View:
As filed with the Securities and Exchange Commission
on July 10, 1996
Registration No. 333-
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
................
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Continental Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 74-2099724
(State or other jurisdiction (I.R.S. employer
of incorporation or identification number)
organization)
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.
Senior 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:
Michael L. Ryan, 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 this Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box: |_|
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than the securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. x/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
|_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
=============================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER OFFERING PRICE REGISTRATION
OF SECURITIES TO BE REGISTERED UNIT (3) (3) FEE(1)
REGISTERED (1)
- -----------------------------------------------------------------------------
6 3/4% Convertible
Subordinated Notes $192,975,000 100% $192,975,000 $66,544
of Continental
Airlines, Inc.
- -----------------------------------------------------------------------------
Class B common stock
of Continental (2) -- -- --
Airlines, Inc.(2)
- -----------------------------------------------------------------------------
Total $192,975,000 100% $192,975,000 $66,544
=============================================================================
(1) Estimated solely for the purpose of computing the
registration fee in accordance with Rule 457(i) of the
Securities Act.
(2) Such indeterminate number of shares of Continental
Airlines, Inc. Class B common stock as may be issuable upon
conversion of the Convertible Subordinated Notes registered
hereunder, including such shares as may be issuable
pursuant to anti-dilution adjustments.
(3) Exclusive of accrued interest, if any.
---------------------------------------------
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.
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 an 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 JULY 10, 1996
PROSPECTUS $192,975,000
Continental Airlines, Inc.
6 3/4% Convertible Subordinated Notes Due April 15, 2006
This Prospectus relates to the offering for resale of
$192,975,000 aggregate principal amount of the 6 3/4% Convertible
Subordinated Notes in registered form as of July __, 1996 (the
"Registered Notes") issued under an Indenture, dated as of March
26, 1996, as supplemented by the First Supplemental Indenture,
dated as of July , 1996, (the "Indenture"), between Continental
Airlines, Inc., a Delaware corporation ("Continental" or the
"Company") and Bankers Trust Company, as Trustee (the "Trustee"),
and the shares of Class B common stock, par value $.01 per share
("Class B common stock"), of the Company issuable upon conversion
of the Registered Notes. The Registered Notes were issued and
sold together with $37,025,000 of the Company's 6 3/4%
Convertible Subordinated Notes in bearer form (the "Bearer
Notes") issued under the Indenture on March 26, 1996 to the
Underwriter (as defined herein, see "Selling Holders") and were
simultaneously sold by the Underwriter in transactions exempt
from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), in the United States to
persons reasonably believed by the Underwriter to be qualified
institutional buyers as defined in Rule 144A under the Securities
Act and outside the United States to non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities
Act. The Registered Notes and the Bearer Notes are collectively
referred to herein as the "Notes". The Bearer Notes, and the
shares of Class B common stock issuable upon conversion of the
Bearer Notes, are not being offered pursuant to this Prospectus.
The Registered Notes and the Class B common stock issuable
upon conversion of the Registered Notes (the "Offered
Securities") may be offered and sold from time to time by the
holders named herein or by their transferees, pledgees, donees or
their successors (collectively, the "Selling Holders") pursuant
to this Prospectus. The Offered Securities may be sold by the
Selling Holders from time to time directly to purchasers or
through agents, underwriters or dealers. See "Plan of
Distribution" and "Selling Holders." If required, the names of
any such underwriters, dealers or agents involved in the sale of
the Offered Securities and the applicable agent's commission,
dealer's purchase price or underwriter's discount, if any, will
be set forth in an accompanying supplement to this Prospectus
(the "Prospectus Supplement"). The Selling Holders will receive
all of the net proceeds from the sale of the Offered Securities
and will pay all underwriting discounts and selling commissions,
if any, applicable to any such sale. The Company is responsible
for payment of all other expenses incident to the offer and sale
of the Offered Securities. The Selling Holders and any
broker-dealers, agents or underwriters which participate in the
distribution of the Offered Securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any
commission received by them and any profit on the resale of the
Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
See "Plan of Distribution" for a description of indemnification
arrangements.
The Notes are convertible into shares of Class B common
stock of Continental at any time prior to the close of business
on the maturity date, unless previously redeemed or repurchased,
at a conversion price of $30.195 per share (equivalent to a
conversion rate of 33.118 shares per $1,000 principal amount of
Notes), subject to adjustment in certain events. Such conversion
price and conversion rate, have been adjusted for the 2-for-1
stock split announced by Continental on June 26, 1996 and payable
on July 16, 1996 to holders of record of its Class B common stock
and Class A common stock on July 2, 1996. On July 5, 1996, the
last reported sale price of the Company's Class B common stock,
which is listed on the New York Stock Exchange ("NYSE") under the
symbol "CAI.B", was $ 59.250 per share, which price does not give
effect to the stock split.
Interest on the Notes is payable on April 15 and October 15
of each year, commencing on October 15, 1996. Principal and
interest payments will be made without any deduction for U.S.
withholding taxes, except to the extent described under
"Description of Notes--Payment of Additional Amounts". The Notes
are redeemable (a) in the event of certain developments involving
U.S. withholding taxes or certification requirements (as
described under "Description of Notes--Redemption--Redemption for
Taxation Reasons"), at a redemption price of 100% of the
principal amount of the Notes to be redeemed, plus accrued
interest to the redemption date, and (b) at the option of the
Company, on or after April 15, 1999, in whole or in part, at the
redemption prices set forth herein, plus accrued interest to the
redemption date. See "Description of Notes--Redemption". The
Notes are not entitled to any sinking fund. The Notes will mature
on April 15, 2006.
In the event of a Change in Control (as defined), each
holder of Notes may require the Company to repurchase its Notes,
in whole or in part, for cash or, at the Company's option, Class
B common stock (valued at 95% of the average closing prices for
the five trading days immediately preceding and including the
third trading day prior to the repurchase date), at a repurchase
price of 100% of the principal amount of Notes to be repurchased,
plus accrued interest to the repurchase date.
The Notes are unsecured obligations subordinated in right
of payment to all existing and future Senior Indebtedness (as
defined) of the Company and are effectively subordinated in right
of payment to all indebtedness and other liabilities of the
Company's subsidiaries. As of March 31, 1996, the aggregate
amount of outstanding Senior Indebtedness of the Company was
approximately $1.7 billion. The Indenture does not restrict the
Company or its subsidiaries from incurring additional Senior
Indebtedness or other indebtedness. See "Description of
Notes--Subordination".
Prospective investors should carefully consider the matters
discussed under the caption "Risk Factors" commencing on page 7.
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 , 1996.
AVAILABLE INFORMATION
The Company 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 Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and
other information may be inspected and copied at the following
public reference facilities maintained by the Commission: Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549; Suite 1300, Seven World Trade Center, New York, New York
10048; and The Citicorp Center, Suite 1400, 500 West Madison
Street, 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. 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-3 (together with all amendments and exhibits,
the "Registration Statement") filed by Continental with the
Commission under the Securities Act with respect to the
securities 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, 1996 and April 10, 1996, respectively), (ii) the
description of Class B common stock contained in Continental's
registration statement (Registration No. 0-21542) on Form 8-A,
and any amendment or report filed for the purpose of updating
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such description, (iii) Continental's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996 and (iv) Continental's
Current Reports on Form 8-K, filed on January 31, 1996, March 26,
1996, May 7, 1996 and June 27, 1996.
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
Securities 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.
Continental will provide without charge to each person to
whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all documents
incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents
should be directed to Continental Airlines, Inc., 2929 Allen
Parkway, Suite 2010, Houston, Texas 77019, Attention: Secretary,
telephone (713) 834-2950.
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 period ended April 30, 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 first three months
of 1996) and, together with its wholly owned subsidiary,
Continental Express, Inc. ("Express"), and its 91%-owned
subsidiary, Continental Micronesia, Inc. ("CMI"), serves 190
airports worldwide.
The Company operates its route system primarily through
domestic hubs at Newark, Houston Intercontinental and Cleveland,
and a Pacific hub on Guam and Saipan. Each of Continental's three
U.S. 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 52%, 79%, 53% and
72% of all daily jet departures, respectively.
Continental directly serves 131 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. Internationally,
Continental flies to 59 destinations and offers additional
connecting service through alliances with foreign carriers.
Continental operates 66 weekly departures to six European cities
and markets service to eight other cities through code-sharing
agreements. 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, including
service between Newark and Bogota, Colombia, with service on to
Quito, Ecuador which began in June 1996. Through its Guam/Saipan
hub, Continental provides extensive service in the western
Pacific, including service to more Japanese
4
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 OFFERING
Securities Offered.......... $192,975,000 principal amount of 6 3/4%
Convertible Subordinated Notes due
April 15, 2006 (the "Registered
Notes"), with interest payable on
April 15 and October 15 of each year,
commencing on October 15, 1996.
Issuer...................... Continental Airlines, Inc., a Delaware
corporation.
Conversion Price............ $30.195 per share (equivalent to a
conversion rate of 33.118 shares per
$1,000 principal amount of Notes)
subject to adjustment. Such
conversion price and conversion rate
have been adjusted for the 2-for-1
stock split announced by Continental
on June 26, 1996 and payable on July
16, 1996 to holders of record of its
Class B common stock and Class A
common stock on July 2, 1996.
Form and Denomination....... The Registered Notes were issued in
the form of a Global Registered Note
and deposited with the Trustee as
custodian for, and registered in the
name of a nominee of, The Depository
Trust Company ("DTC"). The Registered
Notes are in denominations of $1,000
and integral multiples thereof.
Convertibility.............. The Notes are convertible into shares
of Class B common stock of the Company
at any time prior to the close of
business on the maturity date, unless
previously redeemed or repurchased, at
the conversion price set forth above,
subject to adjustment. Holders of
Notes called for redemption will be
entitled to convert the Notes to and
including, but not after, the date
fixed for redemption. The right to
convert a Note delivered for
repurchase will terminate on the close
of business on the repurchase date.
5
Optional Redemption......... Redeemable (a) as described
immediately below under "Additional
Amounts and Redemption for Taxation
Reasons" and (b) at the option of the
Company, on or after April 15, 1999,
at the redemption prices set forth
herein, plus accrued interest to the
redemption date.
Additional Amounts and The Company will pay Additional
Redemption for Taxation Amounts (as defined in "Description of
Reasons................. Notes--Payment of Additional Amounts"),
subject to certain exceptions, in
order that the non-U.S. Holders of
Notes receive the full amount of
the principal, premium, if any, and
interest specified therein
(including any amount payable upon
a repurchase of the Notes as
described immediately below under
"Repurchase at Option of Holders
Upon Change in Control") without
deduction for or on account of U.S.
withholding taxes. In the event
that the Company must pay such
Additional Amounts as a result of a
change in law, the Tax Affected
Notes (as defined) will be
redeemable at the option of the
Company, as a whole but not in
part, at 100% of the principal
amount thereof, plus any accrued
interest to the redemption date
(but without reduction for U.S.
withholding taxes). The Company
will not be obligated to pay
Additional Amounts in respect of
payments becoming due on the Notes
more than 15 days after the
redemption date for such a
redemption, except to the extent
that the Company's obligation to
pay such Additional Amounts does
not arise from the change in law
that resulted in such redemption.
6
Repurchase at Option of Repurchasable at the option of the
Holders Upon Change in holder upon a Change in Control (as
Control................. defined under "Description of Notes --
Repurchase at Option of Holders
Upon a Change in Control") at 100%
of the principal amount thereof,
plus accrued interest to the
repurchase date. The repurchase
price is payable in cash or, at the
option of the Company, in Class B
common stock (valued at 95% of the
average closing prices of the Class
B common stock for the five trading
days preceding and including the
third trading day prior to the
repurchase date).
Subordination............... Subordinated to present and future
Senior Indebtedness (as defined) of
the Company; senior to the Company's
guarantee of the Continental Airlines
Finance Trust's mandatorily redeemable
preferred securities of trust and the
8 1/2% convertible subordinated
debentures due 2020 issued by the
Company in connection therewith. The
Notes are also effectively
subordinated in right of payment to
all indebtedness and other liabilities
of the Company's subsidiaries. As of
March 31, 1996, the aggregate amount
of outstanding Senior Indebtedness was
approximately $1.7 billion. The
Indenture does not restrict the
incurrence of Senior Indebtedness or
other indebtedness by the Company or
any of its subsidiaries.
7
Events of Default........... Include: (a) failure to pay principal
of or premium, if any, on any Note
when due, whether or not such payment
is prohibited by the subordination
provisions of the Indenture; (b)
failure to pay any interest on any
Note when due, continuing for 30 days,
whether or not such payment is
prohibited by the subordination
provisions of the Indenture; (c)
failure to perform any other covenant
of the Company in the Indenture,
continuing for 60 days after written
notices as provided in the Indenture;
(d) default in respect of any
indebtedness for money borrowed by the
Company which results in acceleration
of the maturity of an amount in excess
of $75,000,000 of indebtedness if such
indebtedness is not discharged, or
such acceleration is not rescinded or
annulled, within 30 days after written
notice as provided in the Indenture;
and (e) certain events of bankruptcy,
insolvency or reorganization.
Registration Rights......... Continental has agreed to file this
Shelf Registration Statement in
respect of the Registered Notes and
the Class B common stock issuable upon
conversion thereof pursuant to the
Registration Rights Agreement. Upon
any failure by Continental to comply
with certain of its obligations under
the Registration Rights Agreement,
additional interest will be payable on
the Registered Notes.
Governing Law............... The laws of the State of New York,
United States of America.
Indenture................... Dated as of March 26, 1996, as
supplemented by the First
Supplemental Indenture, dated as of
July , 1996, between the Company
and Bankers Trust Company, as
Trustee.
8
Relationship of Class B The Company's Class A common stock,
common stock to Class A par value $.01 per share (the "Class A
common stock............ common stock"), votes together with
the Class B common stock on all
matters except as otherwise
required by law. Each share of
Class B common stock has one vote;
each share of Class A common stock
has 10 votes. The Class A common
stock and Class B common stock
share equally in any dividends and
distributions. Certain holders of
shares of Class A common stock have
the right, in certain
circumstances, to convert such
shares into Class D common stock,
par value $.01 per share (the
"Class D common stock"), of the
Company. Pursuant to the Company's
Amended and Restated Certificate of
Incorporation (the "Certificate of
Incorporation"), at any time after
January 1, 1997, shares of Class A
common stock will become freely
convertible into an equal number of
shares of Class B common stock. See
"Recent Developments" and
"Description of Capital Stock".
Limitation on Voting by Foreign Ownership Restrictions (as
Foreign Owners.......... defined) contained in the Company's
Certificate of Incorporation and
Bylaws ("Bylaws") limit the number
of shares of voting stock that may
be voted by foreign holders. See
"Description of Capital Stock".
Use of Proceeds............. The Selling Holders will receive all
of the proceeds from the sale of the
Offered Securities. Continental will
not receive any proceeds from the sale
of the Offered Securities.
Listing .................... The Notes are listed on the Luxembourg
Stock Exchange. The Company's Class B
common stock is listed on the NYSE
under the symbol "CAI.B". The Company
has filed a supplemental listing
application with the NYSE for the
listing of the Class B common stock
issuable upon conversion of the Notes.
9
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CAREFULLY REVIEW
THE INFORMATION CONTAINED ELSEWHERE 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 $88 million in the three months ended March 31, 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 during 1995 and 1996.
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 March 31, 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 $702 million of minority
interest, preferred securities of trust, redeemable preferred
stock and common stockholders' equity. 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 March 31, 1996, Continental had approximately $657
million of cash and cash equivalents, including restricted cash
and cash equivalents of $124 million. Continental does not have
general lines of credit and has no significant unencumbered
assets.
10
Continental has firm commitments with The Boeing Company
("Boeing") to take delivery of 43 new jet aircraft during the
years 1997 through 2002. The estimated aggregate cost of these
aircraft is $2.6 billion. The Company is in the process of
negotiating a revised aircraft order with Boeing, which is
expected to change the product mix and timing of delivery of
aircraft without a significant change in the aggregate cost of
such order. In addition, the Company took delivery of one Beech
1900-D aircraft in May 1996 and an additional five such aircraft
are scheduled to be delivered later in 1996. The Company
currently anticipates that the firm financing commitments
available to it with respect to its acquisition of new aircraft
from Beech Acceptance Corporation ("Beech") will be sufficient to
fund all deliveries scheduled during 1996, and that it will have
remaining financing commitments from aircraft manufacturers of
$676 million for jet aircraft deliveries beyond 1996. However,
the Company believes that further financing will be needed to
satisfy the remaining amount of such capital commitments. There
can be no assurance that sufficient financing will be available
for all aircraft and other capital expenditures not covered by
firm financing commitments.
For 1996, Continental expects to incur cash expenditures
under operating leases of approximately $586 million, compared
with $521 million for 1995, relating to aircraft and
approximately $229 million relating to facilities and other
rentals, the same amount as for 1995. In addition, Continental
has capital requirements relating to compliance with regulations
that are discussed below.
See "--Regulatory Matters."
Continental and CMI have secured borrowings from certain
affiliates of General Electric Company (General Electric Company
and affiliates, collectively, "GE") which aggregated $373 million
as of March 31, 1996. CMI's secured loans contain significant
financial covenants, including requirements to maintain a minimum
cash balance and consolidated net worth, restrictions on
unsecured borrowings and mandatory prepayments on the sale of
most assets. These financial covenants limit the ability of CMI
to pay dividends to Continental. In addition, Continental's
secured loans require Continental to, among other things,
maintain a minimum cumulative operating cash flow, a minimum
monthly cash balance and a minimum ratio of operating cash flow
to fixed charges. Continental also is prohibited generally from
paying cash dividends on its capital stock, from purchasing or
prepaying indebtedness and from incurring certain additional
secured indebtedness.
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 12.9% for the three months ended
March 31, 1996), significant changes in fuel costs would
materially affect the Company's operating results. Fuel prices
continue to be susceptible to international events, and the
Company cannot predict
11
near or longer-term fuel prices. The Company has entered into
petroleum option contracts to provide some short-term protection
(currently approximately seven 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
reflects net operating loss carryforwards ("NOLs") of $2.5
billion, subject to audit by the Internal Revenue Service, of
which $1.2 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 $1.2 billion of taxable income
following December 31, 1995. For financial reporting purposes,
Continental will be required to begin accruing tax expense on its
income statement once it has realized an additional $122 million
of taxable income following March 31, 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. The sale of the
Company's common stock in the Secondary Offering (as defined
herein) as described under "Recent Developments" gave rise to an
increase in percentage ownership by certain stockholders for this
purpose. Based upon the advice of its counsel, Cleary, Gottlieb,
Steen & Hamilton, the Company believes that such percentage
increase will not give rise to an ownership change under Section
382 as a result of the Secondary Offering. However, no assurance
can be given that future transactions, whether within or outside
the control of the Company, will not cause a change in ownership,
thereby substantially limiting the potential utilization of the
NOLs in a given future year. In the event that an ownership
change should occur, utilization of Continental's NOLs would be
subject to an annual limitation under Section 382. This Section
382 limitation for any post-change year would be 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 is 5.78% for
June 1996). Unused annual limitation may be carried over to later
years, and 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 a minimum of approximately $100 million per
year.
In connection with the Company's 1993 reorganization under
Chapter 11 of the U.S. bankruptcy code effective April 27, 1993
12
(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. 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.
Principal Stockholders
After the Secondary Offering (as defined) which was
completed on May 14, 1996 and the conversion by Air Canada of its
Class A common stock into Class B common stock, Air Canada holds
approximately 10.0% of the common equity interests and 4.0% of
the general voting power of the Company, and Air Partners, L.P.
("Air Partners") holds approximately 9.8% of the common equity
interests and 39.4% of the general voting power of the Company.
In addition, assuming exercise of all of the warrants held by Air
Partners, approximately 23.4% of the common equity interests and
52.1% of the general voting power would be held by Air Partners.
At any time after January 1, 1997, shares of Class A common stock
will become freely convertible into an equal number of shares of
Class B common
13
stock. Such conversion would effectively increase the relative
voting power of those Class A stockholders who do not convert. See
"Recent Developments" and "Description of Capital Stock".
Various provisions in the Company's Certificate of
Incorporation and Bylaws currently provide Air Partners with the
right to elect one-third of the directors in certain
circumstances; these provisions could have the effect of
delaying, deferring or preventing a change in control of the
Company. See "Recent Developments" and "Description of Capital
Stock".
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, 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.
14
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 benefitted
significantly from the expiration of the aviation trust fund tax
(the "ticket tax") on December 31, 1995, although the amount of
any such benefit resulting directly from the expiration of the
ticket tax cannot precisely be determined. Reinstatement of the
ticket tax will result in higher costs to consumers, which may
have an adverse effect on passenger traffic, revenue and margins.
The Company is unable to predict when or in what form the ticket
tax may be reenacted.
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 enacted or enacted in the future will
not adversely affect the Company.
Risk Factors Relating to the Notes
Ranking of Subordinate Obligations Under the Notes
The obligations of Continental under the Notes are
subordinate to all present and future Senior Indebtedness of
Continental and pari passu with obligations to or rights of
Continental's other general unsecured creditors. The Notes are
senior to the Company's guarantee of Continental Airlines Finance
Trust's mandatorily redeemable preferred securities of trust and
the 8 1/2% convertible subordinated debentures due 2020 issued by
the Company in connection therewith. As of March 31, 1996, Senior
Indebtedness aggregated approximately $1.7 billion. There are no
terms in the Notes that limit Continental's ability to incur
additional
15
indebtedness, including indebtedness that ranks senior to the
Notes. See "Description of Notes--Subordination".
Absence of Trading Market
There is no existing public trading market for the
Registered Notes and there can be no assurance as to the
liquidity of any such market that may develop, the ability of the
holders of Registered Notes to sell such securities, the price at
which the holders of Registered Notes would be able to sell such
securities or whether a public trading market, if it develops,
will continue. If such a market were to exist, the Registered
Notes could trade at prices higher or lower than their principal
amount, depending on many factors, including prevailing interest
rates, the market for similar securities and the operating
results of the Company.
16
RECENT DEVELOPMENTS
Stock Split
On June 26, 1996, the Company announced a 2-for-1 stock
split with respect to the Company's Class A common stock and
Class B common stock, which will be distributed on July 16, 1996
to stockholders of record as of July 2, 1996.
Corporate Governance
On June 26, 1996, at the Company's annual meeting of
stockholders (the "Annual Meeting"), the Company's stockholders
approved changes proposed by the Company to the Company's
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
eliminate special classes of directors (except for Air Partners'
right to elect one-third of the directors in certain
circumstances as described below) and supermajority provisions,
and make a variety of other modifications aimed at streamlining
the Company's corporate governance structure. The amendments to
the Company's Certificate of Incorporation included elimination
of Class C common stock, $.01 par value (the "Class C common
stock"), of the Company as an authorized class of capital stock
and changed the rights of holders of Class D common stock, $.01
par value (the "Class D common stock") with respect to election
of directors--holders of Class D common stock are now entitled to
elect one-third of the directors. Pursuant to the Certificate of
Incorporation, Class D common stock is solely issuable to Air
Partners and certain of its affiliates. There is currently no
Class D common stock outstanding. The Amendments, as a whole,
reflect the reduction of Air Canada's equity interest 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 will become freely
convertible 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 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 stockholders requested that the
17
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
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 has expressed to the Company of
divesting its investment in Continental by early 1997, subject to
market conditions. Air Canada has indicated to the Company that
its original investment in Continental has 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 has determined
it appropriate to redeploy the funds invested in the Company into
other uses in Air Canada's business. 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 2,200,000 shares of Class B common
stock held by it and by certain of the AP Investors of an
aggregate of 1,730,240 such shares pursuant to an underwritten
public offering arranged by the Company (the "Secondary
Offering"). The Secondary Offering was completed on May 14, 1996.
The Agreements provided for the following additional steps to be
taken in connection with the completion of the Secondary
Offering:
- in light of its reduced equity stake in the Company, Air
Canada is no longer entitled to designate nominees to
the Board of Directors of the Company, has caused the
four 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;
- Air Canada and Air Partners have 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
- each of the existing Stockholders' Agreement and the
registration rights agreement (the ("Original
18
Registration Rights Agreement") among the parties
were modified in a number of respects to reflect,
among other matters, the changing composition of the
respective equity interests of the parties.
After such sale and the conversion by Air Canada of its
Class A common stock into Class B common stock, Air Canada holds
approximately 10.0% of the common equity interests and 4.0% of
the general voting power of the Company, and Air Partners holds
approximately 9.8% of the common equity interests and 39.4% of
the general voting power of the Company. In addition, assuming
exercise of all of the warrants held by Air Partners,
approximately 23.3% of the common equity interests and 52.1% of
the general voting power would be held by Air Partners.
The Company and Air Canada also expect to enter into
discussions regarding modifications to the Company's existing
"synergy" agreements with Air Canada, covering items such as
maintenance and ground facilities, with a view to resolving
certain outstanding commercial issues under the agreements and
otherwise modifying the agreements to reflect Continental's and
Air Canada's current needs. The Company has entered into an
agreement with Air Partners for the 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' Class B common
stock warrants. The purchase price would be payable in cash. The
Board of Directors has authorized the Company to publicly issue
up to $50 million of Class B common stock in connection with any
such purchase. In connection with this agreement, the Company has
reclassified $50 million from common equity to redeemable
warrants.
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.
19
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 two years ended December 31, 1994 and 1995, and for
the three months ended March 31, 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 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").
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, for the year ended December 31, 1994
and for the three months ended March 31, 1995, earnings were not
sufficient to cover fixed charges. Additional earnings of $316
million, $131 million, $979 million, $60 million, $667 million
and $28 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 earnings to fixed charges for the three
months ended March 31, 1996 was 1.70. For purposes of calculating
this ratio, earnings consist of earnings before taxes, minority
interest and extraordinary items plus interest expense (net of
capitalized interest), the portion of rental expense deemed
representative of the interest expense and amortization of
previously capitalized interest. Fixed charges consist of
interest expense and the portion of rental expense representative
of interest expense.
USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from
the sale of the Offered Securities. Continental will not receive
any proceeds from the sale of the Offered Securities.
20
SELECTED FINANCIAL DATA
The following tables set forth selected financial data of
(i) the Company for the three months ended March 31, 1996 and
1995, the two years ended December 31, 1995 and 1994 and for 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 two 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 months ended March 31, 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 months ended
March 31, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996. The
Company's selected consolidated financial data should be read in
conjunction with, and are qualified in their entirety by
reference to, the consolidated financial statements, including
the notes thereto, incorporated by reference herein.
Period
from
Reorganiz- Period
ation from
(April January
Three Months 28, 1993 1, 1993
Ended March Year Ended through through
31, December 31, December April
----------- --------------- 31, 27,
1996 1995 1995 1994 1993) 1993
---- ---- ---- ---- ---- ----
Statement of
Operations Data: (In millions of dollars, except per share data)
Operating Revenue: (unaudited)
Passenger $1,375 $1,240 $5,302 $5,036 $3,493 $1,622
Cargo, mail and
other 114 169 523 634 417 235
1,489 1,409 5,825 5,670 3,910 1,857
Operating Expenses:
Wages, salaries
and related costs 364 366 1,432(1) 1,532 1,000 502
Aircraft fuel 177 169 681 741 540 272
Aircraft rentals 124 123 497 433 261 154
Commissions 126 119 489 439 378 175
Maintenance,
materials and
repairs 112 97 429 495 363 184
Other rentals
and landing fees 84 92 356 392 258 120
Depreciation
and amortization 65 64 253 258 162 77
Other 317 351 1,303 1,391 853 487
----- ----- ----- ----- ----- -----
1,369 1,381 5,440 5,681 3,815 1,971
----- ----- ----- ----- ----- -----
Operating Income
(Loss) 120 28 385 (11) 95 (114)
----- ----- ----- ----- ----- -----
Nonoperating Income
(Expense):
Interest expense (47) (53) (213) (241) (165) (52)
Interest capitalized 1 1 6 17 8 2
Interest income 9 6 31 23 14 --
Gain on System One
transactions -- -- 108 -- -- --
Reorganization items,
net -- -- -- -- -- (818)
Other, net 12 (10) (7) (439)(2) (4) 5
-- --
(25) (56) (75) (640) (147) (863)
----- ----- ----- ----- ----- -----
Income (Loss) before
Income Taxes,
Minority Interest and
Extraordinary Gain 95 (28) 310 (651) (52) (977)
Net Income (Loss) $ 88 $(30) $ 224 $ (613) $ (39) $ 2,640(3)
Earnings (Loss)
per Common and
Common Equivalent
Share(4) 1.55 (0.60) 3.60 (11.88) (1.17) N.M.(5)
Earnings (Loss)
per Common Share
Assuming Full
Dilution(4) 1.18 (0.60) 3.15 (11.88) (1.17) N.M.(5)
As of As of
March 31, December 31,
1996 1995
Balance Sheet Data: (In millions of dollars)
(unaudited)
Cash and Cash Equivalents,
including restricted
Cash and Cash Equivalents
of $124 and $144,
respectively(6) $ 657 $ 747
Other Current Assets. 655 568
Total Property and
Equipment, Net 1,410 1,461
Routes, Gates and
Slots, Net 1,517 1,531
Other Assets, Net 507 514
------- -------
Total Assets $ 4,746 $ 4,821
======= =======
Current Liabilities 2,040 $ 1,984
Long-term Debt and
Capital Leases 1,462 1,658
Deferred Credits and
Other Long-term liabilities 542 564
Minority Interest 28 27
Continental-Obligated
Mandatorily Redeemable
Preferred Securities
of Subsidiary Trust
holding solely
Convertible Subordinated
Debentures(7) 242 242
Redeemable Preferred Stock 42 41
Common Stockholders' Equity 390 305
------- -------
Total Liabilities
and Stockholders Equity $ 4,746 $ 4,821
======= =======
________________
(1) 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.
(2) 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.
(3) Reflects a $3.6 billion extraordinary gain from
extinguishment of debt.
(4) On June 26, 1996, the Company announced a 2-for-1 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.
(5) 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.
(6) 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 its
loan agreement with GE to maintain certain minimum cash
balances and net worth levels, which effectively restrict the
amount of cash available to Continental from CMI.
(7) The sole assets of the Trust are convertible subordinated
debentures totalling $250 million which bear interest at the
rate of of 8 1/2 % per annum and are expected to be repaid by 2020.
Upon repayment, the Continental-Obligated Mandatorily
Redeemable Preferred Securities of Trust will be mandatorily
redeemed.
23
24
DESCRIPTION OF NOTES
The Notes were issued under an Indenture, dated as of March
26, 1996, as supplemented by the First Supplemental Indenture
dated as of July , 1996, (the "Indenture"), between the Company
and Bankers Trust Company, as Trustee (the "Trustee"), a copy of
which is filed as an exhibit to the Registration Statement of
which this Prospectus is a part and is available as described
under "Available Information" and for inspection at the Corporate
Trust Office of the Trustee in the Borough of Manhattan, The City
of New York, and at the offices of the Paying Agents identified
herein. The terms of the Notes include those stated in the
Indenture and those made a part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Wherever particular defined terms of the Indenture
(including the Notes and the various forms thereof) are referred
to, such defined terms are incorporated herein by reference (the
Notes and various terms relating to the Notes being referred to
in the Indenture as "Securities"). References in this section to
the "Company" are solely to Continental Airlines, Inc. and not
its subsidiaries. The following summaries of certain provisions
of the Indenture do not purport to be complete, and reference is
made to the detailed provisions of the Notes and the Indenture
and those terms made a part of the Indenture under the Trust
Indenture Act, including the definitions therein of certain
terms.
General
The Notes are unsecured subordinated obligations of the
Company, limited to $230,000,000 aggregate principal amount, will
mature on April 15, 2006 and be payable at a price of 100% of the
principal amount thereof. The Notes bear interest at the rate per
annum shown on the front cover of this Prospectus from March 26,
1996, payable semiannually on April 15 and October 15 of each
year, commencing on October 15, 1996. Interest payable per $1,000
principal amount of Notes for the period from March 26, 1996 to
October 15, 1996 will be $37.3125. (ss.ss. 3.1 and 3.7 of the
Indenture)
The Notes will be convertible into Class B common stock
initially at the conversion price stated on the cover page
hereof, subject to adjustment upon the occurrence of certain
events described under "--Conversion Rights". (ss. 12.1)
The Notes are redeemable (a) in the event of certain
developments involving U.S. withholding taxes or certification
requirements as described below under "--Redemption--Redemption
for Taxation Reasons", at a redemption price of 100% of the
principal amount of the Notes to be redeemed, plus accrued
interest to the redemption date and (b) at the option of the
Company, on or after April 15, 1999, in whole or in part, at the
redemption prices set
25
forth below under "--Redemption--Optional Redemption", plus accrued
interest to the redemption date. (ss. 2.2)
Beneficial interests in the Registered Notes trade in the
Same Day Funds Settlement System of DTC.
Form and Denomination
The Registered Notes were issued in the form of a Global
Registered Note without coupons, and deposited with the Trustee
as custodian for DTC and registered in the name of a nominee of
DTC. Owners of beneficial interests in the Global Registered Note
hold such interests pursuant to the procedures and practices of
DTC and must exercise any rights in respect of their interests
(including any right to convert, exchange or require repurchase
of their interests) in accordance with those procedures and
practices. Such beneficial owners are not Holders, and are not
entitled to any rights under any Note or the Indenture, with
respect to any Global Registered Note, and the Company and the
Trustee, and any of their respective agents, may treat DTC as the
Holder and owner of any Global Registered Note.
The Bearer Notes are in definitive bearer form with
coupons. The Bearer Notes, and the Class B common stock issuable
upon conversion of the Bearer Notes, are not being offered
hereby.
As long as DTC, or its nominee, is the registered Holder of
a Global Registered Note, DTC or such nominee, as the case may
be, will be considered the sole owner and Holder of the Notes
represented by such Global Registered Note for all purposes under
the Indenture and the Notes. Unless DTC notifies the Company that
it is unwilling or unable to continue as depository for a Global
Registered Note, or ceases to be a "Clearing Agency" registered
under the Exchange Act, or announces an intention permanently to
cease business or does in fact do so, or an Event of Default has
occurred and is continuing with respect to a Global Registered
Note, owners of beneficial interests in a Global Registered Note
will not be entitled to have any portions of such Global
Registered Note registered in their names, will not receive or be
entitled to receive physical delivery of Notes in definitive form
and will not be considered the owners or Holders of the Global
Registered Note (or any Notes represented thereby) under the
Indenture or the Notes. In addition, no beneficial owner of an
interest in a Global Registered Note will be able to transfer
that interest except in accordance with DTC's applicable
procedures (in addition to those under the Indenture referred to
herein). In the event that owners of beneficial interests in a
Global Registered Note become entitled to receive Notes in
definitive form, such Notes will be issued only as Registered
Notes in denominations of $1,000 and integral multiples thereof.
Subject to the following considerations, beneficial
interests in the Global Registered Notes will trade in DTC's
Same-Day Funds
26
Settlement System, and secondary market trading activity in such
interests will therefore settle in immediately available funds.
The Company expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of a Global
Registered Note representing any Notes held by it or its nominee,
will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such Global Registered Notes for such Notes
as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial
interests in such Global Registered Notes held through such
participants will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers registered in "street name". Such
payments will be the responsibility of such participants.
DTC has advised the Company as follows: DTC is a limited
purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code,
as amended, and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to
hold securities for its participants and facilitate the clearance
and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical transfer
and delivery of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations.
Indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant,
either directly or indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in
order to facilitate transfers of beneficial ownership interests
in the Global Registered Note among participants of DTC, it is
under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
None of the Company, the Trustee nor any of their respective
agents will have any responsibility for the performance by DTC,
its participants or indirect participants of their respective
obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial
ownership interests in Global Registered Notes.
Conversion Rights
The Holder of any Note has the right, at the Holder's
option, to convert any portion of the principal amount of a
Registered Note that is an integral multiple of $1,000 into
shares of Class B common stock at any time prior to the close of
business on the
27
maturity date, unless previously redeemed or repurchased, at a
conversion price of $30.195 per share (subject to adjustment as
described below). Such conversion price has been adjusted for the
2-for-1 stock split announced by Continental on June 26, 1996 and
payable on July 16, 1996 to holders of record of its Class B
common stock and Class A common stock on July 2, 1996. The right
to convert a Note called for redemption or delivered for
repurchase will terminate at the close of business on the
Redemption Date for such Note or the Repurchase Date, as the case
may be. (ss. 12.1)
Registered Notes may be surrendered for conversion at the
Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York and, subject to any applicable
laws and regulations, at the office of any Conversion Agent
outside the United States, accompanied by a duly signed and
completed notice of conversion. The conversion date will be the
date on which the Note and the duly signed and completed notice
of conversion are so delivered. As promptly as practicable on or
after the conversion date, the Company will issue and deliver to
the Trustee a certificate or certificates for the number of full
shares of Class B common stock issuable upon conversion, together
with payment in lieu of any fraction of a share; such certificate
or certificates will be sent by the Trustee to the Holder, or to
the appropriate Conversion Agent for delivery to the Holder. Such
shares of Class B common stock issuable upon conversion of the
Notes will be fully paid and nonassessable and will rank pari
passu with the other shares of Class B common stock of the
Company outstanding from time to time. Any Registered Note
surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business on
the next succeeding Interest Payment Date (except Notes called
for redemption on a Redemption Date or to be repurchased on a
Repurchase Date during such period) must be accompanied by
payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Registered Notes
being surrendered for conversion. In the case of any Registered
Note which has been converted after any Regular Record Date but
before the next Interest Payment Date, interest the Stated
Maturity of which is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such
conversion, and such interest shall be paid to the Holder of such
Registered Note on such Regular Record Date. As a result, Holders
that surrender Notes for conversion on a date that is not an
Interest Payment Date will not receive any interest for the
period from the Interest Payment Date next preceding the date of
conversion to the date of conversion or for any later period,
even if the Notes are surrendered after a notice of redemption
(except for the payment of interest on Registered Notes called
for redemption on a Redemption Date or to be repurchased on a
Repurchase Date between a Regular Record Date and the Interest
Payment Date to which it relates). No other payment or adjustment
for interest, or for any dividends in respect of Class B common
stock, will be made upon conversion. Holders of Class B common
stock issued upon conversion will not be entitled to receive any
dividends payable to holders of Class B
28
common stock as of any record time before the close of business
on the conversion date. No fractional shares will be issued upon
conversion but, in lieu thereof, an appropriate amount will be
paid in cash by the Company based on the market price of Class B
common stock at the close of business on the day of conversion.
(ss.ss. 2.2, 3.7, 12.2 and 12.3)
A Holder delivering a Note for conversion will not be
required to pay any taxes or duties in respect of the issue or
delivery of Class B common stock on conversion but will be
required to pay any tax or duty which may be payable in respect
of any transfer involved in the issue or delivery of the Class B
common stock in a name other than that of the Holder of the Note.
Certificates representing shares of Class B common stock will not
be issued or delivered unless all taxes and duties, if any,
payable by the Holder have been paid. (ss.ss. 12.2 and 12.8)
The conversion price is subject to adjustment in certain
events, including, without duplication: (a) dividends (and other
distributions) in any class of Continental common stock, (b) the
issuance to all holders of any class of Continental common stock
of rights, options or warrants entitling them to subscribe for or
purchase any class of Continental common stock at less than the
then current market price (determined as of the record date for
stockholders entitled to receive such rights, option or warrants)
of such common stock, (c) subdivisions, combinations and
reclassifications of any class of Continental common stock, (d)
distributions to all holders of any class of Continental common
stock of evidences of indebtedness of the Company, shares of
capital stock, cash or assets (including securities, but
excluding those dividends, rights, options, warrants and
distributions referred to above, dividends and distributions paid
exclusively in cash and mergers and consolidations to which the
next succeeding paragraph applies), (e) distributions consisting
exclusively of cash (excluding any cash portion of distributions
referred to in (d) above, or cash distributed upon a merger or
consolidation to which the next succeeding paragraph applies) to
all holders of any class of Continental common stock in an
aggregate amount that, combined together with (i) other such
all-cash distributions made within the preceding 12 months in
respect of which no adjustment has been made and (ii) any cash
and the fair market value of other consideration payable in
respect of any tender offer (of the type described in (f) below)
by the Company or any of its subsidiaries for any class of
Continental common stock concluded within the preceding 12 months
in respect of which no adjustment has been made, exceeds 15% of
the Company's market capitalization (for this purpose being the
product of the Current Market Price per share of the Class B
common stock on the record date for such distribution times the
number of shares of all classes of Continental's common stock
outstanding) on such date, and (f) payments to holders of any
class of Continental common stock in respect of a tender or
exchange offer (other than an odd-lot offer) by Continental or
any subsidiary of Continental for Continental common stock at a
price
29
in excess of 110% of the Current Market Price per share of such
common stock on the trading day next succeeding the last date
tenders or exchanges may be made pursuant to such tender or
exchange offer. The Company reserves the right to make such
reductions in the conversion price in addition to those required
in the foregoing provisions as it considers to be advisable in
order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the
recipients. No adjustment of the conversion price will be
required to be made until the cumulative adjustments amount to
1.0% or more of the conversion price. (ss. 12.4) Notices of any
adjustments to the conversion price pursuant to this paragraph
will be given as provided under "--Notices". (ss. 12.5)
In case of any consolidation or merger of the Company with
or into another Person or any merger of another Person into the
Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of the
Class B common stock), or in case of any sale or transfer of all
or substantially all of the assets of the Company, each Note then
outstanding will, without the consent of the Holder of any Note
or coupon, become convertible only into the kind and amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number
of shares of Class B common stock into which such Note was
convertible immediately prior thereto (assuming such holder of
Class B common stock failed to exercise any rights of election
and that such Note was then convertible). (ss. 12.11)
If at any time the Company makes a distribution of property
to its stockholders that would be taxable to such stockholders as
a dividend for federal income tax purposes (e.g., distributions
of evidences of indebtedness or assets of the Company, but
generally not stock dividends on common stock or rights to
subscribe for common stock) and, pursuant to the anti-dilution
provisions of the Indenture, the number of shares into which
Notes are convertible is increased, such increase may be deemed
for federal income tax purposes to be the payment of a taxable
dividend to Holders of Notes. See "United States Taxation--United
States Holders--Adjustments in Conversion Price".
Subordination
The payment of the principal of, premium, if any, and
interest on, and the redemption or repurchase of, the Notes and
coupons will be subordinated in right of payment to the extent
set forth in the Indenture to the prior payment in full of the
principal of, premium, if any, interest and other amounts in
respect of all Senior Indebtedness of the Company. The principal
amount of outstanding Senior Indebtedness was approximately $1.7
billion at March 31, 1996. Senior Indebtedness includes, with
respect to Continental, (i) the principal, premium, if any,
interest and other amounts in respect of (A) indebtedness of such
obligor for money
30
borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such
obligor, (ii) all capital lease obligations of such obligor,
(iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale
obligations of such obligor and all obligations of such obligor
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all
obligations of such obligor for the reimbursement on any letter
of credit, bankers acceptance, security purchase facility or
similar credit transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons
for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, and (vi) all obligations of the
type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of such
obligor (whether or not such obligation is assumed by such
obligor), except for (1) any such indebtedness or other
obligation that is by its terms subordinated to or pari passu
with the Notes and (2) any indebtedness between or among such
obligor and its affiliates, including all other debt securities
and guarantees in respect of those debt securities, initially
issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with Continental that,
directly or indirectly, is a financing vehicle of Continental (a
"financing entity") in connection with the issuance by such
financing entity of preferred securities or other securities that
rank pari passu with, or junior to, the Notes. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term
of such Senior Indebtedness. The payment of the principal of,
premium, if any, and interest on the Notes and coupons shall rank
senior in right of payment to the Company's guarantee of payments
under the 8 1/2% Convertible Trust Originated Preferred
Securities issued by Continental Airlines Finance Trust and the
Company's 8 1/2% Convertible Subordinated Deferrable Interest
Debentures due 2020. (ss.ss. 13.1 and 13.2)
No payment on account of principal of, premium, if any, or
interest on, or redemption or repurchase of, the Notes or any
coupon may be made by the Company if there is a default in the
payment of principal, premium, if any, or interest (including a
default under any repurchase or redemption obligation) or other
amounts with respect to any Senior Indebtedness or if any other
event of default with respect to any Senior Indebtedness,
permitting the holders thereof to accelerate the maturity
thereof, shall have occurred and shall not have been cured or
waived or shall not have ceased to exist after written notice to
the Company and the Trustee by any holder of Senior Indebtedness.
Upon any acceleration of the principal due on the Notes or
payment or distribution of assets of the Company to creditors
upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal, premium, if
any,
31
and interest or other amounts due on all Senior Indebtedness must
be paid in full before the Holders of the Notes are entitled to
receive any payment. By reason of such subordination, in the
event of insolvency, creditors of the Company who are holders of
Senior Indebtedness may recover more, ratably, than the Holders
of the Notes, and such subordination may result in a reduction or
elimination of payments to the Holders of the Notes. (ss. 13.2)
In addition, the Notes will be structurally subordinated to
all indebtedness and other liabilities (including trade payables
and lease obligations) of the Company's subsidiaries, as any
right of the Company to receive any assets of its subsidiaries
upon their liquidation or reorganization (and the consequent
right of the Holders of the Notes to participate in those assets)
will be effectively subordinated to the claims of that
subsidiary's creditors (including trade creditors), except to the
extent that the Company itself is recognized as a creditor of
such subsidiary, in which case the claims of the Company would
still be subordinate to any security interest in the assets of
such subsidiary and any indebtedness of such subsidiary senior to
that held by the Company. As of March 31, 1996, there was
outstanding approximately $261.2 million of indebtedness of
subsidiaries of the Company (excluding intercompany
indebtedness); this amount has been included in the principal
amount of Continental's outstanding Senior Indebtedness at March
31, 1996, as set forth above.
The Indenture does not limit the Company's ability to incur
Senior Indebtedness or the ability of the Company or its
subsidiaries to incur any other indebtedness.
Redemption
Optional Redemption
Subject to the discussion under "--Redemption for Taxation
Reasons" below, the Notes may not be redeemed at the option of
the Company prior to April 15, 1999. Thereafter, the Notes may be
redeemed, in whole or in part, at the option of the Company, at
the redemption prices specified below, upon not less than 30 nor
more than 60 days' prior notice as provided under "--Notices"
below.
32
The redemption prices (expressed as a percentage of
principal amount) are as follows for the 12-month period
beginning on April 15 of the following years:
Year Redemption
Price
1999 104.725
2000 104.050
2001 103.375
2002 102.700
2003 102.025
2004 101.350
2005 100.675
and thereafter at a Redemption Price equal to 100% of the
principal amount, in each case together with accrued interest to
the date of redemption. (ss.ss. 2.2, 11.1, 11.5, 11.7)
Redemption for Taxation Reasons
If the Company has or will become obligated to pay
Additional Amounts (as described below under "--Payment of
Additional Amounts") as a result of any change in, or amendment
to, the laws (including any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or any
change in, or amendment to, the application or official
interpretation of such laws, regulations or rulings (any such
change or amendment being herein referred to as a "Tax Law
Change"), and such obligation cannot be avoided by the Company
taking reasonable measures available to it, the Tax Affected
Notes may be redeemed, at the option of the Company, in whole but
not in part. With respect to any Tax Law Change, "Tax Affected
Notes" shall include any Registered Note that, on or before the
30th day after the date on which the Company publishes a notice
of redemption pursuant to this paragraph, is delivered to the
Trustee together with a written statement from or on behalf of
the beneficial owner of such Registered Note to the effect that
such beneficial owner has or will become entitled to receive
Additional Amounts as a result of such Tax Law Change. Such
redemption shall be upon not less than 30 nor more than 60 days'
prior notice as provided under "--Notices" below, at a redemption
price equal to 100% of the principal amount of the Notes, plus
accrued interest to the redemption date and any Additional
Amounts then payable; provided, however, that (1) no such notice
of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay any
such Additional Amounts were a payment in respect of the Notes
then due and (2) at the time such notice of redemption is given,
the obligation to pay such Additional Amounts remains in effect.
Prior to the publication of any notice of redemption pursuant to
this paragraph, the Company shall deliver to the Trustee (a) a
certificate stating that the Company is entitled to effect such
33
redemption and setting forth a statement of facts showing that
the conditions precedent to the right of the Company so to redeem
have occurred and (b) an opinion of independent counsel of
recognized standing, to the effect that the Company has or will
become obligated to pay such Additional Amounts as a result of a
Tax Law Change.
Payment and Conversion
The principal of the Registered Notes will be payable in
U.S. dollars, against surrender thereof at the Corporate Trust
Office of the Trustee in the Borough of Manhattan, The City of
New York, or, subject to any applicable laws and regulations, at
the office of any Paying Agent, by dollar check drawn on, or by
transfer to a dollar account (such transfer to be made only to
Holders of an aggregate principal amount of Registered Notes in
excess of U.S.$2,000,000) maintained by the Holder with, a bank
in New York City. Payment of any installment of interest on
Registered Notes will be made to the Person in whose name such
Registered Notes (or any predecessor Note) are registered at the
close of business on the April 1 or October 1 (whether or not a
Business Day) immediately preceding the relevant Interest Payment
Date (a "Regular Record Date"). Payments of such interest will be
made by a dollar check drawn on a bank in New York City mailed to
the Holder at such Holder's registered address or, upon
application by the Holder thereof to the Trustee not later than
the applicable Regular Record Date, by transfer to a dollar
account (such transfer to be made only to Holders of an aggregate
principal amount of Registered Notes in excess of U.S.$2,000,000)
maintained by the Holder with a bank in New York City. No
transfer to a dollar account will be made unless the Trustee has
received written wire instructions not less than 15 days prior to
the relevant payment date. (ss. 2.2)
Any payment on the Notes due on any day which is not a
Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if
made on such due date, and no interest shall accrue on such
payment for the period from and after such date. "Business Day",
when used with respect to any place of payment, place of
conversion or any other place, as the case may be, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in such place of payment, place
of conversion or other place, as the case may be, are authorized
or obligated by law or executive order to close; provided,
however, that a day on which banking institutions in New York,
New York or London, England are authorized or obligated by law or
executive order to close shall not be a Business Day for certain
purposes. (ss.ss. 1.1 and 2.2)
Registered Notes may be surrendered for conversion at the
Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York and, subject to any applicable
34
laws and regulations, at the office of any Conversion Agent
outside the United States. Registered Notes surrendered for
conversion must be accompanied by appropriate notices and any
payments in respect of interest or taxes, as applicable, as
described above under "--Conversion Rights". (ss.ss. 2.2 and
12.2)
The Company has initially appointed as Paying Agents and
Conversion Agents, Bankers Trust Company, 1 Appold Street,
Broadgate, London EC2A 2HE, Bankers Trust Luxembourg S.A., 14
Boulevard F.D. Roosevelt, L-2450 Luxembourg, and Swiss Bank
Corporation, Paradeplatz 6, Ch-8010 Zurich, Switzerland. The
Company may at any time terminate the appointment of any Paying
Agent or Conversion Agent and appoint additional or other Paying
Agents and Conversion Agents, provided that until the Notes have
been delivered to the Trustee for cancellation, or moneys
sufficient to pay the principal of, premium, if any, and interest
on the Notes have been made available for payment and either paid
or returned to the Company as provided in the Indenture, it will
maintain an office or agency in the Borough of Manhattan, The
City of New York for surrender of Registered Notes for
conversion, and in a Western European city (which, so long as the
Notes are listed on the Luxembourg Stock Exchange and the rules
of the Luxembourg Stock Exchange shall so require, will be
Luxembourg) for payments with respect to the Notes and for the
surrender of Notes for conversion. Notice of any such termination
or appointment and of any change in the office through which any
Paying Agent or Conversion Agent will act will be given in
accordance with "--Notices" below. (ss. 10.2)
Interest payable on Registered Notes on any redemption date
or repurchase date that is an Interest Payment Date will be paid
to the Holders of record as of the immediately preceding Regular
Record Date. (ss.ss. 11.7, 14.1 and 14.2)
All moneys deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of
principal of, premium, if any, or interest on any Notes which
remain unclaimed at the end of two years after such payment has
become due and payable will be repaid to the Company, and the
Holder of such Note or any coupon appertaining thereto will
thereafter look only to the Company for payment thereof. (ss.
10.3)
Payment of Additional Amounts
The Company will pay to the Holder of any Note who is a
United States Alien such additional amounts ("Additional
Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and interest on such Note,
after deduction or withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon or
as a result of such payment by the United States or any political
subdivision or taxing authority thereof or therein, will not be
35
less than the amount provided for in such Note to be then due and
payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge which
would not have been so imposed but for (i) the existence of
any present or former connection between such Holder (or
between a fiduciary, settlor, beneficiary, member,
shareholder of or possessor of a power over such Holder, if
such Holder is an estate, a trust, a partnership or a
corporation) and the United States or any political
subdivision or taxing authority thereof or therein,
including, without limitation, such Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident of
the United States or treated as a resident thereof, or
being or having been engaged in trade or business or
present therein, or having or having had a permanent
establishment therein, or (ii) such Holder's present or
former status as a personal holding company, a foreign
personal holding company with respect to the United States,
or a foreign private foundation or foreign tax exempt
entity for United States tax purposes, or a corporation
which accumulates earnings to avoid United States federal
income tax;
(b) any tax, assessment or other governmental charge which
would not have been so imposed but for the presentation by
the Holder of such Notes for payment on a date more than 15
days after the date on which such payment became due and
payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer,
personal property or similar tax, assessment or governmental
charge;
(d) any tax, assessment or other governmental charge which
would not have been imposed but for the failure to comply
with any certification, identification or other reporting
requirements concerning the nationality, residence,
identity or connection with the United States of the Holder
or beneficial owner of such Note, if compliance is required
by statute or by regulation of the United States as a
precondition to relief or exemption from such tax,
assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which
is payable otherwise than by deduction or withholding from
payments of principal of, premium, if any, or interest on
such Note;
(f) any tax, assessment or other governmental charge
imposed on a holder that actually or constructively owns 10%
36
or more of the total combined voting power of all classes
of stock of the Company entitled to vote or that is a
controlled foreign corporation related to the Company
through stock ownership;
(g) any tax, assessment or other governmental charge
required to be withheld by any Paying Agent from any
payment of the principal of, premium, if any, or interest
on any Note, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(h) any tax, assessment or other governmental charge
imposed on a Holder that is a partnership or a fiduciary or
other than the sole beneficial owner of such payment, but
only to the extent that any beneficial owner or member of
the partnership or beneficiary or settlor with respect to
the fiduciary would not have been entitled to the payment
of Additional Amounts had the beneficial owner, member,
beneficiary or settlor directly been the Holder of the
Note; or
(i) any combination of items (a), (b), (c), (d), (e), (f),
(g) and (h). (ss. 2.2)
Notwithstanding the foregoing, the Company shall not be obligated
to pay Additional Amounts in respect of payments becoming due on
the Notes more than 15 days after the redemption date for a
redemption described in the first paragraph under "--Redemption
for Taxation Reasons", except to the extent that the Company's
obligation to pay such Additional Amounts does not arise from the
Tax Law Change that resulted in such redemption.
As used in this section, "United States" means the United
States of America (including the States and the District of
Columbia), its territories, its possessions and other areas
subject to its jurisdiction and a "United States Alien" is any
person who, for United States federal income tax purposes, is a
foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is for
United States federal income tax purposes, a foreign corporation,
a nonresident alien individual or a nonresident alien fiduciary
of a foreign estate or trust. (ss. 2.2)
Repurchase at Option of Holders Upon a Change in Control
If a Change in Control (as defined) occurs, each Holder of
Notes shall have the right, at the Holder's option, to require
the Company to repurchase all of such Holder's Notes, or any
portion of a Note that is $5,000 or an integral multiple of
$1,000 in excess thereof, on the date (the "Repurchase Date")
that is 45 days after the date of the Company Notice (as
defined), at a price equal to 100% of the principal amount of the
Notes to be repurchased (the
37
"Repurchase Price"), together with interest accrued to the
Repurchase Date. (ss. 14.1)
The Company may, at its option, in lieu of paying the
Repurchase Price in cash, pay the Repurchase Price in Class B
common stock valued at 95% of the average of the closing prices
of the Class B common stock for the five trading days ending on
and including the third trading day preceding the Repurchase
Date; provided that payment may not be made in Class B common
stock unless such stock is listed on a national securities
exchange or traded on the NASDAQ National Market System at the
time of payment.
(ss. 14.1)
Within 30 days after the occurrence of a Change in Control,
the Company is obligated to give to all Holders of the Notes
notice, as provided in the Indenture (the "Company Notice"), of
the occurrence of such Change in Control and of the repurchase
right arising as a result thereof. The Company must also deliver
a copy of the Company Notice to the Trustee. To exercise the
repurchase right, a Holder of Notes must deliver on or before the
30th day after the date of the Company Notice irrevocable written
notice to the Trustee of the Holder's exercise of such right,
together with the Notes with respect to which the right is being
exercised. At least two trading days prior to the Repurchase
Date, the Company must publish a notice in the manner described
above specifying whether the Company will pay the Repurchase
Price in cash or in Class B common stock. (ss. 14.2)
A Change in Control shall be deemed to have occurred at
such time after the original issuance of the Notes as there shall
occur:
(i)the acquisition by any Person (including any
syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Exchange Act) of beneficial
ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of
transactions, of shares of capital stock of the
Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital
stock of the Company entitled to vote generally in
elections of directors, other than any such
acquisition by (x) the Company, any subsidiary of the
Company or any employee benefit plan of the Company or
(y) the Current Principal Shareholders (as defined) or
any syndicate or group in which any Current Principal
Shareholder has a controlling interest, so long as the
entities listed in this clause (y) combined own,
directly or indirectly, shares of capital stock of the
Company representing less than 60% of the Company's
common equity interests and less than 85% of the total
voting power of all shares of capital stock of the
Company entitled to vote generally in elections of
directors, in each case, determined on a fully-diluted
basis; or
38
(ii)any consolidation of the Company with, or
merger of the Company into, any other Person, any
merger of another Person into the Company, or any sale
or transfer of all or substantially all of the assets
of the Company to another Person (other than a merger
(x) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding
shares of capital stock of the Company or (y) which is
effected solely to change the jurisdiction of
incorporation of the Company and results in a
reclassification, conversion or exchange of
outstanding shares of Class B common stock into solely
shares of common stock);
provided, however, that a Change in Control shall not be deemed
to have occurred if either (a) the closing price per share of the
Class B common stock for any five trading days within the period
of 10 consecutive trading days ending immediately after the later
of the Change in Control or the public announcement of the Change
in Control (in the case of a Change in Control under clause (i)
above) or ending immediately before the Change in Control (in the
case of a Change in Control under clause (ii) above) shall equal
or exceed 105% of the conversion price of the Notes in effect on
each such trading day, or (b) all of the consideration (excluding
cash payments for fractional shares) in a transaction or
transactions constituting the Change in Control described in
clause (ii) above consists of shares of common stock traded on a
national securities exchange or quoted on the NASDAQ National
Market System and as a result of such transaction or transactions
the Notes become convertible solely into such common stock.
"Current Principal Shareholders" shall mean Air Partners, Air
Canada and any partners or affiliates thereof. (ss. 14.3)
Rule 13e-4 under the Exchange Act requires the
dissemination of certain information to security holders in the
event of an issuer tender offer and may apply in the event that
the repurchase option becomes available to Holders of the Notes.
The Company will comply with this rule to the extent applicable
at that time.
The Company may, to the extent permitted by applicable law,
at any time purchase Notes in the open market or by tender at any
price or by private agreement. Any Note so purchased by the
Company may, to the extent permitted by applicable law and
subject to restrictions contained in the underwriting agreement
dated March 15, 1996 entered into between the Company and the
Underwriter, be re-issued or resold or may, at the Company's
option, be surrendered to the Trustee for cancellation. Any Notes
surrendered as aforesaid may not be re-issued or resold and will
be canceled promptly.
The foregoing provisions would not necessarily afford
Holders of the Notes protection in the event of highly leveraged
or other transactions involving the Company that may adversely
affect Holders.
39
Mergers and Sales of Assets by the Company
The Company may not consolidate with or merge into any
other Person or transfer or lease its properties and assets
substantially as an entirety to any Person unless (a) the Person
formed by such consolidation or into which the Company is merged
or the Person to which the properties and assets of the Company
are so transferred or leased shall be a corporation, limited
liability company, partnership or trust organized and existing
under the laws of the United States, any State thereof or the
District of Columbia and shall expressly assume the payment of
the principal of, premium, if any, and interest on the Notes and
coupons and the performance of the other covenants of the Company
under the Indenture, and (b) immediately after giving effect to
such transaction, no Event of Default, and no event that, after
notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing. (ss. 7.1)
Events of Default
The following will be Events of Default under the
Indenture: (a) failure to pay principal of or premium, if any, on
any Note or coupon when due, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (b)
failure to pay any interest on any Note or coupon when due,
continuing for 30 days, whether or not such payment is prohibited
by the subordination provision of the Indenture; (c) failure to
perform any other covenant of the Company in the Indenture,
continuing for 60 days after written notice as provided in the
Indenture; (d) default in respect of any indebtedness for money
borrowed by the Company that results in acceleration of the
maturity of an amount in excess of $75,000,000 of indebtedness if
such indebtedness is not discharged, or such acceleration is not
annulled, within 30 days after written notice as provided in the
Indenture; and (e) certain events of bankruptcy, insolvency or
reorganization. (ss. 5.1) Subject to the provisions of the
Indenture relating to the duties of the Trustee in case an Event
of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Trustee reasonable
indemnity. (ss. 6.3) Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Notes will have the
right to 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. (ss. 5.12)
If an Event of Default shall occur and be continuing,
either the Trustee or the Holders of at least 25% in principal
amount of the Outstanding Notes may accelerate the maturity of
all Notes; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders of
a majority in aggregate principal amount of Outstanding Notes
may, under
40
certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the
Indenture. (ss. 5.2) For information as to waiver of defaults,
see "--Meetings, Modification and Waiver".
No Holder of any Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the
Trustee written notice of a continuing Event of Default and the
Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding
as trustee, and the Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days.
(ss. 5.7) However, such limitations do not apply to a suit
instituted by a Holder of a Note for the enforcement of payment
of the principal of, premium, if any, or interest on such Note on
or after the respective due dates expressed in such Note or of
the right to convert such Note in accordance with the Indenture.
(ss. 5.8)
The Company will be required to furnish to the Trustee
annually a statement as to the performance by the Company of
certain of its obligations under the Indenture and as to any
default in such performance. (ss. 10.9)
Meetings, Modification and Waiver
The Indenture contains provision for convening meetings of
the Holders of Notes to consider matters affecting their
interests.
(Article Nine).
Modifications and amendments of the Indenture may be made,
and certain past defaults by the Company may be waived, either
(i) with the written consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time
Outstanding or (ii) by the adoption of a resolution, at a meeting
of Holders of the Notes at which a quorum is present, by the
Holders of at least 66 2/3% in aggregate principal amount of the
Notes represented at such meeting. However, no such modification
or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity
of the principal of, or any installment of interest on, any Note,
(b) reduce the principal amount of, or the premium, if any, or
interest on, any Note, (c) reduce the amount payable upon a
redemption or mandatory repurchase, (d) modify the provisions
with respect to the repurchase right of the Holders in a manner
adverse to the Holders, (e) change the obligation of the Company
to pay Additional Amounts described above in a manner adverse to
the Holders, (f) change the place or currency of payment of
principal of, premium, if any, or interest on, any Note, (g)
impair the right to institute suit for
41
the enforcement of any payment on or with respect to any Note,
(h) modify the obligation of the Company to maintain an office or
agency in New York City and in a Western European city, (i)
adversely affect the right to convert Notes, (j) modify the
subordination provisions in a manner adverse to the Holders of
the Notes, (k) reduce the above-stated percentage of Outstanding
Notes necessary to modify or amend the Indenture, (l) reduce the
percentage of aggregate principal amount of Outstanding Notes
necessary for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults, (m) reduce the
percentage in aggregate principal amount of Outstanding Notes
required for the adoption of a resolution or the quorum required
at any meeting of Holders of Notes at which a resolution is
adopted, or (n) modify the obligation of the Company to deliver
information required under Rule 144A to permit resales of Notes
and Class B common stock issuable upon conversion thereof in the
event the Company ceases to be subject to certain reporting
requirements under the United States securities laws (ss.ss. 8.2
and 5.13). The quorum at any meeting called to adopt a resolution
will be persons holding or representing a majority in aggregate
principal amount of the Notes at the time outstanding and, at any
reconvened meeting adjourned for lack of a quorum, 25% of such
aggregate principal amount. (ss. 9.4)
The Holders of a majority in aggregate principal amount of
the Outstanding Notes may waive compliance by the Company with
certain restrictive provisions of the Indenture by written
consent. (ss. 10.13) The Holders of a majority in aggregate
principal amount of the Outstanding Notes also may waive any past
default under the Indenture, except a default in the payment of
principal, premium, if any, or interest, by written consent. (ss.
5.13)
Registration Rights
In connection with the issuance and sale of the Notes to the
Underwriter (the "Original Offering") on March 26, 1996 (the
"Original Offering Date"), the Company entered into a registration
rights agreement with the Underwriter (the "Registration Rights
Agreement") pursuant to which the Company agreed, at the Company's
expense, for the benefit of the holders of the Offered Securities,
to (i) file with the Commission within 180 days after the Original
Offering Date, a registration statement (the "Shelf Registration
Statement"), of which this Prospectus forms a part, covering
resales of the Offered Securities, (ii) use its best efforts to
cause the Shelf Registration Statement to be declared effective
under the Securities Act within 60 days after the date of filing of
the Shelf Registration Statement and (iii) use its best efforts to
keep effective the Shelf Registration Statement until three years
after the date it is declared effective or such earlier date as all
Offered Securities shall have been disposed of or on which all
Offered Securities held by persons that are not affiliates of
Continental may be resold without registration pursuant to Rule
144(k) under the Securities Act (the "Effectiveness Period"). The
42
Company has agreed to provide to each holder of Offered
Securities copies of this Prospectus, notify each holder when the
Shelf Registration Statement has become effective and take
certain other actions as are required to permit public resales of
the Offered Securities. A holder of Offered Securities that sells
such Offered Securities pursuant to the Shelf Registration
Statement will be required to be named as a selling security
holder in the related prospectus and to deliver this Prospectus
to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales
and will be bound by the provisions of the Registration Rights
Agreement, including certain indemnification obligations.
If (i) on or prior to 180 days following the date of
original issuance of the Registered Notes, a Shelf Registration
Statement had not been filed with the Commission, or (ii) on or
prior to the 60th day following the filing of such Shelf
Registration Statement, such Shelf Registration Statement is not
declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on the Registered
Notes, from and including the day following such Registration
Default. Liquidated Damages will be paid semi-annually in
arrears, with the first semi-annual payment due on the first
interest payment date, as applicable, following the date on which
such Liquidated Damages begin to accrue, and will accrue at a
rate per annum equal to an additional one-quarter of one percent
(0.25%) of the principal amount, to and including the 90th day
following such Registration Default and one-half of one percent
(0.50%) thereof from and after the 91st day following such
Registration Default. In the event that the Shelf Registration
Statement ceases to be effective during the Effectiveness Period
for more than 60 days, whether or not consecutive, during any
12-month period then the interest rate borne by the Registered
Notes will increase by an additional one-half of one percent
(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.
Continental agreed in the Registration Rights Agreement to
use its best efforts to cause such shares of Class B common stock
issuable upon conversion of the Notes to be listed on the NYSE
upon effectiveness of the Shelf Registration Statement.
Continental has filed a supplemental listing application with the
NYSE for the listing of the Class B common stock issuable upon
conversion of the Notes.
This summary of certain provisions of the Registration
Rights Agreement does not purport to be complete, and reference
is made to the Registration Rights Agreement, a copy of which is
filed as an exhibit to the Registration Statement and is
available to prospective investors as described under "Available
Information".
43
Transfer and Exchange
At the option of the Holder upon request confirmed in
writing, and subject to the terms of the Indenture, Registered
Notes will be exchangeable at any time into an equal aggregate
principal amount of Registered Notes of different authorized
denominations. See "--Form and Denomination". Registered Notes
may not be exchanged for Bearer Notes. (ss. 3.5)
Registered Notes may be presented for registration of
transfer (with the form of transfer endorsed thereon duly
executed) or exchange, at the office of any transfer agent or at
the office of the security registrar, without service charge but,
in the case of a transfer, upon payment of any taxes and other
governmental charges as described in the Indenture. Any
registration of transfer or exchange will be effected upon the
transfer agent or the security registrar, as the case may be,
being satisfied with the documents of title and identity of the
person making the request, and subject to such reasonable
regulations as the Company may from time to time agree upon with
the transfer agents and the security registrar, all as described
in the Indenture. Registered Notes may be transferred in whole or
in part in authorized denominations. (ss. 3.5)
The Company has initially appointed the Trustee as security
registrar and transfer agent, acting through its Corporate Trust
Office in New York City, and has appointed Bankers Trust Company
and Bankers Trust Luxembourg S.A. in London and Luxembourg,
respectively, as transfer agents. The Company reserves the right
to vary or terminate the appointment of the security registrar or
of any transfer agent or to appoint additional or other transfer
agents or to approve any change in the office through which any
security registrar or any transfer agent acts, provided that
there will at all times be a security registrar in and a transfer
agent in a Western European city (which, so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange shall so require, will be Luxembourg).
(ss.ss. 3.5 and 10.2)
In the event of a redemption of less than all of the Notes
(other than, in the case of Registered Notes, a redemption for
the reasons described in the second paragraph under
"--Redemption--Redemption for Taxation Reasons") for any of the
reasons set forth above under "--Redemption", the Company will
not be required (a) to register the transfer or exchange of
Registered Notes for a period of 15 days immediately preceding
the date notice is given identifying the serial numbers of the
Notes called for such redemption or (b) to register the transfer
of or exchange any Registered Note, or portion thereof, called
for redemption.
Title
The Company, the Trustee, any Paying Agent and any
44
Conversion Agent may treat the registered owner (as reflected in
the Security Register) of any Registered Note as the absolute
owner thereof (whether or not such Note shall be overdue) for the
purpose of making payment and for all other purposes. (ss. 2.2)
Notices
Notice to Holders of the Notes will be given by publication
in Authorized Newspapers (as set forth in the Indenture) in
London and, so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of the Luxembourg Stock Exchange
shall so require, in Luxembourg or, if publication in either
London or Luxembourg is not practical, in a Western European
city. Such publication is expected to be made in the Financial
Times and the Luxemburger Wort. Notices to Holders of Notes will
also be given by mail to the addresses of such Holders as they
appear in the Security Register. Such notices will be deemed to
have been given on the date of such publication or, if published
in such Authorized Newspapers on different dates, on the date of
the first such publication or on the date of such mailing, as the
case may be. (ss.ss. 1.1 and 1.6)
Notice of a redemption of Notes will be given at least once
not less than 30 nor more than 60 days prior to the redemption
date (which notice shall be published in accordance with the
procedures described in the preceding paragraph, but shall be
irrevocable except as otherwise provided in the second paragraph
under "--Redemption--Redemption for Taxation Reasons") and will
specify the redemption date.
Governing Law
The Indenture and the Notes will be governed by and
construed in accordance with the laws of the State of New York,
United States of America. (ss. 1.1)
The Trustee
In case an Event of Default shall occur (and shall not be
cured), the Trustee will be required to use the degree of care of
a prudent person in the conduct of his own affairs in the
exercise of its powers. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or
powers under the Indenture at the request of any of the Holders
of Notes, unless they shall have offered to the Trustee
reasonable security or indemnity. (ss.ss. 6.1 and 6.3)
45
DESCRIPTION OF CAPITAL STOCK
The current authorized capital stock of the Company
consists of 50,000,000 shares of Class A common stock,
200,000,000 shares of Class B common stock and 50,000,000 shares
of Class D common stock (such classes of common stock referred to
collectively as the "common stock") and 10,000,000 shares of
preferred stock, $.01 par value (the "Preferred Stock"). As of
May 31, 1996, there were 4,640,000 outstanding shares of Class A
common stock, 23,276,788 outstanding shares of Class B common
stock and 421,717 outstanding shares of Series A 12% Cumulative
Preferred Stock.
Pursuant to the Reorganization, on April 27, 1993 the
Company issued 1,900,000 shares of Class A common stock and
5,042,368 shares of Class B common stock to a distribution agent
for the benefit of the Company's Prepetition Creditors. As of
March 31, 1996, there remained 291,459 shares of Class A common
stock, 762,291 shares of Class B common stock, and approximately
$1 million of cash available for distribution. Pending resolution
of certain disputed claims, a distribution agent will continue to
hold undistributed Class A common stock and Class B common stock
and will vote such shares of each class pro rata in accordance
with the vote of all other shares of such class on any matter
submitted to a vote of stockholders. Also pursuant to the
Reorganization, the Company issued 493,621 shares of Class B
common stock to its retirement plan.
The following summary description of capital stock
accurately describes the material matters with respect thereto,
but is not intended to be complete and reference is made to the
provisions of the Company's Certificate of Incorporation and
Bylaws and the agreements referred to in this summary
description. As used in this section, except as otherwise stated
or required by context, each reference to Air Canada or Air
Partners includes any successor by merger, consolidation or
similar transaction and any wholly owned subsidiary of such
entity or such successor.
Common Stock--All Classes
Holders of common stock of all classes participate ratably
as to any dividends or distributions on the common stock, except
that dividends payable in shares of common stock, or securities
to acquire common stock, are paid in common stock, or securities
to acquire common stock, of the same class as that upon which the
dividend or distribution is being paid. Upon any liquidation,
dissolution or winding up of the Company, holders of common stock
of all outstanding classes are entitled to share ratably the
assets of the Company available for distribution to the
stockholders, subject to the prior rights of holders of any
outstanding Preferred Stock. Holders of common stock have no
preemptive, subscription, conversion or redemption rights (other
than the conversion rights of holders of Class A common stock
46
described under "--Class B Common Stock and Class A Common Stock"
and the anti-dilution rights described under "--Corporate
Governance and Control"), and are not subject to further calls or
assessments. Holders of common stock have no right to cumulate
their votes in the election of directors. All classes of common
stock vote together as a single class, subject to the right to a
separate class vote in certain instances required by law and to
the rights of holders of Class D common stock to vote separately
as a class to elect directors as described under "--Special
Classes of Common Stock."
Class B Common Stock and Class A Common Stock
The holders of Class B common stock are entitled to one
vote per share, and the holders of Class A common stock are
entitled to ten votes per share, on all matters submitted to a
vote of stockholders, except that voting rights of non-U.S.
citizens are limited as set forth below under "--Limitation on
Voting by Foreign Owners" and no holder of Class D common stock
can vote any of its Class B common stock for the election of
directors (see "--Special Classes of Common Stock").
Air Canada and Air Partners owned as of May 31, 1996 in the
aggregate approximately 19.8% of the outstanding Class A common
stock and Class B common stock, representing approximately 43.3%
of total voting power (after conversion by Air Canada of its
Class A common stock into Class B common stock, but excluding the
exercise of warrants held by Air Partners) and Air Partners has
warrants to acquire an additional 3,382,632 shares of Class B
common stock and 1,519,734 of Class A common stock (together
representing approximately 21% of total voting power, assuming
exercise of such warrants).
At any time after January 1, 1997, shares of Class A common
stock will become freely convertible into an equal number of
shares of Class B common stock. Because the Class A common stock
has ten votes per share and the Class B common stock has one vote
per share, any such conversion would effectively increase the
relative voting power of those Class A stockholders who do not
convert.
Limitation on Voting by Foreign Owners
The Company's Certificate of Incorporation defines "Foreign
Ownership Restrictions" as "applicable statutory, regulatory and
interpretive restrictions regarding foreign ownership or control
of U.S. air carriers (as amended or modified from time to time)."
Such restrictions currently require that no more than 25% of the
voting stock of the Company be owned or controlled, directly or
indirectly, by persons who are not U.S. Citizens ("Foreigners")
for purposes of the Foreign Ownership Restrictions, and that the
Company's president and at least two-thirds of its other managing
officers and directors be U.S. Citizens. For purposes of the
47
Certificate of Incorporation, "U.S. Citizen" means (i) an
individual who is a citizen of the United States; (ii) a
partnership each of whose partners is an individual who is a
citizen of the United States; or (iii) a corporation or
association organized under the laws of the United States or a
State, the District of Columbia, or a territory or possession of
the United States, of which the president and at least two-thirds
of the board of directors and other managing officers are
citizens of the United States, and in which at least 75% of the
voting interest is owned or controlled by persons that are
citizens of the United States. The Certificate of Incorporation
provides that no shares of capital stock may be voted by or at
the direction of Foreigners, unless such shares are registered on
a separate stock record (the "Foreign Stock Record") maintained
by the Company for the registration of ownership of voting stock
by Foreigners. The Company's Bylaws further provide that no
shares will be registered on the Foreign Stock Record if the
amount so registered would exceed the Foreign Ownership
Restrictions or adversely affect the Company's operating
certificates or authorities. Registration on the Foreign Stock
Record is made in chronological order based on the date the
Company receives a written request for registration, except that
certain shares acquired by Air Partners in connection with its
original investment in the Company that are subsequently
transferred to any Foreigner are entitled to be registered prior
to, and to the exclusion of, other shares. Shares currently owned
by Air Canada and registered on the Foreign Stock Record
constitute a portion of the shares that may be voted by
Foreigners under the Foreign Ownership Restrictions.
Corporate Governance and Control
Board of Directors
The Certificate of Incorporation provides that the
Company's Board of Directors shall consist of such number of
directors as may be determined from time to time by the Board of
Directors in accordance with the Bylaws. The Board of Directors
currently consists of twelve directors to be elected by holders
of common stock, subject to the rights of holders of preferred
stock to elect additional directors as set forth in any preferred
stock designation.
Business Combinations
The Certificate of Incorporation provides that the Company
is not governed by Section 203 of the General Corporation Law of
Delaware that, in the absence of such provisions, would have
imposed additional requirements regarding mergers and other
business combinations.
48
Anti-dilution Rights of Air Partners
Pursuant to the Certificate of Incorporation, Air Partners
has the right to purchase from the Company additional shares of
Class B common stock to the extent necessary to maintain its pro
rata ownership of the outstanding Class B common stock. Such
anti-dilution rights terminate as to Air Partners if the total
voting power of the common stock beneficially owned by it is less
than 20% of the total voting power of all of the outstanding
common stock. Because Air Partners currently does not own any
Class B common stock, such anti-dilution rights are not
operative.
Procedural Matters
The Company's Bylaws require stockholders seeking to
nominate directors or propose other matters for action at a
stockholders' meeting to deliver notice thereof to the Company
certain specified periods in advance of the meeting and to follow
certain other specified procedures.
Change in Control
The cumulative effect of the provisions of the Certificate
of Incorporation and Bylaws referred to under this heading
"Description of Capital Stock," and the Stockholders' Agreement
is to maintain certain rights of the Air Partners to elect
directors and otherwise to preserve its relative ownership and
voting positions. These provisions may have the effect of
delaying, deferring or preventing a change in control of the
Company.
Special Class of Common Stock
The Certificate of Incorporation authorizes Class D common
stock as a mechanism to provide, under certain circumstances, a
specified level of Board representation for Air Partners. No
shares of Class D common stock are currently outstanding, and
they may only be issued in limited circumstances upon conversion
of Class A common stock held by Air Partners. Air Partners has
the option, which may be exercised only once, to convert all (but
not less than all) shares of Class A common stock held by it into
an equal number of shares of Class D common stock. Such right of
conversion is further conditioned upon Air Partners' holding
common stock having at least 20% of the total voting power of all
classes of common stock.
After such conversion, Air Partners is entitled to elect
one-third of the number of directors determined by the Board of
Directors pursuant to the Bylaws (rounded to the nearest whole
number), voting as a separate class. When shares of Class D
common stock are outstanding, Air Partners may not vote any of
its shares of Class B common stock for the election of directors;
and if Air Partners becomes the beneficial owner of any
additional shares of Class A common stock during such time, such
49
shares will automatically be converted into Class D common stock.
Each share of Class D common stock has ten votes and, as to
matters other than the election of directors, votes together with
all other classes of common stock as a single class. In the event
the voting power of all common stock held by Air Partners
represents less than 20% of the voting power of all classes of
common stock, all Class D common stock held by Air Partners will
automatically convert into an equal number of shares of Class A
common stock. Shares of Class D common stock also convert
automatically into an equal number of shares of Class A common
stock upon the transfer of record or beneficial ownership of such
Class D common stock to any person other than certain related
parties of the original holder. Air Partners may also at any time
voluntarily convert all (but not less than all) shares of Class D
common stock held by it into an equal number of shares of Class A
common stock. All shares of Class D common stock surrendered by
Air Partners for conversion into Class A common stock will be
canceled and may not be reissued.
Redeemable Preferred Stock
The Company has authorized and issued a class of preferred
stock, designated as Series A 12% Cumulative Preferred Stock.
Holders of the Series A 12% Preferred are entitled to
receive, when, as and if declared by the Board of Directors,
cumulative dividends payable quarterly in additional shares of
such preferred stock for dividends accumulating through December
31, 1996. Thereafter dividends are payable in cash at an annual
rate of $12 per share; provided, however, that to the extent net
income (as defined in the certificate of designation for the
preferred stock) for any calendar quarter is less than the amount
of dividends due on all outstanding shares of the Series A 12%
Preferred for such quarter, the Board of Directors may declare
dividends payable in additional shares of Series A 12% Preferred
in lieu of cash. At any time, the Company may redeem, in whole or
in part, on a pro rata basis among the stockholders, any
outstanding shares of the Series A 12% Preferred. All outstanding
shares of the Series A 12% Preferred are mandatorily redeemable
on April 27, 2003 out of legally available funds. The redemption
price is $100 per share plus accrued and unpaid dividends. Shares
of the Series A 12% Preferred are not convertible into shares of
common stock and such shares do not have voting rights, except
under limited circumstances described in the following two
paragraphs. Shares of the Series A 12% Preferred have a
liquidation preference of $100 per share plus accrued and unpaid
dividends, senior to any distribution on shares of common stock.
In the event the Company violates certain covenants set
forth in the certificate of designation relating to the Series A
12% Preferred, or fails to pay the full amount of dividends on
the preferred stock for nine consecutive quarterly payment dates
50
or shall not have redeemed the preferred stock within five days
of the date of any redemption of which the Company has given, or
is required to give, notice (a "Default"), the holders of the
Series A 12% Preferred as to which a Default exists, voting
(subject to the Foreign Ownership Restrictions) together as one
class, are entitled to elect one member of the Board of
Directors. In the event the Company pays in full all dividends
accrued on the preferred stock for three consecutive payment
dates following such Default (and no dividend arrearages exist as
to such stock), or otherwise cures any other default that gives
rise to such voting rights, the holders of the Series A 12%
Preferred will cease to have the right to elect a director.
The consent or approval of the holders of a majority of the
then-outstanding shares of Series A 12% Preferred is required for
the creation of certain classes of senior or parity stock,
certain mergers or sales of substantially all of the Company's
assets, the voluntary liquidation or dissolution of the Company
and amendments to the terms of the preferred stock that would
adversely affect the Series A 12% Preferred.
The Board of Directors of the Company has the authority,
without any vote by the stockholders, to issue additional shares
of preferred stock, up to the number of shares authorized in the
Certificate of Incorporation, as it may be amended from time to
time, in one or more series, and to fix the number of shares
constituting any such series, the designations, preferences and
relative rights and qualifications of such series, including the
voting rights, dividend rights, dividend rate, terms of
redemption (including sinking fund provisions), redemption price
or prices, conversion rights and liquidation preferences of the
shares constituting any series.
Limitation of Director Liability and Indemnification
The Company's Certificate of Incorporation provides, to the
fullest extent permitted by Delaware law as it may from time to
time be amended, that no director shall be liable to the Company
or any stockholder for monetary damages for breach of fiduciary
duty as a director. As required under current Delaware law, the
Company's Certificate of Incorporation and Bylaws provide that
such waiver may not apply to liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law (governing
distributions to stockholders), or (iv) for any transaction from
which the director derived any improper personal benefit.
However, in the event the Delaware General Corporation Law is
amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability
of a director of the Company shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation
51
Law, as so amended. The Certificate of Incorporation further
provides that the Company will indemnify each of its directors
and officers to the full extent permitted by Delaware law and may
indemnify certain other persons as authorized by law. The
foregoing provisions do not eliminate any monetary liability of
directors under the federal securities laws.
52
UNITED STATES TAXATION
The following is a summary of certain United States federal
income and estate tax considerations relating to the purchase,
ownership and disposition of the Notes and of Class B common
stock into which Notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations
relating thereto. This summary is based on laws, regulations,
rulings and decisions now in effect, all of which are subject to
change. This summary deals only with holders that will hold Notes
and Class B common stock as capital assets and does not address
tax considerations applicable to investors that may be subject to
special tax rules, such as banks, tax-exempt organizations,
insurance companies, dealers in securities or currencies, persons
that will hold Notes or Class B common stock as a part of an
integrated investment (including a "straddle") comprised of a
Note or shares of Class B common stock and one or more other
positions, persons that have a "functional currency" other than
the U.S. dollar or holders of Notes that did not acquire the
Notes in the initial distribution thereof.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE
UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION
OR UNDER ANY APPLICABLE TAX TREATY.
United States Holders
As used herein, the term "United States Holder" means a
holder of a Note who is a citizen or resident of the United
States, or that is a corporation, partnership or other entity
created or organized in or under the laws of the United States or
any political subdivision thereof or an estate or trust the
income of which is subject to United States federal income
taxation regardless of its source, and the term "United States"
means the United States of America (including the States and the
District of Columbia).
Payment of Interest
Interest on a Note generally will be includible in the
income of a United States Holder as ordinary income at the time
such interest is received or accrued, in accordance with such
Holder's method of accounting for United States federal income
tax purposes.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Note, a United
States Holder generally will recognize capital gain or loss equal
to the difference between (i) the amount of cash proceeds and the
53
fair market value of any property received on the sale, exchange
or redemption (except to the extent such amount is attributable
to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted tax basis in the Note. A United
States Holder's adjusted tax basis in a Note generally will equal
the cost of the Note to such holder. Such capital gain or loss
will be long-term capital gain or loss if the Note was held for
more than one year at the time of sale, exchange or redemption.
Conversion of the Notes
A United States Holder generally will not recognize any
income, gain or loss upon conversion of a Note into Class B
common stock except with respect to cash received in lieu of a
fractional Share of Class B common stock. Such Holder's tax basis
in the Class B common stock received on conversion of a Note will
be the same as such Holder's adjusted tax basis in the Note at
the time of conversion (reduced by any basis allocable to a
fractional share interest), and the holding period for the Class
B common stock received on conversion will generally include the
holding period of the Note converted.
Cash received in lieu of a fractional share of Class B
common stock upon conversion will be treated as a payment in
exchange for the fractional share of Class B common stock.
Accordingly, the receipt of cash in lieu of a fractional share of
Class B common stock generally will result in capital gain or
loss (measured by the difference between the cash received for
the fractional share and the United States Holder's adjusted tax
basis in the fractional share).
Adjustment of Conversion Price
The conversion price of the Notes is subject to adjustment
in certain circumstances. Under Section 305(c) of the Internal
Revenue Code, adjustments that have the effect of increasing the
proportionate interest of holders of the Notes in the assets or
earnings of the Company (for example, an adjustment following a
distribution of property by the Company to its shareholders) may
in some circumstances give rise to deemed dividend income to
United States Holders; similarly, a failure to adjust the
conversion price of the Notes to reflect a stock dividend or
other event increasing the proportionate interest of the holders
of outstanding stock can in some circumstances give rise to
deemed dividend income to United States Holders of such stock.
Dividends
Dividends paid on the Class B common stock generally will
be includible in the income of a United States Holder as ordinary
income to the extent of the Company's current or accumulated
earnings and profits.
54
Sale or Other Disposition of Class B Common Stock
United States Holders generally will be subject to taxation
with respect to any gain recognized on the sale, exchange,
redemption or other disposition of shares of Class B common
stock. Such gain will be capital gain, and will be long-term
capital gain if the shares of Class B common stock were held for
more than one year.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply
to payments of principal, premium, if any, and of interest on a
Note, payments of dividends on Class B common stock and payments
of the proceeds of the sale of a Note or Class B common stock to
certain non-corporate United States Holders, and a 31% backup
withholding tax may apply to such payments if the United States
Holder (i) fails to furnish or certify his correct taxpayer
identification number to the payor in the manner required, (ii)
is notified by the Internal Revenue Service (the "IRS") that he
has failed to report payments of interest and dividends properly,
or (iii) under certain circumstances, fails to certify that he
has not been notified by the IRS that he is subject to backup
withholding for failure to report interest and dividend payments.
Any amounts withheld under the backup withholding rules from a
payment to a United States Holder will be allowed as a credit
against such holder's United States federal income tax liability
and may entitle the holder to a refund.
Non-United States Holders
Under current United States federal income and estate tax
law,
(a)payment on a Note or coupon by the Company or any
Paying Agent to a holder that is a United States Alien (as
defined under "Description of Notes--Payment of Additional
Amounts") will not be subject to withholding of United
States federal income tax, provided that, with respect to
payments of interest, (i) the beneficial owner does not
actually or constructively own 10 percent or more of the
combined voting power of all classes of stock of the
Company and is not a controlled foreign corporation related
to the Company through stock ownership and (ii) in the case
of a Registered Note, the beneficial owner provides a
statement signed under penalties of perjury that includes
its name and address and certifies that it is a United
States Alien in compliance with applicable requirements;
(b)a holder of a Note, coupon or Class B common stock
that is a United States Alien will not be subject to United
States federal income tax on gain realized on the sale,
exchange or redemption of the Note, coupon or Class B
common
55
stock (including the receipt of cash in lieu of fractional
shares upon conversion of a Note into shares of Class B
common stock), unless such holder has a connection with or
status with respect to the United States described in
clause (a) under "Payment of Additional Interest";
(c)a Note or coupon will not be subject to United
States federal estate tax as a result of the death of a
holder who is not a citizen or resident of the United
States at the time of death, provided that such holder did
not at the time of death actually or constructively own 10
percent or more of the combined voting power of all classes
of stock of the Company and, at the time of such holder's
death, payments of interest on such Note or coupon would
not have been effectively connected with the conduct by
such holder of a trade or business in the United States;
(d)except as described in clause (b) above with
respect to the receipt of cash in lieu of fractional shares
by certain holders upon conversion of a Note, no United
States federal income tax will be imposed upon the
conversion of a Note into shares of Class B common stock;
(e)dividends paid (or deemed paid, as described under
"United States Holders--Adjustment of Conversion Price") on
shares of Class B common stock held by a United States
Alien will be subject to withholding of United States
federal income tax at a 30 percent rate (or lower rate
provided under any applicable tax treaty, assuming the
holder of the Class B common stock satisfies any
certification or documentation requirements necessary to
claim the benefits of such treaty), unless the dividends
are effectively connected with the conduct by the United
States Alien holder of a trade or business in the United
States, in which case such dividends will be subject to
United States federal income tax at regular rates and will
be exempt from the 30 percent withholding tax; and
(f)shares of Class B common stock held by an
individual at the time of his death (or previously
transferred subject to certain retained rights or powers)
will be subject to United States federal estate tax unless
otherwise provided by an applicable estate tax treaty.
United States information reporting requirements and backup
withholding tax will not apply to payments on a Registered Note
made by the Company or any Paying Agent to a holder that is a
United States Alien if the statement described in clause (a) of
the preceding paragraph is duly provided to the Trustee.
Payment on a Registered Note by the United States office of
a custodian, nominee or other agent of the beneficial owner of
such Registered Note will be subject to information reporting
56
requirements and backup withholding tax unless the beneficial
owner certifies its non-U.S. status under penalties of perjury or
otherwise establishes an exemption.
Information reporting requirements and backup withholding
tax will not apply to any payment of the proceeds of the sale of
a Note or shares of Class B common stock effected outside the
United States by a foreign office of a foreign "broker" (as
defined in applicable Treasury regulations), provided that such
broker (i) derives less than 50% of its gross income for certain
periods from the conduct of a trade or business in the United
States and (ii) is not a controlled foreign corporation for
United States federal income tax purposes. Payment of the
proceeds of the sale of a Note or shares of Class B common stock
effected outside the United States by a foreign office of any
other broker will not be subject to backup withholding tax, but
will be subject to information reporting requirements unless such
broker has documentary evidence in its records that the
beneficial owner is a United States Alien and certain other
conditions are met, or the beneficial owner otherwise establishes
an exemption. Payment of the proceeds of a sale of a Note or
shares of Class B common stock by the United States office of a
broker will be subject to information reporting requirements and
backup withholding tax unless the beneficial owner certifies its
non-U.S. status under penalties of perjury or otherwise
establishes an exemption.
Dividends on Class B common stock held by a United States
Alien will not be subject to information reporting requirements
or backup withholding tax if paid to an address outside the
United States.
On April 15, 1996, the Internal Revenue Service release
proposed revisions (the "Proposed Regulations") to the
regulations interpreting the withholding tax, information
reporting and backup withholding tax rules described above. The
Proposed Regulations would change in some respects the
requirements for providing the certification described in clause
(a) of the first paragraph above, including requiring that the
partners of a foreign partnership that is a holder of Notes
provide such certification and that such a partnership provide
certain information, including a U.S. taxpayer identification
number. (In the case of certain tiered partnerships, this rule
would be applied to the ultimate partners, on a look-through
basis.) The Proposed Regulations also would modify in certain
respects the information reporting and backup withholding tax
rules. In particular, these rules may apply to foreign
partnerships on a look-through basis and United States Aliens may
be required to comply with certain certification requirements in
order to establish an exemption from information reporting
requirements and backup withholding tax with respect to dividends
paid on Class B common stock.
57
The Proposed Regulations are proposed generally to be
effective for payments made after December 31, 1997. It is not
possible to predict whether, or in what form, the Proposed
Regulations ultimately will be adopted.
58
SELLING HOLDERS
The Notes were originally issued by the Company and sold by
Goldman Sachs International (the "Underwriter"), in transactions
exempt from the registration requirements of the Securities Act,
to persons reasonably believed by such Underwriters to be
"qualified institutional buyers" (as defined in Rule 144A under
the Securities Act) or outside the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S
under the Securities Act. The Selling Holders may from time to
time offer and sell pursuant to this Prospectus any or all of the
Notes and Continental Class B common stock issued upon conversion
of the Notes. The term Selling Holder includes the holders listed
below and the beneficial owners of the Notes and their
transferees, pledgees, donees or other successors.
The following table sets forth information with respect to
the Selling Holders and the respective principal amount of Notes
beneficially owned by each Selling Holder that may be offered
pursuant to this Prospectus. Such information has been obtained
from the Selling Holders and the Trustee. Bear, Stearns & Co.
Inc. (an affiliate of Bear Stearns Securities Corp.), BT
Securities Corporation (an affiliate of Bankers Trust Company),
Goldman, Sachs & Co., Lehman Brothers, Inc. (an affiliate of
Lehman Brothers, International Europe - Prime Broker (LGSI)),
Merrill Lynch, Pierce, Fenner & Smith Incorporated (an affiliate
of Merrill Lynch - Debt Securities and Merrill Lynch, Pierce,
Fenner and Smith Safekeeping), Morgan Stanley & Co. Incorporated,
CS First Boston Corporation and Salomon Brothers Inc have in the
past provided to Continental and/or its affiliates investment
banking and investment advisory services for which they have
received customary fees, and may in the future provide such
services. Bankers Trust Company (an affiliate of BT Securities
Corporation) acts as trustee under an indenture pursuant to which
Continental has issued convertible subordinated notes.
Principal
Selling Holder Amount
of
Notes
Chase Manhattan Bank, N.A. 38,145,000
SSB-Custodian 33,792,000
Bear Stearns Securities Corp. 26,096,000
Bank of New York 25,480,080
Goldman, Sachs & Co. 20,234,000
Boston Safe Deposit & Trust Co. 7,355,000
Bankers Trust Company 4,762,000
Merrill Lynch - Debt Securities 4,641,000
Nomura International Trust Company Incorporated 4,000,000
Sun Trust 3,500,000
Lehman Brothers International (Europe) - Prime 3,150,000
Broker (LBI)
First National Bank of Chicago 3,000,000
59
Northern Trust Co.-Trust 2,193,000
Mercantile, Safe Deposit and Trust Company 2,145,000
Salomon Brothers Inc. 2,050,000
Morgan Stanley & Co., Incorporated 1,710,000
CS First Boston Corporation 1,625,000
Corestates Bank N.A. 1,500,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. 1,500,000
Deutsche Bank-Custody Services 1,000,000
Wagner, Stott & Inc. 1,000,000
Merrill Lynch, Pierce, Fenner & Smith 904,000
Safekeeping
UBS Securities Inc. 775,000
Republic New York Securities Corp. 750,000
Investors Bank & Trust/M.F. Custody 600,000
First Interstate Bank of California 540,000
Wells Fargo Bank, N.A. 250,000
Bank of Bermuda (New York) LTD. 200,000
Chemical Bank 100,000
Huntington National Bank 58,000
Any other holder of Notes or future transferee
from any such holder
192,975,000
None of the other Selling Holders has, or within the past
three years has had, any position, office or other material
relationship with the Company or any of their predecessors or
affiliates, except as noted above. Because the Selling Holders
may, pursuant to this Prospectus, offer all or some portion of
the Notes or the Continental Class B common stock issuable upon
conversion of the Notes, no estimate can be given as to the
amount of the Notes or the Continental Class B common stock
issuable upon conversion of the Notes that will be held by the
Selling Holders upon termination of any such sales. In addition,
the Selling Holders identified above may have sold, transferred
or otherwise disposed of all or a portion of their Notes, since
the date on which they provided the information regarding their
Notes, in transactions exempt from the registration requirements
of the Securities Act. See "Plan of Distribution".
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to
purchasers directly by the Selling Holders. Alternatively, the
Selling Holders may from time to time offer the Offered
Securities to or through underwriters, broker/dealers or agents,
who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Holders or
the purchasers of such securities for whom they may act as
agents. The Selling Holders and any underwriters, broker/dealers
or agents that participate in the distribution of Offered
Securities may be deemed to be "underwriters" within the meaning
of the Securities Act and any profit on the sale of such
securities and any discounts, commissions, concessions or other
60
compensation received by any such underwriter, broker/dealer or
agent may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Offered Securities may be sold from time to time in one
or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. The sale of the Offered Securities
may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or
quotation service on which the Offered Securities may be listed
or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or
in the over-the-counter market or (iv) through the writing of
options. At the time a particular offering of the Offered
Securities is made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount and type of
Offered Securities being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers
or agents, any discounts, commissions and other terms
constituting compensation from the Selling Holders and any
discounts, commissions or concessions allowed or reallowed or
paid to broker/dealers.
To comply with the securities laws of certain
jurisdictions, if applicable, the Offered Securities will be
offered or sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold
unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification
is available and is complied with.
The Selling Holders will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases
and sales of any of the Offered Securities by the Selling
Holders. The foregoing may affect the marketability of such
securities.
Pursuant to the Registration Rights Agreement, all expenses
of the registration of the Offered Securities will be paid by the
Company, including, without limitation, Commission filing fees
and expenses of compliance with state securities or "blue sky"
laws; provided, however, that the Selling Holders will pay all
underwriting discounts and selling commissions, if any. The
Selling Holders will be indemnified by the Company against
certain civil liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in
connection therewith. The Company will be indemnified by the
Selling Holders severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will
be entitled to contribution in connection therewith.
61
LEGAL MATTERS
The validity of the Notes and certain United States Federal
income taxation matters, will be passed upon for the Company by
Cleary, Gottlieb, Steen & Hamilton, New York, New York and the
validity of any Continental Class B common stock issuable upon
conversion of the Notes will be passed upon for the Company by
Jeffery A. Smisek, General Counsel of Continental.
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 to April 27, 1993, incorporated by
reference in this Prospectus, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report 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.
62
=============================== ===============================
No dealer, salesperson or $192,975,000
other person has been
authorized to give any
information or to make any Continental Airlines, Inc.
representations not contained
in this prospectus and, if
given or made, such 6 3/4% Convertible Subordinated
information or representation Notes Due April 15, 2006
must not be relied upon as
having been authorized by Continental
Airlines, Inc. or any of its
agents. This prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy
any of the securities offered
hereby in any jurisdiction to any
person to whom it is unlawful
to make such offer or solicitation
in such jurisdiction. Neither
the delivery of this prospectus nor
any sale made hereunder shall,
under any circumstances, create
any implication that the information
contained herein is correct
as of any time subsequent to
the date hereof or that there has
been no change in the affairs
of Continental Airlines, Inc.
since such date.
---------------
TABLE OF CONTENTS
63
Page
Available Information........
Incorporation of Certain
Documents
by Reference..............
Prospectus Summary..........
Risk Factors................
Recent Developments..........
Ratio of Earnings to Fixed
Charges...................
Use of Proceeds..............
Selected Financial Data......
Description of Notes........
Description of Capital
Stock........................
United States Taxation...... PROSPECTUS
Selling Holders.............
Plan of Distribution........
Legal Matters............... Dated , 1996
Experts.....................
=============================== ===============================
64
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the distribution
of the securities being registered hereunder, other than
underwriting discounts and commissions, are:
Securities and Exchange Commission
registration filing fee....................... $ 66,544
Blue Sky qualification fees and expenses,
including legal fee...........................
Printing and engraving expenses...............
Transfer agent and trustee fees and expenses..
Accounting fees and expenses..................
Legal fees and expenses.......................
Miscellaneous.................................
Total....................................$
Item 15. Indemnification of Directors and Officers of the
Company.
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.
(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 an 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
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 16. Exhibits.
Exhibit Exhibit Description
No.
4.1* Indenture for the 6 3/4% Convertible Subordinated Notes,
dated as of March 26, 1996 between Continental Airlines,
Inc. and Bankers Trust Company, as Trustee
4.2* Form of 6 3/4% Convertible Subordinated Note (included
in Exhibit 4.1)
4.3* Form of First Supplemental Indenture
5.1* Opinion of Cleary, Gottlieb, Steen & Hamilton as to the
validity of the Notes registered hereby
5.2* Opinion of Jeffery A. Smisek, General Counsel of
Continental Airlines, Inc., as to the validity of the
Class B common stock being registered hereby
8.1* Opinion of Cleary, Gottlieb, Steen & Hamilton relating
to certain tax matters (included in Exhibit 5.1)
10.1* Registration Rights Agreement, dated March 26, 1996,
between Continental Airlines, Inc. and Goldman Sachs
International
12 Calculation of Ratio of Earnings to Fixed Charges
(incorporated by reference to the Company's registration
statement (File No. 333-03591))
23.1* Consent of Ernst & Young LLP
23.2* Consent of Cleary, Gottlieb, Steen & Hamilton (included
in its opinion filed as Exhibits 5.1)
23.3* Consent of Jeffery A. Smisek, General Counsel of
Continental Airlines, Inc. (included in his opinion
filed as Exhibit 5.2)
23.4* Consent of Cleary, Gottlieb, Steen & Hamilton
24.1* Powers of Attorney
25.1* Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of Bankers Trust
Company
- -------------
* Filed herewith
Item 17. Undertakings.
(a) 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:
(i)To include any prospectus required by section
10(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;
(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 (a)(1)(i) and (a)(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 of 1933, 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.
(b) 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 section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's 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.
(c) Insofar as the 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 Act 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 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 whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(d) To the extent the registrant intends to rely on section
305(b)(2) of the Trust Indenture Act of 1939 for determining the
eligibility of the trustee under indentures for securities to be
used, offered or sold on a delayed basis by or on behalf of the
registrant, the undersigned registrant hereby undertakes to file
an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of section 310 of such
Act in accordance with the rules and regulations prescribed by
the Commission under section 305(b)(2) of such Act.
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-3 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 July 10, 1996.
CONTINENTAL AIRLINES, INC.
By: /s/ Jeffery A. Smisek
-----------------------------
Senior 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 July 10, 1996.
Signature Title
*
- ---------------------------
Gordon M. Bethune President, Chief Executive
Officer (Principal Executive
Officer) and Director
*
- ---------------------------
Lawrence W. Kellner Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
*
- ---------------------------
Michael P. Bonds Staff Vice President and
Controller
(Principal Accounting Officer)
*
- ---------------------------
Thomas J. Barrack, 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 Director
*By: /s/ Scott R. Peterson
---------------------------
Scott R. Peterson, Attorney in fact
Exhibit Index
Exhibit Exhibit Description
No.
4.1* Indenture for the 6 3/4% Convertible Subordinated Notes,
dated as of March 26, 1996 between Continental Airlines,
Inc. and Bankers Trust Company, as Trustee
4.2* Form of 6 3/4% Convertible Subordinated Note (included
in Exhibit 4.1)
4.3* Form of First Supplemental Indenture
5.1* Opinion of Cleary, Gottlieb, Steen & Hamilton as to the
validity of the Notes registered hereby
5.2* Opinion of Jeffery A. Smisek, General Counsel of
Continental Airlines, Inc., as to the validity of the
Class B common stock being registered hereby
8.1* Opinion of Cleary, Gottlieb, Steen & Hamilton relating
to certain tax matters (included in Exhibit 5.1)
10.1* Registration Rights Agreement, dated March 26, 1996,
between Continental Airlines, Inc. and Goldman Sachs
International
12 Calculation of Ratio of Earnings to Fixed Charges
(incorporated by reference to the Company's registration
statement (File No. 333-03591))
23.1* Consent of Ernst & Young LLP
23.2* Consent of Cleary, Gottlieb, Steen & Hamilton (included
in its opinion filed as Exhibits 5.1)
23.3* Consent of Jeffery A. Smisek, General Counsel of
Continental Airlines, Inc. (included in his opinion
filed as Exhibit 5.2)
23.4* Consent of Cleary, Gottlieb, Steen & Hamilton
24.1* Powers of Attorney
25.1* Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of Bankers Trust
Company
- -------------
* Filed herewith
-----------------------------------------------------
CONTINENTAL AIRLINES, INC.
ISSUER
TO
BANKERS TRUST COMPANY
TRUSTEE
________________
INDENTURE
Dated as of March 26, 1996
________________
U.S.$230,000,000
6 3/4% Convertible Subordinated Notes
Due April 15, 2006
-----------------------------------------------------
TABLE OF CONTENTS
___________
Page
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . 2
Additional Amounts. . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . 2
Authenticating Agent. . . . . . . . . . 2
Authorized Newspaper. . . . . . . . . . 2
Bearer Additional Amounts . . . . . . . 2
Bearer Security . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . 3
Board Resolution. . . . . . . . . . . . 3
Business Day. . . . . . . . . . . . . . 3
CEDEL . . . . . . . . . . . . . . . . . 3
Change in Control . . . . . . . . . . . 3
Class B Common Stock. . . . . . . . . . 3
Closing Price Per Share . . . . . . . . 3
Code. . . . . . . . . . . . . . . . . . 4
Commission. . . . . . . . . . . . . . . 4
Common Depositary . . . . . . . . . . . 4
Common Stock. . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . 4
Company Request . . . . . . . . . . . . 4
Company Order . . . . . . . . . . . . . 4
Constituent Person. . . . . . . . . . . 4
Conversion Agent. . . . . . . . . . . . 4
Conversion Price. . . . . . . . . . . . 4
Corporate Trust Office. . . . . . . . . 4
corporation . . . . . . . . . . . . . . 4
coupon. . . . . . . . . . . . . . . . . 5
Defaulted Interest. . . . . . . . . . . 5
Definitive Security . . . . . . . . . . 5
Depositary. . . . . . . . . . . . . . . 5
Determination Notice. . . . . . . . . . 5
Dollar. . . . . . . . . . . . . . . . . 5
U.S.$ . . . . . . . . . . . . . . . . . 5
EUROCLEAR . . . . . . . . . . . . . . . 5
Event of Default. . . . . . . . . . . . 5
Exchange Act. . . . . . . . . . . . . . 5
Exchange Date . . . . . . . . . . . . . 5
Expiration Time . . . . . . . . . . . . 5
Global Registered Security. . . . . . . 5
Global Security . . . . . . . . . . . . 5
Holder. . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . 6
Liquidated Damages. . . . . . . . . . . 6
Non-electing Share. . . . . . . . . . . 6
Officers Certificate. . . . . . . . . . 6
Opinion of Counsel. . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . 6
Paying Agent. . . . . . . . . . . . . . 7
Person. . . . . . . . . . . . . . . . . 7
Place of Conversion . . . . . . . . . . 7
Place of Payment. . . . . . . . . . . . 7
Predecessor Security. . . . . . . . . . 7
Purchased Shares. . . . . . . . . . . . 7
Record Date . . . . . . . . . . . . . . 7
Redemption Date . . . . . . . . . . . . 8
Redemption Price. . . . . . . . . . . . 8
Reference Date. . . . . . . . . . . . . 8
Registered Security . . . . . . . . . . 8
Registration Rights Agreement . . . . . 8
Regular Record Date . . . . . . . . . . 8
Repurchase Date . . . . . . . . . . . . 8
Repurchase Price. . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . 8
Restricted Global Registered Security . 8
Restricted Security . . . . . . . . . . 8
Rule 144A Information . . . . . . . . . 8
Securities. . . . . . . . . . . . . . . 8
Securities Act. . . . . . . . . . . . . 8
"Security Register" and "Security
Registrar". . . . . . . . . . . . . . . 9
"Senior Indebtedness" . . . . . . . . . 9
"Shelf Registration Statement". . . . . 9
Special Record Date . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . 9
Subsidiary. . . . . . . . . . . . . . . 9
Tax Affected Security . . . . . . . . . 9
Tax Law Change. . . . . . . . . . . . . 9
Temporary Global Bearer Security. . . . 9
Trading Days. . . . . . . . . . . . . . 9
Transfer Agent. . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . 10
United States . . . . . . . . . . . . . 10
United States person. . . . . . . . . . 10
Unrestricted Global Registered
Security. . . . . . . . . . . . . . . . 10
Vice President. . . . . . . . . . . . . 10
Western Europe. . . . . . . . . . . . . 10
SECTION 1.2. Compliance Certificates and Opinions. . 11
SECTION 1.3. Form of Documents Delivered to the
Trustee . . . . . . . . . . . . . . . . 11
SECTION 1.4. Acts of Holders of Securities . . . . . 12
SECTION 1.5. Notices, Etc., to Trustee and
Company . . . . . . . . . . . . . . . . 13
SECTION 1.6. Notice to Holders of Securities;
Waiver. . . . . . . . . . . . . . . . . 14
SECTION 1.7. Effect of Headings and Table of
Contents. . . . . . . . . . . . . . . . 15
SECTION 1.8. Successors and Assigns. . . . . . . . . 15
SECTION 1.9. Separability Clause . . . . . . . . . . 16
SECTION 1.10. Benefits of Indenture . . . . . . . . . 16
SECTION 1.11. Governing Law . . . . . . . . . . . . . 16
SECTION 1.12. Legal Holidays. . . . . . . . . . . . . 16
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally . . . . . . . . . . . . 17
SECTION 2.2. Forms of Securities . . . . . . . . . . 18
SECTION 2.3. Form of Coupon. . . . . . . . . . . . . 52
SECTION 2.4. Form of Certificate of
Authentication. . . . . . . . . . . . . 53
SECTION 2.5. Form of Conversion Notice . . . . . . . 54
SECTION 2.6. Legend on Restricted Securities . . . . 56
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms . . . . . . . . . . . . 57
SECTION 3.2. Denominations . . . . . . . . . . . . . 58
SECTION 3.3. Execution, Authentication, Delivery
and Dating. . . . . . . . . . . . . . . 58
SECTION 3.4. Global Securities.. . . . . . . . . . . 59
SECTION 3.5. Registration, Registration of
Transfer and Exchange; Restrictions
on Transfer . . . . . . . . . . . . . . 63
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen
Securities and Coupons. . . . . . . . . 67
SECTION 3.7. Payment of Interest, Interest Rights
Preserved . . . . . . . . . . . . . . . 69
SECTION 3.8. Persons Deemed Owners . . . . . . . . . 70
SECTION 3.9. Cancellation. . . . . . . . . . . . . . 71
SECTION 3.10. Computation of Interest . . . . . . . . 71
SECTION 3.11. Form of Certification . . . . . . . . . 71
SECTION 3.12. CUSIP Numbers . . . . . . . . . . . . . 73
SECTION 3.13. Notification of Withholding.. . . . . . 73
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . 73
SECTION 4.2. Application of Trust Money. . . . . . . 75
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default . . . . . . . . . . . 75
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment . . . . . . . . . . . . . 77
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement
by Trustee. . . . . . . . . . . . . . . 78
SECTION 5.4. Trustee May File Proofs of Claim. . . . 79
SECTION 5.5. Trustee May Enforce Claims Without
Possession of
Securities or Coupons . . . . . . . . . 80
SECTION 5.6. Application of Money Collected. . . . . 80
SECTION 5.7. Limitation on Suits . . . . . . . . . . 80
SECTION 5.8. Unconditional Right of Holders to
Receive Principal,
Premium and Interest and to Convert . . 81
SECTION 5.9. Restoration of Rights and Remedies. . . 81
SECTION 5.10. Rights and Remedies Cumulative. . . . . 82
SECTION 5.11. Delay or Omission Not Waiver. . . . . . 82
SECTION 5.12. Control by Holders of Securities. . . . 82
SECTION 5.13. Waiver of Past Defaults . . . . . . . . 83
SECTION 5.14. Undertaking for Costs . . . . . . . . . 83
SECTION 5.15. Waiver of Stay or Extension Laws. . . . 83
ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities . . 84
SECTION 6.2. Notice of Defaults. . . . . . . . . . . 85
SECTION 6.3. Certain Rights of Trustee . . . . . . . 85
SECTION 6.4. Not Responsible for Recitals or
Issuance of Securities. . . . . . . . . 87
SECTION 6.5. May Hold Securities, Act as Trustee
Under Other
Indentures. . . . . . . . . . . . . . . 87
SECTION 6.6. Money Held in Trust . . . . . . . . . . 87
SECTION 6.7. Compensation and Reimbursement. . . . . 87
SECTION 6.8. Corporate Trustee Required;
Eligibility . . . . . . . . . . . . . . 88
SECTION 6.9. Resignation and Removal; Appointment
of Successor. . . . . . . . . . . . . . 89
SECTION 6.10. Acceptance of Appointment by
Successor . . . . . . . . . . . . . . . 90
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business. . . . . . . . . 90
SECTION 6.12. Authenticating Agents . . . . . . . . . 91
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only
on Certain Terms. . . . . . . . . . . . 93
SECTION 7.2. Successor Substituted . . . . . . . . . 94
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without
Consent of Holders
of Securities or Coupons. . . . . . . . 94
SECTION 8.2. Supplemental Indentures with Consent
of Holders of Securities. . . . . . . . 95
SECTION 8.3. Execution of Supplemental Indentures. . 96
SECTION 8.4. Effect of Supplemental Indentures . . . 96
SECTION 8.5. Reference in Securities to
Supplemental Indentures . . . . . . . . 97
SECTION 8.6. Notice of Supplemental Indentures . . . 97
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be
Called. . . . . . . . . . . . . . . . . 97
SECTION 9.2. Call, Notice and Place of Meetings. . . 97
SECTION 9.3. Persons Entitled to Vote at Meetings. . 98
SECTION 9.4. Quorum; Action. . . . . . . . . . . . . 98
SECTION 9.5. Determination of Voting Rights;
Conduct and Adjournment of Meetings . . 99
SECTION 9.6. Counting Votes and Recording Action
of Meetings . . . . . . . . . . . . . .100
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and
Interest. . . . . . . . . . . . . . . .100
SECTION 10.2. Maintenance of Offices or Agencies. . .101
SECTION 10.3. Money for Security Payments To Be
Held in Trust . . . . . . . . . . . . .102
SECTION 10.4. Additional Amounts and Bearer
Additional Amounts. . . . . . . . . . .103
SECTION 10.5. Existence . . . . . . . . . . . . . . .104
SECTION 10.6. Maintenance of Properties . . . . . . .105
SECTION 10.7. Payment of Taxes and Other Claims . . .105
SECTION 10.8. Registration and Listing. . . . . . . .105
SECTION 10.9. Statement by Officers as to Default.. .106
SECTION 10.10. Delivery of Certain Information.. . . .106
SECTION 10.11. Resale of Certain Securities;
Reporting Issuer. . . . . . . . . . . .106
SECTION 10.12. Registration Rights . . . . . . . . . .107
SECTION 10.13. Waiver of Certain Covenants.. . . . . .108
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption . . . . . . . . . .108
SECTION 11.2. Applicability of Article. . . . . . . .108
SECTION 11.3. Election to Redeem; Notice to
Trustee . . . . . . . . . . . . . . . .108
SECTION 11.4. Selection by Trustee of Securities
to Be Redeemed. . . . . . . . . . . . .109
SECTION 11.5. Notice of Redemption. . . . . . . . . .110
SECTION 11.6. Deposit of Redemption Price . . . . . .111
SECTION 11.7. Securities Payable on Redemption
Date. . . . . . . . . . . . . . . . . .111
SECTION 11.8. Registered Securities Redeemed in
Part. . . . . . . . . . . . . . . . . .112
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion
Price . . . . . . . . . . . . . . . . .112
SECTION 12.2. Exercise of Conversion Privilege. . . .113
SECTION 12.3. Fractions of Shares . . . . . . . . . .115
SECTION 12.4. Adjustment of Conversion Price. . . . .115
SECTION 12.5. Notice of Adjustments of Conversion
Price . . . . . . . . . . . . . . . . .120
SECTION 12.6. Notice of Certain Corporate Action. . .120
SECTION 12.7. Company to Reserve Class B Common
Stock . . . . . . . . . . . . . . . . .121
SECTION 12.8. Taxes on Conversions. . . . . . . . . .122
SECTION 12.9. Covenant as to Class B Common Stock . .122
SECTION 12.10. Cancellation of Converted Securities. .122
SECTION 12.11. Provision in Case of Consolidation,
Merger or Sale of Assets. . . . . . . .122
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior
Indebtedness. . . . . . . . . . . . . .123
SECTION 13.2. No Payments in Certain
Circumstances; Payment Over
of Proceeds Upon Dissolution, Etc.. . .124
SECTION 13.3. Notice to Trustee of Specified
Events; Reliance on Certificate of
Liquidating Agent . . . . . . . . . . .126
SECTION 13.4. Trustee to Effectuate Subordination . .127
SECTION 13.5. Trustee Not Charged with Knowledge
of Prohibition. . . . . . . . . . . . .127
SECTION 13.6. Trustee Not Fiduciary for Holders of
Senior Indebtedness . . . . . . . . . .127
SECTION 13.7. Rights of Trustee as Holder of
Senior Indebtedness; Preservation of
Trustee's Rights. . . . . . . . . . . .128
SECTION 13.8. Article Applicable to Paying Agents . .128
SECTION 13.9. Certain Conversions Deemed Payment. . .128
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase . . . . . .129
SECTION 14.2. Notices; Method of Exercising
Repurchase Right, Etc . . . . . . . . .130
SECTION 14.3. Certain Definitions . . . . . . . . . .133
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names and
Addresses of Holders. . . . . . . . . .135
SECTION 15.2. Preservation of Information.. . . . . .135
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . 137
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . 137
ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . . . 138
INDENTURE, dated as of March 26, 1996, between Continental
Airlines, Inc., a corporation duly organized and existing under
the laws of the State of Delaware, having its principal office at
2929 Allen Parkway, Suite 2010, Houston, Texas 77019 (herein
called the "Company"), and Bankers Trust Company, a New York
banking corporation, as Trustee hereunder (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
its 6 3/4% Convertible Subordinated Notes due April 15, 2006
(herein called the "Securities") and the coupons, if any, thereto
appertaining, of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Securities and the coupons,
if any, thereto appertaining, when the Securities are executed by
the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms,
have been done. Further, all things necessary to duly authorize
the issuance of the Class B Common Stock of the Company issuable
upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Class B Common Stock issuable
upon such conversion, have been done.
NOW, THEREFORE, THIS INDENTURE 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 of the Securities and the coupons, if any, thereto
appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(2) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles in the United
States, and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally
accepted at the date of such computation; and
(3) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
"Act", when used with respect to any Holder of a Security,
has the meaning specified in Section 1.4.
"Additional Amounts" has the meaning specified in Section
2.2.
"Affiliate" of any specified Person means 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.
"Authenticating Agent" means any Person authorized pursuant
to Section 6.12 to act on behalf of the Trustee to authenticate
Securities.
"Authorized Newspaper" means a newspaper, in an official
language of the country of publication or in the English
language, customarily published on each Monday, Tuesday,
Wednesday, Thursday and Friday, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in the
place in connection with which the term is used or in the
financial community of such place. Where successive publications
are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers
in the same city meeting the foregoing requirements and in each
case on any Monday, Tuesday, Wednesday, Thursday and Friday. For
purposes of publication in London and Luxembourg, such term shall
mean the Financial Times and the Luxemburger Wort, respectively,
unless such newspapers are not available.
"Bearer Additional Amounts" has the meaning specified in
Section 2.2(a).
"Bearer Security" means any Security issued in substantially
the form set forth in Section 2.2(a).
"Board of Directors" or "Board" means either the board of
directors of the Company or any committee of that board empowered
to act for it with respect to this Indenture.
"Board Resolution" means a resolution duly adopted by the
Board of Directors, a copy of which, certified by the Secretary
or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and
effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of
Payment, Place of Conversion or any other place, as the case may
be, means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in such Place of
Payment, Place of Conversion or other place, as the case may be,
are authorized or obligated by law or executive order to close;
provided, however, that a day on which banking institutions in
New York, New York are authorized or obligated by law or
executive order to close shall not be a Business Day for purposes
of Section 13.5; provided, further, that a day on which banking
institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close shall
not be a Business Day for purposes of Sections 10.1, 10.3 or
11.6.
"CEDEL" has the meaning specified in Section 3.4.
"Change in Control" has the meaning specified in Section
14.3.
"Class B Common Stock" means the Class B Common Stock, par
value $0.01 per share, of the Company authorized at the date of
this instrument as originally executed. Subject to the provisions
of Section 12.11, shares issuable upon conversion of Securities
shall include only shares of Class B Common Stock or shares of
any class or classes of common stock resulting from any
reclassification or reclassifications thereof; provided, however,
that if at any time as a result of such reclassification or
reclassifications there shall be more than one such resulting
class, the shares so issuable upon conversion of Securities shall
include shares of all such classes, and the number of shares of
each such class then so issuable shall be in the same proportion
which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all
such classes resulting from all such reclassifications.
"Closing Price Per Share" means, with respect to a class of
Common Stock of the Company, for any day, the reported last sales
price regular way per share of such class or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case
(i) on the New York Stock Exchange or, if such class of Common
Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal (as determined by the Company's Board
of Directors) national securities exchange on which such class of
Common Stock is listed or admitted to trading or (ii) if not
quoted on the New York Stock Exchange or listed or admitted to
trading on any national securities exchange, the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected
from time to time by the Company for that purpose or (iii) if not
so available in either manner set forth in (i) or (ii), as
otherwise determined in good faith by the Board of Directors.
"Code" has the meaning specified in Section 2.1.
"Commission" means the United States Securities and Exchange
Commission.
"Common Depositary" has the meaning specified in Section
3.4.
"Common Stock" means the Company's Class A Common Stock, par
value $0.01 per share, Class B Common Stock, Class C Common
Stock, par value $0.01 per share and Class D Common Stock, par
value $0.01 per share, together with any other class of capital
stock of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor Person shall
have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor
Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the
Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or a Vice President, and by its principal
financial officer, Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Person" has the meaning specified in Section
12.11.
"Conversion Agent" means any Person authorized by the
Company to convert Securities in accordance with Article Twelve.
The Company has initially appointed the Trustee as its Conversion
Agent in the Borough of Manhattan, The City of New York, and as
its Conversion Agent in London, England, Bankers Trust Luxembourg
S.A. as its Conversion Agent in Luxembourg and Swiss Bank
Corporation as its Conversion Agent in Zurich, Switzerland.
"Conversion Price" has the meaning specified in Section
12.1.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall
be principally administered (which at the date of this Indenture
is located at Four Albany Street, New York, New York 10006).
"corporation" means a corporation, company, including,
without limitation, a limited liability company, association,
joint-stock company or business trust.
"Current Principal Shareholders" has the meaning specified
in Section 14.3 hereof.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Defaulted Interest" has the meaning specified in Section
3.7.
"Definitive Security" means any Security that is a Bearer
Security (other than the Temporary Global Bearer Security) or a
Registered Security (other than a Global Registered Security).
"Depositary" means, with respect to any Securities issued in
whole or in part in the form of one or more Global Registered
Securities, the clearing agency that is registered under the
Exchange Act and designated to act as Depositary for such
Securities, as contemplated by Section 3.4(b), or any successor
clearing agency registered under the Exchange Act as contemplated
by Section 3.4(b).
"Determination Notice" has the meaning specified in Section
2.2(a).
"Dollar" or "U.S.$" means a dollar or other equivalent unit
in such coin or currency of the United States as at the time
shall be legal tender for the payment of public and private
debts.
"EUROCLEAR" has the meaning specified in Section 3.4.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended from time to time.
"Exchange Date" means the date 40 days after March 26, 1996.
"Expiration Time" has the meaning specified in Section
12.4(6).
"Global Registered Security" means any Registered Security
issued in the form set forth in Section 2.2(b) and registered in
the Security Register in the name of a Depositary or a nominee
thereof.
"Global Security" means any Security that is a Temporary
Global Bearer Security or a Global Registered Security.
"Holder", when used with respect to any Registered Security,
means the Person in whose name the Security is registered in the
Security Register, when used with respect to any Bearer Security
or Temporary Global Bearer Security, means the bearer thereof
and, when used with respect to any coupon, means the bearer
thereof.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Liquidated Damages" has the meaning specified in Section
10.12.
"Maturity", when used with respect to any Security, means
the date on which the principal of such Security becomes due and
payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption,
exercise of the repurchase right set forth in Article Fourteen or
otherwise.
"Non-electing Share" has the meaning specified in Section
12.11.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the President or a Vice President and by the
principal financial officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the
Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of independent
counsel of recognized standing who may be counsel for, or an
employee of, the Company and who shall be reasonably acceptable
to the Trustee.
"Outstanding", when used with respect to Securities, means,
as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for the payment or redemption of which
money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the
Company) or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the
Holders of such Securities and any coupons thereto
appertaining, provided that if such Securities are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to
Section 3.6 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities are present
at a meeting of Holders of Securities for quorum purposes or 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 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 determination
as to the presence of a quorum or upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually
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
such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Securities on behalf of
the Company and, except as otherwise specifically set forth
herein, such term shall include the Company if it shall act as
its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent in the Borough of Manhattan, The City
of New York and as its Paying Agent in London, England, Bankers
Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450
Luxembourg, Grand Duchy of Luxembourg, as its Paying Agent in
Luxembourg and Swiss Bank Corporation, Paradeplatz 6, CH-8010
Zurich, Switzerland as its Paying Agent in Switzerland.
"Person" means any individual, corporation, partnership,
joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section
3.1.
"Place of Payment" has the meaning specified in Section 3.1.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Purchased Shares" has the meaning specified in Section
12.4(6).
"Record Date" means any Regular Record Date or Special
Record Date.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any Security
to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Reference Date" has the meaning specified in Section
12.4(4).
"Registered Security" means any Security (including any
Global Registered Security) issued in substantially the form set
forth in Section 2.2(b) and registered in the Security Register.
"Registration Rights Agreement" has the meaning specified in
Section 10.12.
"Regular Record Date" for interest payable in respect of any
Registered Security on any Interest Payment Date means the April
1 or October 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section
14.1.
"Responsible Officer", when used with respect to the
Trustee, means any officer within the Corporate Trust Office of
the Trustee including without limitation any vice president,
assistant vice president, assistant treasurer, assistant
secretary, corporate trust officer, assistant corporate trust
officer or other employee 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 knowledge and familiarity with the
particular subject.
"Restricted Global Registered Security" means a Global
Registered Security which is a Restricted Security.
"Restricted Security" has the meaning specified in Section
2.6.
"Rule 144A Information" has the meaning specified in Section
10.10.
"Securities" has the meaning ascribed to it in the first
paragraph under the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of
1933, as amended from time to time.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.5.
"Senior Indebtedness" has the meaning specified in Section
13.1.
"Shelf Registration Statement" has the meaning specified in
Section 10.12.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Company pursuant to Section
3.7.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in
such Security or a coupon representing such installment of
interest as the fixed date on which the principal of such
Security or such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries,
or by the Company and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock or other
similar interests in the corporation which ordinarily has or have
voting power for the election of directors, or persons performing
similar functions, whether at all times or only so long as no
senior class of stock or other interests has or have such voting
power by reason of any contingency.
"Tax Affected Security" means (i) all Bearer Notes if, as a
result of any Tax Law Change, the Company has or will become
obligated to pay Additional Amounts in respect of any Bearer Note
and (ii) any Registered Note that, on or before the 30th day
after the date on which the Company publishes a notice of
redemption pursuant to the third paragraph of the reverse of the
Registered Security in Section 2.2(b) hereof, is delivered to the
Trustee together with a written statement from or on behalf of
the beneficial owner of such Registered Note to the effect that
such beneficial owner has or will become entitled to receive
Additional Amounts as a result of such Tax Law Change.
"Tax Law Change" means any change in, or amendment to, the
laws (including any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or any
change in, or amendment to, the application or official
interpretation of such laws, regulations or rulings.
"Temporary Global Bearer Security" means any Security issued
in substantially the form set forth in Section 2.2(c).
"Trading Days" of a class of Common Stock means (i) if such
class of Common Stock is listed or admitted for trading on the
New York Stock Exchange or on any national securities exchange,
days on which such national securities exchange is open for
business; (ii) if such class of Common Stock is quoted on a
system of automated dissemination of quotations of securities
prices, days on which trades may be effected through such system;
or (iii) if such class of Common Stock is not listed or admitted
for trading on the New York Stock Exchange or other national
securities exchange or quoted on any system of automated
dissemination of quotation of securities prices, days on which
such class of Common Stock is traded regular way in the over-the-
counter market and for which a closing bid and a closing asked
price for such class of Common Stock are available.
"Transfer Agent" has the meaning specified in Section
2.2(a). The Company has initially appointed the Trustee as its
Transfer Agent in the Borough of Manhattan, The City of New York
and as its Transfer Agent in London, England and Bankers Trust
Luxembourg S.A. as its Transfer Agent in Luxembourg.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"United States" means the United States of America
(including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands).
"United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a
nonresident alien individual, a nonresident alien fiduciary of a
foreign estate or trust, or a foreign partnership one or more of
the members of which is for United States federal income tax
purposes, a foreign corporation, a nonresident alien individual
or a nonresident alien fiduciary of a foreign estate or trust.
"United States person" has the meaning specified in Section
2.2(a).
"Unrestricted Global Registered Security" means a Global
Registered Security which is not a Restricted Security.
"Vice President", when used with respect to the Company,
means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice
president".
"Western Europe" means Austria, Belgium, Denmark, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland and the United Kingdom.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee or the Paying Agent in London to take any action under
any provision of this Indenture, the Company shall furnish to the
Trustee or the Paying Agent in London, as the case may be, an
Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (including
certificates provided for in Section 10.9) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such
individual, 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
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 1.3. Form of Documents Delivered to the Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which such certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
SECTION 1.4. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by Holders of Securities may be
embodied in and evidenced by (1) one or more instruments of
substantially similar tenor signed by such Holders in person or
by an agent or proxy duly appointed in writing by such Holders or
(2) the record of Holders of Securities voting in favor thereof,
either in person or by proxies duly appointed in writing, at any
meeting of Holders of Securities duly called and held in
accordance with the provisions of Article Nine. Such action shall
become effective when such instrument or instruments or record is
delivered to the Trustee and, where it is hereby expressly
required, to the Company. The Trustee shall promptly deliver to
the Company copies of all such instruments and records delivered
to the Trustee. Such instrument or instruments and record (and
the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders of Securities
signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a
writing appointing any such agent or proxy, or of the holding by
any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 6.1) conclusive in favor
of the Trustee and the Company if made in the manner provided in
this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 9.6.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgements of
deeds, certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.
(c) The principal amount and serial number of any Bearer
Security held by any Person, and the date of his holding the
same, may be proved by the production of such Bearer Security or
by a certificate executed by any trust company, bank, broker or
other depositary, wherever situated, if such certificate shall be
deemed by the Trustee or the Paying Agent in London to be
satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it,
the Bearer Security therein described; or such facts may be
proved by the certificate or affidavit of the Person holding such
Bearer Security, if such certificate or affidavit is deemed by
the Trustee or the Paying Agent in London to be satisfactory. The
Trustee, the Paying Agent in London and the Company may assume
that any Bearer Security continues to be held by such Person
until (1) another certificate or affidavit bearing a later date
issued in respect of such Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee or the Paying
Agent in London by some other Person, or (3) such Bearer Security
is surrendered in exchange for a Registered Security, or (4) such
Bearer Security is no longer Outstanding.
(d) The principal amount and serial number of any
Registered Security held by any Person, and the date of his
holding the same, shall be proved by the Security Register.
(e) The principal amount and serial numbers of Bearer
Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in
any other manner which the Paying Agent in London deems
sufficient; and the Paying Agent in London may in any instance
require further proof with respect to any of the matters referred
to in this Section 1.4.
(f) The fact and date of execution of any such instrument
or writing and the authority of the Person executing the same may
also be proved in any other manner which the Trustee or the
Paying Agent in London deems sufficient; and the Trustee or the
Paying Agent in London may in any instance require further proof
with respect to any of the matters referred to in this Section
1.4.
(g) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and
any coupon appertaining thereto and the Holder of every Security
or coupon issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made
upon such Security or coupon.
(h) The provisions of this Section 1.4 are subject to the
provisions of Section 9.5.
SECTION 1.5. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, election, waiver or Act of Holders of Securities or
other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee or the Paying Agent in London by any
Holder of Securities or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee and received at its
Corporate Trust Office, Attention: Corporate Trust and
Agency Group, or to or with the Paying Agent in London and
received at 1 Appold Street, Broadgate, London EC2A 2HE,
England, Attention: Corporate Trust and Agency Group, or
(2) the Company by the Trustee or by any Holder of
Securities shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing,
mailed, first-class postage prepaid, or telecopied and
confirmed by mail, first-class postage prepaid, or delivered
by hand or overnight courier, addressed to the Company at
2929 Allen Parkway, Suite 2010, Houston, Texas 77019,
telecopy no.: (713) 520-6329, Attention: Chief Financial
Officer and General Counsel, or at any other address
previously furnished in writing to the Trustee by the
Company.
Any request, demand, authorization, direction, notice,
consent, election or waiver required or permitted under this
Indenture shall be in the English language, except that any
published notice (other than a notice published in Luxembourg)
may be in an official language of the country of publication.
SECTION 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of Securities of any
event,
(1) such notice shall be sufficiently given to Holders
of Bearer Securities or any Temporary Global Bearer Security
if published in an Authorized Newspaper in the City of
London, England, and, so long as the Securities are listed
on the Luxembourg Stock Exchange and such stock exchange
shall so require, in Luxembourg or, if not practicable in
either London, England, or Luxembourg, elsewhere in any
country in Western Europe, on a Business Day at least twice,
the first such publication to be not earlier than the
earliest date and the second such publication to be not
later than the latest date herein prescribed for the giving
of such notice; and
(2) such notice shall be sufficiently given to Holders
of Registered Securities if in writing and mailed, first-
class postage prepaid, to each Holder of a Registered
Security affected by such event, at the address of such
Holder as it appears in the Security Register, not earlier
than the earliest date and not later than the latest date
prescribed for the giving of such notice.
Neither the failure to give notice by publication to Holders
of Bearer Securities or any Temporary Global Bearer Security as
provided above, nor any defect in any notice so published, shall
affect the sufficiency of any notice mailed to Holders of
Registered Securities as provided above. In case by reason of the
suspension of publication of any Authorized Newspaper or
Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice as provided above, then such
notification as shall be given with the approval of the Trustee,
which approval shall not be unreasonably withheld, shall
constitute sufficient notice to such Holders for every purpose
hereunder.
In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder of a
Registered Security shall affect the sufficiency of such notice
with respect to other Holders of Registered Securities or the
sufficiency of any notice by publication to Holders of Bearer
Securities or any Temporary Global Bearer Security given as
provided above. 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
to Holders of Registered Securities as shall be made with the
approval of the Trustee, which approval shall not be unreasonably
withheld, shall constitute a sufficient notification to such
Holders for every purpose hereunder.
In the case of paragraph (1) of this section, such notice
shall be deemed to have been given on the date of such
publication or, if published in Authorized Newspapers on
different dates, on the date of the first such publication.
In the case of paragraph (2) of this section, such notice
shall be deemed to have been given when such notice is mailed.
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 of Securities 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.
SECTION 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
SECTION 1.8. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.9. Separability Clause.
In case any provision in this Indenture or the Securities or
coupons shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 1.10. Benefits of Indenture.
Except as provided in the next sentence, nothing in this
Indenture or in the Securities or coupons, express or implied,
shall give to any Person, other than the parties hereto and their
successors and assigns hereunder and the Holders of Securities
and coupons, any benefit or legal or equitable right, remedy or
claim under this Indenture. The provisions of Article Thirteen
are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Indebtedness.
SECTION 1.11. Governing Law.
THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, THE UNITED STATES OF AMERICA, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12. Legal Holidays.
In any case where any Interest Payment Date, Redemption
Date, Repurchase Date or Stated Maturity of any Security or
coupon or the last day on which a Holder of a Security has a
right to convert his Security shall not be a Business Day at a
Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the
Securities or coupons) payment of interest or principal and
premium, if any, or delivery for conversion of such Security need
not be made at such Place of Payment or Place of Conversion, as
the case may be, on or by such day, but may be made on or by the
next succeeding Business Day at such Place of Payment or Place of
Conversion, as the case may be, with the same force and effect as
if made on the Interest Payment Date, Redemption Date or
Repurchase Date, or at the Stated Maturity or by such last day
for conversion; provided, however, that in the case that payment
is made on such succeeding Business Day, no interest shall accrue
on the amount so payable for the period from and after such
Interest Payment Date, Redemption Date, Repurchase Date, Stated
Maturity or last day for conversion, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the coupons shall be in substantially the
forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, the Internal
Revenue Code of 1986, as amended, and regulations thereunder (the
"Code"), or as may, consistently herewith, be determined by the
officers executing such Securities and coupons, as evidenced by
their execution thereof.
The Trustee's certificates of authentication shall be in
substantially the form set forth in Section 2.4.
Conversion notices shall be in substantially the form set
forth in Section 2.5.
Registered Securities that are Restricted Securities shall
bear the legend required by Section 2.6.
The Registered Securities shall be issued in the form of one
or more Global Registered Securities and will only be issued in
definitive form in accordance with Section 3.4(b). The Depositary
for such Global Registered Securities shall initially be The
Depository Trust Company.
A Global Security may be printed, lithographed, typewritten,
mimeographed or otherwise produced, as determined by the officers
of the Company executing such Security, as evidenced by their
execution thereof. The format and spacing of the text of a
Definitive Security may be varied to facilitate such production.
The Definitive Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these
methods on steel engraved borders 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 and coupons, as evidenced by their
execution thereof.
SECTION 2.2. Forms of Securities.
(a) Form of Bearer Security
[FORM OF FACE]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
OF THE INTERNAL REVENUE CODE.
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTE
DUE APRIL 15, 2006
No. _________________ U.S. $5,000
ISIN No. XS0064495905
CONTINENTAL AIRLINES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to bearer upon presentation and surrender
of this Security the principal sum of five thousand United States
Dollars (U.S.$5,000) on April 15, 2006 and to pay interest
thereon, from March 26, 1996, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid
or duly provided for, semi-annually in arrears on April 15 and
October 15 in each year (each, an "Interest Payment Date"),
commencing October 15, 1996, at the rate of 6 3/4% per annum
(together with any Additional Amounts and Bearer Additional
Amounts (in each case, as defined below) that the Company may be
required to pay), until the principal hereof is due, and at the
rate of 6 3/4% per annum on any overdue principal and premium, if
any, and, to the extent permitted by law, on any overdue
interest. Such payments shall be made, subject to any laws or
regulations applicable thereto and to the right of the Company
(limited as provided in the Indenture) to terminate the
appointment of any such Paying Agent, at the option of the Holder
at (a) the office of Bankers Trust Company, 1 Appold Street,
Broadgate, London EC2A 2HE, England, (b) the office of Bankers
Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450
Luxembourg, Grand Duchy of Luxembourg or (c) the office of Swiss
Bank Corporation, Paradeplatz 6, CH-8010 Zurich, Switzerland, or
at such other offices or agencies outside the United States (as
defined below) as the Company may designate, at the option of the
Holder by United States Dollar check drawn on a bank in the
Borough of Manhattan, The City of New York or by transfer of
United States Dollars to a United States Dollar account
maintained by the payee with a bank located outside the United
States (such a transfer to be made only to a Holder of an
aggregate principal amount of Securities in excess of U.S.
$2,000,000 and only if such Holder shall have furnished wire
instructions in writing to the Paying Agent in London by no later
than 15 days prior to the relevant payment date). Interest on
this Security due on or before Maturity shall be payable only
upon presentation and surrender at such an office or agency of
the interest coupons hereto attached as they severally mature. No
payment of principal of, premium, if any, or interest on,
including Additional Amounts and Bearer Additional Amounts with
respect to this Security shall be made at the Corporate Trust
Office of the Trustee under the Indenture referred to on the
reverse hereof or at any other office or agency of the Company in
the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank
located in the United States; provided, however, that payment of
principal of, premium, if any, or interest on this Security and
payment of any such Additional Amounts or Bearer Additional
Amounts may be made at the office of the Paying Agent in the
Borough of Manhattan, The City of New York, if (but only if)
payment of the full amount of such principal, premium, if any,
interest, Additional Amounts or Bearer Additional Amounts, as the
case may be, at all offices outside the United States maintained
for such purpose by the Company in accordance with the Indenture
is illegal or effectively precluded by exchange controls or other
similar restrictions on the full payment or receipt of such
amounts in United States Dollars, as determined by the Company.
The Company will pay to the Holder of this Security or any
coupon appertaining hereto who is a United States Alien (as
defined below) such additional amounts ("Additional Amounts") as
may be necessary in order that every net payment of the principal
of, premium, if any, and interest on this Security (including
payment on redemption or repurchase), after deduction or
withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of
such payment by the United States or any political subdivision or
taxing authority thereof or therein, will not be less than the
amount provided for in this Security or in such coupon to be then
due and payable; provided, however, that the Company shall not be
obligated to pay any Additional Amounts in respect of payments
becoming due on the Securities more than 15 days after the
redemption date for a redemption pursuant to the third paragraph
of the reverse of this Security, except to the extent that the
Company's obligation to pay such Additional Amounts does not
arise from the Tax Law Change that resulted in such redemption;
and provided further, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge
which would not have been so imposed but for (i) the
existence of any present or former connection between such
Holder (or between a fiduciary, settlor, beneficiary,
member, shareholder of or possessor of a power over such
Holder, if such Holder is an estate, a trust, a partnership
or a corporation) and the United States or any political
subdivision or taxing authority thereof or therein,
including, without limitation, such Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident of the
United States or treated as a resident thereof, or being or
having been engaged in trade or business or present therein,
or having or having had a permanent establishment therein,
or (ii) such Holder's present or former status as a personal
holding company, a foreign personal holding company with
respect to the United States, or a foreign private
foundation or foreign tax exempt entity for United States
tax purposes, or a corporation which accumulates earnings to
avoid United States Federal income tax;
(b) any tax, assessment or other governmental charge
which would not have been so imposed but for the
presentation by the Holder of this Security or any coupon
appertaining hereto for payment on a date more than 15 days
after the date on which such payment became due and payable
or the date on which payment thereof is duly provided for,
whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer,
personal property or similar tax, assessment or governmental
charge;
(d) any tax, assessment or other governmental charge
which would not have been imposed but for the failure to
comply with any certification, identification or other
reporting requirements concerning the nationality,
residence, identity or connection with the United States of
the Holder or beneficial owner of this Security or any
coupon appertaining hereto, if compliance is required by
statute or by regulation the United States as a precondition
to relief or exemption from such tax, assessment or other
governmental charge;
(e) any tax, assessment or other governmental charge
which is payable otherwise than by deduction or withholding
from payments of principal of, premium, if any, or interest
on this Security;
(f) any tax, assessment or other governmental charge
imposed on a Holder as a result of that Person's past or
present actual or constructive ownership, including by
virtue of the right to convert Securities, of 10% or more of
the total combined voting power of all classes of stock of
the Company entitled to vote or that Person's status as a
controlled foreign corporation related to the Company
through stock ownership;
(g) any tax, assessment or other governmental charge
required to be withheld by any Paying Agent from any payment
of the principal of, premium, if any, or interest on this
Security, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(h) any tax, assessment or other governmental charge
imposed on a Holder that is a partnership, a fiduciary or
other than the sole beneficial owner of such payment, but
only to the extent that any beneficial owner or member of
the partnership or beneficiary or settlor with respect to
the fiduciary would not have been entitled to the payment of
Additional Amounts had the beneficial owner, member,
beneficiary or settlor directly been the Holder of this
Security or coupon, if any; or
(i) any combination of items (a), (b), (c), (d), (e),
(f), (g) and (h).
For purposes of this Security, a "United States Alien" is
any person who, for United States federal income tax purposes, is
a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is for
United States federal income tax purposes, a foreign corporation,
a nonresident alien individual or a nonresident alien fiduciary
of a foreign estate or trust. Solely for purposes of the
foregoing definition of "United States Alien", the term "United
States" shall include, when used in the geographical sense, only
the States and the District of Columbia.
Notwithstanding the foregoing, if and so long as a
certification, identification or other information reporting
requirement referred to in the fourth paragraph of the reverse
hereof would be fully satisfied by payment of a backup
withholding tax or similar charge, the Company may elect, by so
stating in the Determination Notice (as defined on the reverse
hereof), to have the provisions of this paragraph apply in lieu
of redeeming this Security pursuant to such fourth paragraph. In
such event, the Company will pay as additional amounts ("Bearer
Additional Amounts") such amounts as may be necessary so that
every net payment made, following the effective date of such
requirements, outside the United States by the Company or any
Paying Agent of principal of and premium, if any, due in respect
of this Security, or interest represented by any coupon, the
beneficial owner of which is a United States Alien (but without
any requirement that the nationality, residence or identity of
such beneficial owner be disclosed to the Company, any Paying
Agent or any governmental authority), after deduction or
withholding for or on account of such backup withholding tax or
similar charge, other than a backup withholding tax or similar
charge which is (a) the result of a certification, identification
or information reporting requirement described in the first
parenthetical clause of such fourth paragraph, (b) imposed as a
result of the fact that the Company or any Paying Agent has
actual knowledge that the beneficial owner of this Security or
such coupon is within the category of Persons described in clause
(a) of the second preceding paragraph or (c) imposed as a result
of presentation of this Security or such coupon for payment more
than 15 days after the date on which such payment becomes due and
payable or on which payment thereof is duly provided for,
whichever occurs later, will not be less than the amount provided
for in this Security or such coupon to be then due and payable.
Except as specifically provided herein and in the Indenture,
the Company shall not be required to make any payment with
respect to any tax, assessment or other governmental charge
imposed by any government or any political subdivision or taxing
authority thereof or therein. Whenever in this Security there is
a reference, in any context, to the payment of the principal of,
premium, if any, or interest on, or in respect of, any Security
or any coupon appertaining thereto, such mention shall be deemed
to include mention of the payment of Additional Amounts and
Bearer Additional Amounts payable as described in the first and
third preceding paragraphs, respectively, to the extent that, in
such context, Additional Amounts or Bearer Additional Amounts, as
the case may be, are, were or would be payable in respect of this
Security pursuant to such paragraphs, and express mention of the
payment of such Additional Amounts or Bearer Additional Amounts
(if applicable), as the case may be, in any provisions of this
Security shall not be construed as excluding Additional Amounts
or Bearer Additional Amounts, as the case may be, in those
provisions of this Security where such express mention is not
made.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place. Capitalized terms used herein, including on
the reverse hereof, and not defined herein or on the reverse
hereof shall have the respective meanings given to such terms in
the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof or its
Authenticating Agent by the manual signature of one of its
authorized signatories, neither this Security, nor any coupon
appertaining hereto, shall be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to
be duly executed under its corporate seal and coupons bearing the
facsimile signature of its Chief Financial Officer be annexed
hereto.
Dated as of March 26, 1996
CONTINENTAL AIRLINES, INC.
[Corporate Seal]
By:__________________________
Name:
Title:
Attest:
________________________
Name:
Title:
[FORM OF REVERSE]
This Security is one of a duly authorized issue of
securities of the Company designated as its "6 3/4% Convertible
Subordinated Notes due April 15, 2006" (herein called the
"Securities"), limited in aggregate principal amount to
U.S.$230,000,000, issued and to be issued under an Indenture,
dated as of March 26, 1996 (herein called the "Indenture"),
between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of
Senior Indebtedness and the Holders of the Securities and any
coupons appertaining thereto and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The
Securities are issuable as Bearer Securities, with interest
coupons attached, in the denomination of U.S.$5,000 and as
Registered Securities, without coupons, in the denomination of
U.S.$1,000 and integral multiples of U.S.$1,000 in excess
thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Bearer Securities are exchangeable
for a like aggregate principal amount of Registered Securities of
any authorized denominations as requested by the Holder
surrendering the same upon surrender of the Bearer Security or
Bearer Securities to be exchanged, with all unmatured coupons and
all matured coupons in default thereto appertaining, except as
provided below, (a) at the Corporate Trust Office of the Trustee
or at such other office or agency of the Company as may be
designated by it for such purpose in The City of New York or (b)
subject to any laws or regulations applicable thereto and to the
right of the Company to terminate the appointment of any Transfer
Agent (as defined below), (i) the office of Bankers Trust
Company, 1 Appold Street, Broadgate, London EC2A 2HE, England,
(ii) the office of Bankers Trust Luxembourg S.A., 14 Boulevard
F.D. Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg or
(iii) the office of Swiss Bank Corporation, Paradeplatz 6, CH-
8010 Zurich, Switzerland, or at such other offices or agencies
outside the United States as the Company may designate (each a
"Transfer Agent"); provided, however, that such surrender may be
made at the Corporate Trust Office of the Trustee in the Borough
of Manhattan, The City of New York, if (but only if) such
surrender at all offices outside the United States maintained for
such purpose by the Company in accordance with the Indenture is
illegal or effectively precluded by exchange controls or other
similar restrictions. Bearer Securities surrendered in exchange
for Registered Securities between a Record Date and the relevant
Interest Payment Date or date for payment of Defaulted Interest
will not be required to be surrendered with the coupon relating
to such Interest Payment Date or date for payment of Defaulted
Interest. Bearer Securities may not be issued in exchange for
Registered Securities.
No sinking fund is provided for the Securities. The
Securities are subject to redemption at the option of the Company
at any time on or after April 15, 1999, in whole or in part, upon
not less than 30 nor more than 60 days' notice to the Holders
prior to the Redemption Date, at the following Redemption Prices
(expressed as percentages of the principal amount) for the
twelve-month period beginning on April 15 of the following years:
Redemption
Year Price
1999 104.725
2000 104.050
2001 103.375
2002 102.700
2003 102.025
2004 101.350
2005 100.675
and thereafter at a Redemption Price equal to 100% of the
principal amount, together, in each case, with accrued interest
to the Redemption Date, and certain Securities held by United
States Aliens and Bearer Securities are also redeemable in whole
but not in part, under the circumstances described in the next
two succeeding paragraphs, respectively, at a Redemption Price
equal to 100% of the principal amount thereof plus interest
accrued to the Redemption Date; provided, however, that interest
installments on Bearer Securities whose Stated Maturity is on or
prior to such Redemption Date will be payable only upon
presentation and surrender of coupons for such interest (at an
office or agency outside the United States except as herein
provided otherwise).
If as a result of a Tax Law Change, the Company has or will
become obligated to pay to the Holder of any Security or coupon
Additional Amounts, as described in the second paragraph of the
face of this Security, and such obligation cannot be avoided by
the Company taking reasonable measures available to it, then the
Company may, at its option, redeem the Tax Affected Securities as
a whole, but not in part, upon not less than 30 nor more than 60
days' notice to the Holders prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount plus
interest accrued to the Redemption Date, and any Additional
Amounts then payable; provided, that (i) no such notice of
redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay any
such Additional Amounts were a payment in respect of the Tax
Affected Securities then due and (ii) at the time such notice of
redemption is given, such obligation to pay such Additional
Amounts remains in effect. Prior to the publication of any notice
of redemption pursuant to this paragraph, the Company shall
deliver to the Trustee (a) an Officers' Certificate stating that
the Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions precedent
to the right of the Company so to redeem have occurred and (b) an
Opinion of Counsel selected by the Company to the effect that the
Company has or will become obligated to pay such Additional
Amounts as a result of such Tax Law Change. The Company's right
to redeem the Tax Affected Securities shall continue as long as
the Company is obligated to pay such Additional Amounts,
notwithstanding that the Company shall have made payments of
Additional Amounts specified in such second paragraph.
In addition, if the Company determines, based upon an
Opinion of Counsel, that, as a result of a Tax Law Change, any
payment made outside the United States by the Company or any of
its Paying Agents of the full amount of principal, premium, if
any, or interest due with respect to any Bearer Security or
coupon appertaining thereto would be subject to any
certification, identification or other information reporting
requirement of any kind, the effect of which requirement is the
disclosure to the Company, any Paying Agent or any governmental
authority of the nationality, residence or identity of a
beneficial owner of such Bearer Security or coupon who is a
United States Alien (other than such a requirement (a) which
would not be applicable to a payment made by the Company or any
one of its Paying Agents (i) directly to the beneficial owner or
(ii) to any custodian, nominee or other agent of the beneficial
owner or (b) which can be satisfied by the custodian, nominee or
other agent certifying that such beneficial owner is a United
States Alien, provided that, in each case referred to in clauses
(a)(ii) and (b), payment by such custodian, nominee or agent to
such beneficial owner is not otherwise subject to any such
requirement, the Company at its election will either (x) redeem
the Bearer Securities, as a whole but not in part, upon not less
than 30 nor more than 60 days' notice prior to the Redemption
Date, at a Redemption Price equal to 100% of the principal amount
thereof plus interest accrued to the Redemption Date, or (y) if
and so long as the conditions of the fourth paragraph on the face
hereof are satisfied, pay the Bearer Additional Amounts specified
in such paragraph. The Company will make such determination and
election and notify the Trustee and the Paying Agent in London,
England, thereof in writing as soon as practicable, and the
Trustee will promptly give notice of such determination in the
manner provided in the second following paragraph (the
"Determination Notice"), in each case stating the effective date
of such certification, identification or information reporting
requirement, whether the Company will redeem the Bearer
Securities or will pay the Bearer Additional Amounts specified in
the fourth paragraph on the face hereof and (if applicable) the
last date by which the redemption of the Bearer Securities must
take place. If the Company shall elect to redeem the Bearer
Securities pursuant to clause (x) above, such redemption shall
take place on such date, not later than one year after the
publication of the Determination Notice, as the Company shall
elect by notice given in writing to the Trustee and the Paying
Agent in London at least 75 days before the Redemption Date,
unless shorter notice shall be acceptable to the Trustee.
Notwithstanding the foregoing, the Company will not so redeem the
Bearer Securities if the Company, based upon an Opinion of
Counsel, subsequently determines, not less than 30 days prior to
the Redemption Date, that subsequent payments would not be
subject to any such requirement, in which case the Company will
notify the Trustee in writing of its determination not to so
redeem the Securities, and the Trustee will promptly give notice
to the Holders of the Bearer Securities of that determination and
any earlier redemption notice will thereupon be revoked and of no
further effect. If the Company elects as provided in clause (y)
above to pay Bearer Additional Amounts, the Company may, as long
as the Company is obligated to pay such Bearer Additional
Amounts, subsequently redeem the Bearer Securities, at any time,
as a whole but not in part, upon not less than 30 nor more than
60 days' notice prior to the Redemption Date, at a Redemption
Price equal to 100% of the principal amount thereof plus interest
accrued to the Redemption Date, and any Additional Amounts or
Bearer Additional Amounts.
In the event of a redemption of less than all of the
Securities, the Company will not be required (a) to register the
transfer or exchange of Registered Securities or to exchange
Bearer Securities for Registered Securities for a period of 15
days immediately preceding the date notice is given identifying
the serial numbers of the Securities called for such redemption,
(b) to register the transfer or exchange of any Registered
Security, or portion thereof, called for redemption, or (c) to
exchange any Bearer Security called for redemption; provided,
however, that a Bearer Security called for redemption may be
exchanged for a Registered Security which is simultaneously
surrendered to the Registrar or Transfer Agent making such
exchange with written instructions for conversion consistent with
the provisions described in Sections 2.5 and 12.2 of the
Indenture.
Notice of redemption will be given by publication in
Authorized Newspapers in the City of London, England, and, so
long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange shall so require,
in Luxembourg, or, if not practicable in either London, England,
or Luxembourg, elsewhere in a Western European city. Notice to
the Holders will be given at least twice not less than 30 nor
more than 60 days prior to the Redemption Date as provided in the
Indenture.
In any case where the due date for the payment of the
principal of, or premium, if any, or interest, including
Additional Amounts and Bearer Additional Amounts, on, any
Security or the last day on which a Holder of a Security has a
right to convert his Security shall be, at any Place of Payment
or Place of Conversion, as the case may be, a day on which
banking institutions at such Place of Payment or Place of
Conversion are authorized or obligated by law or executive order
to close, then payment of principal, premium, if any, or
interest, including Additional Amounts and Bearer Additional
Amounts, or delivery for conversion of such Security need not be
made on or by such date at such place but may be made on or by
the next succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if
made on the date for such payment or the date fixed for
redemption or repurchase, or by such last day for conversion, and
no interest shall accrue on the amount so payable for the period
after such date.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his
option, at any time on or after June 24, 1996 and on or before
the close of business on April 15, 2006, or in case this Security
is called for redemption or the Holder hereof has exercised his
right to require the Company to repurchase this Security, then in
respect of this Security until and including, but (unless the
Company defaults in making the payment due upon redemption or
repurchase, as the case may be) not after, the close of business
on the Redemption Date or the Repurchase Date, as the case may
be, to convert this Security into fully paid and nonassessable
shares of Class B Common Stock of the Company at an initial
Conversion Price of U.S. $60.39 for each share of Class B Common
Stock (or at the current adjusted Conversion Price if an
adjustment has been made as provided in the Indenture) by
surrender of this Security, together with all coupons
appertaining hereto that mature after the date of conversion, and
also the conversion notice hereon, duly executed, to the Company,
subject to any laws or regulations applicable thereto and subject
to the right of the Company to terminate the appointment of any
Conversion Agent (as defined below), at (a) the office of Bankers
Trust Company, 1 Appold Street, Broadgate, London EC2A 2HE,
England, (b) the office of Bankers Trust Luxembourg S.A., 14
Boulevard F.D. Roosevelt, L-2450 Luxembourg, Grand Duchy of
Luxembourg or (c) the office of Swiss Bank Corporation,
Paradeplatz 6, CH-8010 Zurich, Switzerland, or at such other
offices or agencies outside the United States as the Company may
designate (each a "Conversion Agent"). Subject to the aforesaid
requirement to surrender coupons and except as provided in the
Indenture, no cash payment or adjustment is to be made on
conversion, if the date of conversion is not an Interest Payment
Date, for interest accrued hereon from the Interest Payment Date
next preceding the date of conversion, or for dividends on the
Class B Common Stock issued on conversion hereof. The Company
shall thereafter deliver to the Holder the fixed number of shares
of Class B Common Stock (together with any cash adjustment, as
provided in the Indenture) into which this Security is
convertible and such delivery will be deemed to satisfy the
Company's obligation to pay the principal amount of this
Security. No fractions of shares or scrip representing fractions
of shares will be issued on conversion, but instead of any
fractional interest (calculated to the nearest 1/100th of a
share) the Company shall pay a cash adjustment as provided in the
Indenture. The Conversion Price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the
Company is a party or the transfer of all or substantially all of
the property and assets of the Company, the Indenture shall be
amended, without the consent of any Holders of Securities, so
that this Security, if then Outstanding, will be convertible
thereafter, during the period this Security shall be convertible
as specified above, only into the kind and amount of securities,
cash and other property receivable upon such consolidation,
merger or transfer by a holder of the number of shares of Class B
Common Stock of the Company into which this Security could have
been converted immediately prior to such consolidation, merger or
transfer (assuming such holder of Class B Common Stock is not a
Constituent Person, failed to exercise any rights of election and
received per share the kind and amount received per share by a
plurality of Non-electing Shares and further assuming, if such
consolidation, merger or transfer occurs prior to the later of
June 24, 1996 and the receipt of Securities in definitive form
(in the case of Securities initially represented by a Temporary
Global Bearer Security), that the Security was convertible at the
time of such occurrence at the Conversion Price specified above
as adjusted from the issue date of such Security to such time as
provided in the Indenture). No adjustment in the Conversion Price
will be made until such adjustment would require an increase or
decrease of at least one percent of such price, provided that any
adjustment that would otherwise be made will be carried forward
and taken into account in the computation of any subsequent
adjustment.
Subject to certain limitations in the Indenture, at any time
when the Company is not subject to Section 13 or 15(d) of the
United States Securities Exchange Act of 1934, as amended, upon
the request of a Holder of a Restricted Security or the holder of
shares of Class B Common Stock issued upon conversion thereof,
the Company will promptly furnish or cause to be furnished Rule
144A Information (as defined below) to such Holder of Restricted
Securities or such holder of shares of Class B Common Stock
issued upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any such
Holder or holder, as the case may be, to the extent required to
permit compliance by any such Holder or holder with Rule 144A
under the United States Securities Act of 1933, as amended (the
"Securities Act"), in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto).
If a Change in Control occurs, the Holder of this Security
shall have the right, at the Holder's option, in accordance with
the provisions of the Indenture, to require the Company to
repurchase this Security at a Repurchase Price equal to 100% of
the principal amount plus accrued interest to the Repurchase
Date; provided, however, that the Repurchase Price in respect of
any Bearer Security will be payable only upon presentation and
surrender of such Bearer Security at an office or agency outside
the United States, except in the limited circumstances described
in the last sentence of the first paragraph of the face hereof.
At the option of the Company, the Repurchase Price may be paid in
cash or, except as otherwise provided in the Indenture, by
delivery of shares of Class B Common Stock having a fair market
value equal to the Repurchase Price; provided that payment may
not be made in Class B Common Stock unless at the time of payment
such stock is listed on a national securities exchange or quoted
on the Nasdaq National Market System. For purposes of this
paragraph, the fair market value of shares of Class B Common
Stock shall be determined by the Company and shall be equal to
95% of the average of the Closing Prices Per Share for the five
consecutive Trading Days ending on and including the third
Trading Day immediately preceding the Repurchase Date. Whenever
in this Security there is a reference, in any context, to the
principal of any Security as of any time, such reference shall be
deemed to include reference to the Repurchase Price payable in
respect of such Security to the extent that such Repurchase Price
is, was or would be so payable at such time, and express mention
of the Repurchase Price in any provision of this Security shall
not be construed as excluding the Repurchase Price in those
provisions of this Security when such express mention is not
made.
The indebtedness evidenced by this Security and any coupons
appertaining hereto is, to the extent and in the manner provided
in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the
Company, and this Security is issued subject to such provisions
of the Indenture with respect thereto. Each Holder of this
Security or any coupon appertaining to this Security, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the
principal of all the Securities, together with accrued interest
to the date of declaration, may be declared due and payable in
the manner and with the effect provided in the Indenture. Upon
payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of
declaration, and (ii) of interest on any overdue principal and
overdue interest, to the extent permitted by law, all of the
Company's obligations in respect of the payment of the principal
of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the
Holders of the Securities and coupons under the Indenture at any
time by the Company and the Trustee with either (a) the written
consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of 66-2/3% in
principal amount of the Outstanding Securities represented and
entitled to vote at such meeting. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities and coupons, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and any coupon
appertaining hereto and of any Security issued in exchange
herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security or such other
Security.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security or any coupon appertaining
hereto shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a
continuing Event of Default, the Holders of not less than 25% in
principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of
the Securities Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding,
for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security or any coupon appertaining hereto
for the enforcement of any payment of principal hereof, premium,
if any, or interest hereon (including any Additional Amounts and
Bearer Additional Amounts) on or after the respective due dates
expressed herein or for the enforcement of the right to convert
this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of, premium, if any, and interest on
(including Additional Amounts and Bearer Additional Amounts, as
described herein) this Security at the times, places and rate,
and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
Title to this Security and the coupons appertaining hereto
shall pass by delivery. The Company, the Trustee and any agent of
the Company or the Trustee may treat the bearer of this Security
and any coupon appertaining thereto as the owner thereof for all
purposes, whether or not this Security or such coupon be overdue,
and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture, the Securities and any coupons appertaining
thereto shall be governed by and construed in accordance with the
laws of the State of New York, United States of America, without
regard to the principles of conflicts of laws.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the
undersigned hereby elects to have this Security repurchased by
the Company.
2. The undersigned hereby directs the Company to pay bearer
an amount in cash or, at the Company's election, shares of Class
B Common Stock valued as set forth in the Indenture, equal to
100% of the principal amount hereof, plus interest accrued to the
Repurchase Date, as provided in the Indenture.
Dated:_______________________
_______________________
Signature
(b) Form of Registered Security
[FORM OF FACE]
[THE FOLLOWING LEGEND (THE "RULE 144A LEGEND") SHALL APPEAR ON
THE FACE OF EACH RESTRICTED SECURITY OTHER THAN ANY GLOBAL
REGISTERED SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS SECURITY AND ANY SHARES OF CLASS B COMMON STOCK ISSUABLE
UPON ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. THIS SECURITY MAY ONLY BE SOLD IN ACCORDANCE WITH THE
INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE
CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF
CONTINENTAL AIRLINES, INC. (THE "COMPANY") THAT (A) THIS SECURITY
AND ANY SHARES OF CLASS B COMMON STOCK ISSUABLE UPON ITS
CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II)
IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (III) IN THE CASE
OF ANY PURCHASER OTHER THAN A PURCHASER WHO HAS OTHERWISE AGREED
WITH THE COMPANY IN WRITING, TO AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A) UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS THEREOF, (IV) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN EACH OF
CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE
UNITED STATES, AND THAT (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER OF THIS SECURITY OR ANY CLASS B COMMON STOCK ISSUABLE UPON
ITS CONVERSION IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY OR SUCH CLASS B COMMON STOCK ISSUABLE UPON ITS
CONVERSION FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
ABOVE.
THIS SECURITY, ANY SHARES OF CLASS B COMMON STOCK ISSUABLE
UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON
AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY
AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES
RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES
GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL
BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES
TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED
GLOBAL REGISTERED SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL REGISTERED SECURITY
(OR ITS PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH SECURITIES
AND ANY SHARES OF CLASS B COMMON STOCK ISSUABLE UPON THEIR
CONVERSION MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. SUCH SECURITIES MAY ONLY BE SOLD IN ACCORDANCE WITH
THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT
THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY NOTIFIED THAT THE
SELLER OF SUCH BENEFICIAL INTEREST IN THE SECURITIES MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE
SECURITIES EVIDENCED BY THIS GLOBAL REGISTERED SECURITY
(INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE GLOBAL
REGISTERED SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON
THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT
HOLDS THROUGH ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF
CONTINENTAL AIRLINES, INC. (THE "COMPANY") THAT (A) ANY
BENEFICIAL INTEREST IN THE SECURITIES AND ANY SHARES OF CLASS B
COMMON STOCK ISSUABLE UPON THEIR CONVERSION MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (III) IN THE CASE OF ANY
PURCHASER OTHER THAN A PURCHASER WHO HAS OTHERWISE AGREED WITH
THE COMPANY IN WRITING, TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A) UNDER THE SECURITIES
ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
THEREOF, (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND IN EACH OF CASES (I)
THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
THE STATES AND OTHER JURISDICTIONS OF THE UNITED STATES, AND THAT
(B) THE BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT OWNER OF AN
INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS GLOBAL
REGISTERED SECURITY OR ANY CLASS B COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES OR SUCH CLASS B COMMON
STOCK ISSUABLE UPON ITS CONVERSION FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
THIS SECURITY, ANY SHARES OF CLASS B COMMON STOCK ISSUABLE
UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON
AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY
AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES
RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES
GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES,
REPRESENTING THE INTERESTS HELD BY EACH BENEFICIAL OWNER HEREOF
AND THEREOF, SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY
AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL
REGISTERED SECURITY:
THIS SECURITY IS A GLOBAL REGISTERED SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE
DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL
PURPOSES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
EXCHANGE FOR THIS SECURITY IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
REGISTERED SECURITIES IN DEFINITIVE REGISTERED FORM IN THE
LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL
REGISTERED SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH
UNRESTRICTED GLOBAL REGISTERED SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL REGISTERED SECURITY
(OR ITS PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO ANY U.S. PERSON EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER, OR AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF, THE SECURITIES ACT AND IN EACH CASE
IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS. TERMS
USED ABOVE HAVE THE MEANINGS GIVEN THEM IN REGULATION S UNDER THE
SECURITIES ACT.]
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTE
DUE APRIL 15, 2006
No. _____________ U.S.$_____
CUSIP No. ____________
CONTINENTAL AIRLINES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to _______________, or registered assigns,
the principal sum of _____________ United States Dollars
(U.S.$_____) [(which amount may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as
custodian of the Depositary, in accordance with the rules and
procedures of the Depositary)] on April 15, 2006 and to pay
interest thereon, from March 26, 1996, or from the most recent
Interest Payment Date (as defined below) to which interest has
been paid or duly provided for, semi-annually in arrears on April
15 and October 15 in each year (each, an "Interest Payment
Date"), commencing October 15, 1996, at the rate of 6 3/4% per
annum (together with any Additional Amounts and Liquidated
Damages that the Company may be required to pay), until the
principal hereof is due, and at the rate of 6 3/4% per annum on
any overdue principal and premium, if any, and, to the extent
permitted by law, on any overdue interest. The interest so
payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid
to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the
April 1 or October 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will
forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Company, notice whereof shall be given to Holders of Registered
Securities not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice may be
required by such exchange, all as more fully provided in the
Indenture. Payments of principal shall be made upon the surrender
of this Security at, at the option of the Holder, the Corporate
Trust Office of the Trustee, or at such other office or agency of
the Company as may be designated by it for such purpose in the
Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and
private debts, or at such other offices or agencies as the
Company may designate, by United States Dollar check drawn on, or
transfer to a United States Dollar account (such a transfer to be
made only to a Holder of an aggregate principal amount of
Registered Securities in excess of U.S. $2,000,000, and only if
such Holder shall have furnished wire instructions in writing to
the Trustee no later than 15 days prior to the relevant payment
date) maintained by the payee with a bank in the Borough of
Manhattan, The City of New York. Payment of interest on this
Security may be made by United States Dollar check drawn on a
bank in the Borough of Manhattan, The City of New York mailed to
the address of the Person entitled thereto as such address shall
appear in the Security Register, or, upon written application by
the Holder to the Security Registrar setting forth wire
instructions not later than the relevant Record Date, by transfer
to a United States Dollar account (such a transfer to be made
only to a Holder of an aggregate principal amount of Registered
Securities in excess of U.S.$2,000,000 and only if such Holder
shall have furnished wire instructions in writing to the Trustee
no later than 15 days prior to the relevant payment date)
maintained by the payee with a bank in the Borough of Manhattan,
The City of New York.
The Company will pay to the Holder of this Security who is a
United States Alien (as defined below) such additional amounts
("Additional Amounts") as may be necessary in order that every
net payment of the principal of, premium, if any, and interest on
this Security (including payment on redemption or repurchase),
after deduction or withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon or
as a result of such payment by the United States or any political
subdivision or taxing authority thereof or therein, will not be
less than the amount provided for in this Security to be then due
and payable; provided, however, that the Company shall not be
obligated to pay any Additional Amounts in respect of payments
becoming due on the Securities more than 15 days after the
redemption date for a redemption pursuant to the third paragraph
of the reverse of this Security, except to the extent that the
Company's obligation to pay such Additional Amounts does not
arise from the Tax Law Change that resulted in such redemption;
and provided, further, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge
which would not have been so imposed but for (i) the
existence of any present or former connection between such
Holder (or between a fiduciary, settlor, beneficiary,
member, shareholder of or possessor of a power over such
Holder, if such Holder is an estate, a trust, a partnership
or a corporation) and the United States or any political
subdivision or taxing authority thereof or therein,
including, without limitation, such Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident of the
United States or treated as a resident thereof, or being or
having been engaged in trade or business or present therein,
or having or having had a permanent establishment therein,
or (ii) such Holder's present or former status as a personal
holding company, a foreign personal holding company with
respect to the United States, or a foreign private
foundation or foreign tax exempt entity for United States
tax purposes, or a corporation which accumulates earnings to
avoid United States Federal income tax;
(b) any tax, assessment or other governmental charge
which would not have been so imposed but for the
presentation by the Holder of this Security for payment on a
date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof
is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer,
personal property or similar tax, assessment or governmental
charge;
(d) any tax, assessment or other governmental charge
which would not have been imposed but for the failure to
comply with any certification, identification or other
reporting requirements concerning the nationality,
residence, identity or connection with the United States of
the Holder or beneficial owner of this Security, if
compliance is required by statute or by regulation or ruling
of the United States as a precondition to relief or
exemption from such tax, assessment or other governmental
charge;
(e) any tax, assessment or other governmental charge
which is payable otherwise than by deduction or withholding
from payments of principal of, premium, if any, or interest
on this Security;
(f) any tax, assessment or other governmental charge
imposed on a Holder as a result of that Person's past or
present actual or constructive ownership, including by
virtue of the right to convert Securities, of 10% or more of
the total combined voting power of all classes of stock of
the Company entitled to vote or that Person's status as a
controlled foreign corporation related to the Company
through stock ownership;
(g) any tax, assessment or other governmental charge
required to be withheld by any Paying Agent from any payment
of the principal of, premium, if any, or interest on this
Security, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(h) any tax, assessment or other governmental charge
imposed on a Holder that is a partnership, a fiduciary or
other than the sole beneficial owner of such payment, but
only to the extent that any beneficial owner or member of
the partnership or beneficiary or settlor with respect to
the fiduciary would not have been entitled to the payment of
Additional Amounts had the beneficial owner, member,
beneficiary or settlor directly been the Holder of this
Security; or
(i) any combination of items (a), (b), (c), (d), (e),
(f), (g) and (h).
For purposes of this Security, a "United States Alien" is
any person who, for United States federal income tax purposes, is
a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is for
United States federal income tax purposes, a foreign corporation,
a nonresident alien individual or a nonresident alien fiduciary
of a foreign estate or trust. Solely for purposes of the
foregoing definition of "United States Alien", the term "United
States" shall include, when used in the geographical sense, only
the States and the District of Columbia.
Except as specifically provided herein and in the Indenture,
the Company shall not be required to make any payment with
respect to any tax, assessment or other governmental charge
imposed by any government or any political subdivision or taxing
authority thereof or therein. Whenever in this Security there is
a reference, in any context, to the payment of the principal of,
premium, if any, or interest on, or in respect of, any Security
such mention shall be deemed to include mention of the payment of
Additional Amounts payable as described in the second preceding
paragraph to the extent that, in such context, Additional Amounts
are, were or would be payable in respect of such Security and
express mention of the payment of Additional Amounts (if
applicable) in any provisions of this Security shall not be
construed as excluding Additional Amounts in those provisions of
this Security where such express mention is not made.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place. Capitalized terms used herein, including on
the reverse hereof, and not defined herein or on the reverse
hereof shall have the respective meanings given to such terms in
the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof or an
Authenticating Agent by the manual signature of one of their
respective authorized signatories, this Security shall not be
entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to
be duly executed under its corporate seal.
Dated:
CONTINENTAL AIRLINES, INC.
[Corporate Seal]
By:__________________________
Name:
Title:
Attest:
________________________
Name:
Title:
[FORM OF REVERSE]
This Security is one of a duly authorized issue of
securities of the Company designated as its "6 3/4% Convertible
Subordinated Notes due April 15, 2006" (herein called the
"Securities"), limited in aggregate principal amount to
U.S.$230,000,000, issued and to be issued under an Indenture,
dated as of March 26, 1996 (herein called the "Indenture"),
between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of
Senior Indebtedness and the Holders of the Securities and any
coupons appertaining thereto and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The
Securities are issuable as Bearer Securities, with interest
coupons attached, in the denomination of U.S.$5,000, and as
Registered Securities, without coupons, in the denomination of
U.S.$1,000 and integral multiples of U.S.$1,000 in excess
thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Registered Securities are
exchangeable for a like aggregate principal amount of Registered
Securities of any authorized denominations as requested by the
Holder surrendering the same upon surrender of the Registered
Security or Registered Securities to be exchanged, at the
Corporate Trust Office of the Trustee or at such other office or
agency of the Company as may be designated by it for such purpose
in the Borough of Manhattan, The City of New York or at such
other offices or agencies as the Company may designate (each a
"Transfer Agent"). The Transfer Agent will then forward such
surrendered Registered Securities (together with any payment
surrendered therewith) to the Trustee who in turn will issue the
new Registered Securities. Bearer Securities may not be issued in
exchange for Registered Securities.
No sinking fund is provided for the Securities. The
Securities are subject to redemption at the option of the Company
at any time on or after April 15, 1999, in whole or in part, upon
not less than 30 nor more than 60 days' notice to the Holders
prior to the Redemption Date, at the following Redemption Prices
(expressed as percentages of the principal amount) for the
twelve- month period beginning on April 15 of the following
years:
Redemption
Year Price
1999 104.725
2000 104.050
2001 103.375
2002 102.700
2003 102.025
2004 101.350
2005 100.675
and thereafter at a Redemption Price equal to 100% of the
principal amount, together, in each case, with accrued interest
to the Redemption Date, and Securities held by United States
Aliens are also redeemable, in whole but not in part, under the
circumstances described in the next succeeding paragraph, at a
Redemption Price equal to 100% of the principal amount thereof
plus interest accrued to the Redemption Date; provided, however,
that interest installments on Registered Securities whose Stated
Maturity is on or prior to such Redemption Date will be payable
to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in
the Indenture.
If as a result of a Tax Law Change, the Company has or will
become obligated to pay to the Holder of any Security or coupon
Additional Amounts, as described in the second paragraph of the
face of this Security, and such obligation cannot be avoided by
the Company taking reasonable measures available to it, then the
Company may, at its option, redeem the Tax Affected Securities as
a whole, but not in part, upon not less than 30 nor more than 60
days' notice to the Holders prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount plus
interest accrued to the Redemption Date, and any Additional
Amounts then payable; provided, that (i) no such notice of
redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay any
such Additional Amounts were a payment in respect of the Tax
Affected Securities then due and (ii) at the time such notice of
redemption is given, such obligation to pay such Additional
Amounts remains in effect. Prior to the publication of any notice
of redemption pursuant to this paragraph, the Company shall
deliver to the Trustee (a) an Officers' Certificate stating that
the Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions precedent
to the right of the Company so to redeem have occurred and (b) an
Opinion of Counsel selected by the Company to the effect that the
Company has or will become obligated to pay such Additional
Amounts as a result of such Tax Law Change. The Company's right
to redeem the Tax Affected Securities shall continue as long as
the Company is obligated to pay such Additional Amounts,
notwithstanding that the Company shall have made payments of
Additional Amounts specified in such second paragraph.
In the event of a redemption of less than all of the
Securities (other than a redemption that by its terms is
applicable solely to Bearer Securities), the Company will not be
required (a) to register the transfer or exchange of Registered
Securities or to exchange Bearer Securities for Registered
Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities
called for such redemption, (b) to register the transfer or
exchange of any Registered Security, or portion thereof, called
for redemption, or (c) to exchange any Bearer Security called for
redemption; provided, however, that a Bearer Security called for
redemption may be exchanged for a Registered Security which is
simultaneously surrendered to the Registrar or Transfer Agent
making such exchange with written instructions for conversion
consistent with the provisions described in Sections 2.5 and 12.2
of the Indenture.
Notice of redemption will be given by publication in
Authorized Newspapers in the City of London, England, and, so
long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange shall so require,
in Luxembourg, or, if not practicable in either London, England,
or Luxembourg, elsewhere in any country in Western Europe, and by
mail to Holders of Registered Securities. Notice to the Holders
will be given at least twice not less than 30 nor more than 60
days prior to the Redemption Date as provided in the Indenture.
In any case where the due date for the payment of the
principal of, premium, if any, or interest, including Additional
Amounts and Liquidated Damages, on, any Security or the last day
on which a Holder of a Security has a right to convert his
Security shall be, at any Place of Payment or Place of
Conversion, as the case may be, a day on which banking
institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then
payment of principal, premium, if any, or interest, including
Additional Amounts and Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date
at such place but may be made on or by the next succeeding day at
such place which is, with the same force and effect as if made on
the date for such payment or the date fixed for redemption or
repurchase, or by such last day for conversion, and no interest
shall accrue on the amount so payable for the period after such
date.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his
option, at any time on or after June 24, 1996, and on or before
the close of business on April 15, 2006, or in case this Security
or a portion hereof is called for redemption or the Holder hereof
has exercised his right to require the Company to repurchase this
Security or such portion hereof, then in respect of this Security
until and including, but (unless the Company defaults in making
the payment due upon redemption or repurchase, as the case may
be) not after, the close of business on the Redemption Date or
the Repurchase Date, as the case may be, to convert this Security
(or any portion of the principal amount hereof that is an
integral multiple of U.S.$1,000, provided that the unconverted
portion of such principal amount is U.S.$5,000 or any integral
multiple of U.S.$1,000 in excess thereof) into fully paid and
nonassessable shares of Class B Common Stock of the Company at an
initial Conversion Price of U.S.$60.39 for each share of Class B
Common Stock (or at the current adjusted Conversion Price if an
adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the
Company or in blank and, in case such surrender shall be made
during the period from the close of business of any Regular
Record Date next preceding any Interest Payment Date to the
opening of business on such Interest Payment Date ("Interest
Period") (except Securities called for redemption on a Redemption
Date or to be repurchased on a Repurchase Date during, in each
case, such Interest Period), also accompanied by payment in New
York Clearing House or other funds acceptable to the Company of
an amount equal to the interest payable on such Interest Payment
Date on the principal amount of this Security then being
converted (or, if this Security was issued in exchange for a
Bearer Security after the close of business on such Regular
Record Date, by surrender of one or more coupons relating to such
Interest Payment Date or by both payment in such funds and
surrender of such coupon or coupons, in either case, in an amount
equal to the interest payable on such Interest Payment Date on
the principal amount of this Security then being converted;
provided that coupons may be so surrendered only at an office or
agency outside the United States designated pursuant to the
Indenture), and also the conversion notice hereon duly executed,
to the Company at the Corporate Trust Office of the Trustee, or
at such other office or agency of the Company, subject to any
laws or regulations applicable thereto and subject to the right
of the Company to terminate the appointment of any Conversion
Agent (as defined below) as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York, or at
such other offices or agencies as the Company may designate (each
a "Conversion Agent"). Subject to the aforesaid requirement for
payment and, in the case of a conversion after the Regular Record
Date next preceding any Interest Payment Date and on or before
such Interest Payment Date, to the right of the Holder of this
Security (or any Predecessor Security) of record at such Regular
Record Date to receive an installment of interest, no cash
payment or adjustment is to be made on conversion, if the date of
conversion is not an Interest Payment Date, for interest accrued
hereon from the Interest Payment Date next preceding the date of
conversion, or for dividends on the Class B Common Stock issued
on conversion hereof. The Company shall thereafter deliver to the
Holder the fixed number of shares of Class B Common Stock
(together with any cash adjustment, as provided in the Indenture)
into which this Security is convertible and such delivery will be
deemed to satisfy the Company's obligation to pay the principal
amount of this Security. No fractions of shares or scrip
representing fractions of shares will be issued on conversion,
but instead of any fractional interest (calculated to the nearest
1/100th of a share) the Company shall pay a cash adjustment as
provided in the Indenture. The Conversion Price is subject to
adjustment as provided in the Indenture. In addition, the
Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the transfer of all or
substantially all of the property and assets of the Company, the
Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then Outstanding, will be
convertible thereafter, during the period this Security shall be
convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such
consolidation, merger or transfer by a holder of the number of
shares of Class B Common Stock of the Company into which this
Security could have been converted immediately prior to such
consolidation, merger or transfer (assuming such holder of Class
B Common Stock is not a Constituent Person, failed to exercise
any rights of election and received per share the kind and amount
received per share by a plurality of Non-electing Shares and
further assuming, if such consolidation, merger or transfer
occurs prior to the later of June 24, 1996 and the receipt of
Securities in definitive form (in the case of Securities
initially represented by a Temporary Global Bearer Security),
that the Security was convertible at the time of such occurrence
at the Conversion Price specified above as adjusted from the
issue date of such Security to such time as provided in the
Indenture). No adjustment in the Conversion Price will be made
until such adjustment would require an increase or decrease of at
least one percent of such price, provided that any adjustment
that would otherwise be made will be carried forward and taken
into account in the computation of any subsequent adjustment.
Subject to certain limitations in the Indenture, at any time
when the Company is not subject to Section 13 or 15(d) of the
United States Securities Exchange Act of 1934, as amended, upon
the request of a Holder of a Restricted Security or the holder of
shares of Class B Common Stock issued upon conversion thereof,
the Company will promptly furnish or cause to be furnished Rule
144A Information (as defined below) to such Holder of Restricted
Securities or such holder of shares of Class B Common Stock
issued upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any such
Holder or holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"), in
connection with the resale of any such security. "Rule 144A
Information" shall be such information as is specified pursuant
to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
The Holder of this Security and the Class B Common Stock of
the Company issuable upon conversion thereof is entitled to the
benefits of a Registration Rights Agreement (subject to the
provisions thereof), dated as of March 26, 1996, between the
Company and Goldman Sachs International (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the
Company has agreed for the benefit of the Holders from time to
time of the Registered Securities and the Class B Common Stock
issuable upon conversion thereof that it will, at its expense,
(a) within 180 days after the date of issuance of the original
Registered Securities, file a shelf registration statement (the
"Shelf Registration Statement") with the Commission with respect
to resales of the Registered Securities and the Class B Common
Stock issuable upon conversion thereof, (b) use its best efforts
to cause such Shelf Registration Statement to be declared
effective by the Commission within 60 days after the date on
which the Shelf Registration Statement is filed, and (c) use its
best efforts to maintain such Shelf Registration Statement
continuously effective under the Securities Act of 1933, as
amended, until the third annual anniversary of the date of the
effectiveness of the Shelf Registration Statement or such earlier
date as is provided in the Registration Rights Agreement.
If (i) on or prior to 180 days following the date of
original issuance of the Registered Securities, a Shelf
Registration Statement has not been filed with the Commission, or
(ii) on or prior to the 60th day following the filing of such
Shelf Registration Statement, such Shelf Registration Statement
is not declared effective (each, a "Registration Default"),
additional interest ("Liquidated Damages") will accrue on this
Security from and including the day following such Registration
Default to but excluding the day on which such Registration
Default has been cured. Liquidated Damages will be paid semi-
annually in arrears, with the first semi-annual payment due on
the first interest payment date in respect of the Registered
Securities following the date on which such Liquidated Damages
begin to accrue, and will accrue at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the principal
amount of the Registered Securities to and including the 90th day
following such Registration Default and at a rate per annum equal
to one-half of one percent (0.50%) thereof from and after the
91st day following such Registration Default. In the event that
the Shelf Registration Statement ceases to be effective prior to
the third annual anniversary of the initial effective date of the
Shelf Registration Statement or such earlier date as is provided
in the Registration Rights Agreement for a period in excess of 60
days, whether or not consecutive, during any 12-month period,
then the interest rate borne by the Registered Securities shall
increase by an additional one-half of one percent (0.50%) per
annum from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective to but
excluding the day on which the Shelf Registration Statement again
becomes effective.
Whenever in this Security there is a reference, in any
context, to the payment of the principal of, premium, if any, or
interest on, or in respect of, any Registered Security such
mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding
paragraph to the extent that, in such context, Liquidated Damages
are, were or would be payable in respect of such Security and
express mention of the payment of Liquidated Damages (if
applicable) in any provisions of this Security shall not be
construed as excluding Liquidated Damages in those provisions of
this Security where such express mention is not made.
The Holder of this Security, by its acceptance thereof,
agrees to be bound by the terms of the Registration Rights
Agreement relating to the Registered Securities and the Class B
Common Stock issuable upon conversion thereof.
If a Change in Control occurs, the Holder of this Security
shall have the right, at the Holder's option in accordance with
the provisions of the Indenture, to require the Company to
repurchase this Security (or any portion of the principal amount
hereof that is an integral multiple of $1,000) for cash at a
Repurchase Price equal to 100% of the principal amount thereof
plus interest accrued to the Repurchase Date. At the option of
the Company, the Repurchase Price may be paid in cash or, except
as otherwise provided in the Indenture, by delivery of shares of
Class B Common Stock having a fair market value equal to the
Repurchase Price; provided that payment may not be made in Class
B Common Stock unless at the time of payment such stock is listed
on a national securities exchange or quoted on the Nasdaq
National Market System. For purposes of this paragraph, the fair
market value of shares of Class B Common Stock shall be
determined by the Company and shall be equal to 95% of the
average of the Closing Prices Per Share for the five consecutive
Trading Days ending on and including the third Trading Day
immediately preceding the Repurchase Date. Whenever in this
Security there is a reference, in any context, to the principal
of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of
such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Security shall not be
construed as excluding the Repurchase Price in those provisions
of this Security when such express mention is not made.
[The following paragraph shall appear in each Registered
Security that is not a Global Registered Security:
In the event of redemption, repurchase or conversion of this
Security in part only, a new Registered Security or Securities
for the unredeemed, unrepurchased or unconverted portion hereof
will be issued in the name of the Holder hereof.]
[The following paragraph shall appear in each Global
Registered Security:
In the event of a deposit or withdrawal of an interest in
this Security, including an exchange, transfer, redemption,
repurchase or conversion of this Security in part only, the
Trustee, as custodian of the Depositary, shall make an adjustment
on its records to reflect such deposit or withdrawal in
accordance with the rules and procedures of the Depositary.]
The indebtedness evidenced by this Security is, to the
extent and in the manner provided in the Indenture, subordinate
and subject in right of payment to the prior payment in full of
all Senior Indebtedness of the Company, and this Security is
issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
If an Event of Default shall occur and be continuing, the
principal of all the Securities, together with accrued interest
to the date of declaration, may be declared due and payable in
the manner and with the effect provided in the Indenture. Upon
payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of
declaration, and (ii) of interest on any overdue principal and
overdue interest, to the extent permitted by law, all of the
Company's obligations in respect of the payment of the principal
of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the
Holders of the Securities and coupons under the Indenture at any
time by the Company and the Trustee with either (a) the written
consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of 66-2/3% in
principal amount of the Outstanding Securities represented and
entitled to vote at such meeting. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities and coupons, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security
issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security or
such other Security.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the
Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity
and the Trustee shall not have received from the Holders of a
majority in principal amount of the Securities Outstanding a
direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall
not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof, premium,
if any, or interest hereon (including any Additional Amounts and
Liquidated Damages) on or after the respective due dates
expressed herein or for the enforcement of the right to convert
this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of, premium, if any, and interest on
(including Additional Amounts and Liquidated Damages, as
described herein) this Security at the times, places and rate,
and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of Registered
Securities is registrable on the Security Register upon surrender
of a Registered Security for registration of transfer (a) at the
Corporate Trust Office of the Trustee or at such other office or
agency of the Company as may be designated by it for such purpose
in the Borough of Manhattan, The City of New York, or (b) subject
to any laws or regulations applicable thereto and to the right of
the Company to terminate the appointment of any Transfer Agent,
at the offices of the Transfer Agents described herein or at such
other offices or agencies as the Company may designate, duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar
duly executed by, the Holder thereof or his attorney duly
authorized in writing, and thereupon one or more new Registered
Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. No service charge
shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to
recover any tax or other governmental charge payable in
connection therewith.
Prior to due presentation of a Registered Security for
registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name
such Registered Security is registered, as the owner thereof for
all purposes, whether or not such Security be overdue, and
neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Security shall be governed by and
construed in accordance with the laws of the State of New York,
United States of America, without regard to the principles of
conflicts of laws.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the
undersigned hereby elects to have this Security repurchased by
the Company.
2. The undersigned hereby directs the Trustee or the
Company to pay it or __________________ an amount in cash or, at
the Company's election, shares of Class B Common Stock valued as
set forth in the Indenture, equal to 100% of the principal amount
to be repurchased (as set forth below), plus interest accrued to
the Repurchase Date, as provided in the Indenture.
Dated: _____________________
__________________________
Signature
__________________________
Signature Guaranteed
Principal amount to be repurchased: ____________________
Remaining principal amount following such repurchase:
______________
NOTICE: The signature to the foregoing Election must correspond
to the Name as written upon the face of this Security in every
particular, without alteration or any change whatsoever.
(c) Form of Temporary Global Bearer Security
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
OF THE INTERNAL REVENUE CODE.
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES
DUE APRIL 15, 2006
TEMPORARY GLOBAL BEARER SECURITY
ISIN No. XS0064495905
CONTINENTAL AIRLINES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called
the "Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to bearer upon presentation and surrender of this
Temporary Global Bearer Security the principal sum of
_____________ United States Dollars (U.S.$__________) on April
15, 2006, and to pay interest thereon, from March 26, 1996, or
from the most recent Interest Payment Date (as defined below) to
which interest has been paid or duly provided for, semi-annually
in arrears on April 15 and October 15 in each year (each an
"Interest Payment Date"), commencing October 15, 1996, at the
rate of 6 3/4% per annum (together with any Additional Amounts
and Bearer Additional Amounts that the Company may be required to
pay), until the principal hereof is due, and at the rate of 6
3/4% per annum on any overdue principal and, to the extent
permitted by law, on any overdue interest; provided, however,
that interest on this Temporary Global Bearer Security shall be
payable only after the issuance of the Definitive Securities in
bearer form for which this Temporary Global Bearer Security is
exchangeable and, in the case of Definitive Securities in bearer
form, only upon presentation and surrender (at an office or
agency outside the United States, except as otherwise provided in
the Indenture) of the interest coupons thereto attached as they
severally mature.
This Temporary Global Bearer Security is one of a duly
authorized issue of Securities of the Company designated as
specified in the title hereof, issued and to be issued under the
Indenture, dated as of March 26, 1996 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as
Trustee. This Temporary Global Bearer Security is a temporary
security and is exchangeable in whole or from time to time in
part without charge upon request of the holder hereof for
Definitive Securities in bearer form, with interest coupons
attached, of authorized denominations, (a) not earlier than 40
days after March 26, 1996 and (b) as promptly as practicable
following presentation of certification, in one of the forms set
forth in the Indenture for such purpose, that the beneficial
owner or owners of this Temporary Global Bearer Security (or, if
such exchange is only for a part of this Temporary Global Bearer
Security, of such part) are not United States persons (as defined
below), are persons described in Section 1.163-5(c)(2)(i)(D)(6)
of the United States Treasury Regulations or are financial
institutions that are holding such Security for resale during the
restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7)
of the United States Treasury Regulations) and that have not
acquired such Securities for purposes of resale directly or
indirectly to a United States person or within the United States
or its possessions (each as defined below). Definitive Securities
in bearer form to be delivered in exchange for any part of this
Temporary Global Bearer Security shall be delivered only outside
the United States. Upon any exchange of a part of this Temporary
Global Bearer Security for definitive Securities, the portion of
the principal amount hereof so exchanged shall be endorsed by the
Paying Agent in London or its agent on the Schedule hereto, and
the principal amount hereof shall be reduced for all purposes by
the amount so exchanged.
Until exchanged in full for definitive Securities, this
Temporary Global Bearer Security shall in all respects be
entitled to the same benefits under, and subject to the same
terms and conditions of, the Indenture as Bearer Securities
authenticated and delivered thereunder, except that neither the
Holder hereof nor the beneficial owners of this Temporary Global
Bearer Security shall be entitled to receive payment of interest
or other payments hereon or to convert this Temporary Global
Bearer Security into Class B Common Stock of the Company or any
other security, cash or other property.
The Indenture and this Temporary Global Bearer Security
shall be governed by and construed in accordance with the laws of
the State of New York, United States of America, without regard
to the principles of conflicts of laws.
"United States person" is a Person that is, for United
States federal income tax purposes, (a) a citizen or resident of
the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or
any political subdivision thereof or (c) an estate or trust the
income of which is subject to United States Federal income
taxation regardless of the source; "United States" means the
United States of America (including the States and the District
of Columbia); and its "possessions" includes Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
All terms used in this Temporary Global Bearer Security
which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent by the manual
signature of one of their respective authorized signatories, this
Temporary Global Bearer Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this Temporary
Global Bearer Security to be duly executed under its corporate
seal.
Dated as of March 26, 1996 CONTINENTAL
AIRLINES, INC.
[Corporate Seal]
By:___________________________
Name:
Title:
Attest:
____________________________
Name:
Title:
SCHEDULE OF EXCHANGES
Principal Amount Remaining Principal Notation Made on Behalf
Date Exchanged for Amount Following Paying Agent
Made Bearer Securities Such Exchange in London, England
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
______ __________________ __________________ ________________________
SECTION 2.3. Form of Coupon.
[FORM OF FACE]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
OF THE INTERNAL REVENUE CODE.
No.- ________________
ISIN No. XS0064495905
CONTINENTAL AIRLINES, INC.
U.S.$ _______
Due ________ __, ____
6 3/4% CONVERTIBLE SUBORDINATED NOTE
DUE APRIL 15, 2006
Unless the Security to which this coupon appertains shall
have been redeemed, repurchased or converted prior to the date
set forth hereon, Continental Airlines, Inc. (the "Company")
shall, subject to and in accordance with the terms and conditions
of such Security and the Indenture referred to therein, pay to
the bearer on the date set forth hereon, upon surrender hereof,
the amount shown hereon (together with any Additional Amounts and
Bearer Additional Amounts payable in respect thereof which the
Company may be required to pay according to the terms of said
Security) at the paying agencies set out on the reverse hereof or
at such other places outside the United States of America
(including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction as the Company may determine from time to time.
[REVERSE OF COUPON]
TRANSFER, PAYING AND CONVERSION AGENTS
Bankers Trust Company Bankers Trust Luxembourg S.A.Swiss Bank
Corporation
1 Appold Street 14 Boulevard F.D. Roosevelt Paradeplatz 6
Broadgate L-2450 Luxembourg CH-8010 Zurich
London EC2A 2HE Grand Duchy of Luxembourg Switzerland
England
SECTION 2.4. Form of Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _______________*
Bankers Trust Company,
as Trustee
[By Authenticating Agent,
as Authenticating Agent]**
By:___________________________
Authorized Signatory
* For Registered Securities only.
**For the Temporary Global Bearer Security and Bearer Securities in
definitive form.
SECTION 2.5. Form of Conversion Notice.
CONVERSION NOTICE
(a) For Bearer Securities:
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security into shares of Class B Common Stock in
accordance with the terms of the Indenture referred to in this Security and
directs that such shares be registered in the name of and delivered,
together with a check in payment for any fractional share, to the
undersigned unless a different name has been indicated below. The address
for payment of any such check must be outside the United States. If shares
are to be registered in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Dated: ___________________ _________________________
Signature
If shares are to be registered Please print name and
in the nameof and delivered to address of Holder:
a Person other than the
Holder, please print such
Person's name and address:
______________________________ ______________________________
Name Name
______________________________ _______________________________
Address Address
______________________________ _______________________________
________________________________________________________________
Social Security or other TaxpayerSocial Security or other Taxpayer
Identification Number, if any Identification Number, if any
Name and address (outside the United States) to where any check referred to
in the first paragraph of this Conversion Notice
should be mailed:
_____________________________________
Name
____________________________________
Address
____________________________________
Social Security or other Taxpayer
Identification Number, if any
(b) For Registered Securities:
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of U.S.$1,000, provided that the
unconverted portion of such principal amount is U.S.$5,000 or any integral
multiple of U.S.$1,000 in excess thereof) below designated, into shares of
Class B Common Stock in accordance with the terms of the Indenture referred
to in this Security, and directs that such shares, together with a check in
payment for any fractional share and any Securities representing any
unconverted principal amount hereof, be delivered to and be registered in
the name of the undersigned unless a different name has been indicated
below. If shares of Class B Common Stock or Securities are to be registered
in the name of a Person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this
Security.
Dated: _____________________ _____________________________
Signature
If shares or Registered If only a portion of the
Securitiesare to be registered Securities is to be
in the name of a Person other converted, please indicate:
than the Holder, please print
such Person's name and address:
1. Principal amount to be
converted:
_________________________ U.S.$___________
Name
2. Principal amount and
denomination of Registered
Securities representing unconverted principal amount to be
issued:
Amount: U.S.$________
_________________________ Denominations:U.S.$______
Address (any integral multiple of U.S.$1,000,
provided that the unconverted portion of such
principal amount is U.S.$5,000 or any integral multiple of
U.S.$1,000 in excess thereof)
_________________________
Social Security or other
Taxpayer Identification Number,
if any
___________________________ [Signature Guaranteed]
SECTION 2.6. Legend on Restricted Securities.
During the period beginning on March 26, 1996 and ending on
the date three years from such date (or such shorter period as
the Company may direct in an Officers' Certificate), any Security
originally issued otherwise than in reliance on Regulation S
under the Securities Act, including any Security issued in
exchange therefor or in lieu thereof, shall be a Registered
Security, shall be deemed a "Restricted Security" and shall be
subject to the restrictions on transfer provided in the legends
set forth on the face of the form of Registered Security in
Section 2.2(b); provided, however, that the term "Restricted
Security" shall not include any Registered Securities as to which
restrictions have been terminated in accordance with Section 3.5.
All Restricted Securities shall bear the applicable legends set
forth on the face of the form of Registered Security in Section
2.2(b). Securities which are not Restricted Securities shall not
bear such legend. Except as provided in Section 3.5, the Trustee
shall not issue any unlegended Registered Security until it has
received an Officers' Certificate from the Company directing it
to do so.
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
U.S.$230,000,000, except for Securities authenticated and
delivered in exchange for, or in lieu of, other Securities
pursuant to this Indenture.
The Securities shall be known and designated as the "6 3/4%
Convertible Subordinated Notes due April 15, 2006" of the
Company. Their Stated Maturity shall be April 15, 2006 and they
shall bear interest on their principal amount from March 26,
1996, payable semi-annually in arrears on April 15 and October 15
in each year, commencing October 15, 1996, at the rate of 6 3/4%
per annum (together with any Additional Amounts, Bearer
Additional Amounts and Liquidated Damages the Company may be
required to pay) until the principal thereof is due, and at the
rate of 6 3/4% per annum on any overdue principal and, to the
extent permitted by law, on any overdue interest; provided,
however, that payments shall only be made on Business Days as
provided in Section 1.12.
The principal of, premium, if any, and interest on the
Securities shall be payable as provided in the forms of
Securities and coupon set forth in Sections 2.2 and 2.3 (any city
in which any Paying Agent is located being herein called a "Place
of Payment").
The Securities shall be redeemable at the option of the
Company at any time on or after April 15, 1999, in whole or in
part, and at the Company's option or otherwise in the event of
certain developments, including developments with respect to
changes in U.S. withholding taxes or certification requirements,
as provided in Article Eleven and in the forms of Securities set
forth in Section 2.2.
The Securities shall be convertible as provided in Article
Twelve (any city in which any Conversion Agent is located being
herein called a "Place of Conversion").
The Securities shall be subordinated in right of payment to
Senior Indebtedness of the Company as provided in Article
Thirteen.
The Securities shall be subject to repurchase by the Company
at the option of the Holders as provided in Article Fourteen.
SECTION 3.2. Denominations.
The Definitive Securities shall be issuable (i) in bearer
form, with interest coupons attached, in the denomination of
U.S.$5,000 and (ii) as Registered Securities, without coupons, in
the denomination of U.S.$1,000 and integral multiples of
U.S.$1,000 in excess thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its
Chief Executive Officer, its President or one of its Vice
Presidents, under a facsimile of its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant
Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee or to its order for
authentication (or to the Paying Agent in London, or to its
order, in the case of Bearer Securities or the Temporary Global
Bearer Security), together with a Company Order for the
authentication and delivery of such Securities, and the Trustee
or an Authenticating Agent in accordance with such Company Order
shall authenticate and make available for delivery such
Securities as in this Indenture provided and not otherwise. In
connection with any Company Order for authentication, an
Officers' Certificate and Opinion of Counsel pursuant to Section
1.2 shall not be required.
Each Bearer Security and the Temporary Global Bearer
Security shall be dated as of March 26, 1996. Each Registered
Security shall be dated the date of its authentication.
No Security (or coupon attached thereto) shall be entitled
to any benefit under this Indenture or be valid or obligatory for
any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual
signature of an authorized signatory, and such certificate upon
any Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 3.4 or 3.6, neither the
Trustee nor an Authenticating Agent shall authenticate and make
available for delivery any Bearer Security unless all coupons
appurtenant thereto for interest then matured have been detached
and canceled.
SECTION 3.4. Global Securities.
(a) The Securities (other than the Registered Securities)
shall be issued initially in the form of one Temporary Global
Bearer Security, which Temporary Global Bearer Security shall be
deposited on behalf of the subscribers for the Securities
represented thereby with Bankers Trust Company, London Office, as
common depositary (the "Common Depositary"), for credit to their
respective accounts (or to such other accounts as they may
direct) at MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS
OFFICE, as operator of the EUROCLEAR SYSTEM ("EUROCLEAR"), or
CEDEL BANK, SOCIETE ANONYME ("CEDEL").
On or before the Exchange Date, the Company shall deliver to
the Paying Agent in London at its principal London office located
at 1 Appold Street, Broadgate, London EC2A 2HE, England, or its
designated agent, Bearer Securities executed by the Company. On
or after the Exchange Date, the Temporary Global Bearer Security
shall be surrendered by the Common Depositary to the Trustee or
its agent, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for Bearer
Securities without charge to Holders, and the Trustee or the
Paying Agent in London or other Paying Agent outside the United
States shall authenticate and deliver (at an office or agency
outside the United States), in exchange for the Temporary Global
Bearer Security or the portions thereof to be exchanged, an equal
aggregate principal amount of Bearer Securities, as shall be
specified by the beneficial owners thereof; provided, however,
that upon such presentation by the Common Depositary, the
Temporary Global Bearer Security shall be accompanied by a
certificate dated the Exchange Date or a subsequent date and
signed by EUROCLEAR as to the portion of the Temporary Global
Bearer Security held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and
signed by CEDEL as to the portion of the Temporary Global Bearer
Security held for its account then to be exchanged, each to the
effect hereinafter provided. The Company hereby appoints the
principal office of the Paying Agent in London, England, or its
designated agent, as its agent outside the United States where
Bearer Securities may be delivered in exchange for the Temporary
Global Bearer Security or portions thereof. Each beneficial owner
of any portion of the Temporary Global Bearer Security shall be
entitled to take delivery of Bearer Securities only at such
office. Notwithstanding any other provision hereof or of the
Securities, no Security initially represented by the Temporary
Global Bearer Security will be mailed to or otherwise delivered
in connection with its original issuance to any location within
the United States. The Trustee agrees that it will cause the
Paying Agent in London to retain each certificate provided by
EUROCLEAR or CEDEL for a period of four calendar years following
the year in which the certificate is received and not to destroy
or otherwise dispose of any such certificate without first
offering to deliver it to the Company.
Each certificate to be provided by EUROCLEAR and CEDEL shall
be substantially to the following effect or with such changes
therein as shall be approved by the Company and Goldman Sachs
International and be satisfactory to the Trustee:
"CERTIFICATE
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES
DUE APRIL 15, 2006
This is to certify that, based on certificates we have
received from our member organizations substantially in the form
set out in Section 3.11 of the Indenture relating to the above-
captioned Securities, as of the date hereof, U.S.$_____________
principal amount of the above-captioned Securities of Continental
Airlines, Inc. (i) is owned by persons that are not United States
persons (as defined below), (ii) is owned by United States
persons that are (a) foreign branches of United States financial
institutions (as defined in United States Treasury Regulations
Section 1.165-12(c)(1)(v) ("financial institutions")) purchasing
for their own account or for resale or (b) United States persons
who acquired the Securities through foreign branches of United
States financial institutions and who hold the Securities through
such financial institutions on the date hereof (and in the case
of either clause (a) or (b), each financial institution has
agreed for the benefit of Continental Airlines, Inc. to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the
United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder) or (iii) is owned by financial
institutions for purposes of resale during the restricted period
(as defined in United States Treasury Regulations Section 1.163-
5(c)(2)(i)(D)(7)). Financial institutions described in clause
(iii) of the preceding sentence (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired
the Securities for purposes of resale directly or indirectly to
United States persons or to persons within the United States or
its possessions.
As used in this Certificate, "United States person" is a
person that is, for United States federal income tax purposes,
(a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or organized in
or under the laws of the United States or any political
subdivision thereof, or (c) an estate or trust the income of
which is subject to United States Federal income taxation
regardless of the source; "United States" means the United States
of America (including the States and the District of Columbia);
and its "possessions" include Puerto Rico, U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
We further certify that (i) we are not making available
herewith for exchange any portion of the Temporary Global Bearer
Security excepted in such certificates and (ii) as of the date
hereof, we have not received any notification from any of our
member organizations to the effect that the statements made by
such member organizations with respect to any portion of the part
submitted herewith for exchange are no longer true and cannot be
relied upon as of the date hereof.
We understand that this certificate is required in
connection with certain tax laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceedings. We
agree to retain each statement provided by a member organization
for a period of four calendar years following the year in which
the statement is received.
Dated: ________, 19__*
*To be dated no
earlier than the
Exchange Date.
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, AS
OPERATOR OF THE EUROCLEAR
CLEARANCE SYSTEM]
[CEDEL BANK, SOCIETE
ANONYME]
By
__________________________"
Each certificate received by EUROCLEAR and CEDEL from
Persons appearing in their records as Persons entitled to a
portion of the Temporary Global Bearer Security shall be
substantially to the effect set forth in Section 3.11.
Upon any such exchange of a portion of the Temporary Global
Bearer Security for Bearer Securities, the Temporary Global
Bearer Security shall be endorsed to reflect the reduction of the
principal amount evidenced thereby. Until so exchanged in full,
the Temporary Global Bearer Security shall in all respects be
entitled to the same benefits under, and subject to the same
terms and conditions of, this Indenture as Bearer Securities
authenticated and delivered hereunder, except that none of
EUROCLEAR, CEDEL or the beneficial owners of the Temporary Global
Bearer Security shall be entitled to receive payment of interest
or other payments thereon or to convert the Temporary Global
Bearer Security, or any portion thereof, into Class B Common
Stock of the Company or any other security, cash or other
property.
Bearer Securities shall be exchangeable for Registered
Securities as provided in Section 3.5.
(b) The Registered Securities shall be issued initially in
the form of a Restricted Global Registered Security. Unless an
event described in the next paragraph shall have occurred,
Registered Securities issued in exchange for Bearer Securities as
provided in Section 3.5 shall be issued in the form of interests
in a Global Registered Security. The Depositary or its nominee
shall be the Holder of the Global Registered Securities, and
owners of beneficial interests in the Securities represented by
the Global Registered Securities shall hold such interests
pursuant to the procedures and practices of the Depositary. Any
such owner's beneficial ownership of any such Securities will be
shown only on, and the transfer of such ownership interest shall
be effected only through, records maintained by the Depositary or
its nominee. Transfer of interests in the Global Registered
Securities shall be subject to the provisions of Section 3.5(b).
Unless (A) the Depositary notifies the Company that it is
unwilling or unable to continue as depositary for a Global
Registered Security or ceases to be a "Clearing Agency"
registered under the Exchange Act or announces an intention
permanently to cease business or does in fact do so, or (B) an
Event of Default has occurred and is continuing with respect to a
Global Registered Security, owners of beneficial interests in a
Global Registered Security will not be entitled to have any
portions of such Global Registered Security registered in their
names, will not receive or be entitled to receive physical
delivery of Registered Securities in definitive form and will not
be considered the owners or holders of the Global Registered
Security (or any Securities represented thereby). Any Global
Registered Security exchanged upon the occurrence of an event
described in Clause (A) of the preceding sentence shall be so
exchanged in whole and not in part and any Global Registered
Security exchanged upon the occurrence of an event described in
Clause (B) of the preceding sentence may be exchanged in whole or
from time to time in part as directed by the Depositary. Any
Registered Security issued in exchange for a Global Registered
Security or any portion thereof shall be a Global Registered
Security, provided that any such Registered Security so issued
that is registered in the name of a Person other than the
Depositary or a nominee thereof shall not be a Global Registered
Security.
Registered Securities issued in exchange for a Global
Registered Security or any portion thereof pursuant to the
preceding paragraph above shall be issued in denominations of
U.S.$1,000 and integral multiples thereof in definitive, fully
registered form, without interest coupons, shall have an
aggregate principal amount equal to that of such Global
Registered Security or portion thereof to be so exchanged, shall
be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear
any legends required hereunder. Any Global Registered Security to
be exchanged in whole shall be surrendered by the Depositary to
the Trustee, as Security Registrar. With regard to any Global
Registered Security to be exchanged in part, either such Global
Registered Security shall be so surrendered for exchange or, if
the Trustee is acting as custodian for the Depositary or its
nominee with respect to such Global Registered Security, the
principal amount thereof shall be reduced, by an amount equal to
the portion thereof to be so exchanged, by means of an
appropriate adjustment made on the records of the Trustee. Upon
any such surrender or adjustment, the Trustee shall authenticate
and deliver the Registered Security issuable on such exchange to
or upon the order of the Depositary or an authorized
representative thereof. In the event of the occurrence of any of
the events specified in the preceding paragraph, the Company will
promptly make available to the Trustee a reasonable supply of
certificated Registered Securities in definitive form.
Except as otherwise set forth in the Indenture or a Global
Registered Security, owners of beneficial interests in the
Securities evidenced by a Global Registered Security will not be
entitled to any rights under the Indenture with respect to such
Global Registered Security, and the Depositary or its nominee may
be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the owner and Holder of such Global
Registered Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the
Trustee or any such agent from giving effect to any written
certification, proxy or other authorization furnished by the
Depositary or its nominee or impair, as between the Depositary or
its nominee and such owners of beneficial interests, the
operation of customary practices governing the exercise of the
rights of the Depositary or its nominee as Holder of any
Security.
The Depositary shall be a clearing agency registered under
the Exchange Act. Initially, any and all Global Registered
Securities issued hereunder shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Trustee, as custodian for Cede
& Co.
SECTION 3.5. Registration, Registration of Transfer and
Exchange; Restrictions on Transfer.
(a) The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency of the Company
designated pursuant to Section 10.2 being herein sometimes
collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Registered
Securities and of transfers of Registered Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of
registering Registered Securities and transfers and exchanges of
Registered Securities as herein provided.
Upon surrender for registration of transfer of any
Registered Security at an office or agency of the Company
designated pursuant to Section 10.2 for such purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more
new Registered Securities of any authorized denominations and of
a like aggregate principal amount and bearing such restrictive
legends as may be required by this Indenture (including Section
2.6).
At the option of the Holder, and subject to the other
provisions of this Section 3.5, Registered Securities may be
exchanged for other Registered Securities of any authorized
denomination and of a like aggregate principal amount, upon
surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any Registered Securities are so
surrendered for exchange, and subject to the other provisions of
this Section 3.5, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive. Every Registered
Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
Bearer Securities may not be issued in exchange for
Registered Securities.
At the option of the Holder, upon written request, Bearer
Securities may be exchanged at any time after the Exchange Date
for Registered Securities of any authorized denomination and of a
like aggregate principal amount, upon surrender of the Bearer
Securities to be exchanged at any office or agency outside the
United States designated pursuant to Section 10.2, with all
unmatured coupons and all matured coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to
produce any such unmatured coupon or coupons or matured coupon or
coupons in default, such exchange may be effected if such Bearer
Security is accompanied by payment in funds acceptable to the
Company in an amount equal to the face amount of such missing
coupon or coupons or the surrender of such missing coupon or
coupons may be waived by the Company, the Trustee, and the Paying
Agent in London, if there is furnished to them such security or
indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent outside the United States any
such missing coupon in respect of which such a payment shall have
been made, such Holder shall be entitled to receive the amount of
such payment; provided, however, that, except as otherwise
provided in the form of Bearer Security set forth in Section
2.2(a), interest represented by coupons shall be payable only
upon presentation and surrender of such coupons at an office or
agency of the Company outside the United States. Notwithstanding
the foregoing, in case a Bearer Security is surrendered in
exchange for a Registered Security at an office or agency of the
Company outside the United States designated pursuant to Section
10.2 after the close of business at such office or agency on (i)
any Regular Record Date and before the opening of business at
such office or agency on the next succeeding Interest Payment
Date, or (ii) any Special Record Date and before the opening of
business at such office or agency on the related date for payment
of Defaulted Interest, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date or
proposed date of payment, as the case may be, and interest or
Defaulted Interest, as the case may be, will not be payable on
such Interest Payment Date or such related date for payment of
Defaulted Interest, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
Whenever any Bearer Securities are so surrendered for
exchange, subject to the other provisions of this Section 3.5,
the Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Securities which the Holder making the
exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and subject to the other
provisions of this Section 3.5, entitled to the same benefits
under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 8.5, 11.8, 12.2 or 14.2(f)
(other than, in the case of Registered Securities, where the
shares of Class B Common Stock are to be issued or delivered in a
name other than that of the Holder of the Registered Security)
not involving any transfer and other than any stamp and other
duties, if any, which may be imposed in connection with any such
transfer or exchange by the United States or the United Kingdom
or any political subdivision thereof or therein, which shall be
paid by the Company.
In the event of a redemption of the Securities in part
(other than, in the case of Registered Securities, a redemption
pursuant to the fourth paragraph on the reverse of the Form of
Bearer Security set forth in Section 2.2(a)), neither the Company
nor the Security Registrar will be required (a) to register the
transfer of or exchange Registered Securities or to exchange
Bearer Securities for Registered Securities for a period of 15
days immediately preceding the date notice is given identifying
the serial numbers of the Securities called for such redemption,
(b) to register the transfer of or exchange any Registered
Security, or portion thereof, called for redemption, or (c) to
exchange any Bearer Security called for redemption; provided,
however, that a Bearer Security called for redemption may be
exchanged for a Registered Security which is simultaneously
surrendered to the Registrar or Transfer Agent making such
exchange with written instructions for conversion consistent with
the provisions described in Sections 2.5 and 12.2.
(b) Beneficial ownership of every Restricted Security shall
be subject to the restrictions on transfer provided in the
legends required to be set forth on the face of each Restricted
Security pursuant to Section 2.6, unless such restrictions on
transfer shall be waived by the written consent of the Company,
or terminated in accordance with this Section 3.5(b) or Section
3.5(c). The Holder of each Restricted Security, by such Holder's
acceptance thereof, agrees to be bound by such restrictions on
transfer.
The restrictions imposed by this Section 3.5 and Section 2.6
upon the transferability of any particular Restricted Security
shall cease and terminate upon delivery by the Company to the
Trustee of an Officers' Certificate stating that such Restricted
Security has been sold pursuant to an effective registration
statement under the Securities Act or transferred in compliance
with Rule 144 under the Securities Act (or any successor
provision thereto). Any Restricted Security as to which the
Company has delivered to the Trustee an Officers' Certificate
that such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon
surrender of such Restricted Security for exchange to the
Security Registrar or any Transfer Agent in accordance with the
provisions of this Section 3.5, be exchanged for a new Registered
Security, of like tenor and aggregate principal amount, which
shall not bear the restrictive legends required by Section 2.6.
The Company shall inform the Trustee in writing of the effective
date of any registration statement registering the Securities
under the Securities Act. The Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the aforementioned registration statement.
As used in the preceding two paragraphs of this Section 3.5,
the term "transfer" encompasses any sale, pledge, transfer or
other disposition of any Restricted Security.
(c) The restrictions imposed by this Section 3.5 and Section
2.6 upon transferability of any particular Restricted Security
shall cease and terminate upon the surrender for registration of
transfer, or for exchange where the securities issuable upon such
exchange are to be registered in a name other than that of the
undersigned Holder (each such transaction being a "transfer"), of
such Restricted Security to the Security Registrar or any
Transfer Agent, accompanied by a certificate with respect to such
transfer, dated the date of such surrender and signed by the
Holder of such Restricted Security, in substantially the form set
forth below:
"CERTIFICATE
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES
DUE APRIL 15, 2006
With respect to U.S.$______________ principal amount of the
above-captioned securities surrendered on the date hereof (the
"Surrendered Securities") for registration of transfer the
undersigned Holder certifies that the transfer of Surrendered
Securities associated with such registration of transfer complied
with Rule 904 under the United States Securities Act of 1933, as
amended.
[Name of Holder]
_______________________
Dated: _________________, __*"
* To be dated the date
of presentation or
surrender
Any Restricted Security as to which the Holder thereof has
delivered to the Security Registrar or any Transfer Agent a
certificate in such form may, upon such surrender, be exchanged
for a new Registered Security of like tenor and aggregate
principal amount, which shall not bear the legend required by
Section 2.6, and which shall not thereafter be deemed to be a
Restricted Security for purposes of this Indenture.
In any circumstances where the Trustee would be authorized
by this Section 3.5(c) to authenticate an unlegended Registered
Security upon transfer or exchange of a Restricted Global
Security, the Trustee shall be authorized to instruct The
Depository Trust Company, in accordance with the procedures
thereof (as in effect from time to time), to reduce the principal
amount of any Security in global form representing Restricted
Securities (a "Restricted Global Registered Security"), and to
increase the principal amount of any Security in global form
representing Registered Securities which are not Restricted
Securities (an "Unrestricted Global Registered Security"), by the
principal amount of the beneficial interest in such Restricted
Global Registered Security to be so transferred or exchanged, and
to credit or cause to be credited the account of the transferee a
beneficial interest in such Unrestricted Global Registered
Security having a principal amount equal to the amount by which
the principal amount of the Restricted Global Registered Security
was reduced upon such transfer or exchange.
(d) Neither the Trustee, the Paying Agent in London nor any
of their agents shall (1) have any duty to monitor compliance
with or with respect to any federal or state or other securities
or tax laws or (2) have any duty to obtain documentation on any
transfers or exchanges other than as specifically required
hereunder.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities
and Coupons.
If any mutilated Security or a Security with a mutilated
coupon appertaining to it is surrendered to the Trustee or to a
Transfer Agent outside the United States, the Company shall
execute, the Trustee or an Authenticating Agent shall
authenticate and the Trustee or Transfer Agent shall deliver in
exchange therefor a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding,
with coupons corresponding to the coupons, if any, appertaining
to the surrendered Security; provided, however, that any Bearer
Security or any coupon shall be delivered only outside the United
States and, so long as the Securities are listed on the
Luxembourg Stock Exchange and the rules of the Luxembourg Stock
Exchange so require, such delivery shall occur at the Transfer
Agent in Luxembourg; and provided, further, that all Bearer
Securities shall be delivered and received in person.
If there be delivered to the Company and either to the
Trustee or to a Transfer Agent outside the United States:
(1) evidence to their satisfaction of the
destruction, loss or theft of any Security or coupon,
and
(2) such security or indemnity as may be
satisfactory to the Company and the Trustee and such
Transfer Agent to save each of them and any agent of
either of them harmless,
then, in the absence of actual notice to the Company, the Trustee
or the Transfer Agent that such Security or coupon has been
acquired by a bona fide purchaser, the Company shall execute, the
Trustee or an Authenticating Agent shall authenticate and the
Trustee or Transfer Agent shall deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the
Security to which such coupon appertains (together with all
appurtenant coupons not destroyed, lost or stolen), a new
Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding, with coupons corresponding to
the coupons, if any, appertaining to such destroyed, lost or
stolen Security or appertaining to the Security to which such
destroyed, lost or stolen coupon appertains; provided, however,
that any Bearer Security or any coupon shall be delivered only
outside the United States and, so long as the Securities are
listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange so require, such delivery shall occur
at the Transfer Agent in Luxembourg; and provided, further, that
all Bearer Securities shall be delivered and received in person.
In case any such mutilated, destroyed, lost or stolen
Security or coupon has become or is about to become due and
payable, the Company in its discretion, but subject to any
conversion rights, may, instead of issuing a new Security, pay
such Security or coupon, upon satisfaction of the conditions set
forth in the preceding paragraph; provided, however, that, except
as otherwise provided in the form of Securities set forth in
Section 2.2(a), the principal of and interest on Bearer
Securities shall be payable only at an office or agency outside
the United States and, in the case of interest, only upon
presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section
3.6, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto (other than any stamp and other duties, if any,
which may be imposed in connection therewith by the United States
or the United Kingdom or any political subdivision thereof or
therein, which shall be paid by the Company) and any other
expenses (including the fees and expenses of the Trustee, the
Paying Agent in London and the Transfer Agent) connected
therewith.
Every new Security with its coupons, if any, issued pursuant
to this Section 3.6 in lieu of any mutilated, destroyed, lost or
stolen Security or in exchange for a Security to which a
mutilated, destroyed, lost or stolen coupon appertains, shall
constitute an original additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen
Security and its coupons, if any, or the mutilated, destroyed,
lost or stolen coupon shall be at any time enforceable by anyone,
and such new Security and coupons, if any, shall be entitled to
all the benefits of this Indenture equally and proportionately
with any and all other Securities and coupons duly issued
hereunder.
The provisions of this Section 3.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies of
any Holder with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 3.7. Payment of Interest, Interest Rights Preserved.
Interest on any Registered Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest. In case a
Bearer Security is surrendered in exchange for a Registered
Security at an office or agency of the Company designated
pursuant to Section 10.2 for the purpose after the close of
business (at such office or agency) on any Regular Record Date
and before the opening of business (at such office or agency) on
the next succeeding Interest Payment Date, such Bearer Security
shall be surrendered without the coupon relating to such Interest
Payment Date and interest will not be payable on such Interest
Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to
the Holder of such coupon when due.
Interest on the Temporary Global Bearer Security shall be
payable only after the issuance of the Bearer Securities for
which it is exchangeable as provided in the form of Temporary
Global Bearer Security set forth in Section 2.2(c).
Any interest on any Registered Security which is payable,
but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Registered Securities (or their respective Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered
Security, the date of the proposed payment and the Special
Record Date, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. The Special Record Date
for the payment of such Defaulted Interest shall be not more
than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed
payment. The Trustee, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of
Registered Securities at such Holder's address as it appears
in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Registered Securities (or
their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
In case a Bearer Security is surrendered in exchange for a
Registered Security at an office or agency of the Company
designated pursuant to Section 10.2 for such purpose after
the close of business (at such office or agency) on any
Special Record Date and before the opening of business (at
such office or agency) on the related proposed date for
payment of Defaulted Interest, such Bearer Security shall be
surrendered outside the United States without the coupon
relating to such proposed date of payment and Defaulted
Interest will not be payable on such proposed date of
payment in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only
to the Holder of such coupon upon surrender thereof at an
office or agency outside the United States designated
pursuant to Section 10.2 hereof.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 3.5, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
In the case of any Registered Security which is converted
after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Registered
Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding
such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose
name such Registered Security (or one or more Predecessor
Securities) is registered at the close of business on such
Regular Record Date. Except as otherwise expressly provided in
the immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
SECTION 3.8. Persons Deemed Owners.
Title to any Bearer Security or coupon shall pass by
delivery. The Company, the Trustee, the Paying Agent in London
and any other agent of the Company or the Trustee may treat the
bearer of any Bearer Security or the Temporary Global Bearer
Security and the bearer of any coupon as the absolute owner of
such Security or coupon, as the case may be, for the purpose of
receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupon be
overdue, and neither the Company, the Trustee, the Paying Agent
in London nor any other agent of the Company or the Trustee shall
be affected by notice to the contrary. Prior to due presentment
of a Registered Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the
purpose of receiving payment of principal of, premium, if any,
and (subject to Sections 3.5 and 3.7) interest on such Security
and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 3.9. Cancellation.
All Securities and coupons surrendered for payment,
redemption, repurchase, registration of transfer or exchange or
conversion shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee. All Bearer Securities and
coupons so surrendered shall be immediately canceled by such
Person upon receipt prior to being forwarded to the Trustee. All
Registered Securities so delivered to the Trustee shall be
canceled promptly by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 3.9. The Trustee shall
destroy all canceled Securities and coupons in accordance with
applicable law and its customary practices in effect from time to
time.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of
a 360-day year of twelve 30-day months.
SECTION 3.11. Form of Certification.
Whenever any provision of this Indenture or the form of
Temporary Global Bearer Security contemplates that certification
be given by a beneficial owner of a portion of the Temporary
Global Bearer Security, such certification shall be provided
substantially in the form of the following certificate, with only
such changes as shall be approved by the Company and Goldman
Sachs International:
"CERTIFICATE
CONTINENTAL AIRLINES, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES
DUE APRIL 15, 2006
This is to certify that as of the date hereof and except as
provided in the fourth paragraph hereof, the above-captioned
Securities held by you for our account (i) are owned by a person
that is not a United States person (as defined below), (ii) are
owned by a United States person that is (A) a foreign branch of a
United States financial institution (as defined in United States
Treasury Regulations Section 1.165-12(c)(1)(v) (a "financial
institution")) purchasing for its own account or for resale or
(B) a United States person who acquired the Securities through a
foreign branch of a United States financial institution and who
holds the Securities through such financial institution on the
date hereof (and in the case of either clause (A) or (B), the
financial institution hereby agrees for the benefit of
Continental Airlines, Inc. to comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the United States Internal
Revenue Code of 1986, as amended, and the regulations thereunder)
or (iii) are owned by a financial institution for purposes of
resale during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In
addition, if we are a financial institution described in clause
(iii) of the preceding sentence (whether or not also described in
clause (i) or (ii)) we certify that we have not acquired the
Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or
its possessions.
As used in this certificate, "United States person" is a
Person that is, for United States federal income tax purposes,
(a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or organized in
or under the laws of the United States or any political
subdivision thereof or (c) an estate or trust the income of which
is subject to United States Federal income taxation regardless of
the source; "United States" means the United States of America
(including the States and the District of Columbia); and its
"possessions" includes Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
We undertake to advise you by telecopy, on or before the
date on which you intend to submit your certification relating to
the above-captioned Securities then appearing in your books as
being held for our account, if the above statement as to
beneficial ownership is not correct on such date as to all such
Securities.
This certificate excepts and does not relate to
U.S.$________ principal amount of the above-captioned Securities
appearing on your books as being held for our account as to which
we are not yet able to certify and as to which we understand that
exchange and delivery of definitive Securities cannot be made
until we are able so to certify.
We understand that this certificate is required in
connection with certain tax regulations in the United States. If
administrative or legal proceedings are commenced or threatened
in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this
certificate or a copy hereof to any interested party in such
proceedings.
Dated: ___________________, 19__* [Name of Account
Holder]
*To be dated on or after
the 15th day before the
Exchange Date.
________________________
(Authorized Signatory)
Name:
Title:"
SECTION 3.12. CUSIP Numbers.
The Company in issuing Registered Securities may use "CUSIP"
numbers (if then generally in use) in addition to serial numbers,
and in issuing Bearer Securities may use "ISIN" numbers (if then
generally in use); if so, the Trustee shall use such "CUSIP" and
"ISIN" numbers in addition to serial numbers in notices of
redemption and repurchase as a convenience to Holders; provided
that any such notice may state that no representation is made as
to the correctness of such CUSIP and ISIN numbers either as
printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on
the serial or other identification numbers printed on the
Securities, and any such redemption or repurchase shall not be
affected by any defect in or omission of such CUSIP or ISIN
numbers.
SECTION 3.13. Notification of Withholding.
The Company shall notify the Trustee in writing of the
necessity, if any, to withhold any amounts from payments to
Holders (and the amount of any such withholding) arising from the
delivery by a Holder of any certificate pursuant to Section 2.5
or 3.11.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of conversion,
or registration of transfer or exchange, or replacement of
Securities herein expressly provided for and any right to receive
Additional Amounts, Bearer Additional Amounts and Liquidated
Damages as provided in the forms of Securities set forth in
Section 2.2 and the Company's obligations to the Trustee pursuant
to Section 6.7), and the Trustee, at the expense of the Company,
shall execute proper instruments in form and substance
satisfactory to the Trustee acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered and all coupons appertaining thereto (other
than (i) Securities and coupons which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 3.6, (ii) coupons
appertaining to Securities called for redemption or
repurchased and maturing after the relevant Redemption
Date or Repurchase Date, as the case may be, whose
surrender has been waived as provided in Section 11.7
and (iii) Securities and coupons for whose payment
money has theretofore been deposited in trust or
segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities and all coupons
appertaining thereto not theretofore delivered to the
Trustee or the Paying Agent in London or its agent for
cancellation (other than Securities or coupons referred
to in clauses (i) through (iii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at
their Stated Maturity within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of clause (i), (ii) or
(iii) above, has deposited or caused to be deposited
with the Trustee as trust funds (immediately available
to the Holders in the case of clause (i)) in trust for
the purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities and coupons
not theretofore delivered to the Trustee for
cancellation, for principal, premium, if any, and
interest (including any applicable Additional Amounts,
Bearer Additional Amounts and Liquidated Damages) to
the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 6.7, the obligations of the Company to any Authenticating
Agent under Section 6.12, the obligation of the Company to pay
Additional Amounts and Bearer Additional Amounts and, if money
shall have been deposited with the Trustee pursuant to clause
(1)(B) of this Section 4.1, the obligations of the Trustee under
Section 4.2 and the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.3, all money deposited with the Trustee pursuant to Section
4.1 shall be held in trust and applied by it, in accordance with
the provisions of the Securities, the coupons and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the
Persons entitled thereto, of the principal, premium, if any, and
interest for whose payment such money has been deposited with the
Trustee.
All moneys deposited with the Trustee pursuant to Section
4.1 (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the
Company upon Company Request.
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of
the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of
Article Thirteen or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative
or governmental body):
(1) default in the payment of any interest (including
any Additional Amounts, Bearer Additional Amounts or
Liquidated Damages) upon any Security when it becomes due
and payable, and continuance of such default for a period of
30 days, whether or not such payment is prohibited by the
subordination provisions of Article 13; or
(2) default in the payment of the principal of or
premium, if any, on any Security at its Maturity, whether or
not such payment is prohibited by the subordination
provisions of Article 13; or
(3) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in the performance or
breach of which is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 10% in
principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(4) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company
or under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the
Company, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in
indebtedness in an amount in excess of U.S.$75,000,000
becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable,
without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a
period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least
10% in principal amount of the Outstanding Securities a
written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause
such default to be cured or waived or such acceleration to
be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of
the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of
the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of
a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or
insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or
similar relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company
in furtherance of any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default occurs and is continuing, then in
every such case the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Securities may declare the
principal of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration
such principal and all accrued interest thereon shall become
immediately due and payable.
At any time after such declaration of acceleration has been
made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter in this Article
Five provided, the Holders of a majority in principal amount of
the Outstanding Securities, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee
a sum sufficient to pay
(A) all overdue interest (including any
Additional Amounts, Bearer Additional Amounts and
Liquidated Damages) on all Securities,
(B) the principal of and premium, if any, on any
Securities which have become due otherwise than by such
declaration of acceleration and any interest thereon at
the rate borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at a rate of
6 3/4% per annum, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default, other than the nonpayment
of the principal of, and any interest on, Securities which
have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 5.13.
No rescission or annulment referred to above shall affect
any subsequent default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest
(including any Additional Amounts, Bearer Additional Amounts
and Liquidated Damages) on any Security when it becomes due
and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of
or premium, if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities and any coupons
appertaining thereto, the whole amount then due and payable on
such Securities and coupons for principal and interest (including
any Additional Amounts, Bearer Additional Amounts and Liquidated
Damages) and interest on any overdue principal and premium, if
any, and on any overdue interest (including any Additional
Amounts, Bearer Additional Amounts and Liquidated Damages), to
the extent permitted by law, at a rate of 6 3/4% per annum, and
in addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the
Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights
and the rights of the Holders of Securities and coupons by such
appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein,
or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or coupons or the
property of the Company or of such other obligor or the creditors
of either, the Trustee (irrespective of whether the principal of,
and any interest on, the Securities shall then be due and payable
as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(1) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in
respect of the Securities and take such other actions,
including participating as a member, voting or otherwise, of
any official committee of creditors appointed in such
matter, and to file such other papers or documents, in each
of the foregoing cases, 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 of the
Holders of Securities and coupons allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or other
property payable or deliverable on any such claim 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 of Securities and
coupons 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 of Securities and coupons, to pay to the
Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section
6.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of a Security or coupon any plan of reorganization,
arrangement, adjustment or composition affecting the Securities
or the coupons or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding; provided,
however, that the Trustee may, on behalf of such Holders, vote
for the election of a trustee in bankruptcy or similar official.
SECTION 5.5. Trustee May Enforce Claims Without
Possession of Securities or Coupons.
All rights of action and claims under this Indenture or the
Securities or coupons may be prosecuted and enforced by the
Trustee without the possession of any of the Securities or
coupons or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities and coupons in
respect of which judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Subject to Article Thirteen, any money collected by the
Trustee pursuant to this Article Five shall be applied in the
following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of
principal, premium, if any, or interest, upon presentation of the
Securities or coupons, or both, as the case may be, and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 6.7;
SECOND: To the payment of the amounts then due and
unpaid for principal, premium, if any, or interest on the
Securities and coupons in respect of which or for the
benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the
amounts due and payable on such Securities and coupons for
principal, premium, if any, and interest, respectively; and
THIRD: Any remaining amounts shall be repaid to the
Company.
SECTION 5.7. Limitation on Suits.
No Holder of any Security or coupon shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the Outstanding Securities;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders, or
to obtain or seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Security or coupon shall have the right, which is
absolute and unconditional, to receive payment of the principal
of, premium, if any, and (subject to Section 3.7) interest on
such Security or payment of such coupon on the respective Stated
Maturities expressed in such Security or coupon (or, in the case
of redemption or repurchase, on the Redemption Date or Repurchase
Date, as the case may be), and to convert such Security in
accordance with Article Twelve, and to institute suit for the
enforcement of any such payment and right to convert, and such
rights shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or coupon 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 of Securities and coupons shall be restored
severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and such
Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or
coupons in the last paragraph of Section 3.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Holders of Securities or coupons 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 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or coupon 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 any
acquiescence therein. Every right and remedy given by this
Article Five or by law to the Trustee or to the Holders of
Securities or coupons may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or (subject to
the limitations contained in this Indenture) by the Holders of
Securities or coupons, as the case may be.
SECTION 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to 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, provided that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders, either (a) through the written consent of not
less than a majority in principal amount of the Outstanding
Securities, or (b) by the adoption of a resolution, at a meeting
of Holders of the Outstanding Securities at which a quorum is
present, by the Holders of at least 66-2/3% in principal amount
of the Outstanding Securities represented at such meeting, may on
behalf of the Holders of all the Securities and coupons waive any
past default hereunder and its consequences, except a default (1)
in the payment of the principal of, premium, if any, or interest
on any Security, or (2) in respect of a covenant or provision
hereof which under Article Eight cannot be modified or amended
without the consent of the Holder of each Outstanding Security
affected.
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 impair
any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security or coupon by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, 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, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 5.14 shall not apply
to any suit instituted by the Company, to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted
by any Holder of any Security or coupon for the enforcement of
the payment of the principal of, premium, if any, or interest on
any Security or the payment of any coupon on or after the
respective Stated Maturity or Maturities expressed in such
Security or coupon (or, in the case of redemption or repurchase,
on or after the Redemption Date or Repurchase Date, as the case
may be) or for the enforcement of the right to convert any
Security in accordance with Article Twelve.
SECTION 5.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but
not to verify the contents thereof.
(b) In case an Event of Default has occurred and is
continuing of which a responsible officer of the Trustee has
actual knowledge, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that
(1) this paragraph (c) shall not be construed to limit
the effect of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
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; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein 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 Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder
as to which the Trustee has received written notice, the Trustee
shall give to all Holders of Securities, in the manner provided
in Section 1.6, notice of such default, unless such default shall
have been cured or waived; 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 or coupon, 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 or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest
of the Holders; and provided, further, that in the case of any
default of the character specified in Section 5.1(3), no such
notice to Holders of Securities shall be given until at least 30
days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of
Default.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
Officers' Certificate, other certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon, 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 party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request
or Company Order and any resolution of the Board of
Directors shall be sufficiently evidenced by a Board
Resolution;
(3) 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;
(4) the Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
(5) 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
of Securities or coupons pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or
other paper or document, but the Trustee 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;
(7) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(8) the permissive right of the Trustee to take or
refrain from taking any actions enumerated in this Indenture
shall not be construed as a duty and the Trustee shall not
be answerable in such actions other than for its own
negligence or willful misconduct; and
(9) the Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it in good faith
and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the
Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities (except
the Trustee's certificates of authentication) and in the coupons
shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of
this Indenture, of the Securities or coupons, or of the Class B
Common Stock issuable upon the conversion of the Securities. The
Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities, Act as Trustee Under Other
Indentures.
The Trustee, any Authenticating Agent, any Paying Agent, any
Conversion Agent or any other agent of the Company or the
Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and coupons and may otherwise deal
with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Conversion Agent
or such other agent.
The Trustee may become and act as trustee under other
indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are
outstanding in the same manner as if it were not Trustee
hereunder.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing
with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from
time to time agree in writing for all services rendered
by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its
agents and counsel), except any such expense,
disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee (and its directors,
officers, employees and agents) for, and to hold it
harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or
administration of this trust, including the costs,
expenses and reasonable attorneys' fees of defending
itself against any claim or liability in connection
with the exercise or performance of any of its powers
or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(5)
or Section 5.1(6), the expenses (including the reasonable charges
of its counsel) and the compensation for the services are
intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other
similar law.
Any Paying Agent or Authenticating Agent appointed hereunder
shall be entitled to the benefits of Section 6.7(3) as if the
indemnity set forth therefor were specifically afforded to such
Paying Agent or Authenticating Agent.
The provisions of this Section shall survive the termination
of this Indenture or the earlier resignation or removal of the
Trustee, any Paying Agent or any Authenticating Agent, as the
case may be.
SECTION 6.8. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
be a corporation organized and doing business under the laws of
the United States of America, any State thereof, or the District
of Columbia, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least
U.S.$50,000,000, subject to supervision or examination by federal
or state authority, in good standing and having an established
place of business in the Borough of Manhattan, The City of New
York, and the City of London, England. If such corporation
publishes reports of condition at least annually, pursuant to law
or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article and a successor
shall be appointed pursuant to Section 6.9.
SECTION 6.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 6.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by
a successor Trustee required by Section 6.10 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company. If the
instrument of acceptance by a successor Trustee required by
Section 6.10 shall not have been delivered to the Trustee within
30 days after the giving of such notice of removal, the removed
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under
Section 6.8 and shall fail to resign after written request
therefor by the Company or by any Holder of a Security who
has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 5.14, any Holder
of a Security who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee and shall comply with the
applicable requirements of this Section and Section 6.10. If,
within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.10, become the
successor Trustee and supersede the successor Trustee appointed
by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders of Securities and
accepted appointment in the manner required by this Section and
Section 6.10, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor
Trustee to all Holders of Securities in the manner provided in
Section 1.6. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
SECTION 6.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver
an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers
and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be
eligible under this Article.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver
the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 6.12. Authenticating Agents.
The Paying Agent in London may authenticate the Temporary
Global Bearer Security and Bearer Securities, and Bankers Trust
Luxembourg S.A. may authenticate Bearer Securities, in each case
as the Trustee's Authenticating Agent. The Trustee may, with the
written consent of the Company, appoint an additional
Authenticating Agent or Agents acceptable to the Company with
respect to the Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon
exchange or substitution pursuant to this Indenture.
Securities authenticated by an Authenticating Agent shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee
hereunder, and every reference in this Indenture to the
authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication shall be deemed to
include authentication and delivery on behalf of the Trustee by
an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be subject to acceptance by the
Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America,
any State thereof, the District of Columbia, England and Wales or
Luxembourg, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or
other fiscal authority. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of
this Section 6.12, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this
Section 6.12.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section 6.12, without the
execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The
Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, the Trustee
may appoint a successor Authenticating Agent which shall be
subject to acceptance by the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section
6.12.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section 6.12.
If an Authenticating Agent is appointed with respect to the
Securities pursuant to this Section 6.12, the Securities may have
endorsed thereon, in addition to or in lieu of the Trustee's
certification of authentication, an alternative certificate of
authentication in the following form:
This is one of the Securities referred to in the within-
mentioned Indenture.
Dated: Bankers Trust Company
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ___________________________
Authorized Signatory
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge into any
other Person or convey, transfer or lease all its properties and
assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge
into the Company or convey, transfer or lease all or
substantially all of its properties and assets to the Company,
unless:
(1) in case the Company shall consolidate with or
merge into another Person or convey, transfer or lease its
properties and assets substantially as an entirety to any
Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer, or which leases the properties and
assets of the Company substantially as an entirety shall be
a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or
the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of, premium, if any, and
interest (including Additional Amounts and Bearer Additional
Amounts, if any, payable pursuant to Section 10.4 and
Liquidated Damages, if any, payable pursuant to Section
10.12) on all of the Securities and coupons, as applicable,
and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Article Twelve;
(2) immediately after giving effect to such
transaction, no Event of Default, and no event that, after
notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing; and
(3) the Company has delivered (except in the case of
the merger of any Person into the Company where the Class B
Common Stock is not converted into or exchanged for the
right to receive cash, property or securities, or the
conveyance, transfer or lease by any Person of its
properties and assets substantially as an entirety to the
Company) to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating
to such transaction have been complied with, together with
any documents required under Section 8.3.
SECTION 7.2. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or
lease of all or substantially all the properties and assets of
the Company in accordance with Section 7.1, the successor Person
formed by such consolidation or into which the Company is merged
or to which such conveyance, transfer or lease 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, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and
covenants under this Indenture, the Securities and the coupons,
if any.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of Holders
of Securities or Coupons.
Without the consent of any Holders of Securities or coupons,
the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto for any of the following
purposes:
(1) to evidence the succession of another Person to
the Company and the assumption by any such successor of the
covenants and obligations of the Company herein and in the
Securities and coupons as permitted by this Indenture; or
(2) to add to the covenants of the Company for the
benefit of the Holders of Securities or coupons, or to
surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities; or
(4) to permit Registered Securities to be exchanged
for Bearer Securities or to remove or relax the restrictions
on payment of principal, premium, if any, or interest in
respect of Bearer Securities in the United States, in each
case to the extent then permitted under the Code and
applicable regulations of the United States Treasury
Department; provided, however, that no adverse consequences
would result to any Holder; or
(5) to make provision with respect to the conversion
rights of Holders of Securities pursuant to Section 12.11;
or
(6) to cure any ambiguity, to correct or supplement
any provision herein which may be inconsistent with any
other provision herein or which is otherwise defective, or
to make any other provisions with respect to matters or
questions arising under this Indenture as the Company and
the Trustee may deem necessary or desirable, provided, such
action pursuant to this clause (6) shall not adversely
affect the interests of the Holders of Securities or
coupons.
Upon Company Request, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and
subject to and upon receipt by the Trustee of the documents
described in Section 8.3 hereof, the Trustee shall join with the
Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be
therein contained.
SECTION 8.2. Supplemental Indentures with Consent of Holders of
Securities.
With either (a) the written consent of the Holders of not
less than a majority in principal amount of the Outstanding
Securities, by the Act of said Holders delivered to the Company
and the Trustee, or (b) by the adoption of a resolution, at a
meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in principal amount
of the Outstanding Securities represented at such meeting, the
Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities
or coupons under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent or affirmative
vote of the Holder of each Outstanding Security or coupon
affected thereby,
(1) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or coupon
appertaining thereto, or reduce the principal amount or the
rate of interest payable thereon or any premium payable upon
redemption or mandatory repurchase thereof, or change the
obligation of the Company to pay Additional Amounts and any
Bearer Additional Amounts pursuant to Section 10.4 in a
manner adverse to the Holders, or change the Place of
Payment or coin or currency in which any Security or the
interest or any premium thereon or any other amount in
respect thereof is payable, or impair the right to institute
suit for the enforcement of any payment in respect of any
Security or coupon on or after the Stated Maturity thereof
(or, in the case of redemption or any repurchase, on or
after the Redemption Date or Repurchase Date, as the case
may be) or, except as permitted by Section 12.11, adversely
affect the right to convert any Security as provided in
Article Twelve, or modify the provisions of this Indenture
with respect to the subordination of the Securities in a
manner adverse to the Holders of Securities or coupons, or
(2) reduce the requirements of Section 9.4 for quorum
or voting, or reduce the percentage in principal amount of
the Outstanding Securities 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 this Indenture or certain
defaults hereunder and their consequences) provided for in
this Indenture, or
(3) modify the obligation of the Company to maintain
an office or agency in the Borough of Manhattan, The City of
New York, and in a city in a Western European country (or
Luxembourg in particular if so required) pursuant to Section
10.2, or
(4) modify any of the provisions of this Section or
Section 5.13 or 10.13, except to increase any percentage
contained herein or therein 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
(5) modify the provisions of Article Fourteen in a
manner adverse to the Holders; or
(6) modify any of the provisions of Section 10.10,
10.11 or 10.12.
It shall not be necessary for any Act of Holders of
Securities under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient
if such Act shall approve the substance thereof.
SECTION 8.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to
Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this
Indenture, and that such supplemental indenture has been duly
authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee
may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 8.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
and of any coupons appertaining thereto shall be bound thereby.
SECTION 8.5. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new
Securities so modified as to conform, in the opinion of the
Company and the Trustee, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
SECTION 8.6. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of
Section 8.2, the Company shall give notice to all Holders of
Securities of such fact, setting forth in general terms the
substance of such supplemental indenture, in the manner provided
in Section 1.6. Any failure of the Company to give such notice,
or any defect therein, shall not in any way impair or affect the
validity of any such supplemental indenture.
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time
and from time to time pursuant to this Article to make, give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
made, given or taken by Holders of Securities.
SECTION 9.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders
of Securities for any purpose specified in Section 9.1, to be
held at such time and at such place in the Borough of Manhattan,
The City of New York, or in the City of London, England, as the
Trustee shall determine. Notice of every meeting of Holders of
Securities, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 1.6,
not less than 21 nor more than 180 days prior to the date fixed
for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of
the Outstanding Securities shall have requested the Trustee to
call a meeting of the Holders of Securities for any purpose
specified in Section 9.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have made the first publication of the
notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of
Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The
City of New York, or in the City of London, England, for such
meeting and may call such meeting for such purposes by giving
notice thereof as provided in paragraph (a) of this Section.
SECTION 9.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of
Securities, a Person shall be (a) a Holder of one or more
Outstanding Securities, or (b) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any
meeting of Holders shall be the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its
counsel.
SECTION 9.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount
of the Outstanding Securities shall constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for
any such meeting, the meeting shall, if convened at the request
of Holders of Securities, be dissolved. In any other case, the
meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further
adjourned for a period not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this
sentence). Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 9.2(a), except that such
notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the principal amount of the
Outstanding Securities which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote
25% in principal amount of the Outstanding Securities at the time
shall constitute a quorum for the taking of any action set forth
in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any resolution and all
matters (except as limited by the proviso to Section 8.2) shall
be effectively passed and decided if passed or decided by the
Persons entitled to vote not less than 66-2/3% in principal
amount of Outstanding Securities represented and entitled to vote
at such meeting.
Any resolution passed or decisions taken at any meeting of
Holders of Securities duly held in accordance with this Section
shall be binding on all the Holders of Securities and coupons,
whether or not present or represented at the meeting. The Trustee
shall, in the name and at the expense of the Company, notify all
the Holders of Securities of any such resolutions or decisions
pursuant to Section 1.6.
SECTION 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities in regard to
proof of the holding of Securities and of the appointment of
proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any
proxy shall be proved in the manner specified in Section 1.4 or
by having the signature of the Person executing the proxy
witnessed or certified by any officer authorized by Section
1.4(c) to certify to the holding of Bearer Securities.
(b) The Trustee shall, by an instrument in writing, appoint
a temporary chairman (which may be the Trustee) of the meeting,
unless the meeting shall have been called by the Company or by
Holders of Securities as provided in Section 9.2(b), in which
case the Company or the Holders of Securities calling the
meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in principal amount of the
Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy
shall be entitled to one vote for each U.S.$1,000 principal
amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a
Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called
pursuant to Section 9.2 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a
majority in principal amount of the Outstanding Securities
represented at the meeting, and the meeting may be held as so
adjourned without further notice.
SECTION 9.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of
Holders of Securities shall be by written ballots on which shall
be subscribed the signatures of the Holders of Securities or of
their representatives by proxy and the principal amounts at
Stated Maturity and serial numbers of the Outstanding Securities
held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all
votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of
each meeting of Holders of Securities shall be prepared by the
secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more
Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as
provided in Section 9.2 and, if applicable, Section 9.4. Each
copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy
shall be delivered to the Company and another to the Trustee to
be preserved by the Trustee, the latter to have attached thereto
the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein
stated.
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and
punctually pay the principal of and premium, if any, and interest
on the Securities in accordance with the terms of the Securities,
the coupons appertaining thereto and this Indenture. The interest
due on the Bearer Securities on or before Maturity, other than
Additional Amounts and Bearer Additional Amounts payable as
provided in Section 10.4 in respect of principal of such a
Security, shall be payable only upon presentation and surrender
of the several coupons for such interest installments as are
evidenced thereby as they severally mature. The Company will
deposit or cause to be deposited with the Trustee, one Business
Day prior to the Stated Maturity of any Bearer Security or one
Business Day prior to the due date for any installment of
interest thereon and by noon Eastern Standard Time on the Stated
Maturity of any Registered Security or on the due date for any
installment of interest thereon, all payments so due, which
payments shall be in immediately available funds on the date of
such Stated Maturity or due date, as the case may be.
SECTION 10.2. Maintenance of Offices or Agencies.
The Company hereby appoints (a) the Corporate Trust Office
of the Trustee as its agent in the Borough of Manhattan, The City
of New York, where Registered Securities may be presented or
surrendered for payment, where Bearer Securities and coupons may
be presented or surrendered for payment in the circumstances
described below (and not otherwise), where Registered Securities
may be surrendered for registration of transfer or exchange,
where Registered Securities may be surrendered for conversion,
where Bearer Securities may be surrendered for conversion in the
circumstances described below (and not otherwise) and where
notices and demands to or upon the Company in respect of the
Securities and coupons and this Indenture may be served, and (b)
(i) the office of Bankers Trust Company, 1 Appold Street,
Broadgate, London EC2A 2HE, England, (ii) the office of Bankers
Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450
Luxembourg, Grand Duchy of Luxembourg and (iii) the office of
Swiss Bank Corporation, Paradeplatz 6, CH-8010 Zurich,
Switzerland, as its agents outside of the United States where,
subject to any applicable laws or regulations, Bearer Securities
and coupons may be presented and surrendered for payment, where,
subject to any applicable laws and regulations, Registered
Securities may be surrendered for payment, where Registered
Securities may be surrendered for registration of transfer or
exchange, where Bearer Securities may be presented for exchange,
and where Securities may be surrendered for conversion. Payment
of principal of, premium, if any, or interest on Bearer
Securities, including any Additional Amounts and Bearer
Additional Amounts payable on Bearer Securities pursuant to
Section 10.4, may be made at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount of such principal,
interest, Additional Amounts and Bearer Additional Amounts at all
offices outside the United States maintained for such purpose by
the Company in accordance with this Indenture is illegal or
effectively precluded by exchange controls or other similar
restrictions on the full payment or receipt of such amounts in
United States Dollars, as determined by the Company.
The Company may at any time and from time to time vary or
terminate the appointment of any such agent or appoint any
additional agents for any or all of such purposes; provided,
however, that until all of the Securities have been delivered to
the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities
have been made available for payment and either paid or returned
to the Company pursuant to the provisions of Section 10.3, the
Company will maintain (1) in the Borough of Manhattan, The City
of New York, an office or agency where Registered Securities may
be presented or surrendered for payment and conversion, where
Bearer Securities and coupons may be presented or surrendered for
payment and conversion in the circumstances described in the last
sentence of the first paragraph of this Section (and not
otherwise), where Registered Securities may be surrendered for
registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and
coupons and this Indenture may be served, and (2) subject to any
laws or regulations applicable thereto, in any city in a Western
European country, an office or agency where Securities and
coupons may be presented and surrendered for payment and where
Securities may be presented for registration of transfer or
exchange or conversion; and provided, further, that so long as
the Securities are listed on the Luxembourg Stock Exchange and
such stock exchange shall so require, the Company will maintain a
Paying Agent and Conversion Agent in Luxembourg. The Company will
give prompt written notice to the Trustee, and notice to the
Holders in accordance with Section 1.6, of the appointment or
termination of any such agents and of the location and any change
in the location of any 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, presentations and surrenders may be
made and notices and demands may be served on the Corporate Trust
Office of the Trustee, except that Bearer Securities and coupons
may be presented and surrendered for payment and conversion to
the Paying Agent in London at its office in the City of London,
England or other Paying Agent or conversion agent outside the
United States, and the Company hereby appoints the Paying Agent
in London as its agent to receive such respective presentations,
surrenders, notices and demands.
SECTION 10.3. Money for Security Payments To Be Held in Trust.
If the Company shall act as its own Paying Agent, it will,
on or before each due date of the principal of, premium, if any,
or interest on any of the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal, premium, if any, or interest so becoming
due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and the Company will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents,
it will, one Business Day prior to each due date of the principal
of, premium, if any, or interest on any Securities, deposit with
the Trustee a sum sufficient to pay the principal, premium, if
any, or interest so becoming due, such sum to be held for the
benefit of the Persons entitled to such principal, premium, if
any, or interest, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Securities for
the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal, premium, if any, or
interest; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any Security and
remaining unclaimed for two years after such principal, premium,
if any, or interest has become due and payable shall be paid to
the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such
Security or any coupon appertaining thereto shall thereafter, as
an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper in
each Place of Payment, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the
Company.
SECTION 10.4. Additional Amounts and Bearer Additional Amounts.
The Company will pay to the Holder of any Bearer Security or
any coupon appertaining thereto Additional Amounts and Bearer
Additional Amounts as provided in the form of Bearer Security and
to a Holder of any Registered Security Additional Amounts as
provided in the form of Registered Security, in each case set
forth in Section 2.2. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of,
premium, if any, or interest on, or in respect of, any Security
or any coupon, such mention shall be deemed to include mention of
the payment of Additional Amounts and Bearer Additional Amounts
provided for in this Section to the extent that, in such context,
Additional Amounts and Bearer Additional Amounts are, were or
would be payable in respect thereof pursuant to the provisions of
this Section and express mention of the payment of Additional
Amounts and Bearer Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional
Amounts and Bearer Additional Amounts in those provisions hereof
where such express mention is not made.
At least 10 days prior to March 26, 1997, or an earlier
Redemption Date or Repurchase Date (and at least 10 days prior to
each date of payment of principal, premium, if any, or interest
after March 26, 1997, or such earlier Redemption Date or
Repurchase Date, if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate),
the Company will furnish the Trustee and the Company's Paying
Agents in London, England, and in the Borough of Manhattan, The
City of New York, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agents
whether such payment of principal of, premium, if any, or
interest on the Securities shall be made to Holders of Securities
or coupons who are not United States persons without withholding
for or on account of any tax, assessment or other governmental
charge described in the second paragraph of the face of the forms
of Definitive Securities set forth in Section 2.2. If any such
withholding shall be required, then such Officers' Certificate
shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities or
coupons and the Company will pay to the Trustee or the Paying
Agent in London the Additional Amounts required by this Section
to be paid in the event of any such withholding. The Company
covenants to indemnify the Trustee and any Paying Agent for, and
to hold them harmless against, any loss, liability or expense
arising out of or in connection with actions taken or omitted by
any of them in reliance on any Officers' Certificate furnished
pursuant to this Section, except to the extent such loss,
liability or expense is attributable to the Trustee's negligence
or bad faith.
SECTION 10.5. Existence.
Subject to Article Seven, the Company will do or cause to be
done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Board of
Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.6. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary 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, however, that nothing in this Section shall
prevent the Company from discontinuing the operation and
maintenance of any of such properties if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its
business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 10.7. Payment of Taxes and Other Claims.
The Company will pay or discharge, or cause to be paid or
discharged, before the same may become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property
of the Company or any Subsidiary, (2) all claims for labor,
materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any
Subsidiary, and (3) all stamps and other duties, if any, which
may be imposed by the United States or the United Kingdom or any
political subdivision thereof or therein in connection with the
issuance, transfer, exchange or conversion of any Securities or
coupons or with respect to this Indenture; provided, however,
that, in the case of clauses (1) and (2), the Company shall not
be required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 10.8. Registration and Listing.
Within a reasonable time after the issuance of the Temporary
Global Bearer Security, the Company (i) will effect all
registrations with, and obtain all approvals by, all governmental
authorities that may be necessary under any United States Federal
or state law (including the Securities Act, the Exchange Act and
state securities and Blue Sky laws) before the shares of Class B
Common Stock issuable upon conversion of Securities may be
lawfully issued and delivered, and thereafter publicly traded (if
permissible under the Securities Act), and qualified or listed as
contemplated by clause (ii); and (ii) will cause the shares of
Class B Common Stock required to be issued and delivered upon
conversion of Securities, prior to such issuance or delivery, to
be listed on the New York Stock Exchange, Inc. or, if the Class B
Common Stock is not then listed on the New York Stock Exchange,
Inc., cause to be listed the Class B Common Stock on each
national securities exchange on which outstanding Class B Common
Stock is listed or quoted at the time of such delivery.
SECTION 10.9. Statement by Officers as to Default.
The Company shall deliver to the Trustee within 120 days
after the end of each fiscal year of the Company an Officers'
Certificate stating whether or not to the best knowledge of the
signers thereof any default exists in the performance and
observance of any of the terms, provisions and conditions of this
Article Ten and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they
may have knowledge.
SECTION 10.10. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, upon the request of a Holder of a
Restricted Security or the holder of shares of Class B Common
Stock issued upon conversion thereof, the Company will promptly
furnish or cause to be furnished Rule 144A Information (as
defined below) to such Holder of Restricted Securities or such
holder of shares of Class B Common Stock issued upon conversion
of Restricted Securities, or to a prospective purchaser of any
such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by such
Holder or holder with Rule 144A under the Securities Act (or any
successor provision thereto) in connection with the resale of any
such security; provided, however, that the Company shall not be
required to furnish such information in connection with any
request made on or after the date which is three years from the
later of (i) the date such a security (or any such predecessor
security) was last acquired from the Company or (ii) the date
such a security (or any such predecessor security) was last
acquired from an "affiliate" of the Company within the meaning of
Rule 144 under the Securities Act (or any successor provision
thereto). "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto).
SECTION 10.11. Resale of Certain Securities; Reporting Issuer.
During the period beginning on March 26, 1996 and ending on
the date that is three years from such date, the Company will
not, and will not permit any of its "affiliates" (as defined
under Rule 144 under the Securities Act or any successor
provision thereto) to, resell (x) any Securities which constitute
"restricted securities" under Rule 144 or (y) any securities into
which the Securities have been converted under this Indenture
which constitute "restricted securities" under Rule 144, that in
either case have been reacquired by any of them. The Trustee
shall have no responsibility in respect of the Company's
performance of its agreement in the preceding sentence. The
Company will continue to be a "reporting issuer" for purposes of
Rule 903 under the Securities Act until the full principal amount
of the Temporary Global Bearer Security has been exchanged for
Bearer Securities in accordance with this Indenture.
SECTION 10.12. Registration Rights.
The holders of the Registered Securities and the Class B
Common Stock issuable upon conversion thereof are entitled to the
benefits of a Registration Rights Agreement, dated as of March
26, 1996, between the Company and Goldman Sachs International
(the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, the Company has agreed for the
benefit of the holders from time to time of the Registered
Securities and the Class B Common Stock issuable upon conversion
thereof that it will, at its expense, (i) within 180 days after
the date of issuance of the original Registered Securities, file
a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the
Registered Securities and the Class B Common Stock issuable upon
conversion thereof, (ii) use its best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission
within 60 days after the date on which the Shelf Registration
Statement is filed and (iii) use its best efforts to maintain
such Shelf Registration Statement continuously effective under
the Securities Act of 1933, as amended, until the third annual
anniversary of the date of the effectiveness of the Shelf
Registration Statement or such earlier date as is provided in the
Registration Rights Agreement.
If (i) on or prior to 180 days following the date of
original issuance of the Registered Securities, a Shelf
Registration Statement has not been filed with the Commission, or
(ii) on or prior to the 60th day following the filing of such
Shelf Registration Statement, such Shelf Registration Statement
is not declared effective (each, a "Registration Default"),
additional interest ("Liquidated Damages") will accrue on the
Registered Securities from and including the day following such
Registration Default to but excluding the day on which such
Registration Default has been cured. Liquidated Damages will be
paid semi-annually in arrears, with the first semi-annual payment
due on the first Interest Payment Date in respect of the
Registered Securities following the date on which such Liquidated
Damages begin to accrue, and will accrue at a rate per annum
equal to an additional one-quarter of one percent (0.25%) of the
principal amount of the Registered Securities to and including
the 90th day following such Registration Default and at a rate
per annum equal to one-half of one percent (0.50%) thereof from
and after the 91st day following such Registration Default. In
the event that the Shelf Registration Statement ceases to be
effective prior to the third annual anniversary of the initial
effective date of the Shelf Registration Statement or such
earlier date as is provided in the Registration Rights Agreement
for a period in excess of 60 days, whether or not consecutive,
during any 12-month period, then the interest rate borne by the
Registered Securities shall increase by an additional one-half of
one percent (0.50%) per annum on the 61st day of the applicable
12-month period such Shelf Registration Statement ceases to be
effective to but excluding the day on which the Shelf
Registration Statement again becomes effective.
Whenever in this Indenture there is mentioned, in any
context, the payment of the principal of, premium, if any, or
interest on, or in respect of, any Registered Security, such
mention shall be deemed to include mention of the payment of
Liquidated Damages provided for in this Section to the extent
that, in such context, Liquidated Damages are, were or would be
payable in respect thereof pursuant to the provisions of this
Section and express mention of the payment of Liquidated Damages
(if applicable) in any provisions hereof shall not be construed
as excluding Liquidated Damages in those provisions hereof where
such express mention is not made.
SECTION 10.13. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply
with any covenant or conditions set forth in Sections 10.5 to
10.7, inclusive (other than a covenant or condition which under
Article Eight cannot be modified or amended without the consent
of the Holder of each Outstanding Security affected), if before
the time for such compliance the Holders shall, through the
written consent of, or the adoption of a resolution at a meeting
of Holders of the Outstanding Securities at which a quorum is
present by, not less than a majority in principal amount of the
Outstanding Securities, either waive such compliance in such
instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee or any Paying or
Conversion Agent in respect of any such covenant or condition
shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption.
The Securities may be redeemed in accordance with the
provisions of the forms of Securities set forth in Section 2.2.
SECTION 11.2. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of the
Securities or this Indenture, shall be made in accordance with
such provision and this Article Eleven.
SECTION 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall
be evidenced by a Board Resolution. In case of any redemption at
the election of the Company of any of the Securities, the Company
shall, at least 60 days (or 75 days in the case of a redemption
pursuant to the fourth paragraph of the reverse of the form of
Bearer Security set forth in Section 2.2(a)) prior to the
Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee in
writing of such Redemption Date. If the Securities are to be
redeemed pursuant to an election of the Company which is subject
to a condition specified in the forms of Securities set forth in
Section 2.2, the Company shall furnish the Trustee with an
Officers' Certificate stating that the Company is entitled to
effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Company
so to redeem have occurred.
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (other
than pursuant to the third or fourth paragraph on the reverse of
the form of Bearer Security in Section 2.2(a) or the third
paragraph on the reverse of the form of Registered Security in
Section 2.2(b)), the particular Securities to be redeemed shall
be selected by the Trustee within two Business Days after it
receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption, individually by
lot in the case of Bearer Securities, and by such method as the
Trustee may deem substantially equivalent thereto in the case of
Registered Securities and under circumstances intended not to
discriminate between Registered and Bearer Securities to be
redeemed pursuant to the terms thereof and hereof in the
selection of Securities (or portion thereof) selected for
redemption. Partial redemption must be in an amount not less than
U.S.$1,000,000 principal amount of Securities.
If any Registered Security selected for partial redemption
is converted in part before termination of the conversion right
with respect to the portion of the Security so selected, the
converted portion of such Security shall be deemed (so far as may
be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as Outstanding for the
purpose of such selection.
The Trustee shall promptly notify the Company and each
Security Registrar in writing of the securities selected for
redemption and, in the case of any Registered Securities selected
for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed
or to be redeemed only in part, to the portion of the principal
amount of such Securities which has been or is to be redeemed.
SECTION 11.5. Notice of Redemption.
Notice of redemption shall be given in the manner provided
in Section 1.6 to the Holders of Securities to be redeemed not
less than 30 nor more than 60 days prior to the Redemption Date,
and (except, in the case of a redemption pursuant to the fourth
paragraph of the form of reverse of the Bearer Security set forth
in Section 2.2(a), to the extent otherwise expressly provided in
such form) such notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities are to be
redeemed, the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities
which will be outstanding after such partial redemption,
(4) that on the Redemption Date the Redemption Price,
and accrued interest, if any, will become due and payable
upon each such Security to be redeemed, and that interest
thereon shall cease to accrue on and after said date,
(5) the Conversion Price, the date on which the right
to convert the Securities to be redeemed will terminate and
the places where such Securities, together with all
unmatured coupons and any matured coupons in default
appertaining thereto, may be surrendered for conversion, and
(6) the place or places where such Securities,
together with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered
for payment of the Redemption Price and accrued interest, if
any.
In case of a partial redemption, the first notice given
shall specify the last date on which exchanges or transfers of
Securities may be made pursuant to Section 3.5 and shall specify
the serial number and ISIN number (if any) of the Bearer
Securities (either individually or in group, from one number to
another, or by last digit or digits) called for redemption and in
the case of Registered Securities the serial and CUSIP numbers
(if any) and the portions thereof called for redemption, and the
second notice shall specify the serial number and ISIN number (if
any) of the Bearer Securities (either individually or in group,
from one number to another, or by last digit or digits) called
for redemption and, in the case of Registered Securities, the
serial and CUSIP numbers (if any) and the portions thereof called
for redemption.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the
Company's written request, by the Trustee in the name of and at
the expense of the Company. Notice of redemption of Securities to
be redeemed at the election of the Company received by the
Trustee shall be given by the Trustee to each Paying Agent in the
name of and at the expense of the Company.
SECTION 11.6. Deposit of Redemption Price.
Not less than one Business Day prior to any Redemption Date
of the Bearer Securities and by noon Eastern Standard Time on any
Redemption Date of the Registered Securities, the Company shall
deposit with the Trustee or with the Paying Agent in London if so
directed by the Trustee (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section
10.3) an amount of money (which shall be in immediately available
funds on such Redemption Date) sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are
to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the
date of such deposit.
If any Security called for redemption is converted, any
money deposited with the Trustee or with a Paying Agent or so
segregated and held in trust for the redemption of such Security
shall (subject to any right of the Holder of such Security, if a
Registered Security, or any Predecessor Security to receive
interest as provided in the last paragraph of Section 3.7) be
paid to the Company on Company Request as soon as
administratively practicable after the Trustee receives such
Company Request or, if then held by the Company, shall be
discharged from such trust.
SECTION 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified
and from and after such date (unless the Company shall default in
the payment of the Redemption Price, including accrued interest)
such Securities shall cease to bear interest and the coupons for
such interest appertaining to Bearer Securities shall, except to
the extent provided below, be void. Upon surrender of any
Security for redemption in accordance with said notice, together
with all coupons, if any, appertaining thereto maturing after the
Redemption Date, such Security shall be paid by the Company at
the Redemption Price together with accrued and unpaid interest to
the Redemption Date; provided, however, that installments of
interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only upon
presentation and surrender of coupons for such interest (at an
office or agency outside the United States, except as otherwise
provided in the form of Bearer Security set forth in Section
2.2(a)); and provided, further, that installments of interest on
Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as
such on the relevant Record Date according to their terms and the
provisions of Section 3.7.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal amount of,
premium, if any, and, to the extent permitted by applicable law,
accrued interest on such Security shall, until paid, bear
interest from the Redemption Date at a rate of 6 3/4% per annum
and such Security shall remain convertible into Class B Common
Stock until the principal of such Security (or portion thereof,
as the case may be) shall have been paid or duly provided for.
If any Bearer Security surrendered for redemption shall not
be accompanied by all appurtenant coupons maturing after the
Redemption Date, such Security may be paid after deducting from
the Redemption Price an amount equal to the face amount of all
such missing coupons or the surrender of such missing coupons or
coupon may be waived by the Company and the Trustee or the Paying
Agent in London or its agent, if there be furnished to them such
security or indemnity as they may require to save each of them
and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from
the Redemption Price, such Holder shall be entitled to receive
the amount so deducted (without interest thereon); provided,
however, that interest represented by coupons shall be payable
only upon presentation and surrender of those coupons at an
office or agency located outside of the United States (except as
otherwise provided in the form of Bearer Security set forth in
Section 2.2(a)).
SECTION 11.8. Registered Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part
shall be surrendered at an office or agency of the Company
designated for that purpose pursuant to Section 10.2 (with, if
the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Registered Security without
service charge, a new Registered Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed
portion of the principal of the Registered Security so
surrendered.
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Security other
than the Temporary Global Bearer Security may be converted into
fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Class B Common
Stock of the Company at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence on June 24, 1996 and expire at
the close of business on April 15, 2006, subject, in the case of
the conversion of any Global Registered Security, to any
applicable book-entry procedures of the Depositary therefor and
the following sentence. In case a Security or portion thereof is
called for redemption or is delivered for repurchase, such
conversion right in respect of the Security or portion so called
shall expire at the close of business on the Redemption Date or
the Repurchase Date (as defined in Article Fourteen), as the case
may be, unless the Company defaults in making the payment due
upon redemption or repurchase, as the case may be.
The price at which shares of Class B Common Stock shall be
delivered upon conversion (herein called the "Conversion Price")
shall be initially U.S.$60.39 per share of Class B Common Stock.
The Conversion Price shall be adjusted in certain instances as
provided in this Article Twelve.
SECTION 12.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security to be converted shall surrender such Security, duly
endorsed or assigned to the Company or in blank (in the case of
any Registered Security), at any office or agency of the Company
maintained for that purpose pursuant to Section 10.2, accompanied
by a duly signed conversion notice substantially in the form set
forth in Section 2.5, stating that the Holder elects to convert
such Security or, if less than the entire principal amount
thereof is to be converted (in the case of any Registered
Security), the portion thereof to be converted. Each Bearer
Security surrendered for conversion must be surrendered together
with all coupons appertaining thereto that mature after the date
of conversion and may only be converted at the office of any
Conversion Agent outside the United States. If any Bearer
Security surrendered for conversion shall not be accompanied by
all such appurtenant coupons, the surrender of any or all of such
missing coupons may be waived by the Company and the Trustee, if
there be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless.
Matured coupons not in default (including coupons maturing on the
date of conversion) will be payable against surrender thereof,
and matured coupons previously surrendered and in default will
continue to be payable, notwithstanding the exercise of the right
of conversion by the Holder of the Security to which the coupon
appertains, but coupons maturing after the date of conversion
will not be paid. Each Registered Security surrendered for
conversion (in whole or in part) during the period from the close
of business on any Regular Record Date to the opening of business
on the next succeeding Interest Payment Date (except Notes called
for redemption on a Redemption Date or to be repurchased on a
Repurchase Date during, in each case, such period) shall be
accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal
amount of such Registered Security (or part thereof, as the case
may be) being surrendered for conversion (or, if such Registered
Security was issued in exchange for a Bearer Security after the
close of business on such Regular Record Date, by surrender of
one or more coupons relating to such Interest Payment Date or by
both payment in such funds and surrender of such coupon or
coupons, in either case in an amount equal to the interest
payable on such Interest Payment Date on the principal amount of
such Registered Security (or portion thereof) then being
converted). The interest so payable on such Interest Payment Date
in respect of such Registered Security (or portion thereof, as
the case may be) surrendered for conversion shall be paid to the
Holder of such Security as of such Regular Record Date. Interest
payable in respect of any Registered Security surrendered for
conversion on or after an Interest Payment Date shall be paid to
the Holder of such Security as of the next preceding Regular
Record Date, notwithstanding the exercise of the right of
conversion. Except as provided in this paragraph and subject to
the last paragraph of Section 3.7, no cash payment or adjustment
shall be made upon any conversion on account of, if the date of
conversion is not an Interest Payment Date, any interest accrued
from the Interest Payment Date next preceding the conversion
date, in respect of any Security (or part thereof, as the case
may be) surrendered for conversion, or on account of any
dividends on the Class B Common Stock issued upon conversion. The
Company's delivery to the Holder of the number of shares of Class
B Common Stock (and cash in lieu of fractions thereof, as
provided in this Indenture) into which a Security is convertible
will be deemed to satisfy the Company's obligation to pay the
principal amount of the Security.
Securities shall be deemed to have been converted
immediately prior to the close of business on the day of
surrender of such Securities for conversion in accordance with
the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Class B Common Stock issuable
upon conversion shall be treated for all purposes as the record
holder or holders of such Class B Common Stock at such time. As
promptly as practicable on or after the conversion date, the
Company shall issue and deliver to the Trustee, for delivery to
the Holder, a certificate or certificates for the number of full
shares of Class B Common Stock issuable upon conversion, together
with payment in lieu of any fraction of a share, as provided in
Section 12.3.
All shares of Class B Common Stock delivered upon such
conversion of Restricted Securities shall bear restrictive
legends substantially in the form of the legends required to be
set forth on the Restricted Securities pursuant to Section 2.6
and shall be subject to the restrictions on transfer provided in
such legends. Neither the Trustee nor any agent maintained for
the purpose of such conversion shall have any responsibility for
the inclusion or content of any such restrictive legends on such
Class B Common Stock; provided, however, that the Trustee or any
agent maintained for the purpose of such conversion shall have
provided, to the Company or to the Company's transfer agent for
such Class B Common Stock, prior to or concurrently with a
request to the Company to deliver such Class B Common Stock,
written notice that the Securities delivered for conversion are
Restricted Securities.
In the case of any Registered Security which is converted in
part only, upon such conversion the Company shall execute and the
Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Registered Security or
Securities of authorized denominations in an aggregate principal
amount equal to the unconverted portion of the principal amount
of such Security. A Registered Security may be converted in part,
but only if the principal amount of such Security to be converted
is any integral multiple of U.S.$1,000 and the principal amount
of such security to remain Outstanding after such conversion is
equal to U.S.$5,000 or any integral multiple of $1,000 in excess
thereof.
SECTION 12.3. Fractions of Shares.
No fractional shares of Class B Common Stock shall be issued
upon conversion of any Securities. If more than one Security
shall be surrendered for conversion at one time by the same
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share
of Class B Common Stock which would otherwise be issuable upon
conversion of any Securities (or specified portions thereof), the
Company shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of a share) in
an amount equal to the same fraction of the current market price
per share of Class B Common Stock (calculated in accordance with
Section 12.4(8) below) at the close of business on the day of
conversion. Such cash payments shall, in the case of a conversion
of Bearer Securities, be made to an address outside of the United
States as requested in writing by such Holder.
SECTION 12.4. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustments by the
Company from time to time as follows:
(1) In case, after the date of this Indenture, the Company
shall pay or make a dividend or other distribution on any class
of capital stock of the Company payable in Common Stock, the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number
of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. If, after any
such date fixed for determination, any dividend or distribution
is not in fact paid, the Conversion Price shall be immediately
readjusted, effective as of the date the Board of Directors
determines not to pay such dividend or distribution, to the
Conversion Price that would have been in effect if such
determination date had not been fixed. For the purposes of this
paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of
the Company.
(2) In case, after the date of this Indenture, the Company
shall issue rights, options or warrants to all holders of any
class of Common Stock entitling them to subscribe for or purchase
shares of any class of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (8) of this Section) of such class of Common Stock
on the date fixed for the determination of stockholders entitled
to receive such rights, options or warrants, the Conversion Price
in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the
number of shares of Common Stock which the aggregate of the
offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of
shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares
of Common Stock so offered for subscription or purchase, such
reduction to become effective immediately after the opening of
business on the day following the date fixed for such
determination. If, after any such date fixed for determination,
any such rights, options or warrants are not in fact issued, the
Conversion Price shall be immediately readjusted, effective as of
the date the Board of Directors determines not to issue such
rights, options or warrants, to the Conversion Price that would
have been in effect if such determination date had not been
fixed. For the purposes of this paragraph (2), the number of
shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock. The Company will not
issue any rights, options or warrants in respect of shares of
Common Stock held in the treasury of the Company.
(3) In case, after the date of this Indenture, outstanding
shares of any class of Common Stock shall be subdivided into a
greater number of shares of such class of Common Stock, and,
conversely, in case outstanding shares of any class of Common
Stock shall each be combined into a smaller number of shares of
such class of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such
subdivision or combination becomes effective shall be adjusted by
the Company so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price adjustment contemplated
by this subparagraph (3) by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the
denominator shall be the number of shares of Common Stock
outstanding immediately after giving effect to such subdivision
or combination, such adjustment to become effective immediately
after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) In case, after the date of this Indenture, the Company
shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class
of capital stock, or other cash or assets (including securities,
but excluding (i) any rights, options or warrants referred to in
paragraph (2) of this Section, (ii) any dividend or distribution
paid exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this Section and (iv) any merger
or consolidation to which Section 12.11 applies), the Conversion
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such
distribution by a fraction of which (i) the numerator shall be
the current market price per share (determined as provided in
paragraph (8) of this Section) of the Class B Common Stock on the
third Trading Day prior to the date fixed for such determination
(the "Reference Date") less the then fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the
Trustee) on the Reference Date of the portion of the assets,
shares or evidences of indebtedness so distributed applicable to
one share of Class B Common Stock and the denominator shall be
the current market price per share of Class B Common Stock on the
Reference Date, such adjustment to become effective immediately
prior to the opening of business on the day following the
Reference Date. If, after any such date fixed for determination,
any such distribution is not in fact made, the Conversion Price
shall be immediately readjusted, effective as of the date the
Board of Directors determines not to make such distribution, to
the Conversion Price that would have been in effect if such
determination date had not been fixed. If the Board of Directors
determines the fair market value of any distribution for purposes
of this subparagraph (4) by reference to the actual or when
issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such
market over the same period used in computing 15% of the average
of the current market prices per share of Class B Common Stock
pursuant to this subparagraph (4). For purposes of this
subparagraph (4), any dividend or distribution that includes
shares of Class B Common Stock or rights or warrants to subscribe
for or purchase shares of Class B Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other than
such shares of Class B Common Stock or such rights or warrants
(making any Conversion Price reduction required by this
subparagraph (4)) immediately followed by (2) a dividend or
distribution of such shares of Class B Common Stock or such
rights or warrants (making any further Conversion Price reduction
required by subparagraph (1) or (2)), except (x) the Reference
Date of such dividend or distribution as defined in this
subparagraph (4) shall be substituted in place of the phrases (a)
"the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and (b) "the date
fixed for such determination" within the meaning of subparagraphs
(1) and (2), respectively, of this Section 12.4 and (y) any
shares of Class B Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the
meaning of subparagraph (1) of this Section 12.4.
(5) In case the Company shall, by dividend or otherwise,
distribute to all holders of any class of its Common Stock cash
(excluding any cash that is distributed upon a merger or
consolidation to which Section 12.11 applies or as part of a
distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (I) the aggregate
amount of any other cash distributions to all holders of any
class of its Common Stock made exclusively in cash within the 12
months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to this paragraph (5) has
been made and (II) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) of other consideration payable in respect of any
tender offer (of the type described paragraph (6) below) by the
Company or any of its subsidiaries for all or any portion of any
class of the Common Stock concluded within the 12 months
preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to paragraph (6) of this Section
has been made, exceeds 15% of the product of the current market
price per share of the Class B Common Stock on the date for the
determination of holders of shares of Common Stock entitled to
receive such distribution times the number of shares of all
classes of Common Stock outstanding on such date, then, and in
each such case, immediately after the close of business on such
date for determination, the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of
business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the current market price per
share (determined as provided in paragraph (8) of this Section)
of the Class B Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the
excess of such combined amount over such 15% and (y) the number
of shares of all classes of Common Stock outstanding on such date
for determination and (ii) the denominator of which shall be
equal to the current market price per share (determined as
provided in paragraph (8) of this Section) of the Class B Common
Stock on such date for determination.
(6) In case, after the date of this Indenture, a tender or
exchange offer (other than an odd-lot offer) made by the Company
or any Subsidiary for all or any portion of any class of Common
Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such Subsidiary of
consideration per share of such class of Common Stock having a
fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described
in a Board Resolution) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds 110%
of the current market price per share (determined as provided in
paragraph (8) of this Section) of such class of Common Stock as
of the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion
Price reduction contemplated by this subparagraph (6) by a
fraction of which the numerator shall be the sum of the products
of the number of shares of each class of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration
Time multiplied by the respective current market price per share
(determined as provided in paragraph (8) of this Section) of each
such class of Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the
fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the sum of the products of the number
of shares of each class of Common Stock outstanding (less any
Purchased Shares) at the Expiration Time and the respective
current market price per share (determined as provided in
paragraph (8) of this Section) of each such class of Common Stock
on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of
business on the day following the Expiration Time.
(7) The reclassification of any class of Common Stock into
securities including other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section
12.11 applies) shall be deemed to involve (a) a distribution of
such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and "the date
fixed for such determination" within the meaning of paragraph (4)
of this Section), and (b) a subdivision or combination, as the
case may be, of the number of shares of such class of Common
Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately
thereafter (and the effective date of such reclassification shall
be deemed to be "the day upon which such subdivision becomes
effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning
of paragraph (3) of this Section).
(8) For the purpose of any computation under paragraphs
(2), (4), (5) or (6) of this Section 12.4, the current market
price per share of a class of Common Stock on any date shall be
calculated by the Company and be deemed to be the average of the
daily Closing Prices Per Share of such class for the five
consecutive Trading Days selected by the Company commencing not
more than 10 Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date
with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "-ex'
date", when used with respect to any issuance or distribution,
means the first date on which such class of Common Stock trades
regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such
issuance or distribution.
(9) No adjustment in the Conversion Price shall be required
unless such adjustment (plus any adjustments not previously made
by reason of this paragraph (9)) would require an increase or
decrease of at least one percent in such price; provided,
however, that any adjustments which by reason of this paragraph
(9) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations
under this Article shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(10) The Company may make such reductions in the Conversion
Price, for the remaining term of the Securities or any shorter
term, in addition to those required by paragraphs (1), (2), (3),
(4), (5) and (6) of this Section 12.4, as it considers to be
advisable in order to avoid or diminish any income tax to any
holders of shares of any class of Common Stock or rights to
purchase any class of Common Stock resulting from any dividend or
distribution on any class of Common Stock (or rights to acquire
such stock) or from any event treated as such for income tax
purposes, resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock
or from any event treated as such for income tax purposes.
SECTION 12.5. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein
provided:
(1) the Company shall compute the adjusted Conversion
Price in accordance with Section 12.4 and shall prepare a
certificate signed by the Treasurer of the Company setting
forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is
based, and such certificate shall promptly be filed with the
Trustee and with each Conversion Agent; and
(2) a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion
Price shall promptly be prepared and as soon as practicable
thereafter, such notice shall be provided by the Company to
all Holders in accordance with Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any
duty or responsibility with respect to any such certificate or
the information and calculations contained therein, except to
exhibit the same to any Holder of Securities desiring inspection
thereof at its office during normal business hours.
SECTION 12.6. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any
other distribution) on any class of its Common Stock
payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any
adjustment pursuant to Section 12.4; or
(b) the Company shall authorize the granting to
the holders of any class of its Common Stock of rights,
options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other
rights; or
(c) of any reclassification of any class of Common
Stock of the Company (other than a subdivision or
combination of its outstanding shares of Common Stock),
or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders
of the Company is required, or of the sale or transfer
of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company or any Subsidiary shall commence a
tender offer for all or a portion of any class of the
Company's outstanding shares of Common Stock (or shall
amend any such tender offer);
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant
to Section 10.2, and shall cause to be provided to all Holders in
accordance with Section 1.6, at least 20 days (or 10 days in any
case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, options or warrants are
to be determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such
reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or
winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or
winding up. If at the time the Trustee shall not be the
conversion agent, a copy of such notice and any notice referred
to in the following paragraph shall also forthwith be filed by
the Company with the Trustee.
SECTION 12.7. Company to Reserve Class B Common Stock.
The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued
Class B Common Stock, for the purpose of effecting the conversion
of Securities, the full number of shares of Class B Common Stock
then issuable upon the conversion of all Outstanding Securities.
SECTION 12.8. Taxes on Conversions.
The Company will pay any and all taxes and duties that may
be payable in respect of the issue or delivery of shares of Class
B Common Stock on conversion of Securities pursuant hereto. The
Company shall not, however, be required to pay any tax or duty
which may be payable in respect of any transfer involved in the
issue and delivery of shares of Class B Common Stock in a name
other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to the Company
the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid.
SECTION 12.9. Covenant as to Class B Common Stock.
The Company agrees that all shares of Class B Common Stock
which may be delivered upon conversion of Securities, upon such
delivery, will have been duly authorized and validly issued and
will be fully paid and nonassessable and, except as provided in
Section 12.8, the Company will pay all taxes, liens and charges
with respect to the issue thereof.
SECTION 12.10. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered
to the Trustee or the Paying Agent in London or its agent to be
canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.9.
SECTION 12.11. Provision in Case of Consolidation, Merger or Sale
of Assets.
In case of any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another
Person into the Company (other than a merger which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Class B Common Stock of the
Company) or any sale or transfer of all or substantially all of
the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified
in Section 12.1, to convert such Security only into the kind and
amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the
number of shares of Class B Common Stock of the Company into
which such Security might have been converted immediately prior
to such consolidation, merger, sale or transfer, assuming such
holder of Class B Common Stock of the Company (i) is not a Person
with which the Company consolidated or into which the Company
merged or which merged into the Company or to which such sale or
transfer was made, as the case may be ("Constituent Person"), or
an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the
kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same
for each share of Class B Common Stock of the Company held
immediately prior to such consolidation, merger, sale or transfer
by others than a Constituent Person or an Affiliate thereof and
in respect of which such rights of election shall not have been
exercised ("Non-electing Share"), then for the purpose of this
Section 12.11 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or
transfer by the holders of each Non-electing Share shall be
deemed to be the kind and amount so receivable per share by a
plurality of the Non-electing Shares), and further assuming, if
such consolidation, merger, conveyance, transfer, sale or lease
occurs prior to the later of June 24, 1996 and the receipt of
Securities in definitive form (in the case of Securities
initially represented by a Temporary Global Bearer Security),
that the Security was convertible at the time of such occurrence
at the Conversion Price specified in Section 12.1 as adjusted
from the issue date of such Security to such time as provided in
this Article Twelve. Such supplemental indenture shall provide
for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly
equivalent as may be practicable to the adjustments provided for
in this Article. The above provisions of this Section 12.11 shall
similarly apply to successive consolidations, mergers, sales or
transfers. Notice of the execution of such a supplemental
indenture shall be given by the Company to the Holder of each
Security as provided in Section 1.6 promptly upon such execution.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinated to Senior Indebtedness.
All Securities and any coupons appertaining thereto issued
under this Indenture shall be issued subject to the following
provisions and each Holder of any Security or any coupon whether
upon original issue or upon transfer or assignment thereof
accepts and agrees to be bound by such provisions.
All Securities and any coupons appertaining thereto issued
hereunder shall, to the extent and in the manner hereinafter set
forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness. "Senior
Indebtedness" means (i) the principal of, premium, if any,
interest and other amounts in respect of (A) indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds or other similar instruments issued
by the Company, (ii) all capital lease obligations of the
Company, (iii) all obligations of the Company issued or assumed
as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business, (iv) all
obligations of the Company for the reimbursement on any letter of
credit, bankers acceptance, security purchase facility or similar
credit transaction, (v) all obligations of the type referred to
in clauses (i) through (iv) above of other persons for the
payment of which the Company is responsible or liable as obligor,
guarantor or otherwise, and (vi) all obligations of the type
referred to in clauses (i) through (v) above of other persons
secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company) except
for (1) any such indebtedness or other obligation that is by its
terms subordinated to or pari passu with the Securities, (2) any
indebtedness between or among the Company and its affiliates,
including all other debt securities and guarantees in respect of
those debt securities, initially issued to any trust, or a
trustee of such trust, partnership or other entity affiliated
with the Company that, directly or indirectly, is a financing
vehicle of the Company (a "financing entity") in connection with
the issuance by such financing entity of preferred securities or
other securities that rank pari passu with, or junior to, the
Securities and (3) the Company's guarantee of certain payments
under the 8 1/2% Convertible Trust Originated Preferred Securities
issued by Continental Airlines Finance Trust and the Company's
8 1/2% Convertible Subordinated Deferrable Interest Debentures due
2020. Such Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination
provisions herein irrespective of any amendment, modification or
waiver of any term of such Senior Indebtedness. The payment of
the principal of, premium, if any, and interest on the Securities
and coupons shall rank senior in right of payment to the
Company's guarantee of certain payments under the 8-1/2%
Convertible Trust Originated Preferred Securities issued by
Continental Airlines Finance Trust and the Company's 8-1/2%
Convertible Subordinated Deferrable Interest Debentures due 2020.
SECTION 13.2. No Payments in Certain Circumstances; Payment Over
of Proceeds Upon Dissolution, Etc.
No payment on account of principal of, premium, if any, or
interest on, or redemption or repurchase of, the Securities or
any coupons appertaining thereto shall be made if, at the time of
such payment or immediately after giving effect thereto: (i)
there shall exist a default in the payment of principal of,
premium, if any, sinking funds or interest (including a default
under any purchase or redemption obligations) or other amounts
with respect to any Senior Indebtedness, or (ii) there shall have
occurred an event of default (other than a default in the payment
of principal, premium, if any, sinking funds or interest) with
respect to any Senior Indebtedness, as defined therein or in the
instrument under which the same is outstanding, permitting the
holders thereof to accelerate the maturity thereof and written
notice of such occurrence shall have been given to the Company
and to the Trustee under this Indenture by the holder or holders
of such Senior Indebtedness and such event of default shall not
have been cured or waived or shall not have ceased to exist.
Notwithstanding the foregoing, the Company may make, and the
Trustee may receive and shall apply, any payment in respect of
the Securities (for principal, premium, if any, or interest or
repurchase) if such payment was made prior to the occurrence of
any of the contingencies specified in clauses (i) and (ii) above.
Upon (i) any acceleration of the principal amount due on the
Securities or (ii) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding up or
total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if
any, sinking fund and interest or other amounts due or to become
due upon all Senior Indebtedness shall first be paid in full, or
payment thereof provided for in money or money's worth in
accordance with its terms, before any payment is made on account
of the principal of, premium, if any, or interest on, or
repurchase of, the indebtedness evidenced by the Securities or
any coupon appertaining thereto, and upon any such dissolution or
winding up or liquidation or reorganization any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of
the Securities or any coupons appertaining thereto or the Trustee
under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making
such payment or distribution, or by the Holders of the Securities
or any coupons appertaining thereto or by the Trustee under this
Indenture if received by them or it, as the case may be, directly
to the holders of Senior Indebtedness (pro rata to each such
holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to
the extent necessary to pay all Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the
Holders of the Securities or any coupons appertaining thereto or
to the Trustee under this Indenture.
In the event that, contrary to the foregoing, any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by the
Trustee or the Holders of the Securities before all Senior
Indebtedness is paid in full or provision made for such payment,
in accordance with its terms, such payment or distribution shall
be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing
any of such Senior Indebtedness have been issued, as their
respective interests may appear, for application to the payment
of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all such Senior Indebtedness in full in
accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness,
the Holders of the Securities and any coupons (together with the
holders of any other indebtedness of the Company which is
subordinated in right of payment to the payment in full of all
Senior Indebtedness, which is not subordinated in right of
payment to the Securities and which by its terms grants such
right of subrogation to the holders thereof) shall be subrogated
to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company made on the
Senior Indebtedness until the principal of, premium, if any, and
interest on, or repurchase of, the Securities shall be paid in
full; and, for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities and
any coupons appertaining thereto or the Trustee would be entitled
except for the provisions of this Article, and no payment over
pursuant to the provisions of this Article to the holders of
Senior Indebtedness by the Holders of the Securities or any
coupon or the Trustee, shall, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the
Holders of Securities and coupons, be deemed to be a payment by
the Company to the holders of or on account of Senior
Indebtedness, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining
the relative rights of the Holders of the Securities and coupons,
on the one hand, and the holders of Senior Indebtedness, on the
other hand.
SECTION 13.3. Notice to Trustee of Specified Events; Reliance on
Certificate of Liquidating Agent.
The Company shall give prompt written notice to the Trustee
of any insolvency or bankruptcy proceeding in respect of the
Company, of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company (whether or not
involving insolvency or bankruptcy), of the declaration of any
Security as due and payable before its expressed maturity, and of
any event which pursuant to Section 13.2 would prevent payment by
the Company on account of the principal, premium, if any, or
interest on, or repurchase of, the Securities. The Trustee,
subject to the provisions of Section 6.1, shall be entitled to
assume that no such event has occurred unless the Company, or a
holder of Senior Indebtedness, or any trustee therefor, has given
such notice.
Upon any distribution of assets of the Company or payment by
or on behalf of the Company referred to in this Article, the
Trustee and the Holders of the Securities shall be entitled to
rely upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to
in Section 13.2 are pending, and the Trustee, subject to the
provisions of Section 6.1, and the Holders of the Securities and
coupons shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of the Securities
or coupons for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article. In the event that the Trustee determines, in good
faith, that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, as to the extent to
which such Person is entitled to participate in such payment or
distribution, and as to other facts pertinent to the rights of
such Person under this Article, and if such evidence is not
furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment.
SECTION 13.4. Trustee to Effectuate Subordination.
The Holder of each Security and coupon by his acceptance
thereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or
effectuate the subordination as provided in this Article and
appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Notwithstanding the provisions of this Article or any other
provision of this Indenture, but subject to the provisions of
Section 6.1 as between the Holders of Securities and coupons and
the Trustee, neither the Trustee nor any Paying Agent shall be
charged with knowledge of any facts which would prohibit the
making of any payment of moneys to or by the Trustee or any such
Paying Agent, unless and until the Trustee or such Paying Agent
shall have received written notice thereof at its Corporate Trust
Office from the Company or any holder of Senior Indebtedness or
the trustee or representative of any holder of such Senior
Indebtedness on his behalf; and, prior to the receipt of any such
written notice, the Trustee and any such Paying Agent shall be
entitled to assume that no such facts exist. If the Trustee or
Paying Agent, as the case may be, shall not have received, at
least three Business Days prior to the date upon which by the
terms hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of the principal of,
premium, if any, or the interest on any Security) with respect to
such moneys, the notice provided for in this Section, then,
anything herein contained to the contrary notwithstanding, the
Trustee and such Paying Agent, as the case may be, shall have
full power and authority to receive such moneys and to apply the
same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by
it within three Business Days prior to such date.
SECTION 13.6. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any
such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or coupons or to the Company
or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this
Article and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture
against the Trustee.
SECTION 13.7. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.7.
SECTION 13.8. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 13.5, 13.6 and 13.7
shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
SECTION 13.9. Certain Conversions Deemed Payment.
For the purposes of this Article only, (1) the issuance and
delivery of junior securities upon conversion of Securities in
accordance with Article Twelve shall not be deemed to constitute
a payment or distribution on account of the principal of or
premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance
or delivery of cash, property or securities (other than junior
securities and cash in lieu of fractional shares of junior
securities) upon conversion of a Security shall be deemed to
constitute payment on account of the principal of such Security.
For the purposes of this Section, the term "junior securities"
means Class B Common Stock and any other cash, property or
securities into which the Securities are convertible pursuant to
Article Twelve. Nothing contained in this Article or elsewhere in
this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any
Security to convert such Security in accordance with Article
Twelve.
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase.
In the event that a Change in Control (as hereinafter
defined) shall occur, then each Holder shall have the right, at
the Holder's option, to require the Company to repurchase, and
upon the exercise of such right the Company shall repurchase, all
of such Holder's Securities, or any portion of the principal
amount thereof that is equal to U.S.$5,000 or any integral
multiple of U.S.$1,000 in excess thereof (provided that no single
Bearer Security may be repurchased in part, and no single
Registered Security may be repurchased in part unless the portion
of the principal amount of such Registered Security to be
Outstanding after such repurchase is equal to U.S.$5,000 or
integral multiples of U.S.$1,000 in excess thereof), on the date
(the "Repurchase Date") that is 45 days after the date of the
Company Notice (as defined in Section 14.2) at a purchase price
equal to 100% of the principal amount of the Securities to be
repurchased (the "Repurchase Price") plus interest accrued to the
Repurchase Date; provided, however, that installments of interest
on Bearer Securities whose Stated Maturity is on or prior to the
Repurchase Date shall be payable only upon presentation and
surrender of coupons for such interest (at an office or agency
outside the United States, except as otherwise provided in the
form of Bearer Security set forth in Section 2.2(a)); and
provided, further, that installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Repurchase
Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the
relevant Record Date according to their terms and the provisions
of Section 3.7. Such right to require the repurchase of the
Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance
with Article Four, unless a Change in Control shall have occurred
prior to such discharge. At the option of the Company, the
Repurchase Price may be paid in cash or, except as otherwise
provided in Section 14.2(j), by delivery of shares of Class B
Common Stock having a fair market value equal to the Repurchase
Price; provided that payment may not be made in Class B Common
Stock unless at the time of payment such stock is listed on a
national securities exchange or quoted on the Nasdaq National
Market System. For purposes of this Section, the fair market
value of shares of Class B Common Stock shall be determined by
the Company and shall be equal to 95% of the average of the
Closing Prices Per Share for the five consecutive Trading Days
ending on and including the third Trading Day immediately
preceding the Repurchase Date. Whenever in this Indenture
(including Sections 2.2, 3.1, 5.1(2) and 5.8) there is a
reference, in any context, to the principal of any Security as of
any time, such reference shall be deemed to include reference to
the Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable
at such time, and express mention of the Repurchase Price in any
provision of this Indenture shall not be construed as excluding
the Repurchase Price in those provisions of this Indenture when
such express mention is not made.
SECTION 14.2. Notices; Method of Exercising Repurchase Right,
Etc.
(a) Unless the Company shall have theretofore called for
redemption all of the Outstanding Securities, on or before the
30th day after the occurrence of a Change in Control, the Company
or, at the request and expense of the Company, the Trustee, shall
give to all Holders of Securities, in the manner provided in
Section 1.6, notice (the "Company Notice") of the occurrence of
the Change in Control and of the repurchase right set forth
herein arising as a result thereof. The Company shall also
deliver a copy of such notice of a repurchase right to the
Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must
follow to exercise a repurchase right, and the place or
places where such Securities, together with all coupons
appertaining thereto, if any, maturing after the Repurchase
Date, are to be surrendered for payment of the Repurchase
Price and accrued interest, if any,
(5) that on the Repurchase Date the Repurchase Price,
and accrued interest, if any, will become due and payable
upon each such Security designated by the Holder to be
repurchased, and that interest thereon shall cease to accrue
on and after said date,
(6) the Conversion Price then in effect, the date on
which the right to convert the principal amount of the
Securities to be repurchased will terminate and the place or
places where such Securities, together with all unmatured
coupons and any matured coupons in default appertaining
thereto, may be surrendered for conversion, and
(7) the place or places that the certificate required
by Section 2.2 shall be delivered, and the form of such
certificate.
In addition, at least two Business Days preceding the
Repurchase Date, the Company shall give to all Holders of the
Securities and coupons, in the manner provided in Section 1.6,
notice specifying whether the Repurchase Price will be payable in
cash or shares of Class B Common Stock and shall deliver a copy
of such notice to the Trustee.
No failure of the Company to give the foregoing notices or
defect therein shall limit any Holder's right to exercise a
repurchase right or affect the validity of the proceedings for
the repurchase of Securities.
If any of the foregoing provisions or other provisions of
this Article are inconsistent with applicable law, such law shall
govern.
(b) To exercise a repurchase right, a Holder shall deliver
to the Trustee or any Paying Agent on or before the 30th day
after the date of the Company Notice (i) written notice of the
Holder's exercise of such right, which notice shall set forth the
name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Registered Security is to repurchased in
part, the serial number thereof, the portion of the principal
amount thereof to be repurchased and the name of the Person in
which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election
to exercise the repurchase right is being made thereby, and, in
the event that the Repurchase Price shall be paid in shares of
Class B Common Stock, the name or names (with addresses) in which
the certificate or certificates for shares of Class B Common
Stock shall be issued, and (ii) the Securities with respect to
which the repurchase right is being exercised, together with all
coupons, if any, appertaining thereto maturing after the
Repurchase Date; provided, however, that Bearer Securities shall
be delivered only to an office of a Paying Agent located outside
the United States except in the limited circumstances described
in Section 10.2. Such written notice shall be irrevocable, except
that the right of the Holder to convert the Securities with
respect to which the repurchase right is being exercised shall
continue until the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause
to be paid to the Trustee or the Paying Agent in London the
Repurchase Price in cash or shares of Class B Common Stock, as
provided above, for payment to the Holder on the Repurchase Date
or, if shares of Class B Common Stock are to be paid, as promptly
after the Repurchase Date as practicable, together with accrued
and unpaid interest to the Repurchase Date payable with respect
to the Securities as to which the purchase right has been
exercised; provided, however, that installments of interest that
mature on or prior to the Repurchase Date shall be payable in
cash, in the case of Registered Securities, to the Holders of
such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant
Regular Record Date and, in the case of Bearer Securities, to the
holder of the coupon with respect thereto, in each case according
to the terms and provisions of Article Three; and provided,
further, that Bearer Securities and coupons shall be so payable
only at an office or agency outside the United States (except as
otherwise provided in the form of Bearer Security set forth in
Section 2.2(a)).
(d) If any Bearer Security surrendered for repurchase shall
not be accompanied by all appurtenant coupons maturing after the
Repurchase Date, such Security may be paid after deducting from
the Repurchase Price an amount equal to the face amount of all
such missing coupons or the surrender of such missing coupons or
coupon may be waived by the Company and the Trustee, if there be
furnished to them such security or indemnity as they may require
to save each of them and any Paying Agent harmless. If thereafter
the Holder of such Bearer Security shall surrender to any Paying
Agent any such missing coupon in respect of which a deduction
shall have been made from the Repurchase Price, if any, such
Holder shall be entitled to receive the amount so deducted
without interest thereon; provided, however, that interest
represented by coupons shall be payable only upon presentation
and surrender of those coupons at an office or agency located
outside of the United States (except as otherwise provided in the
form of Bearer Security set forth in Section 2.2(a)).
(e) If any Security (or portion thereof) surrendered for
repurchase shall not be so paid on the Repurchase Date, the
principal amount of such Security (or portion thereof, as the
case may be) shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate
of 6 3/4% per annum, and each Security shall remain convertible
into Class B Common Stock until the principal of such Security
(or portion thereof, as the case may be) shall have been paid or
duly provided for.
(f) Any Registered Security which is to be repurchased only
in part shall be surrendered to the Trustee (with, if the Company
or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to
the Holder of such Registered Security without service charge, a
new Registered Security or Registered Securities, containing
identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the
Registered Security so surrendered.
(g) Any issuance of shares of Class B Common Stock in
respect of the Repurchase Price shall be deemed to have been
effected immediately prior to the close of business on the
Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Class B Common
Stock shall be issuable upon such repurchase shall be deemed to
have become on the Repurchase Date the holder or holders of
record of the shares represented thereby; provided, however, that
any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the Person
or Persons in whose name or names the certificate or certificates
for such shares are to be issued as the recordholder or holders
thereof for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open. No
payment or adjustment shall be made for dividends or
distributions on any Class B Common Stock issued upon repurchase
of any Security declared prior to the Repurchase Date.
(h) No fractions of shares shall be issued upon repurchase
of Securities. If more than one Security shall be repurchased
from the same Holder and the Repurchase Price shall be payable in
shares of Class B Common Stock, the number of full shares which
shall be issuable upon such repurchase shall be computed on the
basis of the aggregate principal amount of the Securities so
repurchased. Instead of any fractional share of Class B Common
Stock which would otherwise be issuable on the repurchase of any
Security or Securities, the Company will deliver to the
applicable Holder its check for the current market value of such
fractional share. The current market value of a fraction of a
share is determined by multiplying the current market price of a
full share by the fraction, and rounding the result to the
nearest cent. For purposes of this Section, the current market
price of a share of Class B Common Stock is the Closing Price Per
Share of the Class B Common Stock on the last Trading Day prior
to the Repurchase Date.
(i) Any issuance and delivery of certificates for shares of
Class B Common Stock on repurchase of Securities shall be made
without charge to the Holder of Securities being repurchased for
such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall
not be required to pay any tax or duty which may be payable in
respect of (i) income of the Holder or (ii) any transfer involved
in the issuance or delivery of certificates for shares of Class B
Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery
shall be made unless and until the Person requesting such
issuance or delivery has paid to the Company the amount of any
such tax or duty or has established, to the satisfaction of the
Company, that such tax or duty has been paid.
(j) If any shares of Class B Common Stock to be issued upon
repurchase of Securities hereunder require registration with or
approval of any governmental authority under any federal or state
law before such shares may be validly issued or delivered upon
repurchase, the Company covenants that it will in good faith and
as expeditiously as possible endeavor to secure such registration
or approval, as the case may be; provided, however, that nothing
in this Section shall be deemed to affect in any way the
obligations of the Company to repurchase Securities as provided
in this Article and if such registration is not completed or does
not become effective or such approval is not obtained prior to
the Repurchase Date, the Repurchase Price shall be paid in cash.
(k) The Company covenants that all shares of Class B Common
Stock which may be issued upon repurchase of Securities will upon
issue be duly and validly issued and fully paid and
non-assessable.
SECTION 14.3. Certain Definitions.
For purposes of this Article Fourteen,
(a) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3, as in effect on the date of the
original execution of this Indenture, promulgated by the
Commission pursuant to the Exchange Act;
(b) a "Change in Control" shall be deemed to have occurred
at the time, after the original issuance of the Securities, of:
(i) the acquisition by any Person of beneficial
ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of
transactions, of shares of capital stock of the Company
entitling such Person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company
entitled to vote generally in the elections of directors
(any shares of voting stock of which such person or group is
the beneficial owner that are not then outstanding being
deemed outstanding for purposes of calculating such
percentage) other than any such acquisition by (x) the
Company, any Subsidiary of the Company or any employee
benefit plan of the Company or (y) the Current Principal
Shareholders (as defined below) or any syndicate or group in
which any Current Principal Shareholder has a controlling
interest, so long as the entities listed in this clause (y)
combined own, directly or indirectly, shares of capital
stock of the Company representing less than 60% of the
Company's common equity interests and less than 85% of the
total voting power of all shares of capital stock of the
Company entitled to vote generally in elections of
directors, in each case, determined as if each security
convertible, exchangeable or exercisable for capital stock
of the Company is so converted, exchanged or exercised
(other than any conversion or exchange of one class of
common stock for another class of common stock); or
(ii) any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another
Person into the Company, or any sales or transfer of all or
substantially all of the assets of the Company to another
Person (other than a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or (y) which is effected
solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or
exchange of outstanding shares of Class B Common Stock into
solely shares of Common Stock);
provided, however, that a Change in Control shall not be deemed
to have occurred if either (x) the Closing Price Per Share of the
Class B Common Stock for any five Trading Days within the period
of 10 consecutive Trading Days ending immediately after the later
of the date of the Change in Control or the date of the public
announcement of the Change in Control (in the case of a Change in
Control under Clause (i) above) or the period of 10 consecutive
Trading Days ending immediately prior to the date of the Change
in Control (in the case of a Change in Control under Clause (ii)
above) shall equal or exceed 105% of the Conversion Price in
effect on such trading day or (y) all of the consideration
(excluding cash payments for fractional shares) to be paid for
the Class B Common Stock in a transaction or transactions
constituting the Change in Control as described in Clause (ii)
above consists of shares of common stock traded on a national
securities exchange or quoted on the Nasdaq National Market
System and as a result of such transaction or transactions the
Securities become convertible solely into such common stock;
(c) the term "Current Principal Shareholders" shall mean
Air Partners L.P., Air Canada and any partners or Affiliates
thereof; and
(d) the term "Person" shall include any syndicate or group
which would be deemed to be a "person" under Section 13(d)(3) of
the Exchange Act, as in effect on the date of the original
execution of this Indenture.
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names and
Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee:
(a) semi-annually, not more than 15 days after the
Regular Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the
Holders of Registered Securities as of such Regular Record
Date, and
(b) at such other times as the Trustee may reasonably
request in writing, within 30 days after the receipt by the
Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the
Trustee in its capacity as Security Registrar.
SECTION 15.2. Preservation of Information.
The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 15.1 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar.
The Trustee may destroy any list furnished to it pursuant to
Section 15.1 upon receipt of a new list so furnished.
_____________________
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
CONTINENTAL AIRLINES,
INC.
By ___________________
Name:
Title:
Attest:
________________________
Name:
Title:
BANKERS TRUST COMPANY,
Trustee
By ______________________
Name:
Title:
Attest:
____________________________
Name:
Title:
STATE OF )
) : ss.:
COUNTY OF )
On the ___ day of _________, 1996, before me personally came
__________, to me known, who, being by me duly sworn, did depose
and say that he/she is ________________ of Continental Airlines,
Inc., one of the corporations described in and which executed the
foregoing instrument; that he/she knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board
of Directors of said corporation; and that he/she signed his/her
name thereto by like authority.
_______________________
Notary Public
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ___ day of _________, 1996, before me personally came
__________, to me known, who, being by me duly sworn, did depose
and say that he/she is ________________ of Bankers Trust
Company, one of the corporations described in and which executed
the foregoing instrument; that he/she knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed pursuant to the bylaws of
said corporation; and that he/she signed his/her name thereto by
like authority.
________________________
Notary Public
=================================================================
CONTINENTAL AIRLINES, INC.,
Issuer
and
BANKERS TRUST COMPANY,
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of July ___, 1996
Supplemental to Indenture dated as of March 26, 1996
=================================================================
FIRST SUPPLEMENTAL INDENTURE dated as of July ___,
1996 (this "Supplemental Indenture"), made and entered into by
and between Continental Airlines, Inc., a corporation duly
organized and existing under the laws of the State of Delaware
and having its principal office at 2929 Allen Parkway, Houston,
Texas 77019 (herein called the "Company"), and Bankers Trust
Company, a New York banking corporation, as Trustee (herein
called the "Trustee") supplementing the indenture dated as of
March 26, 1996 (such Indenture as supplemented to the date
hereof, the "Indenture") between the Company and the Trustee.
RECITALS
WHEREAS Section 8.1 of the Indenture provides that the
Company and Trustee may enter into one or more indentures
supplemental to the Indenture without the consent of any
Securityholder to, among other things, make any provision with
respect to matters or questions arising under the Indenture as
the Company and the Trustee may deem necessary, provided such
action does not adversely affect the interests of the Holders of
the Securities or coupons; and
WHEREAS Section 10.12 of the Indenture provides that
holders of Registered Securities and Class B Common Stock
issuable upon conversion thereof shall be entitled to the
benefits of a Registration Rights Agreement, dated as of March
26, 1996, between the Company and Goldman Sachs International
(the "Registration Rights Agreement"), which Registration Rights
Agreement provides that the Company shall file a shelf
registration statement (the "Shelf Registration Statement") with
the Securities and Exchange Commission (the "Commission") with
respect to resales of the Registered Securities and the Class B
Common Stock issuable upon conversion thereof; and
WHEREAS in order for the Shelf Registration Statement
to be declared effective by the Commission, the Indenture must be
qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"); and
WHEREAS certain amendments to the Indenture are
required to qualify the Indenture under the Trust Indenture Act;
and
WHEREAS the entry into this Supplemental Indenture by
the parties hereto is in all respects authorized by the
provisions of the Indenture; and
WHEREAS the Company has duly authorized the execution
and delivery of this Supplemental Indenture, and all things
necessary have been done to make this Supplemental Indenture a
valid agreement of the Company, in accordance with its terms:
NOW, THEREFORE THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises set forth
herein, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as
follows:
1. The Indenture is hereby amended by adding the
following reconciliation and tie to the Trust Indenture Act, but
such reconciliation and tie shall not be deemed for any purpose
to be a part of the Indenture.
Certain Sections of this Indenture relating to
Sections 310 through 318
of the Trust Indenture Act of 1939:
Trust Indenture Act Indenture Section
Section
ss.310(a)(1) ..................... 6.8
(a)(2) ..................... 6.8
(a)(3) ..................... Not Applicable
(a)(4) ..................... Not Applicable
(b) ..................... 6.13
..................... 6.9
ss.311(a) ..................... 6.14
(b) ..................... 6.14
ss.312(a) ..................... 15.1
15.2(a)
(b) ..................... 15.2(b)
(c) ..................... 15.2(c)
ss.313(a) ..................... 15.3(a)
(a)(4) ..................... 1.1
..................... 10.9
(b) ..................... 15.3(a)
(c) ..................... 15.3(a)
(d) ..................... 15.3(b)
ss.314(a) ..................... 15.4
(b) ..................... Not Applicable
(c)(1) ..................... 1.2
(c)(2) ..................... 1.2
(c)(3) ..................... Not Applicable
(d) ..................... Not Applicable
(e) ..................... 1.2
ss.315(a) ..................... 6.1
(b) ..................... 6.2
(c) ..................... 6.1
(d) ..................... 6.1
(e) ..................... 5.14
ss.316(a) ..................... 1.1
(a)(1)(A) ..................... 5.2
5.12
(a)(1)(B) ..................... 5.13
(a)(2) ..................... Not Applicable
(b) ..................... 5.8
(c) ..................... 1.4(g)
ss.317(a)(1) ..................... 5.3
(a)(2) ..................... 5.4
(b) ..................... 10.3
ss.318(a) ..................... 1.13
2. Section 1.1 of the Indenture is hereby amended by
substituting the following definition for the definition of such
term in Section 1.1:
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively.
3. Section 1.1 of the Indenture is hereby amended by
adding the following definition:
"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was
executed; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
4. Section 1.4 of the Indenture is hereby amended by
adding a new clause (g) as follows and by relettering clauses (g)
and (h) as (h) and (i), respectively:
(g) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the
purpose of determining the Holders entitled to give or take any
request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the
Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such
vote, prior to such vote, the record date for any such action or
vote shall be the 30th day (or, if later, the date of the most
recent list of Holders required to be provided pursuant to
Section 15.1) prior to such first solicitation or vote, as the
case may be. With regard to any record date, only the Holders on
such date (or their duly designated proxies) shall be entitled to
give or take, or vote on, the relevant action.
5. Article One of the Indenture is hereby amended by
adding a new section 1.13 as follows:
SECTION 1.13. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is
required under the Trust Indenture Act to be a part of and govern
this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be. Until such time
as this Indenture shall be qualified under the Trust Indenture
Act, this Indenture, the Company and the Trustee shall be deemed
for all purposes hereof to be subject to and governed by the
Trust Indenture Act to the same extent as would be the case if
this Indenture were so qualified on the date hereof.
6. Article Six of the Indenture is hereby amended by
adding new sections 6.13 and 6.14 as follows:
SECTION 6.13 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the
Trustee shall either eliminate such interests or resign, to the
extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14 Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a
creditor of the Company (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
7. Article Fifteen of the Indenture is hereby amended
by replacing in its entirety Section 15.2 and by adding new
sections 15.3 and 15.4 as follows:
SECTION 15.2. Preservation of Information;
Communication to Holders.
(a) The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of
Holders contained in the most recent list furnished to the
Trustee as provided in Section 15.1 and the names and addresses
of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as
provided in Section 15.1 upon receipt of a new list so furnished.
(b) After this Indenture has been qualified under
the Trust Indenture Act, the rights of Holders to communicate
with other Holders with respect to their rights under this
Indenture or under the Securities, and the corresponding rights
and duties of the Trustee, shall be as provided by the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that
neither the Company nor the Trustee nor any agent of either of
them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 15.3. Reports by Trustee.
(a) After this Indenture has been qualified under
the Trust Indenture Act, the Trustee shall transmit to Holders
such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant thereto.
(b) After this Indenture has been qualified under
the Trust Indenture Act, a copy of each such report shall, at the
time of such transmission to Holders, be filed by the Trustee
with each stock exchange upon which the Securities are listed,
with the Commission and with the Company. The Company will notify
the Trustee when the Securities are listed on any stock exchange.
SECTION 15.4. Reports by Company.
After this Indenture has been qualified under the
Trust Indenture Act, the Company shall file with the Trustee and
the Commission, and transmit to Holders, such information
documents and other reports and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in
the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 shall be filed with the Trustee within 15
days after the same is so required to be filed with the
Commission.
8. For all purposes of the Indenture and this
Supplemental Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
a. the terms defined in this Supplemental Indenture
have the meanings assigned to them in this Supplemental
Indenture;
b. the words "herein", "hereof" and "hereunder" and
other words of similar import refer to the Indenture and this
Supplemental Indenture as a whole and not to any particular
Article, Section or other subdivision; and
c. capitalized terms used but not defined herein are
used as they are defined in the Indenture.
9. All covenants and agreements in this Supplemental
Indenture by the Company shall bind its successors and assigns,
whether so expressed or not.
10. Except as otherwise provided herein, the Indenture
shall remain in full force and effect in accordance with its
terms.
11. In case any provision in this Supplemental
Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
12. If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be
included in this Supplemental Indenture by any of the provisions
of the Trust Indenture Act, such required provision shall
control.
13. Nothing in this Supplemental Indenture, expressed
or implied, shall give to any Person, other than the parties
hereto and their successors and assigns hereunder and the Holders
of the Securities and coupons, any benefit or any legal or
equitable right, remedy or claim under this Supplemental
Indenture.
14. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, UNITED STATES OF AMERICA, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAWS.
15. This Supplemental Indenture shall be deemed to be
incorporated in, and made a part of the Indenture, and the
Indenture, as supplemented hereby is in all respects ratified and
confirmed, and shall be read, taken and construed as one and the
same instrument.
16. The Trustee assumes no duties, responsibilities or
liabilities by reason of this Supplemental Indenture other than
as set forth in the Indenture.
17. This Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original; but
such counterparts shall together constitute but one and the same
instrument.
In WITNESS WHEREOF, the parties hereto have caused
this Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested,
all as of the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:___________________________
Name:
Title:
Attest:___________________________
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By:____________________________
Name:
Title:
Attest:___________________________
Name:
Title:
Writer's Direct Dial: (212) 225-2420
July 10, 1996
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Ladies and Gentlemen:
We have acted as special counsel to Continental
Airlines, Inc., a Delaware corporation (the "Company"), in
connection with the registration under the Securities Act of
1933, as amended (the "Act"), of resales of (i) the Company's 6 3/4%
Convertible Subordinated Notes due April 15, 2006 (the "Notes")
issued under the indenture dated as of March 26, 1996, as it may
be amended from time to time, between the Company and Bankers
Trust Company, as Trustee (the "Indenture"), and (ii) the shares
(the "Conversion Shares") of the Company's Class B common stock,
$.01 par value, issuable upon conversion of the Notes. The Notes
and the Conversion Shares are being registered under a
registration statement of the Company on Form S-3 (the
"Registration Statement") under the Act filed today with the
Securities and Exchange Commission.
We have participated in the preparation of the
Registration Statement and have reviewed originals or copies
certified or otherwise identified to our satisfaction of all such
documents and corporate 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.
In rendering the opinions expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified (i) the accuracy as to factual matters of each
document we have reviewed and (ii) that the Notes have been duly
authenticated in accordance with the terms of the Indenture.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that the execution and delivery of the Notes have been duly
authorized by all necessary corporate action of the Company, and
the Notes have been duly executed and delivered by the Company
and are the legal, valid, binding and enforceable obligations of
the Company, entitled to the benefits of the Indenture.
Insofar as the foregoing opinions relate to the
legality, validity, binding effect or enforceability of any
agreement or obligation of the Company, (a) we have assumed that
each other party to such agreement or obligation has satisfied
those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable
against it, and (b) such opinions are subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity.
We also hereby confirm, subject to the assumptions,
qualifications and conditions contained herein, that the
statements set forth in the form of the Prospectus included in
the Registration Statement under the heading "United States
Taxation" accurately describe the material United States federal
income tax consequences of the purchase of the Notes.
The foregoing opinions are limited to the law of the
State of New York and the General Corporation Law of the State of
Delaware.
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 headings "Legal Matters" and "United States
Taxation" 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
July 3, 1996
Continental Airlines, Inc.
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and
Secretary of Continental Airlines, Inc., a Delaware corporation
(the "Company"). You have requested my opinion in my capacity as
General Counsel of the Company in connection with the
registration under the Securities Act of 1933, as amended (the
"Act"), of resales of (i) the Company's 6 3/4% Convertible
Subordinated Notes due April 15, 2006 (the "Notes") issued under
the indenture dated as of March 26, 1996, as it may be amended
from time to time, between the Company and Bankers Trust Company,
as trustee (the "Indenture"), and (ii) the shares (the
"Conversion Shares") of the Company's Class B common stock, $.01
par value, into which the Notes are convertible. The Notes and
the Conversion Shares are being registered under a registration
statement of the Company on Form S-3 (the "Registration
Statement") under the Act filed today with the Securities and
Exchange Commission.
I have participated in the preparation of the
Registration Statement and have reviewed the originals or copies
certified or otherwise identified to my satisfaction of all such
instruments and other documents, and I have made such
investigations of law, as I have deemed appropriate as a basis
for the opinion expressed below.
Based on the foregoing, it is my opinion that the
Conversion Shares have been duly authorized by all necessary
corporate action on the part of the Company and reserved for
issuance and, upon issuance thereof on conversion of the Notes in
accordance with the Indenture and the terms of the Notes at
conversion prices at or in excess of the par value of such
Conversion Shares, will be validly issued, fully paid and
nonassessable.
I express no opinion other than as to the General
Corporation Law of the State of Delaware.
The opinion expressed herein is rendered solely for the
benefit of the Company in connection with the filing of the
Registration Statement. This opinion may not be used or relied
upon by any other person, nor may this letter or any copy thereof
be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without my prior written
consent.
I hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to me
under the caption "Legal Matters" therein. In so doing, I do not
admit that I am in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations
thereunder.
Very truly yours,
/s/ Jeffery A. Smisek
CONTINENTAL AIRLINES, INC.
6 3/4% Convertible Subordinated Notes Due April 15, 2006
REGISTRATION RIGHTS AGREEMENT
March 26, 1996
Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB, England.
Ladies and Gentlemen:
Continental Airlines, Inc., a Delaware corporation
("Continental"), proposes to issue and sell to Goldman Sachs
International ("GSI") upon the terms set forth in an underwriting
agreement dated March 15, 1996 (the "Underwriting Agreement")
between GSI and Continental 6 3/4% Convertible Subordinated Notes
Due April 15, 2006 in registered and bearer form (the "Securi-
ties"). As an inducement to GSI to enter into the Underwriting
Agreement and in satisfaction of a condition to the obligations
of GSI thereunder, Continental agrees with GSI, (i) for the
benefit of GSI and (ii) for the benefit of the holders from time
to time of the Securities in registered form and the Class B
Common Stock, par value $0.01 per share (the "Class B Common
Stock"), of Continental initially issuable upon conversion of
such Securities in registered form (collectively, the
"Registrable Securities"), including GSI (each of the foregoing a
"Holder" and together the "Holders"), as follows, it being
understood that Securities that are in bearer form on the date
that is 15 business days prior to the date the Shelf Registration
Statement is filed pursuant to Section 2(a) hereof ("Ineligible
Securities"), and any Securities in bearer or registered form
delivered in exchange for, or on transfer of, such Ineligible
Securities, or Class B Common Stock issuable upon conversion of
such Ineligible Securities, shall not be Registrable Securities
for any purpose hereunder:
1. DEFINITIONS. Capitalized terms used herein
without definition shall have their respective meanings set forth
in or pursuant to the Underwriting Agreement or the Confidential
Offering Circular, dated March 15, 1996, in respect of the
Securities. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Act" or "Securities Act" means the Securities Act of
1933, as amended.
"Affiliate" of any specified person means any other
person which, directly or indirectly, is in control of, is con-
trolled by, or is under common control with such specified
person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Commission" means the Securities and Exchange
Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in
Section 2(b) hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer
an underwritten offering, if any, as set forth in Section 6
hereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable
Securities.
"Shelf Registration" means a registration effected
pursuant to Section 2 hereof.
"Shelf Registration Statement" means a shelf regis-
tration statement of Continental pursuant to the provisions of
Section 2 hereof filed with the Commission which covers some or
all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar
rule that may be adopted by the Commission, 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.
"underwriter" means any underwriter of Registrable
Securities in connection with an offering thereof under a Shelf
Registration Statement.
2. SHELF REGISTRATION. (a) Continental shall, within
180 days following the date of original issuance (the "Issue
Date") of the Securities, file with the Commission a Shelf
Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement and,
thereafter, shall use its best efforts to cause such Shelf
Registration Statement to be declared effective under the Act
within 60 calendar days after the date of filing of such Shelf
Registration Statement; provided, however, that no Holder shall
be entitled to have the Registrable Securities held by it covered
by such Shelf Registration unless such Holder is in compliance
with Section 3(m) hereof.
(b) Continental shall use its best efforts (i) to keep
the Shelf Registration Statement continuously effective in order
to permit the Prospectus forming part thereof to be usable by
Holders for a period of three years from the date the Shelf
Registration Statement is declared effective or such shorter
period that will terminate upon the earlier of the following:
(A) when all the Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration
Statement, (B) when all shares of Class B Common Stock issued
upon conversion of any such Securities that had not been sold
pursuant to the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement and (C) when, in the
written opinion of counsel to Continental, all outstanding
Registrable Securities held by persons that are not affiliates of
Continental may be resold without registration under the Act
pursuant to Rule 144(k) under the Act or any successor provision
thereto (in any such case, such period being called the
"Effectiveness Period") and (ii) after the effectiveness of the
Shelf Registration Statement, promptly upon the request of any
Holder to take any action reasonably necessary to register the
sale of any Registrable Securities of such Holder and to identify
such Holder as a selling securityholder. Continental shall be
deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if
Continental voluntarily takes any action that would result in
Holders of Registrable Securities covered thereby not being able
to offer and sell any such Registrable Securities during that
period, unless (i) such action in required by applicable law,
(ii) upon the occurrence of any event contemplated by paragraph
3(c)(2) (iii) below, such action is taken by Continental in good
faith and for valid business reasons or (iii) the continued
effectiveness of the Shelf Registration Statement would require
Continental to disclose a material financing, acquisition or
other corporate transaction, and the Board of Directors shall
have determined in good faith that such disclosure is not in the
best interests of Continental and its stockholders, and, in the
case of clause (i) or (ii) above, Continental thereafter promptly
complies with the requirements of paragraph 3(i) below.
3. REGISTRATION PROCEDURES. In connection with any
Shelf Registration Statement, the following provisions shall
apply:
(a) Continental shall furnish to GSI, prior to the
filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included
therein and shall each use its best efforts to reflect in
each such document, when so filed with the Commission, such
comments as GSI reasonably may propose.
(b) Continental shall take such action an may be
necessary so that (i) any Shelf Registration Statement and
any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto (and each
report or other document incorporated therein by reference
in each case) complies in all material respects with the
Securities Act and the Exchange Act and the respective 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 amendment or
supplement to such Prospectus, 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 the light
of the circumstances under which they were made, not
misleading.
(c) (1) Continental shall advise GSI and, in the case
of clause (i), the Holders and, if requested by GSI or any
such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission
and when the Shelf Registration Statement or any post-
effective amendment thereto has become effective; and
(ii) of any request by the Commission for
amendments or supplements to the Shelf Registration
Statement or the Prospectus included therein or for
additional information.
(2) Continental shall advise GSI and the Holders and,
if requested by GSI or any such Holder, confirm such advice
in writing of:
(i) the issuance by the Commission of any stop
order suspending effectiveness of the Shelf
Registration Statement or the initiation of any
proceedings for that purpose;
(ii) the receipt by Continental of any
notification with respect to the suspension of the
qualification of the securities included therein for
sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(iii) the happening of any event that requires the
making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such date,
the Shelf Registration Statement and the Prospectus do
not contain an untrue statement of a material fact and
do not omit to state a material fact required to be
stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not
misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until
the requisite changes have been made).
(d) Continental shall use its best efforts to prevent
the issuance, and if issued to obtain the withdrawal, of any
order suspending the effectiveness of any Shelf Registration
Statement at the earliest possible time.
(e) Continental shall furnish to each Holder of
Registrable Securities included within the coverage of any
Shelf Registration Statement, without charge, 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).
(f) Continental shall, during the Effectiveness
Period, deliver to each Holder of Registrable Securities
included within the coverage of any Shelf Registration
Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and
Continental consents (except during the continuance of any
event described in Section 3(c)(2)(iii)) to the use of the
Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities in connection
with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement
thereto during the Shelf Registration Period.
(g) Prior to any offering of Registrable Securities
pursuant to any Shelf Registration Statement, Continental
shall register or qualify or cooperate with the Holders of
Registrable Securities included therein and their respective
counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any
such Holders reasonably request in writing and do any and
all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Registrable
Securities covered by such Shelf Registration Statement;
provided, however, that in no event shall Continental be
obligated to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify but for this Section
3(g), (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then
so subject or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in
book-entry only form, Continental shall cooperate with the
Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and
in such permitted denominations and registered in such names
as Holders may request in connection with the sale of
Registrable Securities pursuant to such Shelf Registration
Statement.
(i) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, Continental shall promptly
prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Registrable
Securities included therein, the Prospectus will not include
an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading. If Continental notifies the Holders of the
occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Holders shall suspend the use of the
Prospectus until the requisite changes to the Prospectus
have been made.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, Continental shall provide
a CUSIP number for the Securities registered under such
Shelf Registration Statement.
(k) Continental shall use its best efforts to comply
with all applicable rules and regulations of the Commission
and shall make generally available to their security holders
or otherwise provide in accordance with Section 11(a) of the
Securities Act as soon as practicable after the effective
date of the applicable Shelf Registration Statement an
earnings statement satisfying the provisions of Section
11(a) of the Securities Act.
(l) Continental shall cause the Indenture and the
Securities to be qualified under the Trust Indenture Act in
a timely manner.
(m) Continental may require each Holder of
Registrable Securities to be sold pursuant to any Shelf
Registration Statement to furnish to Continental such
information regarding the Holder and the distribution of
such Registrable Securities as Continental may from time to
time reasonably require for inclusion in such Shelf
Registration Statement and Continental may exclude from such
registration the Registrable Securities of any Holder that
fails to furnish such information within a reasonable time
after receiving such request.
(n) Continental shall, if requested, promptly include
or incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement, such
information as the Managing Underwriters reasonably agree
should be included therein and to which Continental does not
reasonably object and shall make all required filings of
such Prospectus supplement or post-effective amendment as
soon as practicable after they are notified of the matters
to be included or incorporated in such Prospectus supplement
or post-effective amendment.
(o) Continental shall enter into such customary
agreements (including underwriting agreements in customary
form) to take all other appropriate actions in order to
expedite or facilitate the registration or the disposition
of the Registrable Securities, and in connection therewith,
if an underwriting agreement is entered into, cause the same
to contain indemnification provisions and procedures
substantially identical to those set forth in Section 5 (or
such other provisions and procedures acceptable to the
Managing Underwriters, if any) with respect to all parties
to be indemnified pursuant to Section 5.
(p) Continental shall (i) make reasonably available
for inspection by the Holders of Registrable Securities to
be registered thereunder, any underwriter participating in
any disposition pursuant to such Shelf Registration
Statement, and any attorney, accountant or other agent
retained by such Holders or any such underwriter all
relevant financial and other records, pertinent corporate
documents and properties of Continental and its
subsidiaries; (ii) cause Continental's officers, directors
and employees to make reasonably available for inspection
all relevant information reasonably requested by such
Holders or any such underwriter, attorney, accountant or
agent in connection with any such Shelf Registration
Statement, in each case, as is customary for similar due
diligence examinations; provided, however, that any
information that is designated in writing by Continental, in
good faith, as confidential at the time of delivery of such
information shall be kept confidential by such Holders or
any such underwriter, attorney, accountant or agent, 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 greatest extent
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; (iii) make
such representations and warranties to the Holders of
Registrable Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are
customarily made by Continental to underwriters in primary
underwritten offerings and covering matters including, but
not limited to, those set forth in the Underwriting
Agreement; (iv) obtain opinions of counsel to Continental
(who may be the general counsel of Continental) and updates
thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and
the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably
requested by such Holders and underwriters (it being agreed
that the matters to be covered by such opinion or written
statement by such counsel delivered in connection with such
opinions shall include in customary form, without
limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be,
the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or
supplemented, including the documents incorporated by
reference therein, of an untrue statement of a material fact
or the omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading; (v) obtain "cold comfort" letters
and updates thereof from the independent public accountants
of Continental (and, if necessary, any other independent
public accountants of any subsidiary of Continental or of
any business acquired by Continental for which financial
statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed to
each such Holder of Registrable Securities registered
thereunder and the underwriters, if any, in customary form
and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary under-
written offerings; (vi) deliver such documents and
certificates as may be reasonably requested by any such
Holders and the Managing Underwriters, if any, including
those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by Continental. The
foregoing actions set forth in clauses (iii), (iv), (v) and
(vi) of this Section 3(p) shall be performed at each closing
under any underwritten offering to the extent required
thereunder.
(q) Continental will use its best efforts to cause the
Class B Common Stock issuable upon conversion of the
Securities to be listed on the New York Stock Exchange on or
prior to the effective date of any Shelf Registration State-
ment hereunder.
(r) In the event that any broker-dealer registered
under the Exchange Act shall underwrite any Registrable
Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution"
(within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers,
Inc. ("NASD")) thereof, whether as a Holder of such
Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or
otherwise, assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without
limitation, by (A) such Rules or By-Laws, including Schedule
E thereto, shall so require, engaging a "qualified
independent underwriter" (as defined in Schedule E) to
participate in the preparation of the Shelf Registration
Statement relating to such Registrable Securities and to
exercise usual standards of due diligence in respect
thereto, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of under-
writers provided in Section 5 hereof and (C) providing such
information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements
of the Rules of Fair Practice of the NASD.
(s) Continental shall use its best efforts to take all
other steps necessary to effect the registration, offering
and sale of the Registrable Securities covered by the Shelf
Registration Statement contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise
provided in Section 6, Continental shall bear all fees and
expenses incurred in connection with the performance of its
obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements
of one firm of counsel designated by Continental and reasonably
acceptable to the Holders of a majority of the Registrable
Securities covered by the Shelf Registration Statement to act as
counsel therefor in connection therewith.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In
connection with any Shelf Registration Statement, Continental
shall indemnify and hold harmless GSI, each Holder, each
underwriter who participates in an offering of Registrable
Securities, each person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and each of their respective directors,
officers, employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, including any amounts paid in
settlement of any investigation, litigation, proceeding or
claim, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement (or any
amendment thereto) covering Registrable Securities,
including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material
fact contained in any Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, that
Continental shall not be liable under this clause (i) for
any settlement of any action effected without its written
consent, which consent shall not be unreasonably withheld;
and
(ii) against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of
counsel chosen by the Holders, such Holder or any
underwriter (except to the extent otherwise expressly
provided in Section 5(c) hereof)), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by any court
or governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under
subparagraph (i) of this Section 5(a);
provided that this indemnity shall not apply to any loss, lia-
bility, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or
omission (i) made in reliance upon and in conformity with written
information furnished to Continental by GSI, such Holder or any
underwriter in writing expressly for use in the Shelf
Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) or
(ii) contained in any preliminary prospectus if GSI, such Holder
or such underwriter failed to send or deliver a copy of the
Prospectus (or any amendment or supplement thereto) to the Person
asserting such losses, claims, damages or liabilities on or prior
to the delivery of written confirmation of any sale of securities
covered thereby to such Person in any case where such Prospectus
(or any amendment or supplement thereto) corrected such untrue
statement or omission. Any amounts advanced by Continental to an
indemnified party pursuant to this Section 5 as a result of such
losses shall be returned to Continental if it shall be finally
determined by such a court in a judgment not subject to appeal or
final review that such indemnified party was not entitled to
indemnification by Continental.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless Continental, GSI, each underwriter
who participates in an offering of Registrable Securities and the
other selling Holders and each of their respective directors,
officers (including each officer of Continental who signed the
Shelf Registration Statement), employees, trustees and agents and
each Person, if any, who controls Continental, GSI, any under-
writer or any other selling Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all loss, liability, claim, damage and
expense whatsoever described in the indemnity contained in
Section 5(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or
omissions, made in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with
written information furnished to Continental by such selling
Holder expressly for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto); provided, however, that, no such Holder
shall be liable for any claims hereunder in excess of the amount
of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the Shelf Registration
Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, enclosing a
copy of all papers served on such indemnified party, but failure
to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have other
than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any
such action. If an indemnifying party so elects within a
reasonable time after receipt of such notice, such indemnifying
party, jointly with any other indemnifying party, may assume the
defense of such action with counsel chosen by it and approved by
the indemnified party or parties defendant in such action,
provided that if any such indemnified party reasonably determines
that there may be legal defenses available to such indemnified
party which are different from or in addition to those available
to such indemnifying party or that representation of such
indemnifying party and any indemnified party by the same counsel
would present a conflict of interest, then such indemnifying
party or parties shall not be entitled to assume such defense.
If an indemnifying party is not entitled to assume the defense of
such action as a result of the proviso to the preceding sentence,
counsel for such indemnifying party shall be entitled to conduct
the defense of such indemnifying party and counsel for each
indemnified party or parties shall be entitled to conduct the
defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as
permitted by the provisions of this paragraph, such indemnifying
party shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection
with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from its own
counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity provision
agreement provided for in this Section 5 is for any reason held
to be unavailable to the indemnified parties although applicable
in accordance with its terms, Continental, GSI and the Holders
shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity
agreement incurred by Continental, GSI and the Holders, as
incurred; provided that 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
that was not guilty of such fraudulent misrepresentation. As
between Continental, GSI and the Holders, such parties shall
contribute to such aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect
the relative fault of Continental, on the one hand, and GSI and
the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage
or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of
Continental, on the one hand, and of GSI and the Holders, 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 Continental, on
the one hand, or by or on behalf of GSI or the Holders, on the
other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission. Continental, GSI and the Holders of the Registrable
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5 were to be determined by
pro rata allocation or by any other method of allocation that
does not take into account the relevant equitable considerations.
For purposes of this Section 5(d), each director, officer,
employee, trustee, agent and Person, if any, who controls GSI or
a Holder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to
contribution as GSI or such Holder, and each director, officer,
employee, trustee and agent of Continental, and each Person, if
any, who controls Continental within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as Continental. No party shall
be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent.
6. UNDERWRITTEN OFFERING. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire
to do so may sell such Registrable Securities 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 Securities to be
included in such offering; provided, however, that (i) such
investment bankers and managers and underwriting arrangements
must be reasonably satisfactory to Continental and (ii)
Continental shall not be obligated to arrange for more than one
underwritten offering during the Effectiveness Period. No Holder
may participate in any underwritten offering contemplated hereby
unless such Holder (a) agrees to sell such Holder's Registrable
Securities 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 Securities 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 and shall reimburse
Continental for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses
incurred in connection with such underwritten offerings.
Notwithstanding the foregoing or the provisions of Section 3(n)
hereof, upon receipt of a request from the Managing Underwriter
or a representative of Holders of a majority of the Registrable
Securities outstanding to prepare and file an amendment or
supplement to the Shelf Registration Statement and Prospectus in
connection with an underwritten offering, Continental may delay
the filing of any such amendment or supplement for up to 90 days
if Continental in good faith has a valid business reason for such
delay.
7. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. Continental may grant
registration rights that would permit any Person that is a third
party the right to piggy-back on any Shelf Registration
Statement, provided that if the Managing Underwriter, if any, of
such offering delivers an opinion to 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 is so large as to materially adversely affect the
success of such offering (including the price at which such
securities can be sold), then only the amount, the 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 the Man-
aging Underwriter prior to any reduction in the amount of
Registrable Securities to be included.
(b) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, qualified, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given, unless Continental has obtained the written consent of
GSI.
(c) NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telex, telecopier, or air cou-
rier guaranteeing overnight delivery:
1. if to a Holder, at the most current address given
by such Holder to Continental in accordance with the provisions
of this Section 6(c);
2. if to GSI, initially at the address set forth in
the Underwriting Agreement; and
3. if to Continental, initially at its address set
forth in the Underwriting Agreement.
All such notices and communications shall be deemed to have been
duly given when received.
GSI or Continental by notice to the other may designate
additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties and the Holders, including,
without the need for an express assignment or any consent by
Continental thereto, subsequent Holders of Registrable
Securities. Continental hereby agrees to extend the benefits of
this Agreement to any Holder of Registrable Securities and any
such Holder may specifically enforce the provisions of this
Agreement as if an original party hereto.
(e) 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.
(f) HEADINGS. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(g) GOVERNING LAW. This agreement shall be governed
by and construed in accordance with the laws of the State of New
York, without giving effect to any provisions relating to
conflicts of laws.
(h) SEVERABILITY. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
impaired or affected thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the
fullest extent permitted by law.
Please confirm that the foregoing correctly sets forth
the agreement between Continental and you.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By:__________________________
Name: Jeffery A. Smisek
Title: Senior Vice President
and General Counsel
The foregoing Registration Rights Agreement is hereby confirmed
and accepted as of the date first above written.
GOLDMAN SACHS INTERNATIONAL
By:_______________________________
(Attorney-in-fact)
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-3) and related
Prospectus of Continental Airlines, Inc. for the registration of
$192,975,000 6 3/4% Convertible Subordinated Notes 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. 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
July 9, 1996
[LETTERHEAD OF CLEARY, GOTTLIEB, STEEN & HAMILTON]
July 10, 1996
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Registration Statement on Form S-3
Ladies & Gentlemen:
We hereby consent to the reference to this firm under
the heading "Risk Factors-Certain Tax Matters" in the Prospectus
included in the above-referenced 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/ Dana L. Trier
--------------------------------
Dana L. Trier, a Partner
24.1(a)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Gordon M. Bethune
Printed name: Gordon M. Bethune
Dated and effective as of April 30, 1996
24.1(b)
POWER OF ATTORNEY
The undersigned officer and director of Continental
Airlines, Inc., a Delaware corporation (the "Company"), does
hereby constitute and appoint 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 or 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 or 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-3 relating to the Company's 6-3/4% Convertible
Subordinated Notes Due April 15, 2006 (the "Registration
Statement"), including specifically, but not limited to, power
and authority to sign for the undersigned in the capacity as an
officer or 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.
By: /s/ Lawrence W. Kellner
Printed name: Lawrence W. Kellner
Dated and effective as of April 30, 1996
24.1(c)
POWER OF ATTORNEY
The undersigned officer and director of Continental
Airlines, Inc., a Delaware corporation (the "Company"), does
hereby constitute and appoint 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 or 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 or 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-3 relating to the Company's 6-3/4% Convertible
Subordinated Notes Due April 15, 2006 (the "Registration
Statement"), including specifically, but not limited to, power
and authority to sign for the undersigned in the capacity as an
officer or 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.
By: /s/ Michael P. Bonds
Printed name: Michael P. Bonds
Dated and effective as of April 30, 1996
24.1(d)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Thomas J. Barrack, Jr.
Printed name: Thomas J. Barrack, Jr.
Dated and effective as of April 30, 1996
24.1(e)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ David Bonderman
Printed name: David Bonderman
Dated and effective as of April 30, 1996
24.1(f)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Gregory D. Brenneman
Printed name: Gregory D. Brenneman
Dated and effective as of April 30, 1996
24.1(g)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Patrick Foley
Printed name: Patrick Foley
Dated and effective as of April 30, 1996
24.1(h)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Douglas H. McCorkindale
Printed name: Douglas H. McCorkindale
Dated and effective as of April 30, 1996
24.1(i)
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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ George G.C. Parker
Printed name: George G.C. Parker
Dated and effective as of June 26, 1996
24.1(j)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Richard W. Pogue
Printed name: Richard W. Pogue
Dated and effective as of April 30, 1996
24.1(k)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ William S. Price III
Printed name: William S. Price III
Dated and effective as of April 30, 1996
24.1(l)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Donald L. Sturm
Printed name: Donald L. Sturm
Dated and effective as of April 30, 1996
24.1(m)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Karen Hastie Williams
Printed name: Karen Hastie Williams
Dated and effective as of April 30, 1996
24.1(n)
POWER OF ATTORNEY
The undersigned officer and 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 an officer or 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 or 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-3 relating to the
Company's 6-3/4% Convertible Subordinated Notes Due April 15,
2006 (the "Registration Statement"), including specifically, but
not limited to, power and authority to sign for the undersigned
in the capacity as an officer or 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.
By: /s/ Charles A. Yamarone
Printed name: Charles A. Yamarone
Dated and effective as of April 30, 1996
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 200549
_____________________
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)__________________
_____________________
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(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 no.)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
-------------------------------
6-3/4% Convertible Subordinated Notes due April 15, 2006
(Title of the 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.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise
corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee,
describe each such affiliation.
None.
Item 3. - 15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7,
1990 and Certificate of Amendment of
the Organization Certificate of Bankers
Trust Company dated June 21, 1995 -
Incorporated herein by reference to
Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by
reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-
21047.
Exhibit 3 - Authorization of the Trustee to
exercise corporate trust powers -
Incorporated herein by reference to
Exhibit 2 filed with Form T-1
Statement, Registration No.
33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, dated as amended on
October 19, 1995. - Incorporated
herein by reference to Exhibit 4
filed with Form T-1 Statement,
Registration No. 33-6517
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act.
- Incorporated herein by reference to
Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of
condition of Bankers Trust Company
dated as of March 31, 1996.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, Bankers Trust Company, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 5th day of June, 1996.
BANKERS TRUST COMPANY
By:_______________________________
Jackie Bartnick
Assistant Vice President
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, Bankers Trust Company, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 5th day of June, 1996.
BANKERS TRUST COMPANY
By: Jackie Bartnick
---------------
Jackie Bartnick
Assistant Vice President
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/96
Address: 130 Liberty Street Vendor ID:D
City, State ZIP: New York, NY 10006 ST-BK: 36-4840
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3 CERT: 00623
FFIEC 031
Page RC-1
11
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks March 31, 1996
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, reported the amount outstanding as of the last
business day of the quarter.
Schedule RC--Balance Sheet
Dollar Amounts C400
in Thousands RCFD Bil Mil Thou
--------------
ASSETS
1. Cash and balances due from ////////////////
depository institutions ////////////////
(from Schedule RC-A): ////////////////
a. Noninterest-bearing ////////////////
balances and currency ////////////////
and coin (1)................ 0081 1,145,000 1.a.
b. Interest-bearing balances(2) 0071 1,403,000 1.b.
2. Securities: ////////////////
a. Held-to-maturity securities
(from Schedule RC-B,
column A)................... 1754 0 2.a.
b. Available-for-sale
securities (from Schedule
RC-B, column D)............. 1773 3,535,000 2.b.
3. Federal funds sold and securities ////////////////
purchased under agreements to ////////////////
resell in domestic offices of the ////////////////
bank and of its Edge and ////////////////
Agreement subsidiaries, and in ////////////////
IBF's:...........................
a. Federal funds sold: 0276 3,190,000 3.a.
b. Securities purchased
under agreements to resell: 0277 2,242,000 3.b.
4. Loans and lease financing ////////////////
receivables: //////////////// 4.a.
//////////////// 4.b.
//////////////// 4.c.
////////////////
a. Loans and leases, net of
unearned income (from
Schedule RC-C)............ RCFD 2122 24,678,000
b. LESS:
Allowance for loan
and lease losses: ........ RCFD 3123 938,000
c. LESS:
Allocated transfer
risk reserve.............. RCFD 3128 0
d. Loans and leases, net of
unearned income, allowance, and
reserve (Item 4.a minus
4.b and 4.c).............. 2125 23,740,000 4.d
5. Assets held in trading accounts 3545 32,261,000 5.
6. Premises and fixed assets
(including capitalized leases) 2145 857,000 6.
7. Other real estate owned (from
Schedule RC-M).................. 2150 247,000 7.
8. Investments in unconsolidated
subsidiaries and associated
companies (from Schedule RC-M).. 2130 253,000 8.
9. Customers' liability to this
bank on acceptances outstanding 2155 402,000 9.
10. Intangible assets (from Schedule
RC-M)........................... 2143 12,000 10.
11. Other assets (from Schedule RC-F) 2160 11,579,000 11.
12. Total assets (sum of items 1
through 11)..................... 2170 80,866,000 12.
- -------------------------
(1) Includes cash items of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading
accounts.
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/96
Address: 130 Liberty Street Vendor ID:D
City, State ZIP: New York, NY 10006 ST-BK: 36-4840
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3 CERT: 00623
FFIEC 031
Page RC-2
12
Schedule RC-Continued
Dollar Amounts in thousands Bil Mil Thou
LIABILITIES
13. Deposits:
a. In domestic
offices (sum of
totals of
columns A and C
from Schedule
RC-E, part 1) RCON 2200 7,327,000 13.a
(1) Noninterest-
bearing(1)...RCON 6642 3,243,000
(2) Interest-
bearing......RCON 6636 5,195,000
b. In foreign offices, Edge and Agreement
subsidiaries, and IBF's (from Schedule
RC-E part II)
(1) Noninterest-
bearing......RCFN 6631 552,000
(2) Interest-
bearing......RCFN 6636 18,023,000
14. Federal Funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBF's:
a. Federal funds purchased....... RCFD 0278 2,324,000 14.a.
b. Securities sold under
agreements to repurchase...... RCFD 0279 651,000 14.b.
15. a. Demand notes issued
to the U.S. Treasury.......... RCON 2840 0 15.a.
b. Trading liabilities........... RCFD 3548 18,807,000 15.b.
16. Other borrowed money:
a. With original maturity
of one year or less........... RCFD 2332 13,784,000 16.a.
b. With original maturity
of more than one year......... RCFD 2333 3,462,000 16.b.
17. Mortgage indebtedness and
obligations under
capitalized leases............... RCFD 2910 34,000 17.
18. Bank's liability on
acceptances executed and
outstanding...................... RCFD 2920 415,000 18.
19. Subordinated notes and
debentures....................... RCFD 3200 1,227,000 19.
20. Other liabilities (from
Schedule RC-G)................... RCFD 2930 9,724,000 20.
21. Total liabilities (sum of items
13 through 20)................... RCFD 2948 76,330,000 21.
22. Limited-life preferred
stock and related surplus........ RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock
and related surplus.............. RCFD 3838 500,000 23.
24. Common stock..................... RCFD 3230 1,002,000 24.
25. Surplus (exclude all
surplus related to
preferred stock)................. RCFD 3839 528,000 25.
26. a. Undivided profits
and capital reserves.......... RCFD 3632 2,879,000 26.a.
b. Net unrealized
holding gains (losses)
on available-for-sale
securities.................... RCFD 8434 ( 8,000 6.b.
27. Cumulative foreign currency
translation adjustments.......... RCFD 3284 ( 365,000) 27.
28. Total equity capital (sum
of items 23 through 27).......... RCFD 3210 4,536,000 28.
29. Total liabilities, limited-
life preferred stock, and
equity capital (sum of
items 21, 22, and 28)............ RCFD 3300 80,866,000 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the
number of the statement below that best
describes the most comprehensive level of
auditing work performed for the bank by
independent external
auditors as of any date Number
during 1994..........................RCFD 6724 2 M.1
1 = Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
4 = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by external
auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work