respect to
information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any
such amendment to become effective and such Shelf Registration to
become usable as soon as practicable thereafter and to furnish to
the Holders of Registrable Notes copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
The Company shall be allowed a period of five days,
beginning on the first day a Registration Default (as hereinafter
defined) referred to in Section 2(b)(ii) occurs, to cure such
Registration Default before the Company will be required to
comply with the requirements of Section 2(b).
(c) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section
2(a) or 2(b) and, in the case of any Shelf Registration
Statement, will reimburse the Holders or Initial Purchaser for
the reasonable fees and disbursements of one firm or counsel
designated in writing by the Majority Holders to act as counsel
for the Holders of the Registrable Notes in connection therewith.
Each Holder shall pay all expenses of its counsel, other than as
set forth in the preceding sentence, underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Notes pursuant to the
Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company
will be deemed not to have used its best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, to become, or to remain, effective
during the requisite period if the Company voluntarily takes any
action that would result in any such Registration Statement not
being declared effective or in the Holders of Registrable Notes
covered thereby not being able to exchange or offer and sell such
Registrable Notes during that period unless (A) such action is
required by applicable law or (B) such action is taken by the
Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder),
including, without limitation, the acquisition or divestiture of
assets, so long as the Company promptly complies with the
requirements of Section 3(j) hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant
to Section 2(a) hereof or a Shelf Registration Statement pursuant
to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective,
the offering of Registrable Notes pursuant to a Registration
Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not
to have been effective during the period of such interference,
until the offering of Registrable Notes pursuant to such
Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that
neither the consummation of the Exchange Offer nor the
declaration by the Commission of a Shelf Registration to be
effective (each a "Registration Event') occurs on or prior to the
105th day after the date of the issuance of the Registrable
Notes, the interest rate per annum borne by the Notes shall be
increased by 0.50%, effective from and including such 105th day,
to but excluding the date on which a Registration Event occurs.
In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)
hereof for more than 60 days, whether or not consecutive, during
any 12-month period, the interest rate borne by the Notes shall
be increased by 0.50% per annum from the 61st day of the
applicable 12-month period such Shelf Registration Statement
ceases to be effective until such time as the Shelf Registration
Statement again becomes effective.
3. Registration Procedures. In connection with the
obligations of the Company with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company
shall.
(a) prepare and file with the SEC a Registration
Statement, within the time period specified in Section 2, on the
appropriate form under the 1933 Act, which form (i) shall be
selected by the Company, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Notes
by the selling Holders thereof and (iii) shall comply as to form
in all material respects with the requirements of the applicable
form;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may
be necessary under applicable law to keep such Registration
Statement effective for the applicable period; cause each
Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule
424 under the 1933 Act;
(c) in the case of a Shelf Registration, (i) notify
each Holder of Registrable Notes when a Shelf Registration
Statement with respect to the Registrable Notes has been filed
and advise such Holders that the distribution of Registrable
Notes will be made in accordance with the method elected by the
Majority Holders; (ii) furnish to each Holder of Registrable
Notes included within the coverage of the Shelf Registration
Statement at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in
writing, all reports, other documents and exhibits (including
those incorporated by reference) at the expense of the Company,
(iii) furnish to each Holder of Registrable Notes included within
the coverage of the Shelf Registration Statement, to counsel for
the Holders and to each underwriter of an underwritten offering
of Registrable Notes, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto as such Holder or underwriter may
reasonably request in order to facilitate the public sale or
other disposition of the Registrable Notes; and (iv) subject to
the last paragraph of Section 3, consent to the use of the
Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Notes included in the Shelf
Registration Statement in connection with the offering and sale
of the Registrable Notes covered by the Prospectus or any
amendment or supplement thereto;
(d) use its best efforts to register or qualify the
Registrable Notes or cooperate with the Holders of Registrable
Notes and their counsel in the registration or qualification of
such Registrable Notes under all applicable state securities or
"blue sky" laws of such jurisdictions as any Holder of
Registrable Notes covered by a Registration Statement and each
underwriter of an underwritten offering of Registrable Notes
shall reasonably request in writing to cooperate with the Holders
in connection with any filings required to be made with the NASD,
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holders to consummate the
disposition in each such jurisdiction of such Registrable Notes
owned by such Holders; provided, however; that in no event shall
the Company be required to (i) qualify as a foreign corporation
or as a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d) or
(ii) take any action which would subject it to general service of
process or taxation in any such jurisdiction if it is not then so
subject;
(e) in the case of a Shelf Registration, notify each
Holder of Registrable Notes promptly and, if requested by such
Holder or counsel, confirm such advice in writing promptly (i)
when a Shelf Registration Statement has become effective and when
any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a
Shelf Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has become
effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the
effectiveness of a Shelf Registration Statement or the initiation
of any proceedings for that purpose, (iv) at the closing of any
sale of Registrable Notes if, between the effective date of a
Shelf Registration Statement and such closing, the
representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to such offering cease to be
true and correct in all material respects, (v) of the receipt by
the Company of any notification with respect to the suspension of
the qualification of the Registrable Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose, (vi) of the happening of any material event or
the discovery of any material facts during the period a Shelf
Registration Statement is effective which makes any statement
made in such Registration Statement or the related Prospectus
untrue or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the
statements therein (in the case of the Prospectus in light of the
circumstances under which they were made) not misleading and
(vii) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include
in the Exchange Offer Registration Statement a "Plan of
Distribution" section covering the use of the Prospectus included
in the Exchange Offer Registration Statement by broker-dealers
who have exchanged their Registrable Notes for Exchange Notes for
the resale of such Exchange Notes, (ii) furnish to each
broker-dealer who desires to participate in the Exchange Offer,
without charge, as many copies of each Prospectus included in the
Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
broker-dealer may reasonably request, (iii) include in the
Exchange Offer Registration Statement a statement that any
broker-dealer who holds Registrable Notes acquired for its own
account as a result of market-making activities or other trading
activities (a "Participating Broker-Dealer"), and who receives
Exchange Notes for Registrable Notes pursuant to the Exchange
Offer, may be a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in connection
with any resale of such Exchange Notes, (iv) subject to the last
paragraph of Section 3, hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the
Exchange Notes covered by the Prospectus or any amendment or
supplement thereto, and (v) include in the transmittal letter or
similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following
provision:
"If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and
does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account
in exchange for Registrable Notes, it represents that
the Registrable Notes to be exchanged for Exchange
Notes were acquired by it as a result of market-making
activities or other trading activities and
acknowledges that it will deliver a prospectus meeting
the requirements of the 1933 Act in connection with
any resale of such Exchange Notes pursuant to the
Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the
meaning of the 1933 Act"; and
(y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a
Prospectus in connection with the exchange of Registrable Notes,
the broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, use its best efforts to
cause to be delivered at the request of an entity
representing the Participating Broker-Dealers (which entity
shall be the Initial Purchaser, unless it elects not to act
as such representative) only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing
on the last date for which exchanges are accepted pursuant
to the Exchange Offer and with respect to each subsequent
amendment or supplement, if any, effected during the period
specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, use its best efforts to
maintain the effectiveness of the Exchange Offer
Registration Statement for the 180 day period specified in
clause (D) below; and
(D) not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration
Statement as would otherwise be contemplated by Section
3(b), or take any other action as a result of this Section
3(f), for a period exceeding 180 days after the last date
for which exchanges are accepted pursuant to the Exchange
Offer (as such period may be extended by the Company) and
Participating Broker-Dealers shall not be authorized by the
Company to, and shall not, deliver such Prospectus after
such period in connection with resales contemplated by this
Section 3;
(g) (A) in the case of an Exchange Offer, furnish
counsel for the Initial Purchasers and (B) in the case of a Shelf
Registration, furnish counsel for the Holders of Registrable
Notes copies of any request by the SEC or any state securities
authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement as soon as practicable and provide
immediate notice to each Holder of the withdrawal of any such
order;
(i) unless any Registrable Notes are in book entry
form only, in the case of a Shelf Registration, cause the Trustee
to cooperate with the selling Holders of Registrable Notes to
facilitate the timely preparation and delivery of certificates
representing Registrable Notes to be sold free from any
restrictive legends; and cause such Registrable Notes to be in
such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders or
the underwriters, if any, may reasonably request at least one
business day prior to the closing of any sale of Registrable
Notes;
(j) in the case of a Shelf Registration, upon the
occurrence of any event or the discovery of any facts, each as
contemplated by Sections 2(d)(i)(B) or 3(e)(ii)-(vi) hereof, use
its best efforts to prepare a post-effective amendment to a
Registration Statement or an amendment or supplement to the
related Prospectus or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Notes, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Company agrees to notify each Holder to suspend
use of the Prospectus as promptly as practicable after the
occurrence of such an event, and each Holder hereby agrees to
suspend use of the Prospectus as promptly as practicable upon
receipt of such notice until the Company has amended or
supplemented the Prospectus to correct such misstatement or
omission, provided that the Company shall cause such suspension
not to last more than 30 days per occurrence or more than 60 days
in aggregate in a calendar year. At such time as such public
disclosure is otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder
of such determination and to furnish each Holder such numbers of
copies of the Prospectus, as amended or supplemented, as such
Holder may reasonably request;
(k) obtain a CUSIP number for all Exchange Notes, or
Registrable Notes, as the case may be, not later than the
effective date of an Exchange Offer Registration Statement or
Shelf Registration Statement, as the case may be, and provide the
Trustee with printed certificates evidencing the Exchange Notes
or the Registrable Notes, as the case may be, held in book entry
form, in a form eligible for deposit with the Depositary;
(1) (i) cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended (the "TIA"), in
connection with the registration of the Exchange Notes, or
Registrable Notes, as the case may be, (ii) cooperate with the
Trustee and the Holders to effect such changes to the Indenture
as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and (iii) execute, and use
its best efforts to cause the Trustee to execute, all documents
as may be required to effect such changes, and all other forms
and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into
such customary agreements (including underwriting agreements in
customary form) and take all other customary and appropriate
actions (including those reasonably requested by the Holders of a
majority in principal amount of Registrable Notes being sold) in
order to expedite or facilitate the disposition of such
Registrable Notes and in such connection whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(i) make such representations and warranties to the
Holders of such Registrable Notes and the underwriters, if
any, in form, substance and scope as are customarily made
by the Company to underwriters in similar underwritten
offerings as may be reasonably requested by them;
(ii) obtain opinions of counsel to the Company (who
may be the general counsel of the Company) and updates
thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters, if any, or if there are no such managing
underwriters, to the Holders of a majority in principal
amount of the Registrable Notes being sold) addressed to
each selling Holder and the underwriters, if any, covering
the matters customarily covered in opinions requested in
sales of securities or underwritten offerings and such
other matters as may be reasonably requested by such
Holders and underwriters;
(iii) obtain a "cold comfort" letter and updates
thereof from the Company's independent certified public
accountants addressed to the underwriters, if any, and will
use its best efforts to have such letter addressed to the
selling Holders of Registrable Notes, such letter to be in
customary form and covering such matters of the type
customarily covered in "cold comfort" letters in connection
with similar underwritten offerings as the Holders of a
majority in principal amount of the Registrable Notes being
sold shall request;
(iv) enter into a securities sales agreement with the
Holders and an agent of the Holders providing for, among
other things, the appointment of such agent for the selling
Holders for the purpose of soliciting purchases of
Registrable Notes, which agreement shall be in form,
substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into,
cause the same to set forth indemnification provisions and
procedures substantially equivalent to the indemnification
provisions and procedures set forth in Section 5 hereof
with respect to all parties to be indemnified pursuant to
said Section; and
(vi) deliver such other documents and certificates as
may be reasonably requested by Holders of a majority in
principal amount of Registrable Notes being sold, and as
are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such
Registration Statement (and, if appropriate, each post-effective
amendment thereto) if appropriate in connection with any
particular disposition of Registrable Notes and (ii) each closing
under any underwriting or similar agreement as and to the extent
required thereunder. In the case of any underwritten offering,
the Company shall provide written notice to the Holders of all
Registrable Notes of such underwritten offering at least 30 days
prior to the filing of a prospectus supplement for such
underwritten offering. Such notice shall (x) offer each such
Holder the right to participate in such underwritten offering,
(y) specify a date, which shall be no earlier than 10 days
following the date of such notice, by which such Holder must
inform the Company of its intent to participate in such
underwritten offering and (z) include the instructions such
Holder must follow in order to participate in such underwritten
offering;
(n) in the case of a Shelf Registration, make
available for inspection by representatives of the Holders of the
Registrable Notes and any underwriters participating in any
disposition pursuant to a Shelf Registration Statement and any
counsel or accountant retained by such Holders or underwriters,
all financial and other records, pertinent corporate documents
and properties of the Company reasonably requested by it, and
cause the respective officers, directors, employees, and any
other agents of the Company to make reasonably available all
relevant information reasonably requested by any such
representative, underwriter, counsel or accountant in connection
with a Registration Statement, in each case as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such
information shall be kept confidential by such representatives,
underwriters, counsel or accountant, unless such disclosure is
made in connection with a court proceeding or required by law, or
such information becomes available to the public generally or
through a third party without an accompanying, obligation of
confidentiality; and provided further that the foregoing
inspection and information gathering shall, to the extent
reasonably possible, be coordinated on behalf of the Holders and
the other parties entitled thereto by one counsel designated by
and on behalf of such Holders and other parties;
(o) (i) a reasonable time prior to the filing of any
Exchange Offer Registration Statement, any Prospectus forming a
part thereof; any amendment to an Exchange Offer Registration
Statement or amendment or supplement to a Prospectus, provide
copies of such document to the Initial Purchaser, and use its
best efforts to reflect in any such document when filed such
comments as the Initial Purchaser or its counsel may reasonably
request; (ii) in the case of a Shelf Registration, a reasonable
time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof; any amendment to such Shelf
Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Holders of
Registrable Notes, to the Initial Purchaser, to counsel on behalf
of the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Notes, if any, and use its
best efforts to reflect such comments in any such document when
filed as the Holders of Registrable Notes, their counsel and any
underwriter may reasonably request; and (iii) cause the
representatives of the Company to be available for discussion of
such document as shall be reasonably requested by the Holders of
Registrable Notes, the Initial Purchaser on behalf of such
Holders or any underwriter and shall not at any time make any
filing of any such document of which such Holders, the Initial
Purchaser on behalf of such Holders, their counsel or any
underwriter shall not have previously been advised and furnished
a copy or to which such Holders, the Initial Purchaser on behalf
of such Holders, their counsel or any underwriter shall
reasonably object;
(p) in the case of a Shelf Registration, use its best
efforts to cause the Registrable Notes to be rated with the
appropriate rating agencies at the time of effectiveness of such
Shelf Registration Statement, unless the Registrable Notes are
already so rated; and
(q) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally
available to its security holders, as soon as reasonably
practicable after the effective date of a Registration Statement,
an earnings statement which shall satisfy the provisions of
Section 11(a) of the 1933 Act and Rule 158 thereunder.
In the case of a Shelf Registration Statement, the
Company may (as a condition to such Holder's participation in the
Shelf Registration) require each Holder of Registrable Notes to
furnish to the Company such information regarding such Holder and
the proposed distribution by such Holder of such Registrable
Notes as the Company may from time to time reasonably request and
the Company may exclude from such registration the Registrable
Notes of any Holder that fails to furnish such information within
a reasonable time after receiving such request.
In the case of a Shelf Registration Statement, each
Holder agrees that, upon receipt of any notice from the Company
of the happening of any event or the discovery of any facts, each
of the kind described in Sections 2(d)(i)(B) or 3(e)(ii)-(vi)
hereof; such Holder will forthwith discontinue disposition of
Registrable Notes pursuant to such Shelf Registration Statement
until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(j) hereof; and, if
so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies in its possession,
other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes
current at the time of receipt of such notice. If the Company
shall give any such notice to suspend the disposition of
Registrable Notes pursuant to a Shelf Registration Statement as a
result of the happening of any event or the discovery of any
facts, each of the kind described in Sections 2(d)(i)(B) or
3(e)(ii)-(vi) hereof; the Company shall be deemed to have used
its best efforts to keep the Shelf Registration Statement
effective during such period of suspension provided that the
Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment
or supplement to the Shelf Registration Statement and shall
extend the period during which the Registration Statement shall
be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the
giving of such notice to and including the date when the Holders
shall have received copies of the supplemented or amended
Prospectus necessary to resume such dispositions.
4. Underwritten Offering. The Holders of Registrable
Notes covered by a Shelf Registration Statement who desire to do
so may sell such Registrable Notes in an underwritten offering.
In any such underwritten offering, the investment banker or
bankers and manager or managers that will administer the offering
will be selected by, and the underwriting arrangements with
respect thereto will be approved by, the Holders of a majority of
the Registrable Notes to be included in such offering; provided,
however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the
Company and (ii) the Company shall not be obligated to arrange
for more than one underwritten offering during the period such
Shelf Registration Statement is required to be effective pursuant
to Section 2(b)(i)(B) hereof. No Holder may participate in any
underwritten offering contemplated hereby unless such Holder (a)
agrees to sell such Holder's Registrable Notes in accordance with
any approved underwriting arrangements, (b) completes and
executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting
arrangements and (c) at least 20% of the outstanding Registrable
Notes are included in such underwritten offering. The Holders
participating in any underwritten offering shall be responsible
for any expenses customarily borne by selling securityholders,
including underwriting discounts and commissions and fees and
expenses of counsel to the selling securityholders.
5. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Holder and each
person, if any, who controls any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act,
from and against all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses
reasonably incurred by any Holder or any such controlling person
in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement (or
any amendment thereto) pursuant to which Exchange Notes or
Registrable Notes were registered under the 1933 Act, including
all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or caused by any untrue statement or
alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except
insofar as such losses, claims, damages or liabilities are caused
by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any
Holder furnished to the Company in writing by any selling Holder
expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary Prospectus
shall not inure to the benefit of any Person from whom the Person
asserting any such losses, claims, damages or liabilities
purchased Registerable Notes, or any person controlling such
seller, if a copy of the final Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of
such seller to such purchaser with or prior to the written
confirmation of the sale of the Registerable Notes to such
Person, and if the final Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities. In connection with any
underwritten offering permitted by Section 3, the Company will
also indemnify the underwriters participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act
and the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the other selling
Holders, and each of their respective directors, officers who
sign the Registration Statement and each Person, if any, who
controls the Company and any other selling Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the
Company to the Holders, but only with reference to information
relating to such Holder furnished to the Company in writing by
such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to either
paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified
parties and that such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by
the Majority Holders in the case of parties indemnified pursuant
to paragraph (a) above and by the Company in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered
into more than 90 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party for such fees and
expenses of counsel in accordance with such request prior to the
date of such settlement, unless such fees and expenses are being
disputed in good faith. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which such indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph
(a) or paragraph (b) of this Section 5 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative
fault of the Company and the Holders shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or by the Holders and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section
5(d) are several in proportion to the respective aggregate
principal amount of Registrable Notes of such Holder that were
registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would
not be just or equitable if contribution pursuant to this Section
5 were determined by pro rata allocation or by any other method
of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by
which the total price at which Registrable Notes were sold by
such Holder exceeds the amount of any damages that such Holder
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution provisions contained in
this Section 5 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Holder or any
person controlling any Holder, or by or on behalf of the Company,
its officers or directors or any person controlling the Company,
(iii) acceptance of any of the Exchange Notes and (iv) any sale
of Registrable Notes pursuant to a Shelf Registration Statement.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so
long as the Company is subject to the reporting requirements of
Section 13 or 15 of the 1934 Act, the Company covenants that it
will file the reports required to be filed by it under Section
13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so
required to file such reports, it will upon the request of any
Holder of Registrable Notes (i) make publicly available such
information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (ii) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to
Rule 144A under the 1933 Act and it will take such farther action
as any Holder of Registrable Notes may reasonably request, and
(iii) take such farther action that is reasonable in the
circumstances, in each case, to the extent required from time to
time to enable such Holder to sell its Registrable Notes without
registration under the 1933 Act within the limitation of the
exemptions provided by (x) Rule 144 under the 1933 Act, as such
Rule may be amended from time to time, (y) Rule 144A under the
1933 Act, as such Rule may be amended from time to time, or (z)
any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Notes, the Company
will deliver to such Holder a written statement as to whether it
has complied with such requirements.
(b) Other Registration Rights. The Company may grant
registration rights that would permit any Person the right to
piggy-back on any Shelf Registration Statement, provided that if
the managing underwriter, if any, of an offering pursuant to such
Shelf Registration Statement delivers an opinion of the selling
Holders that the total amount of securities which they and the
holders of such piggy-back rights intend to include in any Shelf
Registration Statement materially adversely affects the success
of such offering (including the price at which such securities
can be sold), then the amount, number or kind of securities to be
offered for the account of holders of such piggy-back rights will
be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount, number
or kind recommended by such managing underwriter; and provided
farther that such piggy-back registration rights shall in no
event materially adversely affect the interests of any Holder.
(c) No Inconsistent Agreements. The Company has not
entered into nor will the Company on or after the date of this
Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof.
(d) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the
Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification,
supplement, waiver or departure; that no amendment, modification,
supplement or waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any
Holder of Registrable Notes unless consented to in writing by
such Holder.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or
any courier guaranteeing overnight delivery (i) if to a Holder,
at the most current address given by such Holder to the Company
by means of a notice given in accordance with the provisions of
this Section 6(e), which address initially is, with respect to
the Initial Purchaser, the address set forth in the Purchase
Agreement; and (ii) if to the Company initially at the Company's
address set forth in the Purchase Agreement and thereafter at
such other address, notice of which is given in accordance with
the provisions of this Section 6(e).
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier
guaranteeing overnight delivery.
(f) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation
and without the need for an express assignment, subsequent
Holders; provided that nothing herein shall be deemed to permit
any assignment, transfer or other disposition of Registrable
Notes in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall
acquire Registrable Notes, in any manner, whether by operation of
law or otherwise, such Registrable Notes shall be held subject to
all of the terms of this Agreement, and by taking and holding
such Registrable Notes, such Person shall be conclusively deemed
to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(g) Third Party Beneficiary. The Holders shall be
third party beneficiaries to the agreements made hereunder and to
the obligations of the Company hereunder and shall have the right
to enforce such agreements and obligations directly to the extent
any such Holder deems such enforcement necessary or advisable to
protect its rights hereunder.
(h) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(k) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
CONTINENTAL AIRLINES, INC.
By: /s/ Jeffery A. Smisek
-----------------------------
Name: Jeffery A. Smisek
Title: Executive Vice President
Confirmed and accepted as of the date
first above written:
LEHMAN BROTHERS INC.
By:_____________________________
Name:
Title:
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
CONTINENTAL AIRLINES, INC.
By:___________________________________
Name:
Title:
Confirmed and accepted as of the date
first above written:
LEHMAN BROTHERS INC.
By: /s/ David C. Coquillette
-----------------------------------
Name: David C. Coquillette
Title: Associate
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Writer's Direct Dial: (212) 225-2420
January 10, 1997
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Continental Airlines, Inc. - Registration Statement
on Form S-4
---------------------------------------------------
Ladies and Gentlemen:
We have acted as your counsel in connection with the
above-referenced Registration Statement on Form S-4 (the
"Registration Statement") filed today with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), in respect of the 9 1/2% Senior Notes due
2001 (the "New Notes"), to be offered in exchange for all
outstanding 9 1/2% Senior Notes due 2001 (the "Old Notes"). The
New Notes will be issued pursuant to an indenture (the "Indenture"),
dated as of December 10, 1996, between Continental Airlines, Inc.
(the "Company") and Texas Commerce Bank National Association, as
trustee.
We have participated in the preparation of the
Registration Statement and have reviewed originals or copies
certified or otherwise identified to our satisfaction of such
documents and records of the Company and such other instruments
and other certificates of public officials, officers and
representatives of the Company and such other persons, and we
have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that when the New Notes, in the form filed as an exhibit to the
Registration Statement, have been duly executed and authenticated
in accordance with the Indenture, and duly issued and delivered
by the Company in exchange for an equal principal amount of Old
Notes pursuant to the terms of the Registration Rights Agreement
in the form filed as an exhibit to the Registration Statement, the
New Notes will be legal, valid, binding and enforceable obligations
of the Company, entitled to the benefits of the Indenture, subject
to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
The foregoing opinion is limited to the law of the
State of New York.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to
this firm under the heading "Legal Matters" in the Prospectus
included in the Registration Statement. In giving such consent,
we do not thereby admit that we are "experts" within the meaning
of the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder with respect to any part of
the Registration Statement, including this exhibit.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Stephen H. Shalen
--------------------------------
Stephen H. Shalen, a partner
CONTINENTAL AIRLINES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS)
4/28/93 1/1/93
THROUGH THROUGH
1995 1994 12/31/93 4/27/93 1992 1991
---- ---- -------- ------- ---- ----
Earnings:
Earnings
(Loss) Before
Income Taxes,
Minority
Interest and
Extraordinary
Items $310 $(651) $(52) $(977) $(125) $(304)
Plus:
Interest
Expense (a) 213 241 165 52 153 174
Capitalized
Interest (6) (17) (8) (2) (6) (12)
Amortization of
Capitalized
Interest 2 1 0 0 0 0
Portion of
Rent Expense
Representative
of Interest
Expense (a) 360 337 216 117 324 333
Adjusted ----- ----- ----- ----- ----- -----
Earnings
(Loss) 879 (89) 321 (810) 346 191
----- ----- ----- ----- ----- -----
Fixed Charges:
Interest
Expense (a) 213 241 165 52 153 174
Portion of
Rent Expense
Representative
of Interest
Expense (a) 360 337 216 117 324 333
----- ----- ----- ----- ----- -----
Total Fixed
Charges 573 578 381 169 477 507
----- ----- ----- ----- ----- -----
Coverage
Adequacy
(Deficiency) $306 $(667) $(60) $(979) $(131) $(316)
===== ===== ===== ===== ===== =====
Coverage Ratio 1.53 n/a n/a n/a n/a n/a
===== ===== ===== ===== ===== =====
(a) Includes Fair Market Value Adjustments resulting from the
Company's emergence from bankruptcy.
1996 1995
--------------------- -----------------------
Nine Three Nine Three
Months Months Months Months
Ending Ending Ending Ending
9/30/96 9/30/96 9/30/95 9/30/95
------- ------- ------- -------
Earnings:
Earnings (Loss)
Before Income
Taxes,
Minority
Interest and
Extraordinary
Items $348 $47 $266 $113
Plus:
Interest Expense 129 40 162 52
Capitalized
Interest (a) (2) (1) (5) (1)
Amortization of
Capitalized
Interest 2 1 3 1
Portion of Rent
Expense
Representative
of Interest
Expense 267 89 268 88
----- ----- ----- -----
Adjusted Earnings
(Loss) 744 176 694 253
----- ----- ----- -----
Fixed Charges:
Interest Expense 129 40 162 52
Portion of Rent
Expense
Representative
of Interest
Expense 267 89 268 88
----- ----- ----- -----
Total Fixed Charges 396 129 430 140
----- ----- ----- -----
Coverage Adequacy
(Deficiency) $348 $47 $264 $113
===== ===== ===== =====
Coverage Ratio 1.88 1.36 1.61 1.81
===== ===== ===== =====
2
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the
caption "Experts" in the Registration Statement (Form S-4) and
related Prospectus of Continental Airlines, Inc. for the
registration of the 9-1/2% Senior Notes due 2001, and to the
incorporation by reference therein of our reports dated February
12, 1996, with respect to the consolidated financial statements
and schedules of Continental Airlines, Inc. and of Continental
Airlines Holdings, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1995, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Houston, Texas
January 9, 1997
POWER OF ATTORNEY
The undersigned director and officer of Continental
Airlines, Inc., a Delaware corporation (the "Company"), does
hereby constitute and appoint Lawrence W. Kellner, Jeffery A.
Smisek and Scott R. Peterson, or any of them, as the
undersigned's true and lawful attorneys in-fact and agents to do
any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director or officer of the Company,
and to execute any and all instruments for the undersigned and in
the undersigned's name and capacity as a director or officer that
such person or persons may deem necessary or advisable to enable
the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director or officer of the Company the
Registration Statement, and any and all amendments thereto,
including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person
or persons shall do or cause to be done by virtue hereof.
/s/ Gordon M. Bethune
---------------------------
Gordon M. Bethune
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute
and appoint Jeffery A. Smisek and Scott R. Peterson or either of
them, as the undersigned's true and lawful attorneys in-fact and
agents to do any and all things in the undersigned's name and
behalf in the undersigned's capacity as an officer of the
Company, and to execute any and all instruments for the
undersigned and in the undersigned's name and capacity as an
officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement'), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as an officer of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Lawrence W. Kellner
---------------------------
Lawrence W. Kellner
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute
and appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson' or any of them, as the undersigned's true and lawful
attorneys in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as an
officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
an officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement'), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as an officer of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Michael P. Bonds
---------------------------
Michael P. Bonds
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Lloyd Bentsen
---------------------------
Name: Lloyd Bentsen
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute
and appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement'), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ David Bonderman
---------------------------
Name: David Bonderman
Dated and effective as of January 2,1997
POWER OF ATTORNEY
The undersigned director and officer of Continental
Airlines, Inc., a Delaware corporation (the "Company"), does
hereby constitute and appoint Lawrence W. Kellner, Jeffery A.
Smisek and Scott K Peterson, or any of them, as the undersigned's
true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's
capacity as a director or officer of the Company, and to execute
any and all instruments for the undersigned and in the
undersigned's name and capacity as a director or officer that
such person or persons may deem necessary or advisable to enable
the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement'), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director or officer of the Company the
Registration Statement, and any and all amendments thereto,
including post-effective amendments, and the undersigned does
hereby ratify and confirm all that such person or persons shall
do or cause to be done by virtue hereof.
/s/ Gregory D. Brenneman
---------------------------
Gregory D. Brenneman
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Douglas McCorkindale
---------------------------
Name: Douglas McCorkindale
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Company's 9 1/2% Senior Notes due December 15, 2001 (the
"Registration Statement'), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ George Parker
---------------------------
Name: George Parker
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Richard W. Pogue
---------------------------
Name: Richard W. Pogue
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as an officer that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ William S. Price
---------------------------
Name: William S. Price
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Donald L. Sturm
---------------------------
Name: Donald L. Sturm
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Karen Hastie Williams
---------------------------
Name: Karen Hastie Williams
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Charles A. Yamarone
---------------------------
Name: Charles A. Yamarone
Dated and effective as of January 2, 1997
POWER OF ATTORNEY
The undersigned director of Continental Airlines,
Inc., a Delaware corporation (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner, Jeffery A. Smisek and
Scott R. Peterson, or any of them, as the undersigned's true and
lawful attorneys in-fact and agents to do any and all things in
the undersigned's name and behalf in the undersigned's capacity
as a director of the Company, and to execute any and all
instruments for the undersigned and in the undersigned's name and
capacity as a director that such person or persons may deem
necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in
connection with that certain Registration Statement on Form S-4
relating to the Company's 9 1/2% Senior Notes due December 15,
2001 (the "Registration Statement'), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Patrick Foley
---------------------------
Name: Patrick Foley
Dated and effective as of January 2, 1997
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
-----------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
74-0800980
(I.R.S. Employer Identification Number)
712 Main Street, Houston, Texas 77002
(Address of principal executive offices) (Zip code)
Lee Boocker, 712 Main Street, 26th Floor
Houston, Texas 77002 (713) 216-2448
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2929 Allen Parkway, Suite 2010, Houston, Texas 77019
(Address of principal executive offices) (Zip code)
9 1/2% Senior Notes Due 2001
(Title of indenture securities)
=====================================================================
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with the obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
(See Note on Page 7.)
Item 3. Voting Securities of the trustee.
Furnish the following information as to each class of
voting securities of the trustee.
Col. A Col. B
Title of class Amount outstanding
Not applicable by virtue of Form T-1 General
Instruction B and response to Item 13.
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture
under which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, furnish the following information:
(a) Title of the securities outstanding under each
such other indenture.
Not applicable by virtue of Form T-1 General
Instruction B and response to Item 13.
1
Item 4. (Continued)
(b) A brief statement of the facts relied upon as a
basis for the claim that no conflicting interest
within the meaning of Section 310(b)(1) of the Act
arises as a result of the trusteeship under any such
other indenture, including a statement as to how the
indenture securities will rank as compared with the
securities issued under such other indenture.
Not applicable by virtue of Form T-1 General
Instruction B and response to Item 13.
Item 5. Interlocking directorates and similar relationships
with obligor or underwriters.
If the trustee or any of the directors or executive
officer of the trustee is a director, officer, partner, employee,
appointee, or representative of the obligor or of any underwriter
for the obligor, identify each such person having any such
connection and state the nature of each such connection.
Not applicable by virtue of Form T-1 General
Instruction B and response to Item 13.
Item 6. Voting securities of the trustee owned by the obligor
or its officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by the obligor and
each director, partner and executive officer of the obligor.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given in
Name of owner Title of class beneficially Col. C
- ------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
2
Item 7. Voting securities of the trustee owned by underwriter
or their officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by each underwriter
for the obligor and each director, partner and executive officer
of each such underwriter.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given in
Name of owner Title of class beneficially Col. C
- ------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to the securities
of the obligor owned beneficially or held as collateral security
for obligations in default by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
Whether the beneficially or Percent of
securities held as collateral class
are voting security for represented by
or nonvoting obligations in amount given
Title of class securities default in Col. C
- -------------- ------------ ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
3
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as
collateral security for obligations in default any securities of
an underwriter for the obligor, furnish the following information
as to each class of securities of such underwriter any of which
are so owned or held by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Name of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
- -------------- ----------- ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
Item 10. Ownership or holdings by the trustee of voting
securities of certain affiliates or security holders
of the obligor.
If the trustee owns beneficially or holds as
collateral security for obligations in default voting securities
of a person who, to the knowledge of the trustee (1) owns 10% or
more of the voting securities of the obligor or (2) is an
affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person.
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Name of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
- -------------- ----------- ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
4
Item 11. Ownership or holdings by the trustee of any
securities of a person owning 50% or more of the
voting securities of the obligor.
If the trustee owns beneficially or holds as
collateral security for obligations in default any securities of
a person who, to the knowledge of the trustee, owns 50% or more
of the voting securities of the obligor, furnish the following
information as to each class of securities or such person any of
which are so owned or held by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Name of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
- -------------- ----------- ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is
indebted to the trustee, furnish the following information:
Col. A Col. B Col. C
Nature of Amount
Indebtedness Outstanding Date Due
------------ ----------- --------
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture. Explain the
nature of any such default.
There is not, nor has there been, a default with respect to
the securities under this indenture. (See Note on Page 7.)
5
Item 13. (Continued)
(b) If the trustee is a trustee under another indenture
under which any securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been a
default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such
default.
There has not been a default under any such indenture or
series. (See Note on Page 7.)
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee,
describe each such affiliation.
Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the
foreign trustee is authorized to act as sole trustee under
indentures qualified or to be qualified under the Act.
Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this
statement of eligibility.
o 1. A copy of the articles of association of the
trustee now in effect.
# 2. A copy of the certificate of authority of the
trustee to commence business.
* 3. A copy of the certificate of authorization of the
trustee to exercise corporate trust powers issued by
the Board of Governors of the Federal reserve System
under date of January 21, 1948.
+ 4. A copy of the existing bylaws of the trustee.
5. Not applicable.
6. The consent of the United States institutional
trustees required by Section 321(b) of the Act.
^ 7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements of its super-
vising or examining authority.
6
8. Not applicable.
9. Not applicable.
- -----------------------
o Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-56195.
# Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-42814.
* Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-11 File No. 33-25132.
+ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-65055.
^ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-18511.
----------------
NOTE
Inasmuch as this Form T-1 is filed prior to the
ascertainment by the trustee of all facts on which to base
responsive answers to Items 2 and 13, the answers to said Items
are based on incomplete information. Such Items may, however, be
considered as correct unless amended by an amendment to this Form
T-1.
7
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939 the trustee, Texas Commerce Bank National Association, a
national banking association organized and existing under the
laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the
undersigned, thereunto authorized, all in the City of Houston,
and State of Texas, on the 10th day of January, 1997.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Trustee)
By: /s/ Ronda L. Parman
----------------------------
Ronda L. Parman
Corporate Trust Officer
8
Exhibit 6
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is trustee under an indenture dated as of
December 10, 1996, between Continental Airlines, Inc., a Delaware
corporation, and Texas Commerce Bank National Association, as
Trustee, entered into in connection with the issuance of its 9
1/2% Senior Notes Due 2001.
In accordance with Section 321(b) of the Trust Indenture
Act of 1939, the undersigned hereby consents that reports of
examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Ronda L. Parman
-------------------------
Ronda L. Parman
Corporate Trust Officer
LETTER OF TRANSMITTAL
CONTINENTAL AIRLINES, INC.
Offer to Exchange
9 1/2% Senior Notes due 2001,
which have been registered under the Securities Act
of 1933, as amended,
for any and all Outstanding
9 1/2% Senior Notes due 2001,
Pursuant to the Prospectus, dated January , 1997.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON ____________________, 1997.
Delivery to: Texas Commerce Bank National Association, Exchange
Agent
By Mail: By Hand:
Texas Commerce Bank National Texas Commerce Bank National
Association Association
P.O. Box 2320 One Main Place
Dallas, Texas 75221-2320 1201 Main Street, 18th Floor
Attention: Frank Ivins, Registered Dallas, Texas 75202
Bond Events Attention: Frank Ivins, Registered
Bond Events
Telephone: (214) 672-5678
Facsimile: (214) 672-5746
Delivery of this instrument to an address other than
as set forth above, or transmission of instructions via facsimile
other than as set forth above, will not constitute a valid
delivery.
The undersigned acknowledges receipt of the
Prospectus, dated January , 1997 (the "Prospectus"), of
Continental Airlines, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal (this "Letter"), which
together constitute the offer (the "Exchange Offer") to exchange
an aggregate principal amount of up to $250,000,000 of 9 1/2%
Senior Notes due 2001 (the "New Notes") for an equal principal
amount of the outstanding 9 1/2% Senior Notes due 2001 (the "Old
Notes").
For each Old Note accepted for exchange, the holder of
such Old Note will receive a New Note having a principal amount
at maturity equal to that of the surrendered Old Note. The New
Notes will accrue interest at the applicable per annum rate from
December 10, 1996 (the "Issue Date"). Interest on the New Notes
is payable on June 15 and December 15 of each year commencing
June 15, 1997. In the event that neither the consummation of the
Exchange Offer nor the declaration by the Commission of the Shelf
Registration Statement to be effective (each a "Registration
Event") occurs on or prior to the 105th calendar day after the
Issue Date, the interest rate per annum borne by the Notes shall
be increased by 0.50% from and including the 106th calendar day
after the Issue Date, but excluding the date on which a
Registration Event occurs. In the event that the Shelf
Registration Statement ceases to be effective at any time, during
the period the Company is required to keep such Shelf
Registration Statement effective, for more than 60 days, whether
or not consecutive, during any 12-month period, the interest rate
per annum borne by the Notes shall be increased by 0.50% from the
61st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective until such time as
the Shelf Registration Statement again becomes effective. The
Company reserves the right, at any time or from time to time, to
extend the Exchange Offer at its discretion, in which event the
term "Expiration Date" shall mean the latest time and date to
which the Exchange Offer is extended. The Company shall notify
the holders of the Old Notes of any extension by means of a press
release or other public announcement prior to 9:00 A.M., New York
City time, on the next business day after the previously
scheduled Expiration Date.
This Letter is to be completed by a holder of Old
Notes either if Old Notes are to be forwarded herewith or if a
tender of Old Notes, if available, is to be made by book-entry
transfer to the account maintained by the Exchange Agent at The
Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedure set forth in "The Exchange Offer"
section of the Prospectus. Holders of Old Notes whose
certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry
tender of their Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation")
and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section
of the Prospectus. See Instruction 1. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes
below and signed this Letter to indicate the action the
undersigned desires to take with respect to the Exchange Offer.
List below the Old Notes to which this Letter relates.
If the space provided below is inadequate, the certificate
numbers and principal amount of Old Notes should be listed on a
separate signed schedule affixed hereto.
- ------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- ------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Certificate Principal Principal
Registered Holder(s) Number(s)* Amount of Amount
(Please fill in, if blank) Old Note(s) Tendered**
- ------------------------------------------------------------------
--------------------------------------
--------------------------------------
Total
- ------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will be
deemed to have tendered ALL of the Old Notes represented by
the Old Notes indicated in column 2. See Instruction 2.
Old Notes tendered hereby must be in denominations of
principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
- ------------------------------------------------------------------
/_/ CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution_______________________________
Account Number_____________ Transaction Code Number_________
/_/ CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT
TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)_____________________________
Window Ticket Number (if any)_______________________________
Date of Execution of Notice of Guaranteed Delivery__________
Name of Institution which guaranteed delivery_______________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number____________ Transaction Code Number_________
/_/ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_______________________________________________________
Address:____________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the
Exchange Offer, the undersigned hereby tenders to the Company the
aggregate principal amount of Old Notes indicated above. Subject
to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title
and interest in and to such Old Notes as are being tendered
hereby.
The undersigned hereby represents and warrants that
the undersigned has full power and authority to tender, sell,
assign and transfer the Old Notes tendered hereby and that the
Company will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents that
any New Notes acquired in exchange for Old Notes tendered hereby
will have been acquired in the ordinary course of business of the
person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor
any such other person is engaged in, or intends to engage in a
distribution of such New Notes, or has an arrangement or
understanding with any person to participate in the distribution
of such New Notes, and that neither the holder of such Old Notes
nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act of 1933, as amended (the "Securities
Act"), of the Company.
The undersigned also acknowledges that this Exchange
Offer is being made based upon the Company's understanding of an
interpretation by the staff of the Securities and Exchange
Commission (the "Commission") as set forth in no-action letters
issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available April 13, 1989),
Morgan Stanley & Co. Incorporated, SEC No-Action Letter
(available June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (available July 2, 1993), that the New Notes issued
in exchange for the Old Notes pursuant to the Exchange
Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than a broker-dealer who
acquires such New Notes directly from the Company for resale
pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act or any such holder
that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders are not engaged
in, and do not intend to engage in, a distribution of such New
Notes and have no arrangement with any person to participate in
the distribution of such New Notes. If a holder of Old Notes is
engaged in or intends to engage in a distribution of the New
Notes or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such holder may not rely on the applicable
interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale
transaction. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes,
it represents that the Old Notes to be exchanged for the New
Notes were acquired by it as a result of market-making activities
or other trading activities and acknowledges that it will deliver
a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and
deliver any additional documents deemed by the Company to be
necessary or desirable to complete the sale, assignment and
transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and
shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only
in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, please deliver the New
Notes (and, if applicable, substitute certificates representing
Old Notes for any Old Notes not exchanged) in the name of the
undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at
the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions"
below, please send the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the
box entitled "Description of Old Notes".
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED
"DESCRIPTION OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX
ABOVE.
- ----------------------------------- ----------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if To be completed ONLY if
certificates for Old Notes not certificates for Old Notes not
exchanged and/or New Notes are to exchanged and/or New Notes are
be issued in the name of and sent to be sent to someone other than
to someone other than the the person(s) whose signature(s)
person(s) whose signature(s) appear(s) on this Letter above
appear(s) on this Letter above, or to such person(s) at an
or if Old Notes delivered by address other than shown in the
book-entry transfer which are not box entitled "Description of Old
accepted for exchange are to be Notes" on this Letter above.
returned by credit to an account
maintained at the Book-Entry
Transfer Facility other than the
account indicated above.
Issue New Notes and/or Old Notes Mail New Notes and/or Old Notes
to: to:
Name(s):......................... Name(s):.........................
(Please Type or Print) (Please Type or Print)
................................. .................................
(Please Type or Print) (Please Type or Print)
Address:......................... Address:.........................
................................. .................................
(Including Zip Code) (Including Zip Code)
(Complete accompanying Substitute
Form W-9)
Credit unexchanged Old Notes
delivered by book-entry
transfer to the Book-Entry
Transfer Facility account set
forth below.
- -----------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
- ----------------------------------- ----------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL
OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY)
MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- ---------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated:........................................................, 1997
...........................................................x
...........................................................x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:...........................
If a holder is tendering any Old Notes, this Letter must be
signed by the registered holder(s) as the name(s) appear(s) on
the certificate(s) for the Old Notes or by any person(s)
authorized to become registered holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting
in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):..................................................
..........................................................
(Please Type or Print)
Capacity:.................................................
Address:..................................................
..........................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:..................................
(Authorized Signature)
..........................................................
(Title)
..........................................................
(Name and Firm)
Dated:........................................................, 1997
- ---------------------------------------------------------------------
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer to Exchange
9 1/2% Senior Notes due 2001,
which have been registered under the Securities Act of 1933, as
amended,
for any and all Outstanding
9 1/2% Senior Notes due 2001,
Continental Airlines, Inc.
1. Delivery of this Letter and Old Notes; Guaranteed Delivery
Procedures.
This Letter is to be completed by holders of Old Notes
either if certificates are to be forwarded herewith or if tenders
are to be made pursuant to the procedures for delivery by
book-entry transfer set forth in "The Exchange Offer --
Book-Entry Transfer" section of the Prospectus. Certificates for
all physically tendered Old Notes, or Book-Entry Confirmation, as
the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter, must be received by the
Exchange Agent at the address set forth herein on or prior to the
Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes
tendered hereby must be in denominations of principal amount at
maturity of $1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes
are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible
Institution (as defined below), (ii) prior to the Expiration
Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the
name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Old Notes, or a Book-Entry Confirmation, as the case may be, and
any other documents required by this letter will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper
form for transfer, or Book-Entry Confirmation, as the case may
be, and all other documents required by this Letter, are received
by the Exchange Agent within three NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes
and all other required documents is at the election and risk of
the tendering holders, but the delivery will be deemed made only
when actually received or confirmed by the Exchange Agent. If Old
Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery
to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders of Old Notes who
tender by book-entry transfer).
If less than all of the Old Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s)
should fill in the aggregate principal amount of Old Notes to be
tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered". A reissued certificate
representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration
Date. All of the Old Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
3. Signatures of this Letter; Bond Powers and Endorsements;
Guarantee of Signatures.
If this Letter is signed by the registered holder of
the Old Notes tendered hereby, the signature must correspond
exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Old Notes are owned of record by two
or more joint owners, all such owners must sign this Letter.
If any tendered Old Notes are registered in different
names on several certificates, it will be necessary to complete,
sign and submit as many separate copies of this Letter as there
are different registrations of certificates.
When this Letter is signed by the registered holder of
the Old Notes specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are
required. If, however, the New Notes are to be issued, or any
untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required.
Signatures on such certificates must be guaranteed by an Eligible
Institution.
If this Letter is signed by a person other than the
registered holder of any certificates specified herein, such
certificates must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name of the
registered holder appears on the certificates and the signatures
on such certificates must be guaranteed by an Eligible
Institution.
If this Letter or any certificates or bond powers are
signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company of their authority to so act
must be submitted.
Endorsements on certificates for Old Notes or
signatures on bond powers required by this Instruction 3 must be
guaranteed by a firm which is a member of a registered national
securities exchange or a member of the National Association of
Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an
"eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934 (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by
a registered holder of Old Notes (which term, for purposes of the
Exchange Offer, includes any participant in the Book-Entry
Transfer Facility system whose name appears on a security
position listing as the holder of such Old Notes) tendered who
has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on this Letter,
or (ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the
applicable box the name and address to which New Notes issued
pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must
also be indicated. A holder of Old Notes tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer
Facility as such holder of Old Notes may designate hereon. If no
such instructions are given, such Old Notes not exchanged will be
returned to the name or address of the person signing this
Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a
tendering holder whose Old Notes are accepted for exchange must
provide the Company (as payor) with such Holder's correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which, in the case of a tendering holder who is an
individual, is his or her social security number. If the Company
is not provided with the current TIN or an adequate basis for an
exemption, such tendering holder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, delivery of
New Notes to such tendering holder may be subject to backup
withholding in an amount equal to 31% of all reportable payments
made after the exchange. If withholding results in an overpayment
of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others,
all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the
enclosed Guidelines of Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder
of Old Notes must provide its correct TIN by completing the
"Substitute Form W-9" set forth below, certifying that the TIN
provided is correct (or that such holder is awaiting a TIN) and
that (i) the holder is exempt from backup withholding, (ii) the
holder has not been notified by the Internal Revenue Service that
such holder is subject to a backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal
Revenue Service has notified the holder that such holder is no
longer subject to backup withholding. If the tendering holder of
Old Notes is a nonresident alien or foreign entity not subject to
backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be
obtained from the Exchange Agent. If the Old Notes are in more
than one name or are not in the name of the actual owner, such
holder should consult the W-9 Guidelines for information on which
TIN to report. If such holder does not have a TIN, such holder
should consult the W-9 Guidelines for instructions on applying
for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN. Note: checking this box
and writing "applied for" on the form means that such holder has
already applied for a TIN or that such holder intends to apply
for one in the near future. If such holder does not provide its
TIN to the Company within 60 days, backup withholding will begin
and continue until such holder furnishes its TIN to the Company.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any,
applicable to the transfer of Old Notes to it or its order
pursuant to the Exchange Offer. If, however, New Notes and/or
substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than
the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such
tendering holder.
Except as provided in this Instruction 6, it is not
necessary for transfer tax stamps to be affixed to the Old Notes
specified in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the
Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice
of the acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other
person is obligated to give notice of any defect or irregularity
with respect to any tender of Old Notes nor shall any of them
incur any liability for failure to give any such notice.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the
address indicated above for further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as
well as requests for additional copies of the Prospectus and this
Letter, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: CONTINENTAL AIRLINES, INC.
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SUBSTITUTE Part 1 -- PLEASE PROVIDE
Form W-9 YOUR TIN IN THE BOX AT TIN:_____________________
RIGHT AND CERTIFY BY (Social Security Number
SIGNING AND DATING BELOW. or Employer Identification
Number)
------------------------------------------------------
Department of Part 2 -- TIN Applied For /_/
the Treasury
------------------------------------------------------
Internal CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I
Revenue Service CERTIFY THAT:
(1) the number shown on this form is my correct
Payor's Request Taxpayer Identification Number (or I am waiting
For for a number to be issued to me).
Taxpayer (2) I am not subject to backup withholding either
Identification because: (a) I am exempt from backup
Number withholding, or (b) I have not been notified by
("TIN") and the Internal Revenue Service (the "IRS") that I
Certification am subject to backup withholding as a result of a
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup witholding, and
(3) any other information provided on this form is
true and correct.
SIGNATURE.............. DATE........................
- -----------------------------------------------------------------------
You must cross out item (2) of the above certification if you have
been notified by the IRS that you are subject to backup withholding
because of underreporting of interest or dividends on your tax return
and you have not been notified by the IRS that you are no longer
subject to backup withholding.
- -----------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- -----------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification
number by the time of the exchange, 31 percent of all reportable
payments made to me thereafter will be withheld until I provide a
number.
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Signature Date
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NOTICE OF GUARANTEED DELIVERY FOR
CONTINENTAL AIRLINES, INC.
This form or one substantially equivalent hereto must
be used to accept the Exchange Offer of Continental Airlines,
Inc. (the "Company") made pursuant to the Prospectus, dated
January __, 1997 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal") if certificates for Old
Notes are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Company prior
to 5:00 P.M., New York City time, on the Expiration Date of the
Exchange Offer. Such form may be delivered or transmitted by
facsimile transmission, mail or hand delivery to Texas Commerce
Bank National Association (the "Exchange Agent") as set forth
below. In addition, in order to utilize the guaranteed delivery
procedure to tender Old Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile
thereof) must also be received by the Exchange Agent prior to
5:00 P.M., New York City time, on the Expiration Date.
Capitalized terms not defined herein are defined in the
Prospectus.
Delivery to: Texas Commerce Bank National Association, Exchange
Agent
By Mail: By Hand:
Texas Commerce Bank National Texas Commerce Bank National
Association Association
P.O. Box 2320 One Main Place
Dallas, Texas 75221-2320 1201 Main Street, 18th Floor
Attention: Frank Ivins, Registered Dallas, Texas 75202
Bond Events Attention: Frank Ivins, Registered
Bond Events
Telephone: (214) 672-5678
Facsimile: (214) 672-5746
Delivery of this instrument to an address other than as
set forth above, or transmission of instructions via facsimile
other than as set forth above, will not constitute a valid
delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the
Prospectus and the accompanying Letter of Transmittal, the
undersigned hereby tenders to the Company the principal amount of
Old Notes set forth below, pursuant to the guaranteed delivery
procedure described in "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Prospectus.
Principal Amount of Old Notes Name(s) of Record Holders(s):
Tendered:
$--------------------------------- ---------------------------------
Certificate Nos. (if available):
---------------------------------
Address(es):
- ----------------------------------
- ----------------------------------
---------------------------------
---------------------------------
If Old Notes will be delivered Area Code and Telephone Number(s):
by book-entry transfer to The
Depositary Trust Company,
provide account number. ---------------------------------
Signature(s):
Account Number______________________
---------------------------------
---------------------------------
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office correspondent in the United States or any
"eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Exchange Act of 1934, as amended., hereby (a)
guarantees to deliver to the Exchange Agent, at one of its
addresses set forth above, the certificates representing all
tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation , together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, and any other documents required
by the Letter of Transmittal within three New York Stock
Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
Name of Firm:______________________ _____________________________________
(Authorized Signature)
Address:___________________________
___________________________________
Area Code and
Telephone Number:__________________
Title:________________________________
Name:_________________________________
Date:_________________________________
CONTINENTAL AIRLINES, INC.
Offer to Exchange
9 1/2% Senior Notes due 2001
which have been registered under the Securities Act
of 1933, as amended,
for any and all Outstanding
9 1/2% Senior Notes due 2001
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Upon and subject to the terms and conditions set forth
in the Prospectus, dated January __, 1997 (the "Prospectus"), and
the enclosed Letter of Transmittal (the "Letter of Transmittal"),
an offer to exchange (the "Exchange Offer") the registered 9 1/2%
Senior Notes due 2001 (the "New Notes") for any and all
outstanding 9 1/2% Senior Notes due 2001 (the "Old Notes") (CUSIP
No. ________ ) is being made pursuant to such Prospectus. The
Exchange Offer is being made in order to satisfy certain
obligations of Continental Airlines, Inc. (the "Company")
contained in the Registration Rights Agreement, dated as of
December 10, 1996, between the Company and Lehman Brothers Inc.
(the "Initial Purchaser").
We are requesting that you contact your clients for
whom you hold Old Notes regarding the Exchange Offer. For your
information and for forwarding to your clients for whom you hold
Old Notes registered in your name or in the name of your nominee,
or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated January __, 1997;
2. The Letter of Transmittal for your use and for
the information of your clients;
3. A Notice of Guaranteed Delivery to be used to
accept the Exchange Offer if certificates for Old Notes are not
immediately available or time will not permit all required
documents to reach the Exchange Agent prior to the Expiration
Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients
for whose account you hold Old Notes registered in your name or
the name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer
will expire at 5:00 p.m., New York City time, on ______, 1997
(the "Expiration Date") (30 calendar days following the
commencement of the Exchange Offer), unless extended by the
Company. The Old Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed
and properly completed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other
required documents, should be sent to the Exchange Agent and
certificates representing the Old Notes should be delivered to
the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Old Notes wish to tender, but it is
impracticable for them to forward their certificates for Old
Notes prior to the expiration of the Exchange Offer or to comply
with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer
- - Guaranteed Delivery Procedures".
Additional copies of the enclosed material may be
obtained from Texas Commerce Bank National Association, the
Exchange Agent, One Main Place, 1201 Main Street, 18th Floor,
Dallas, Texas 75202, Attention: Frank Ivins, Registered Bond
Events, Telephone: (214) 672-5678, Facsimile: (214) 672-5746.
CONTINENTAL AIRLINES, INC.
Offer to Exchange
9 1/2% Senior Notes due 2001
which have been registered under the Securities Act
of 1933, as amended,
for any and all Outstanding
9 1/2% Senior Notes due 2001
To Our Clients:
Enclosed for your consideration is a Prospectus of
Continental Airlines, Inc., a Delaware corporation (the "Company"
or "Continental"), dated January __, 1997 (the "Prospectus"), and
the enclosed Letter of Transmittal (the "Letter of Transmittal")
relating to the offer to exchange (the "Exchange Offer") of
registered 9 1/2% Senior Notes due 2001 (the "New Notes") for any
and all outstanding 9 1/2% Senior Notes due 2001 (the "Old
Notes") (CUSIP No. __________), upon the terms and subject to the
conditions described in the Prospectus. The Exchange Offer is
being made in order to satisfy certain obligations of Continental
contained in the Registration Rights Agreement, dated as of
December 10, 1996, between the Company and Lehman Brothers Inc.
(the "Initial Purchaser").
This material is being forwarded to you as the
beneficial owner of the Old Notes carried by us in your account
but not registered in your name. A tender of such Old Notes may
only be made by us as the holder of record and pursuant to your
instructions.
Accordingly, we request instructions as to whether you
wish us to tender on your behalf the Old Notes held by us for
your account, pursuant to the terms and conditions set forth in
the enclosed Prospectus and Letter of Transmittal. We also
request that we may, on your behalf, make the representations
and warranties contained in the Letter of Transmittal.
Your instructions should be forwarded to us as
promptly as possible in order to permit us to tender the Old
Notes on your behalf in accordance with the provisions of the
Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New
York City time, on ____________, 1997 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer),
unless extended by the Company. Any Old Notes tendered pursuant
to the Exchange Offer may be withdrawn at any time before 5:00
p.m., New York City time on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions
set forth in the Prospectus in the section captioned "The
Exchange Offer -- Conditions".
3. Any transfer taxes incident to the transfer of Old
Notes from the holder to the Company will be paid by the Company,
except as otherwise provided in the Instructions in the Letter of
Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York
City time, on the Expiration Date unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct
us by completing, executing and returning to us the instruction
form set forth below. The Letter of Transmittal is furnished to
you for information only and may not be used directly by you to
tender Old Notes.
Instructions with Respect to the Exchange Offer
The undersigned acknowledge(s) receipt of your letter
enclosing the Prospectus, dated January __, 1997, of Continental
Airlines, Inc., a Delaware corporation, and the related specimen
Letter of Transmittal.
- ---------------------------------------------------------------------
This will instruct you to tender the number of Old Notes
indicated below held by you for the account of the undersigned,
pursuant to the terms and conditions set forth in the Prospectus
and the related Letter of Transmittal. (Check one).
Box 1 /__/ Please tender my Old Notes held by you for my
account. If I do not wish to tender all of the Old
Notes held by you for my account, I have identified on
a signed schedule attached hereto the number of Old
Notes that I do not wish tendered.
Box 2 /_/ Please do not tender any Old Notes held by you for
my account.
- ---------------------------------------------------------------------
Date____________________________, 1997
-------------------------------------------
Signature(s)
-------------------------------------------
-------------------------------------------
Please print name(s) here
-------------------------------------------
Area Code and Telephone No.
Unless a specific contrary instruction is given in the
space provided, your signature(s) hereon shall constitute an
instruction to us to tender all Old Notes.