As filed with the Securities and Exchange Commission on February 7, 2001
Registration No. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONTINENTAL AIRLINES, INC.
CONTINENTAL AIRLINES FINANCE TRUST II
(Exact name of Registrants as specified in their charters)
Delaware 74-2099724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1600 Smith Street
Houston, Texas 77002
(713) 324-2950
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Jeffery A. Smisek, Esq.
Executive Vice President, General Counsel and Secretary
Continental Airlines Inc.
Administrative Agent, Continental Airlines Finance Trust II
1600 Smith Street, Dept. HQSEO
Houston, Texas 77002
(713) 324-5000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Michael L. Ryan, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
(212) 225-2000
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
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 securities offered only in connection with
dividend or interest reinvestment plans, please 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: |_|
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CALCULATION OF REGISTRATION FEE
Proposed
Title of Each Class of Securities Amount To Be Proposed Maximum Offering Maximum Aggregate Amount of
To Be Registered Registered Price Per Security(1) Offering Price(1) Registration Fee
---------------- ---------- --------------------- ----------------- ----------------
6% Convertible Preferred Securities, Term
Income Deferrable Equity Securities
(TIDESSM)(2) of Continental Airlines
Finance Trust II........................ 5,000,000 $50 $250,000,000 $62,500
6% Convertible Junior Subordinated Debentures
due 2030 of Continental Airlines, Inc... (3) (3) (3) (3)
Preferred Securities Guarantee of the TIDES by
Continental Airlines, Inc............... (4) (4) (4) (4)
Class B Common Stock of Continental Airlines,
Inc..................................... 4,166,667 (5) (5) (5) (5)
Total................................ N/A N/A $250,000,000 $62,500
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.
(2) Exclusive of accrued interest and distributions, if any.
(3) $257,732,000 in aggregate principal amount of 6% Convertible Junior
Subordinated Debentures due 2030 (the "debentures") of Continental
Airlines, Inc. (the "Company") were issued and sold to Continental Airlines
Finance Trust II (the "Trust") in connection with the issuance by the Trust
of 5,000,000 of its 6% Convertible Preferred Securities, Term Income
Deferrable Equity Securities ("TIDES"). The debentures may be distributed,
under certain circumstances, to the holders of the TIDES for no additional
consideration.
(4) Includes the rights of holders of the TIDES under the preferred securities
guarantee agreement between the Company and Wilmington Trust Company, as
guarantee trustee (the "guarantee"). No separate consideration will be
received for the guarantee.
(5) Such number of shares of common stock as are initially issuable upon
conversion of the TIDES or the debentures registered hereunder for no
additional consideration. This Registration Statement also covers such
shares of common stock as may be issuable pursuant to anti-dilution
adjustments.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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X The Information in this preliminary prospectus is not complete and may be X
X changed. These securities may not be sold until the registration statement X
X filed with the Securities and Exchange Commission is effective. This X
X preliminary prospectus is not an offer to sell nor does it seek an offer to X
X buy these securities in any jurisdiction where the offer or sale is not X
X permitted. X
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Subject to completion, dated February 7, 2001
Prospectus
5,000,000 TIDESSM
Continental Airlines Finance Trust II
6% Convertible Preferred Securities,
Term Income Deferrable Equity Securities (TIDES)SM*
(liquidation amount $50 per each of the TIDES)
guaranteed by, and convertible into Class B common stock of,
[LOGO OF CONTINENTAL AIRLINES, INC.]
Continental Airlines, Inc.
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The selling holders may offer, from time to time:
o 6% Convertible Preferred Securities, Term Income Deferrable Equity
Securities (TIDES)SM, or TIDES SM of Continental Airlines Finance Trust II
o 6% Convertible Junior Subordinated Debentures due 2030 of Continental
Airlines, Inc.
o shares of Class B common stock of Continental Airlines, Inc.
Continental Airlines Finance Trust II is a Delaware business trust. The
TIDES represent undivided beneficial ownership interests in the assets of
Continental Airlines Finance Trust II.
The selling holders may sell these securities from time to time
directly to purchasers or through agents, underwriters or dealers. If required,
the names of any other selling holders, agents or underwriters involved in the
sale of these securities and the applicable agent's commission, dealer's
purchase price or underwriter's discount, if any, will be set forth in a
supplement to this prospectus. This prospectus may not be used to offer and sell
these securities unless accompanied by a prospectus supplement. We will not
receive any proceeds from the sale of these securities.
*The terms Term Income Deferrable Equity Securities (TIDES)SM and
TIDESSM are registered service marks of Credit Suisse First Boston Corporation.
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You should carefully consider matters discussed under the caption "Risk
Factors" beginning on page 8.
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.
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The date of this prospectus is [ ], 2001.
TABLE OF CONTENTS
Page
WHERE YOU CAN FIND MORE INFORMATION................................ii
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS.............iii
PROSPECTUS SUMMARY..................................................1
RISK FACTORS........................................................8
USE OF PROCEEDS....................................................15
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS..............................15
ACCOUNTING TREATMENT OF THE TIDES..................................15
CONTINENTAL AIRLINES FINANCE TRUST II..............................16
DESCRIPTION OF TIDES...............................................17
DESCRIPTION OF DEBENTURES..........................................34
DESCRIPTION OF GUARANTEE...........................................42
RELATIONSHIP AMONG THE TIDES,
THE DEBENTURES AND THE GUARANTEE...................................44
DESCRIPTION OF CAPITAL STOCK.......................................46
TAX CONSEQUENCES...................................................53
CERTAIN ERISA CONSIDERATIONS.......................................57
REGISTRATION RIGHTS................................................59
SELLING HOLDERS....................................................59
PLAN OF DISTRIBUTION...............................................61
LEGAL MATTERS......................................................62
EXPERTS ..........................................................62
As used in this prospectus, (a) the "indenture" means the Indenture
between Continental Airlines, Inc. and Wilmington Trust Company, as trustee (the
"debenture trustee") relating to the debentures, (b) the "declaration of trust"
means the Amended and Restated Declaration of Trust relating to the trust among
Continental Airlines, Inc., as trust sponsor (the "sponsor"), Wilmington Trust
Company, as property trustee, Wilmington Trust Company, as Delaware trustee, the
individuals named as administrative trustees therein (the "administrative
trustees" and collectively with the property trustee and the Delaware trustee,
the "trustees") and the holders from time to time of undivided beneficial
interests in the assets of the trust, (c) the "guarantee" means the Preferred
Securities Guarantee Agreement between Continental Airlines, Inc. and Wilmington
Trust Company, as guarantee trustee, (d) the "common securities" means the
common securities issued by the trust, (e) the "trust securities" means the
TIDES and the common securities, (f) unless the context requires otherwise, the
"common stock" means the Class B common stock of Continental Airlines, Inc., par
value $.01 per share, (g) the "debentures" means the 6% Convertible Junior
Subordinated Debentures due 2030 issued by us, and (h) the "offered securities"
means the TIDES and underlying common stock. Unless the context requires
otherwise, "Continental," "we," "us," "our" and similar terms in this prospectus
refer solely to Continental Airlines, Inc. and not the trust or any of our other
consolidated subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act. You may read
and copy this information at the following locations of the SEC:
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, N.W. 13th Floor 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661
You may also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at (800) SEC-0330.
The SEC also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
reports electronically with the SEC. The address of that site is
http://www.sec.gov.
You may also inspect reports, proxy statements and other information
about us at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
The SEC allows us to incorporate by reference information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus, except
for any information that is superseded by subsequent incorporated documents or
by information that is included directly in this prospectus.
This prospectus includes by reference the documents listed below that
we previously have filed with the SEC and that are not delivered with this
prospectus. They contain important information about our company and its
financial condition.
Continental SEC Filings (File No. 0-9781) Date Filed
----------------------------------------- ----------
Registration Statement on Form February 6, 2001
8-A/A#3, which contains the
description of our Class B
common stock, and any amendment or
report filed for the purpose
of updating such description
Registration Statement on Form January 22, 2001
8-A/A, which contains the
description of the Series A
Junior Participating Preferred
Stock Purchase Rights associated
with our Class B common stock,
and any amendment or report filed
for the purpose of updating such description
Annual Report on Form 10-K for the February 6, 2001
year ended December 31, 2000
We are also incorporating by reference all additional documents that we
file with the SEC under Section 13(a) or 15(d) of the Securities Exchange Act
after the date of this prospectus.
You may obtain any of these incorporated documents from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference in such document. You may obtain
documents incorporated by reference in this prospectus by requesting them from
us in writing or by telephone at the following address:
Continental Airlines, Inc.
1600 Smith Street, Dept. HQSEO
Houston, Texas 77002
Attention: Secretary (713) 324-2950
If you request any incorporated documents from us, we will mail them to
you by first class mail, or another equally prompt means, within one business
day after we receive your request.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference may
contain statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. Forward-looking statements include any statements that predict,
forecast, indicate or imply future results, performance or achievements, and may
contain the words "believe," "anticipate," "expect," "estimate," "project,"
"will be," "will continue," "will result," or words or phrases of similar
meaning.
Any such forward-looking statements are not assurances of future
performance and involve risks and uncertainties. Actual results may vary
materially from anticipated results for a number of reasons, including those
stated in our SEC reports incorporated in this prospectus by reference under the
caption "Risk Factors."
All forward-looking statements attributable to us are expressly
qualified in their entirety by the cautionary statements above.
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
information contained elsewhere in this prospectus.
CONTINENTAL AIRLINES, INC.
We are a major U.S. air carrier engaged in the business of transporting
passengers, cargo and mail. We are the fifth largest U.S. airline, as measured
by 2000 revenue passenger miles, and, together with our wholly owned
subsidiaries, Continental Express, Inc. and Continental Micronesia, Inc., served
230 airports worldwide at January 19, 2001. As of January 19, 2001, we flew to
136 domestic and 94 international destinations and offered additional connecting
service through alliances with domestic and foreign carriers. We directly served
16 European cities, seven South American cities, Tel Aviv and Tokyo and are one
of the leading airlines providing service to Mexico and Central America, serving
more destinations there than any other U.S. airline. Through our Guam hub,
Continental Micronesia provides extensive service in the western Pacific,
including service to more Japanese cities than any other U.S. carrier.
We operate our route system primarily through domestic hubs at Newark
International Airport, George Bush Intercontinental Airport in Houston, Hopkins
International Airport in Cleveland, and a Pacific hub on the island of Guam. We
are the primary carrier at each of these hubs, accounting for 55%, 78%, 50% and
68% of average daily jet departures from these locations, respectively, as of
January 19, 2001 (in each case excluding regional jets). Each of our domestic
hubs is located in a large business and population center, contributing to a
high volume of "origin and destination" traffic. The Guam hub is strategically
located to provide service from Japanese and other Asian cities to popular
resort destinations in the western Pacific.
We are a Delaware corporation, with executive offices located at 1600
Smith Street, Houston, Texas 77002. Our telephone number is (713) 324-2950.
NORTHWEST TRANSACTION
On November 15, 2000, we executed various agreements, which we refer to
as the Northwest Agreements, with Northwest Airlines Corporation and certain of
its affiliates (which we refer to collectively as Northwest) under which we,
among other things, repurchased most of the Class A common stock owned by
Northwest, reclassified all issued shares of Class A common stock into Class B
common stock, and made other adjustments to our corporate and alliance
relationship with Northwest. Our stockholders ratified this reclassification and
the related charter amendments at a special stockholders meeting held on January
22, 2001. We refer to these events collectively as the Northwest Transaction.
Under the Northwest Agreements, we and Northwest supported an adjournment of the
Department of Justice, or DOJ, lawsuit pending closing of the transaction (which
adjournment was granted by the U.S. District Court on November 6, 2000) and
sought dismissal of the DOJ litigation, which dismissal was granted on January
22, 2001. The Northwest Agreements have, among other matters, effected the
following as of January 22, 2001:
Repurchase and Recapitalization. We repurchased from Northwest
6,685,279 shares of Class A common stock for $450 million in cash. We
refer to this transaction as the repurchase. Immediately thereafter,
the remaining 1,975,945 shares of Class A common stock held by
Northwest (as well as all other issued shares of Class A common stock)
were reclassified into Class B common stock at an exchange ratio of
1.32 shares of common stock per share of Class A common stock. We refer
to this event as the recapitalization. The repurchase, the
reclassification and the related termination of a limited proxy reduced
Northwest's general voting power with respect to us from approximately
59.6% to approximately 7.2%.
Northwest Alliance. The existing alliance with Northwest
Airlines, Inc. was amended to extend its term through 2025 and to add
additional termination rights (principally related to changes of
control of Northwest Airlines or us and certain redemptions of the
preferred stock described below).
Preferred Stock. In connection with the amendment to the
Northwest Alliance, we issued to Northwest Airlines one share of a new
series of preferred stock, which we refer to as the Preferred Stock,
for a nominal price. The Preferred Stock gives Northwest Airlines the
right to block, during the term of the Northwest Alliance, or if
earlier, until the Preferred Stock becomes redeemable, on:
o certain business combinations and similar changes of control
transactions involving us and a third party major air carrier,
o certain amendments to our rights plan (or redemption of those
rights),
o any dividend or distribution of all or substantially all of our
assets, and
o certain reorganizations and restructuring transactions involving
us.
The Preferred Stock is redeemable by us at a nominal price (and the
blocking rights eliminated) if:
o Northwest Airlines transfers or encumbers the Preferred Stock,
o there is a change of control of Northwest involving a third party
major air carrier,
o the Northwest Alliance terminates or expires (other than as a
result of a breach by us), or
o Northwest materially breaches its standstill obligations to us or
triggers our rights agreement (described below under "Description
of Capital Stock").
Standstill Agreement. We entered into a customary standstill
agreement with Northwest that contains standstill and conduct
restrictions similar to those that were contained in the parties'
corporate governance agreement (now terminated), except that all of our
securities now owned by Northwest following the repurchase are to be
voted neutrally on all matters other than a Continental change of
control (in which case they may be voted at Northwest's discretion) and
the percentage of our equity permitted to be owned by Northwest will be
adjusted downward to reflect its holdings following the repurchase and
recapitalization, and upward if the number of shares of our common
stock outstanding decreases.
Rights Agreement. Our rights agreement was amended to take into
account the effects of the recapitalization and the repurchase, and to
eliminate Northwest as an "Exempt Person." See "Description of Capital
Stock--Preferred Stock Purchase Rights--Exempt Person."
Charter Amendment. At the special meeting of our stockholders
held on January 22, 2001, our charter was amended to:
o reclassify the Class A common stock pursuant to the
recapitalization,
o eliminate references to Class A and Class D common stock,
o eliminate the special rights of a Northwest affiliate that owned
Class A common stock, and
o provide that until the termination of the Preferred Stock
blocking rights (or the earlier redemption of the Preferred
Stock), we will maintain and renew our rights agreement and,
without the approval of the holder of the Preferred Stock, will
not amend the rights agreement or redeem the rights thereunder to
permit any change of control of our company involving a third
party major air carrier.
Governance Agreement and Supplemental Agreement. The corporate
governance agreement and the related supplemental agreement with
certain parties who are affiliates of Northwest were each terminated at
the closing of the transactions described in this section.
We also entered into an agreement with 1992 Air, Inc. pursuant to which
we purchased and terminated the "rights of offer and re-offer" covering the
Class A common stock formerly owned by Northwest in exchange for a payment from
us of $10 million in cash.
In the Northwest Agreement, Northwest irrevocably waived the
pre-emptive rights contained in its corporate governance agreement with us as
they related to the original offering of the TIDES.
THE OFFERING
The TIDES were originally issued by the trust and sold by Credit Suisse
First Boston Corporation and UBS Warburg LLC (the "initial purchasers") in a
transaction exempt from the registration requirements of the Securities Act, to
persons reasonably believed by such initial purchasers to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act). The
trust used all of the proceeds from the issuance of the TIDES and the concurrent
sale of its common securities to us to purchase debentures from us.
Issuer..............Continental Airlines Finance Trust
II is a Delaware business trust and our subsidiary.
Substantially all the assets of the trust consist of
debentures issued by us. We own all of the outstanding
common securities of the trust. The address of the trust's
principal office is c/o Continental Airlines, Inc., 1600
Smith Street, Houston, Texas 77002, and its telephone number
is (713) 324-2950.
Securities
Registered..........5,000,000 TIDES, $257,732,000 in
aggregate principal amount of the 6% Convertible Junior
Subordinated Debentures, due November 15, 2030, 4,166,667
shares of common stock issuable upon conversion of the TIDES
(subject to adjustment) and the guarantee of the TIDES.
Distributions.......Distributions on the TIDES are
payable at the annual rate of 6% of the $50 liquidation
amount per TIDES. Distributions are cumulative and began to
accumulate on the date of original issuance of the TIDES.
Distributions are payable quarterly, in arrears, on
February 15, May 15, August 15 and November 15 of each year,
beginning February 15, 2001, unless we defer interest
payments on the debentures.
Distribution Deferral
Provisions..........We can, on one or more occasions, defer the
interest payments due on the debentures for up to 20
consecutive quarters unless an event of default under the
debentures has occurred and is continuing. However, we
cannot defer interest payments beyond the maturity date of
the debentures, which is November 15, 2030. If we defer
interest payments on the debentures, the trust will also
defer distributions on the TIDES. The trust will be able to
pay distributions on the TIDES only if and to the extent it
receives interest payments from us on the debentures. During
any deferral period, distributions will continue to
accumulate quarterly at an annual rate of 6% of the
liquidation amount of $50 per TIDES. Also, the deferred
distributions will themselves accrue additional
distributions at an annual rate of 6%, to the extent
permitted by law. The trust will send you written notice of
any deferral of distributions on the TIDES not later than 10
days prior to the record date for the related TIDES
distribution. During any period in which we defer interest
payments on the debentures, in general, the trust cannot:
o declare or pay any dividend or distribution on our
capital stock,
o redeem, purchase, acquire or make a liquidation payment
on any of our capital stock,
o make any interest, principal or premium payment on, or
repurchase or redeem any of our debt securities that
rank equally with or junior to the debentures, or
o make any payment on any guarantee by us of the debt
securities of any of our subsidiaries if the guarantee
ranks equal or junior to the debentures.
If an interest payment deferral occurs,
you will continue to recognize interest
income for U.S. federal income tax purposes in
advance of your receipt of any corresponding
cash distribution.
If you convert your TIDES during any interest
payment deferral period, you will not receive
any cash payment for any deferred distributions.
Conversion into
Common Stock.............You may convert each TIDES into
shares of our common stock at the initial conversion
price of $60 per share of our common stock (equivalent
to an initial conversion rate of approximately 0.8333
shares of common stock for each of the TIDES). The last
reported sale price of our common stock on the New York
Stock Exchange on February 5, 2001 was $51.21 per
share. In connection with any conversion of the TIDES,
the property trustee of the trust will exchange those
TIDES for debentures having a principal amount equal to
the stated liquidation amount of $50 per TIDES
exchanged. The property trustee will then immediately
convert the debentures into our common stock. We will
not issue any fractional shares of common stock as a
result of the conversion. Instead, we will pay the
fractional interest in cash based on the then current
market value of our common stock. Also, we will not
issue any additional shares of our common stock upon
conversion of the TIDES to pay for any accrued but
unpaid distributions on the TIDES at the time of
conversion.
Redemption by
the Trust................The trust will redeem all outstanding TIDES when the
debentures are paid at maturity on November 15, 2030.
In addition, we can make the trust redeem some or all
of the TIDES at any time on or after November 20, 2003
by redeeming the debentures at the redemption prices
described on page 35, plus any accrued and unpaid
distributions thereon. If that happens, the trust will
use the cash it receives from our redemption of the
debentures to redeem, on a pro rata basis, TIDES of an
aggregate liquidation amount equal to the aggregate
principal amount of the debentures redeemed.
Tax Event or
Investment Company
Event Redemption or
Distribution.............Upon the occurrence of a tax event described below or a
change in law that would require the trust to register
as an investment company under the Investment Company
Act of 1940, we may be required to dissolve the trust
and, after satisfaction of liabilities to creditors of
the trust as required by applicable law, exchange all
outstanding TIDES for debentures. In certain limited
circumstances, upon the occurrence of a tax event, we
will have the right to redeem the debentures in whole,
but not in part, at a price equal to their aggregate
principal amount plus any accrued and unpaid interest.
Additionally, upon the occurrence of a tax event, we
may elect to leave the TIDES outstanding and pay
additional amounts to the trust so that the
distributions to holders of the TIDES are not reduced
because of the tax event.
A tax event generally means specified tax changes that
could result in:
o the trust being subject to U.S. federal income
taxes or more than a de minimis amount of other
governmental charges, or
o the non-deductibility of interest payments on the
debentures.
Liquidation Amount.......If the trust is liquidated and the debentures are not
distributed to you, you will generally be entitled to
receive, after satisfaction of liabilities to creditors
of the trust as required by applicable law, $50 per
TIDES plus accrued and unpaid distributions on each
TIDES you hold.
The Guarantee...........We have irrevocably guaranteed the trust's payment
obligations on the TIDES to the extent described in
this prospectus. Under the guarantee, we guarantee the
trust's payment obligations, but only to the extent the
trust has sufficient funds to make payments on the
TIDES. If we do not make payments on the debentures,
the trust will not have sufficient funds to make
payments on the TIDES, in which case you will be unable
to rely on the guarantee for payment. Our obligations
under the guarantee are unsecured and junior to our
obligations to make payments on all of our senior
obligations, except as discussed elsewhere in this
prospectus.
Liquidation of
the Trust...............We have the right to dissolve the trust at any time. If
we exercise this right, the trust will, after
satisfaction of liabilities to creditors of the trust
as required by applicable law, redeem the TIDES by
distributing the debentures to you. If a tax event or a
change in law that could require the trust to register
as an investment company under the Investment Company
Act of 1940 occurs, the trust may be required to redeem
the TIDES by distributing the debentures to you.
Voting Rights............Generally, you do not have any voting rights as a
holder of TIDES. However, in limited circumstances, the
holders of the TIDES, by majority vote, will have the
right to elect a special trustee.
Ranking..................Payments on the TIDES are made pro rata with the
common securities except as described under the
"Description of TIDES--Subordination of Common
Securities" section of this prospectus. The debentures
will be unsecured and subordinated to all of our senior
obligations and be effectively subordinated to
indebtedness of our subsidiaries. Please read the
"Description of Debentures--Subordination" section of
this prospectus. At December 31, 2000, our senior
obligations included approximately $3.7 billion of debt
and capital lease obligations. Our senior obligations
also included certain minimum annual commitments under
long-term operating leases of aircraft or aircraft
engines.
Form of TIDES............The TIDES are represented by a global certificate
registered in the name of Cede & Co., as nominee for
The Depository Trust Company, or DTC. Beneficial
interests in the TIDES are evidenced by records
maintained by DTC or the participants in DTC. Except
under limited circumstances, TIDES in certificated form
will not be issued in exchange for the global
certificate or certificates.
Use of Proceeds..........The selling holders will receive all of the net
proceeds from the resale of the offered securities.
Neither we nor the trust will receive any such
proceeds.
Registration Rights......Under a registration rights agreement, we and the trust
have agreed to use our best efforts to keep the shelf
registration statement, of which this prospectus is a
part, effective and useable (subject to certain
exceptions) for two years or such other period as shall
be required under Rule 144(k) of the Securities Act or
such shorter period ending when all the TIDES,
debentures and common stock issuable upon their
conversion that are covered by the registration
statement have been sold. Special interest and special
distributions will accrue on the debentures and the
TIDES if we or the trust fail to meet our obligations
under the registration rights agreement.
Absence of Market
for the TIDES...........The TIDES were initially a privately placed security.
As a result of the effectiveness of the registration
statement of which this prospectus is a part, the TIDES
are no longer restricted securities under the
Securities Act. However, there is currently no market
for the TIDES. Although the initial purchasers have
informed us that they currently intend to make a market
in the TIDES, the initial purchasers are not obligated
to do so, and any market making may be discontinued at
any time without notice. Accordingly, you cannot be
assured that a liquid market for the TIDES will
develop.
Trading..................Our common stock is listed on the New York Stock
Exchange under the symbol "CAL." The common stock
issuable upon conversion of the TIDES has been listed
on the New York Stock Exchange.
RISK FACTORS
Investing in the TIDES involves risk. In addition to the risk factors
described in our Annual Report on Form 10-K for the year ended December 31,
2000, which is incorporated by reference in this prospectus, you should
carefully consider the risk factors described below, in addition to the other
information contained or incorporated by reference in this prospectus, before
making an investment decision. The risks and uncertainties described below and
incorporated by reference are not the only risks we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
impair our business operations.
Each of the following factors could have a material adverse affect on
our business, financial condition or results of operations, causing the trading
price of the TIDES and our common stock to decline and the loss of all or part
of your investment.
Risk Factors Relating to Continental
High Leverage and Significant Financing Needs
We have a higher proportion of debt compared to our equity capital than
some of our principal competitors. In addition, we have less cash resources than
some of our principal competitors. A majority of our property and equipment is
subject to liens securing indebtedness. Accordingly, we may be less able than
some of our competitors to withstand a prolonged recession in the airline
industry or respond as flexibly to changing economic and competitive conditions.
As of December 31, 2000, we had approximately $3.7 billion (including
current maturities) of long-term debt and capital lease obligations and
approximately $1.9 billion of Continental-obligated mandatorily redeemable
preferred securities of trust, redeemable common stock and common stockholders'
equity. Also at December 31, 2000, we had $1.4 billion in cash, cash equivalents
and short-term investments.
We have substantial commitments for capital expenditures, including for
the acquisition of new aircraft. As of December 31, 2000, we had agreed to
acquire or lease a total of 86 additional Boeing jet aircraft through 2005. We
anticipate taking delivery of 35 Boeing jet aircraft in 2001. We also have
options for an additional 105 aircraft (exercisable subject to certain
conditions). The estimated aggregate cost of our firm commitments for Boeing
aircraft is approximately $4 billion. We currently plan to finance our new
Boeing aircraft with a combination of enhanced pass through trust certificates,
lease equity and other third-party financing, subject to availability and market
conditions. As of December 31, 2000, we had approximately $890 million in
financing arranged for such Boeing deliveries. We also have commitments or
letters of intent for backstop financing for approximately 23% of the
anticipated remaining acquisition cost of future Boeing deliveries. In addition,
at December 31, 2000, we had firm commitments to purchase 26 spare engines
related to the new Boeing aircraft for approximately $158 million, which will be
deliverable through March 2005.
As of December 31, 2000, Continental Express had firm commitments for
178 Embraer regional jets with options for an additional 100 Embraer regional
jets exercisable through 2007. Continental Express anticipates taking delivery
of 41 regional jets in 2001. The estimated cost of our firm commitments for
Embraer regional jets is approximately $3 billion. Neither Continental Express
nor we will have any obligation to take any such firm Embraer aircraft that are
not financed by a third party and leased to us.
For 2000, cash expenditures under operating leases relating to aircraft
approximated $864 million, compared to $758 million for 1999, and approximated
$353 million relating to facilities and other rentals compared to $328 million
in 1999. We expect that our operating lease expenses for 2001 will increase over
2000 amounts.
Additional financing will be needed to satisfy our capital commitments.
We cannot predict whether sufficient financing will be available for capital
expenditures not covered by firm financing commitments.
We utilized some of our cash and issued the debentures in order to
finance the purchase in cash of $450 million of shares of Class A common stock
from Northwest after the recapitalization described under "Northwest
Transaction" above. The industry in which we operate is a cash-intensive
business and it is therefore desirable for us to maintain adequate cash on hand.
While we believe that the amount of cash, cash equivalents, short-term
investments and borrowing capacity that remains available to us after the
recapitalization will be sufficient, we cannot provide complete assurance that
this will be the case in all circumstances.
Our Historical Operating Results
We have recorded positive net income in each of the last six years.
However, we experienced significant operating losses in the previous eight
years. Historically, the financial results of the U.S. airline industry have
been cyclical. We cannot predict whether current industry conditions will
continue.
Significant Cost of Aircraft Fuel
Fuel costs constitute a significant portion of our operating expense.
Fuel costs were approximately 15.6% of operating expenses for the year ended
December 31, 2000 and 9.7% for the year ended December 31, 1999 (excluding fleet
disposition/impairment losses). Fuel prices and supplies are influenced
significantly by international political and economic circumstances. We enter
into petroleum swap contracts, petroleum call option contracts and/or jet fuel
purchase commitments to provide some short-term protection (generally three to
six months) against a sharp increase in jet fuel prices. Our fuel hedging
strategy could result in our not fully benefiting from certain fuel price
declines. If a fuel supply shortage were to arise from OPEC production
curtailments, a disruption of oil imports or otherwise, higher fuel prices or
reduction of scheduled airline service could result. Significant changes in fuel
costs or continuation of high current jet fuel prices would materially affect
our operating results.
Labor Costs
Labor costs constitute a significant percentage of our total operating
costs, and we experience competitive pressure to increase wages and benefits. In
July 2000, we completed a three-year program bringing all employees to industry
standard wages and also announced and began to implement a phased plan to bring
employee benefits to industry standard levels by 2003. The plan provides for
increases in vacation, paid holidays, increased 401(k) company matching
contributions and additional past service retirement credit for most senior
employees.
Ability to Use Net Operating Loss Carryforwards
At December 31, 2000, we had estimated net operating loss
carryforwards, or NOLs, of $1 billion for federal income tax purposes that will
expire through 2021 and federal investment tax credit carryforwards of $45
million that will expire through 2001. Due to an ownership change of our company
on April 27, 1993, the ultimate utilization of our NOLs and investment tax
credits may be limited, as described below. Reflecting this limitation, we had a
valuation allowance of $263 million at December 31, 2000.
We had, as of December 31, 2000, deferred tax assets aggregating $677
million, including $366 million related to NOLs. We have consummated several
transactions that resulted in the recognition of NOLs of our predecessor. To the
extent we were to determine in the future that additional NOLs of our
predecessor could be recognized in the accompanying consolidated financial
statements, such benefit would reduce the value ascribed to routes, gates and
slots.
Section 382 of the Internal Revenue Code imposes limitations on a
corporation's ability to utilize NOLs if it experiences an "ownership change."
In general terms, an ownership change may result from transactions increasing
the ownership of certain stockholders in the stock of a corporation by more than
50 percentage points over a three-year period. In the event that an ownership
change occurred, utilization of our NOLs would be subject to an annual
limitation under Section 382 determined by multiplying the value of our stock at
the time of the ownership change by the applicable long-term tax-exempt rate
(which was 5.39% for December 2000). Any unused annual limitation may be carried
over to later years, and the amount of the limitation may under certain
circumstances be increased by the built-in gains in assets held by us 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, our annual NOL
utilization would be limited to approximately $174 million per year other than
through the recognition of future built-in gain transactions.
In November 1998, Northwest completed its acquisition of certain
equity of our company previously held by Air Partners, L.P. and its affiliates,
together with certain of our Class A common stock held by other investors,
totaling 8,661,224 shares of the Class A common stock. On January 22, 2001, we
repurchased 6,685,279 shares of our Class A common stock from Northwest and an
affiliate. In addition, each issued share of our Class A common stock was
reclassified into 1.32 shares of Class B common stock in a nontaxable
transaction. We do not believe that these transactions resulted in an ownership
change for purposes of Section 382.
Continental Micronesia's Dependence on the Japanese Economy; Currency
Risk
Because the majority of Continental Micronesia'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. To reduce
the potential negative impact on Continental Micronesia's earnings, we have
entered into forward contracts as a hedge against a portion of our expected net
yen cash flow position. As of December 31, 2000, we had hedged approximately 75%
of 2001 projected yen-denominated net cash flows at a rate of 99 yen to $1 US.
Risk Factors Relating to the Airline Industry
Competition and Industry Conditions
The airline industry is highly competitive and susceptible to price
discounting. Carriers have used discount fares to stimulate traffic during
periods of slack demand, to generate cash flow and to increase market share.
Some of our competitors have substantially greater financial resources or lower
cost structures than we do.
Airline profit levels are highly sensitive to changes in fuel costs,
fare levels and passenger demand. Passenger demand and fare levels have in the
past been influenced by, among other things, the general state of the economy
(both internationally and domestically), international events, airline capacity
and pricing actions taken by carriers. Domestically, from 1990 to 1993, the weak
U.S. economy, turbulent international events and extensive price discounting by
carriers contributed to unprecedented losses for U.S. airlines. In the last
several years, the U.S. economy has improved and excessive price discounting has
abated. We cannot predict the extent to which these industry conditions will
continue.
In recent years, the major U.S. airlines have sought to form marketing
alliances with other U.S. and foreign air carriers. Such alliances generally
provide for "code-sharing," frequent flyer reciprocity, coordinated scheduling
of flights of each alliance member to permit convenient connections and other
joint marketing activities. Such arrangements permit an airline to market
flights operated by other alliance members as its own. This increases the
destinations, connections and frequencies offered by the airline, which provide
an opportunity to increase traffic on its segment of flights connecting with its
alliance partners. The Northwest Alliance is an example of such an arrangement,
and we have existing alliances with numerous other air carriers. Other major
U.S. airlines have alliances or planned alliances more extensive than we do. We
cannot predict the extent to which we will benefit from our alliances or be
disadvantaged by competing alliances.
In recent years, and particularly since our deregulation in 1978, the
U.S. airline industry has also undergone substantial consolidation, and it may
in the future undergo additional consolidation. For example, in May 2000,
United, the nation's largest commercial airline, announced its agreement to
acquire US Airways, the nation's sixth largest commercial airline, subject to
regulatory approvals and other conditions. In addition, in January 2001,
American Airlines announced agreements to acquire the majority of Trans World
Airlines Inc.'s assets and some of US Airways' assets, subject to regulatory
approvals and other conditions. We routinely monitor changes in the competitive
landscape and engage in analysis and discussions regarding our strategic
position, including alliances and business combination transactions. We have
had, and anticipate we will continue to have, discussions with the third parties
regarding strategic alternatives. The impact on us of these pending transactions
and any additional consolidation within the U.S. airline industry cannot be
predicted at this time.
Potential Increased Costs due to Regulatory Compliance
Airlines are subject to extensive regulatory and legal compliance
requirements that engender significant costs. In the last several years, the
Federal Aviation Administration, or FAA, has issued a number of directives and
other regulations relating to the maintenance and operation of aircraft that
have required significant expenditures. Some FAA requirements cover, among other
things, retirement of older aircraft, security measures, collision avoidance
systems, airborne windshear avoidance systems, noise abatement, commuter
aircraft safety and increased inspections and maintenance procedures to be
conducted on older aircraft. We expect to continue incurring expenses in
complying with the FAA's regulations.
Additional laws, regulations, taxes and airport rates and charges have
been proposed from time to time that could significantly increase the cost of
airline operations or reduce revenues. For instance, "passenger bill of rights"
legislation has been introduced in Congress that would, among other things,
require the payment of compensation to passengers as a result of certain delays,
and limit the ability of carriers to prohibit or restrict usage of certain
tickets in manners currently prohibited or restricted. The U.S. Department of
Transportation has proposed rules that would significantly limit major carriers'
ability to compete with new entrant carriers. If adopted, these measures could
have the effect of raising ticket prices, reducing revenue and increasing costs.
Restrictions on the ownership and transfer of airline routes and takeoff and
landing slots have also been proposed. The ability of U.S. carriers to operate
international routes is subject to change because the applicable arrangements
between the United States and foreign governments may be amended from time to
time, or because appropriate slots or facilities are not made available. We
cannot provide assurance that laws or regulations enacted in the future will not
adversely affect us.
Seasonal Nature of Airline Business and Other Variability in Results
Due to greater demand for air travel during the summer months, revenue
in the airline industry in the second and third quarters of the year is
generally stronger than revenue in the first and fourth quarters of the year for
most U.S. air carriers. Our results of operations generally reflect this
seasonality, but have also been impacted by numerous other factors that are not
necessarily seasonal, including the extent and nature of competition from other
airlines, fare wars, excise and similar taxes, changing levels of operations,
fuel prices, weather, air traffic control delays, foreign currency exchange
rates and general economic conditions.
Risk Factors Related to the TIDES
Ability to Make Distributions on the TIDES
Because of the subordinated nature of the guarantee and the debentures,
we:
o are not permitted to make any payments of principal, including
redemption payments, or interest on the debentures if we default
on our senior obligations, as described under "Description of
Debentures--Subordination" in this prospectus,
o are not permitted to make payments on the guarantee if we default
on any of our other liabilities, including senior obligations,
other than liabilities that are equal or subordinate to the
guarantee by their terms as described under "Description of
Guarantee" in this prospectus, and
o must pay all of our senior obligations before we make payments on
the guarantee or the debentures if we become bankrupt, liquidate
or dissolve.
In addition, if we fail to make any payments on the debentures, the
trust will not be able to make any payments on the TIDES.
Neither the TIDES, the guarantee nor the debentures limit our or our
subsidiaries' ability to incur additional indebtedness, including indebtedness
that ranks senior to the debentures and the guarantee. At December 31, 2000, our
senior obligations included approximately $3.7 billion of debt and capital lease
obligations. Our senior obligations also included certain minimum annual
commitments under long-term operating leases of aircraft or aircraft engines.
Limited Scope of the Guarantee
If we fail to make payments on the debentures, the trust will be unable
to make the related distribution, redemption or liquidation payments on the
TIDES to you. In those circumstances, you cannot rely on the guarantee for
payments of those amounts. Instead, if we are in default under the debentures,
you may:
o rely on the property trustee of the trust to enforce the trust's
rights under the debentures or
o directly sue us or seek other remedies to collect your pro rata
share of payments owed.
Tax Consequences of Distribution Deferral Provisions
We can, on one or more occasions, defer interest payments on the
debentures for up to 20 consecutive quarterly periods unless an event of default
under the debentures has occurred and is continuing. We cannot, however, defer
interest payments beyond the maturity date of the debentures, which is November
15, 2030. If we defer interest payments on the debentures, the trust will also
defer distribution payments on the TIDES and the common securities. During a
deferral period, distributions will continue to accumulate on the TIDES and the
common securities. Also, additional distributions will accumulate to the extent
permitted by applicable law on any deferred distributions at an annual rate of
6%, compounded quarterly.
Because of our ability to defer interest payments, special tax rules
will apply that will require you to include interest in income on an accrual
basis, regardless of when such interest is paid to you. Accordingly, if we defer
payments of interest on the debentures, you will be required to include accrued
interest income for the deferred interest allocable to your share of TIDES in
your gross income for U.S. federal income tax purposes prior to receiving any
cash distributions. In addition, you will not receive cash from the trust
related to that income if you sell your TIDES prior to the record date for those
distributions. You should consult with your own tax advisor regarding the tax
consequences of an investment in the TIDES. Please read the "Tax Consequences"
section in this prospectus for more information regarding the tax consequences
of holding and selling the TIDES.
Effect on the Market Price of the TIDES of Deferral of Interest
Payments on the Debentures
If we defer interest payments on the debentures in the future, the
market price of the TIDES may not fully reflect the value of accrued but unpaid
interest on the debentures. If you sell TIDES during a deferral period, you may
not receive the same return on investment as someone who continues to hold
TIDES. In addition, our right to defer interest payments on the debentures may
mean that the market price for the TIDES will be more volatile than other
securities that are not subject to these rights.
Redemption of the Debentures
If specified tax events occur that render interest payments on the
debentures non-deductible or subject the trust to taxation or upon a change in
law that could require the trust to register as an investment company under the
Investment Company Act, as more fully described under "Description of TIDES--Tax
Event or Investment Company Event Redemption or Distribution," we may redeem the
debentures, causing the redemption of your TIDES. The tax redemption price you
would receive if we redeem the debentures will be $50 per each TIDES, plus
accumulated and unpaid distributions. In addition, upon the occurrence of a tax
event, we may elect to pay any increased taxes or expenses of the trust caused
by the tax event.
We may also redeem all or some of the debentures at any time on or
after November 20, 2003, subject to certain conditions, without your consent. If
a redemption occurs, the trust will use the cash it receives from the redemption
of the debentures to redeem an equivalent amount of TIDES and common securities
on a pro rata basis. The redemption price you would receive in that event may
vary, but will be at least 100% of the principal amount of TIDES to be redeemed,
plus any accumulated and unpaid distributions. Please read "Description of
TIDES--Mandatory Redemption" and "Description of Debentures--Redemption" in this
prospectus. You should assume that we will redeem the debentures if we can
refinance the debentures at a lower interest rate or if it is otherwise in our
interest to redeem the debentures.
Disposal of TIDES Between Record Dates for Payments of Distributions
or During Deferral Periods
For tax purposes, if you dispose of your TIDES between record dates for
payments of distributions, or during deferral periods, you will be required to:
o include in your gross ordinary income accrued but unpaid interest
on the debentures through the date of disposition as original
issue discount, and
o add that amount to your adjusted tax basis in your pro rata share
of the underlying debentures that you are deemed to have disposed
of.
Accordingly, you may recognize a capital loss to the extent that the selling
price, which may not fully reflect the value of accrued but unpaid interest, is
less than your adjusted tax basis, which will include accrued but unpaid
interest. In most instances, capital losses cannot be applied to offset ordinary
income for U.S. federal income tax purposes. Accordingly, you may not be able to
offset such accrued but unpaid interest income against any such capital loss.
Absence of a Trading Market for the TIDES
There is no public market for the TIDES. At the time of the original
offering of the TIDES, the initial purchasers of the TIDES, Credit Suisse First
Boston and UBS Warburg LLC, informed us that they intended to make a market for
the TIDES offered hereby, however, the initial purchasers are not obligated to
do so and such market making activity is subject to the limits imposed by
applicable law and may be discontinued at any time without notice. We cannot
assure you that an active trading market for the TIDES will develop or be
sustained. Any market that develops for the TIDES is likely to be influenced by
the market for our common stock. If a market were to develop, the TIDES could
trade at prices that may be higher or lower than their initial public offering
price depending upon many factors, including:
o prevailing interest rates,
o our common stock price,
o our operating results, and
o the market for similar securities.
Voting Rights of TIDES Holders
As a holder of TIDES, you have limited voting rights relating only to
the modification of the TIDES and, in specified circumstances, the exercise of
the trust's rights as holder of the debentures and the guarantee. Except during
an event of default with respect to the debentures, only we can replace or
remove any of the trustees or increase or decrease the number of trustees.
Risk Factors Related to Ownership of Our Common Stock
Anti-Takeover Provisions
We have a rights plan pursuant to which one preferred stock purchase
right is currently associated with each outstanding share of our common stock.
Each of these rights entitles the registered holder to purchase from us one
one-thousandth of a share of our junior preferred stock at a purchase price of
$200 per one one-thousandth of a share, subject to adjustment. The rights have
anti-takeover effects. The rights could cause substantial dilution to a person
or group that attempts to acquire us and effect a change in the composition of
our board of directors on terms not approved by the board of directors,
including by means of a tender offer at a premium to the market price and, as a
result, could delay or prevent a change of control or other transaction that
could provide our stockholders with a premium over the then-prevailing market
price of their shares or which might otherwise be in their best interest. The
rights should not interfere with any merger or business combination approved by
the board of directors. For a detailed description of these preferred stock
purchase rights, see "Description of Capital Stock--Preferred Stock Purchase
Rights."
Our certificate of incorporation and bylaws contain other provisions
that could make it difficult for a third party to acquire us without the consent
of our board of directors.
Pursuant to the Northwest Transaction, we issued to Northwest a new
series of preferred stock with a separate class vote in any required vote of our
stockholders relating to certain changes of control affecting our company, as
described under "Northwest Transaction." This may delay or prevent the
acquisition of our company.
Limitation on Voting by Foreign Owners
Our certificate of incorporation provides that no shares of capital
stock may be voted by or at the direction of persons who are not citizens of the
United States unless the shares are registered on a separate stock record. Our
bylaws further provide that no shares will be registered on this separate stock
record if the amount so registered would exceed applicable foreign ownership
restrictions. U.S. law currently requires that no more than 25% of the voting
stock of our company (or any other domestic airline) may be owned directly or
indirectly by persons who are not citizens of the United States. See
"Description of Capital Stock--Common Stock--Limitation on Voting by Foreign
Owners."
Payment of Dividends on Common Stock
We have not paid cash dividends in the past and do not intend to pay
dividends on our common stock into which the TIDES may be converted in the
foreseeable future. We have no obligation to pay dividends on our common stock
and currently intend to retain any earnings for the future operation and
development of our business. Our ability to make dividend payments in the future
will depend on our future performance and liquidity. In addition, our credit
facility contains restrictions on our ability to pay cash dividends on our
capital stock, including our common stock. As a result, we may not be able to
pay dividends on the common stock into which your TIDES may be converted.
USE OF PROCEEDS
The selling holders will receive all of the net proceeds from the
resale of the TIDES, the debentures, the common stock issuable upon conversion
of the TIDES and the guarantee. Neither we nor the trust will receive any of the
proceeds from the resale of those securities.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratios of our "earnings" to our "combined fixed charges and
preferred stock dividends" for each of the years 1996 through 2000 were:
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
Ratio........ 1.75 2.01 1.90 1.80 1.51
The ratio of earnings to combined fixed charges and preferred stock
dividends are based on continuing operations. For purposes of the ratios,
"earnings" means the sum of:
o our pre-tax income, and
o our fixed charges, net of interest capitalized.
"Combined fixed charges and preferred stock dividends" represent:
o the interest we pay on borrowed funds,
o the amount we amortize for debt discount, premium and issuance
expense and interest previously capitalized,
o that portion of rentals considered to be representative of the
interest factor, and
o preferred stock dividend requirements.
ACCOUNTING TREATMENT OF THE TIDES
The trust is treated as our subsidiary for financial reporting
purposes. Accordingly, the accounts of the trust are included in our
consolidated financial statements. We account for the TIDES in our consolidated
balance sheets as a separate line item entitled "Mandatorily redeemable
preferred securities of subsidiary trust holding solely convertible subordinated
debentures." We also include appropriate disclosures about the TIDES, the
debentures and the guarantee in the notes to our consolidated financial
statements. For financial reporting purposes, we record distributions on the
TIDES as a separate line item entitled "Distributions on Preferred Securities of
Trust" in our consolidated statements of operations.
CONTINENTAL AIRLINES FINANCE TRUST II
Continental Airlines Finance Trust II is a statutory business trust
that was formed under Delaware law on November 6, 2000. The trust was created
under an original declaration of trust among the trust's initial trustees and us
by the filing of a certificate of trust with the Secretary of State of the State
of Delaware. The trust's original declaration of trust was amended and restated
in its entirety as of November 10, 2000, the date the trust initially issued the
TIDES.
We own all of the trust's common securities. The common securities
represent common undivided beneficial interests in the assets of the trust with
an aggregate liquidation amount equal to at least 3% of the total capital of the
trust.
The trust exists for the exclusive purposes of:
o issuing the TIDES,
o issuing the common securities to us,
o investing the gross proceeds of the sale of the TIDES and the
common securities in the debentures,
o distributing payments received on the debentures to holders of
the TIDES and the common securities, and
o engaging in only those other activities necessary or incidental
to such purposes.
The trust currently has four trustees. Two of those trustees, referred
to as administrative trustees, are our employees or officers. Wilmington Trust
Company currently serves as the trust's property trustee and as the trust's
Delaware trustee. In some circumstances, the holders of a majority of the TIDES
are entitled to appoint one additional trustee, referred to as a special
trustee, who does not need to be affiliated with us and who will have the same
rights, powers and privileges as the administrative trustees.
The property trustee, among other things:
o holds title to the debentures for the benefit of the holders of
the TIDES and the common securities,
o has the power to exercise all rights, powers and privileges under
the indenture as the holder of the debentures, and
o maintains exclusive control of a segregated non-interest bearing
bank account, called the property account, to hold all payments
made in respect of the debentures for the benefit of the holders
of the TIDES and the common securities.
Subject to the right of the holders of the TIDES to appoint a special
trustee, we, as holder of all the common securities, have the right to appoint,
remove or replace any of the trustees and to increase or decrease the number of
trustees. However, the number of trustees is required to be at least three, a
majority of which are administrative trustees.
We paid all fees and expenses related to the offering of the TIDES and
will continue to pay all fees and expenses related to the trust.
The address of the principal office of the trust is c/o Continental
Airlines, Inc., 1600 Smith Street, Houston, Texas 77002, and its telephone
number is (713) 324-2950.
DESCRIPTION OF TIDES
The trust issued the TIDES pursuant to the terms of the declaration of
trust. The declaration of trust is qualified under the Trust Indenture Act and
incorporates certain provisions of the Trust Indenture Act. We have summarized
selected provisions of the declaration of trust and the TIDES below. This
summary is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the declaration of trust. The declaration of
trust is filed as an exhibit to this registration statement, of which this
prospectus is a part.
General
The declaration of trust authorized the trust to issue the TIDES and
the common securities. The TIDES represent preferred undivided beneficial
ownership interests in the assets of the trust. The common securities represent
common undivided beneficial ownership interests in the assets of the trust.
Payments on the TIDES are made pro rata with payments on the common securities,
except as described under "--Subordination of Common Securities." Under the
guarantee agreement we guarantee, on a subordinated basis, any payments required
to be made by the trust to the holders of the TIDES, but only to the extent that
the trust has funds on hand available to make the payments. Please read the
"Description of Guarantee" section of this prospectus.
Distributions
You are entitled to receive cash distributions at an annual rate of 6%
of the $50 stated liquidation amount per each TIDES. Distributions are
cumulative and began to accumulate on the date of original issuance of the
TIDES. Distributions are payable quarterly in arrears on February 15, May 15,
August 15 and November 15 of each year, beginning February 15, 2001, to the
person in whose name each of the TIDES is registered, subject to certain
exceptions, at the close of business on the 1st day of the month of the
applicable distribution date.
The amount of distributions payable for any period are computed on the
basis of the number of days elapsed in a 360-day year consisting of 12 30-day
months. If a distribution date is not a business day, the trust will make the
distributions on the next day that is a business day, without any additional
distributions or other payments due to the delay.
Accrued distributions that are not paid on the applicable distribution
date will accrue additional distributions compounded quarterly from the relevant
distribution date. For the purpose of this prospectus, a "distribution" will
include quarterly distributions, additional distributions on quarterly
distributions not paid on the applicable distribution date, special
distributions (as described in the "Registration Rights" section of this
prospectus) and additional sums (as described in the "Description of
Debentures--Additional Sums" section of this prospectus), as applicable. A
"business day" is any day other than a Saturday or a Sunday, or a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to remain closed, or a day on
which the corporate trust office of the property trustee or the debenture
trustee is closed for business.
Option to Defer Distributions
We can, on one or more occasions, defer interest payments on the
debentures for up to 20 consecutive quarterly periods unless an event of default
under the indenture has occurred and is continuing. Interest payments are not
due and payable on the debentures during a deferral period. We cannot, however,
defer interest payments beyond the earlier of the maturity date of the
debentures, which is November 15, 2030 or the date the debentures are redeemed.
If we defer interest payments on the debentures, the trust will defer
distribution payments on the TIDES and the common securities. Distributions will
continue to accumulate on the TIDES and the common securities during a deferral
period. Also, additional distributions will accumulate on any deferred
distributions at the annual rate of 6%, compounded quarterly, to the extent
permitted by applicable law.
We do not currently intend to defer interest payments on the
debentures.
We may extend a deferral period prior to the period's termination.
However, we may not extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods or
the maturity date of the debentures. Once a deferral period ends and we make all
payments due on the debentures, we can commence a new deferral period.
Consequently, there could be multiple deferral periods of varying lengths
throughout the term of the debentures. Please read the "Tax Consequences--U.S.
Holders--Interest Income and Original Issue Discount" section of this
prospectus.
Payment of Distributions
The trust must pay distributions on the TIDES on the distribution
payment dates to the extent that the property trustee has cash on hand to make
distributions. The property trustee will maintain that cash in the property
account. The only funds the property trustee has to distribute to the holders of
the TIDES are from payments received on the debentures. If we do not make
interest payments on the debentures, the property trustee will not have funds
available to make distributions on the TIDES. If and to the extent we make
interest payments on the debentures, the property trustee is obligated to make
distributions on the TIDES and the common securities on a pro rata basis. We
guarantee the payment of distributions and other payments on the TIDES on a
subordinated basis, but only if, and to the extent that, we make corresponding
payments to the trust on the debentures and, as a result, the property trustee
has funds available to make distributions on the TIDES. Please read the
"Description of Guarantee" section in this prospectus.
Conversion Rights
General
Holders of TIDES may convert them into our common stock at any time
before the earlier of:
o the close of business on the business day immediately prior to
the maturity date of the debentures, or
o in the case of TIDES called for redemption, the close of business
on the business day immediately prior to the redemption date.
Initially, each of the TIDES is convertible into shares of our common
stock at an initial conversion price of $60 per share of common stock
(equivalent to an initial conversion rate of approximately 0.8333 shares of
common stock for each of the TIDES). The conversion price and conversion rate
are subject to adjustment as described under the "--Conversion Price
Adjustments" section of this prospectus.
If you wish to exercise your conversion right, you must deliver an
irrevocable conversion notice, together, if the TIDES are in certificated form,
with the certificated security, to the conversion agent who will, on your
behalf, exchange the TIDES for a like amount of debentures and immediately
convert the debentures into shares of our common stock. You may obtain copies of
the required form of the conversion notice from the conversion agent.
At the close of business on a distribution record date, you will be
entitled to receive the distribution payable on your TIDES on the corresponding
distribution date even if you convert your TIDES after the distribution record
date but prior to the distribution date. Except as provided in the immediately
preceding sentence, neither we nor the trust will make, or be required to make,
any payment, allowance or adjustment for accrued and unpaid distributions,
whether or not in arrears, on converted TIDES, even if you convert your TIDES
during a deferral period. We will make no payment or allowance for distributions
on our shares of common stock issued upon conversion, except to the extent that
those shares of common stock are held of record on the record date for any
distributions. We will deem each conversion to have been effected immediately
prior to the close of business on the day on which the trust received the
related conversion notice.
We will not issue any fractional shares of our common stock as a result
of a conversion of TIDES. We will pay cash in lieu of a fractional share of
common stock.
Conversion Price Adjustments--General
The conversion price is subject to adjustment for some events,
including:
o the payment of dividends or distributions payable in our common
stock on our common stock,
o the issuance of rights or warrants to all holders of our common
stock at a price per share less than the then-current market
price,
o subdivisions and combinations of our common stock,
o the payment of dividends or distributions to all holders of our
common stock consisting of our indebtedness, securities or
capital stock, cash or assets, excluding any rights, warrants,
dividends or distributions referred to in the first two bullet
points and dividends and distributions paid exclusively in cash,
o the payment of dividends or other distributions on our common
stock exclusively in cash, excluding:
o cash dividends that do not exceed the per share amount of
the smallest of the four immediately preceding quarterly
cash dividends as adjusted to reflect any of the events
referred to in the preceding bullet points,
o cash dividends, if the annualized per share amount of the
cash dividends does not exceed 15% of the market price of
our common stock on the trading day immediately prior to the
date of declaration of the dividend, and
o payment to holders of our common stock in respect of a
tender or exchange offer, other than an odd-lot offer by us
or any subsidiary of ours, for our common stock at a price
in excess of 110% of the market price of our common stock as
of the trading day next succeeding the last date tenders or
exchanges may be made in the tender or exchange offer.
We may, at our option, make other reductions in the conversion price
that our board of directors determines are advisable to avoid or diminish any
income tax to holders of our common stock resulting from any dividend or
distribution of stock or rights to acquire stock or from any event treated as
such for income tax purposes. Please read the "Tax Consequences--U.S.
Holders--Adjustment of Conversion Price" section of this prospectus.
The conversion price will not be adjusted for the issuance of our
common stock (or securities convertible into or exchangeable for our common
stock), except as described above. For example, the conversion price will not be
adjusted upon the issuance of shares of our common stock
o under any present or future plan providing for the reinvestment
of dividends or interest payable on our securities,
o in connection with the investment of additional optional amounts
in shares of our common stock under any plan described in the
preceding bullet point,
o under any present or future employee benefit plan or program of
ours, or
o pursuant to any option, warrant or right or exercisable,
exchangeable or convertible security outstanding as of the date
the TIDES were first issued.
The conversion price was not adjusted for the recapitalization described under
"Northwest Transaction."
If any action requires adjustment of the conversion price under more
than one of the provisions described above, only one adjustment will be made and
that adjustment will be the amount of adjustment that has the highest absolute
value to holders of the TIDES. An adjustment in the conversion price is not
required unless the adjustment requires a change of at least 1% in the
conversion price then in effect. However, any adjustment otherwise required to
be made will be carried forward and taken into account in any subsequent
adjustment.
Conversion Price Adjustments--Merger, Consolidation or Sale of Assets
If we are a party to any transaction, including a merger (other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of our common stock), consolidation, sale of all or substantially
all of our assets, recapitalization or reclassification of our common stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination of our
common stock), or any compulsory share exchange, that results in shares of our
common stock being converted into the right to receive other securities, cash or
other property, then lawful provision will be made as part of the terms of the
transaction so that the holders of the TIDES will have the right to convert each
TIDES into:
o in the case of any transaction other than a transaction involving
a Common Stock Fundamental Change (as defined below) (and subject
to funds being legally available for that purpose under
applicable law at the time of conversion), the kind and amount of
securities, cash or other property receivable upon the
consummation of the transaction by a holder of that number of
shares of our common stock into which a TIDES was convertible
immediately prior to the transaction, or
o in the case of a transaction involving a Common Stock Fundamental
Change, common stock of the kind received by holders of our
common stock as a result of such Common Stock Fundamental Change.
In each case described in the foregoing bullet points, the conversion
will be made after giving effect to any adjustment discussed below relating to a
Fundamental Change (as described below) if the transaction constitutes a
Fundamental Change. The holders of TIDES have no voting rights with respect to
any transaction described in this section.
If a Fundamental Change occurs, the conversion price in effect
immediately before the Fundamental Change will be adjusted as described below.
In the case of a Non-Stock Fundamental Change (as described below), the
conversion price of the TIDES will be adjusted to become the lower of:
o the conversion price in effect immediately prior to the Non-Stock
Fundamental Change, but after giving effect to any other
adjustments that may be made pursuant to the first paragraph
under the "--Conversion Price Adjustments--General" section of
this prospectus, and
o the result obtained by multiplying the greater of the Relevant
Price (as defined below) or the then applicable Reference Market
Price (as defined below) by the Optional Redemption Ratio (as
defined below) (this product is referred to as the "Adjusted
Relevant Price" or the "Adjusted Reference Market Price," as the
case may be).
In the case of a Common Stock Fundamental Change, the conversion price
of the TIDES in effect immediately before the Common Stock Fundamental Change,
but after giving effect to any other prior adjustments, will thereupon be
adjusted by multiplying the conversion price by a fraction of which the
numerator will be the Purchaser Stock Price (as defined below) and the
denominator will be the Relevant Price; provided, however, that in the event of
a Common Stock Fundamental Change in which:
o 100% of the value of the consideration received by a holder of
our common stock is common stock of the successor, acquiror or
other third party (and cash, if any, is paid only with respect to
any fractional interests in that common stock resulting from such
Common Stock Fundamental Change), and
o all of our common stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror or other third
party,
the conversion price of the TIDES in effect immediately before the Common Stock
Fundamental Change will be adjusted by multiplying the conversion price by a
fraction of which the numerator will be one and the denominator will be the
number of shares of common stock of the successor, acquiror, or other third
party received by a holder of one share of our common stock as a result of the
Common Stock Fundamental Change.
In the absence of the adjustments to the conversion price after a
Fundamental Change, in the case of a transaction mentioned above, each TIDES
would become convertible into the securities, cash, or other property receivable
by a holder of the number of shares of our common stock into which each TIDES
was convertible immediately prior to the transaction. As a result, in the
absence of the Fundamental Change provisions, a transaction could substantially
lessen or eliminate the value of the conversion privilege associated with the
TIDES. For example, if we are acquired in a cash merger, each TIDES would become
convertible solely into cash and would no longer be convertible into securities
whose value would vary depending on our future prospects and other factors.
In Non-Stock Fundamental Change transactions, the foregoing conversion
price adjustments are designed to increase the securities, cash or other
property into which each TIDES is convertible. In a Non-Stock Fundamental Change
transaction where the initial value received per share of our common stock
(measured as described in the definition of Relevant Price) is lower than the
conversion price of the TIDES but greater than or equal to the Reference Market
Price, the conversion price will be adjusted as described above with the effect
that each TIDES will be convertible into securities, cash or other property of
the same type received by the holders of our common stock in the transaction
with the conversion price adjusted as though the initial value had been the
Adjusted Relevant Price.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of our common stock (measured as described in the definition
of Relevant Price) is lower than both the conversion price of each TIDES in
effect immediately before any adjustment described above and the Reference
Market Price, the conversion price will be adjusted as described above but
calculated as though the initial value had been the Adjusted Reference Market
Price.
In Common Stock Fundamental Change transactions, the adjustments
described above are designed to provide in effect that:
o where our common stock is converted partly into common stock and
partly into other securities, cash or property, each TIDES will
be convertible solely into a number of shares of common stock
determined so that the initial value of those shares (measured as
described in the definition of Purchaser Stock Price below)
equals the value of the shares of our common stock into which the
TIDES was convertible immediately before the transaction
(measured as described above), and
o where our common stock is converted solely into common stock,
each TIDES will be convertible into the same number of shares of
common stock receivable by a holder of the number of shares of
our common stock into which the TIDES was convertible immediately
before the transaction.
"Closing Price" of any security on any day means the last reported sale
price of that security on that day, or if no sale takes place on that day, the
average of the closing bid and asked prices in each case on the principal
national securities exchange on which the securities are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Market System of the Nasdaq Stock Market or any
successor national automated interdealer quotation system (the "Nasdaq Stock
Market") or, if such securities are not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq Stock Market, the average
of the closing bid and asked prices of that security in the over-the-counter
market as furnished by any New York Stock Exchange member firm selected by us
for that purpose.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value, as determined in good faith by our board of
directors, of the consideration received by holders of our common stock consists
of common stock that for each of the 10 consecutive trading days immediately
prior to and including the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the Nasdaq Stock Market; provided, however, that a
Fundamental Change will not be a Common Stock Fundamental Change unless either:
o we continue to exist after the occurrence of the Fundamental
Change and the outstanding TIDES continue to exist as outstanding
TIDES, or
o not later than the occurrence of such Fundamental Change, the
outstanding debentures are converted into or exchanged for
debentures of a corporation succeeding to the business of our
company, which debentures have terms substantially similar to
those of the debentures.
"Entitlement Date" means the record date for determination of the
holders of our common stock entitled to receive securities, cash or other
property in connection with a Non-Stock Fundamental Change or a Common Stock
Fundamental Change or, if there is no record date, the date on which holders of
our common stock will have the right to receive such securities, cash or other
property.
"Fundamental Change" means the occurrence of any transaction or event
in connection with a plan under which all or substantially all of our common
stock will be exchanged for, converted into, acquired for or constitute solely
the right to receive securities, cash or other property (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided that, in the case of
a plan involving more than one of these transactions or events, for purposes of
adjustment of the conversion price, the Fundamental Change will be deemed to
have occurred when substantially all of our common stock will be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment will be based upon the
highest weighted average per share consideration that a holder of our common
stock could have received in that transaction or event as a result of which more
than 50% of our common stock will have been exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash or other
property. The Northwest Transaction did not, and our continuing stock buyback
program would not, constitute a Fundamental Change.
"Non-Stock Fundamental Change" means any Fundamental Change other than
a Common Stock Fundamental Change.
"Optional Redemption Ratio" means a fraction of which the numerator is
$50 and the denominator is the then current redemption price or, prior to
November 20, 2003, an amount per TIDES determined by us in our sole discretion,
after consultation with an investment banking firm, to be the equivalent of the
hypothetical redemption price that would have been applicable if the TIDES had
been redeemable during such period.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in the Common Stock Fundamental Change for the 10 consecutive trading
days prior to and including the Entitlement Date, as adjusted in good faith by
us to appropriately reflect any of the events referred to in the first paragraph
under the "--Conversion Price Adjustments--General" section of this prospectus.
"Reference Market Price" initially means $32.67 (which is an amount
equal to 662/3% of the last reported sale price for our common stock on the New
York Stock Exchange Composite Transactions Tape on November 6, 2000), and, in
the event of any adjustment to the conversion price, other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price will also be adjusted
so that the ratio of the Reference Market Price to the conversion price after
giving effect to the adjustment will always be the same as the ratio of $32.67
to the initial conversion price of the TIDES.
"Relevant Price" means (a) in the case of a Non-Stock Fundamental
Change in which the holder of our common stock receives only cash, the amount of
cash received by the holder of one share of our common stock; and (b) in the
event of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the daily Closing Prices for our common stock during the
10 consecutive trading days prior to and including the Entitlement Date, in each
case as adjusted in good faith by us to appropriately reflect any of the events
referred to in the first paragraph under the "--Conversion Price
Adjustments--General" section of this prospectus.
Mandatory Redemption
When the debentures are repaid in full at their stated maturity or the
debentures are redeemed in whole or in part (other than following any
distribution of the debentures to the holders of the TIDES and common
securities), the proceeds from the repayment or redemption of the debentures
will be applied to redeem, on a pro rata basis, an equivalent liquidation amount
of TIDES and common securities. The redemption price for each TIDES on any such
redemption will be equal to:
o the liquidation amount of each TIDES plus any accrued and unpaid
distributions on the TIDES in the case of (a) the repayment of
the debentures at their stated maturity or (b) the redemption of
the debentures in some limited circumstances upon the occurrence
of a tax event, or
o the redemption price described under the "Description of
Debentures--Redemption--Optional Redemption" section of this
prospectus in the case of an optional redemption of the
debentures on or after November 20, 2003.
Redemption Procedures
If the trust gives a redemption notice for the TIDES, then, by 12:00
noon, New York City time, on the redemption date and provided that we have paid
to the property trustee a sufficient amount of cash for the redemption, and the
TIDES are held in global form, the property trustee will:
o deposit with DTC funds sufficient to pay the applicable
redemption price, and
o give DTC irrevocable instructions and authority to pay the
applicable redemption price to the holders of the TIDES.
For TIDES held in certificated form, the property trustee will:
o deposit with the paying agent for the TIDES funds sufficient to
pay the applicable redemption price, and
o give the paying agent irrevocable instructions and authority to
pay the redemption price to the holders of the TIDES upon
surrender of their certificates evidencing the TIDES.
Distributions payable on or prior to the applicable redemption date
will be payable to the holders of the TIDES on the relevant record dates for the
related distribution dates. If notice of redemption has been given and funds
have been deposited as required, then upon the date of the deposit, all rights
of the holders of the TIDES will cease, except the right of the holders of the
TIDES to receive the applicable redemption price, but without interest on such
redemption price, and the TIDES will cease to be outstanding.
If a date fixed for redemption is not a business day, then payment of
the redemption price payable on that date will be made on the next day that is a
business day, and without any interest or other payment because of the delay.
However, if the next business day falls in the next calendar year, the payment
will be made on the immediately preceding business day. Payment made in either
of these cases will have the same effect as if made on the date fixed for
redemption. If payment of the redemption price is improperly withheld or refused
and not paid either by the property trustee or by us pursuant to the guarantee,
distributions on the TIDES will continue to accrue from the original redemption
date of the TIDES to the date the redemption price is actually paid. In that
case, the actual payment date will be the date fixed for redemption for purposes
of calculating the redemption price and accrued interest.
Subject to applicable law, we or our subsidiaries may at any time
purchase outstanding TIDES by tender, in the open market or by private
agreement.
If we desire to consummate an optional redemption we must send a notice
to each holder of TIDES at its registered address in accordance with the notice
procedures set forth under the "Description of Debentures--Redemption--Optional
Redemption" section of this prospectus. Notice of a redemption due to a tax
event must be mailed at least 20 days but not more than 60 days before the
redemption date to each holder of TIDES. Notice of repayment at the stated
maturity of the debentures is not required.
Tax Event or Investment Company Event Redemption or Distribution
Tax Event
If a tax event occurs, we will cause the trustees to dissolve the trust
and, after satisfaction of liabilities to creditors of the trust as required by
applicable law, distribute the debentures to the holders of the TIDES within 90
days following the occurrence of the tax event. However, such a liquidation and
distribution will be conditioned on:
o the trustees' receipt of an opinion of nationally recognized
independent tax counsel experienced in such matters that the
holders of the TIDES will not recognize any income, gain or loss
for U.S. federal income tax purposes as a result of distribution
of the debentures, and
o our being unable to avoid the tax event within the 90-day period
by taking some ministerial action or pursuing some other
reasonable measure that, in our sole judgment, will have no
adverse effect on the trust, us or the holders of the TIDES and
will involve no material cost.
Furthermore, if a tax event occurs and:
o we receive an opinion of nationally recognized independent tax
counsel experienced in such matters that, as a result of a tax
event, there is more than an insubstantial risk that we would be
precluded from deducting the interest on the debentures for U.S.
federal income tax purposes, even after the debentures were
distributed to the holders of the TIDES upon liquidation of the
trust as described above, or
o the trustees are informed by such tax counsel that it cannot
deliver the opinion contemplated by the immediately preceding
paragraph,
then we will have the right, upon not less than 20 nor more than 60 days' notice
and within 90 days following the occurrence and continuation of the tax event,
to redeem the debentures, in whole, but not in part, for cash, for the principal
amount of the debentures plus accrued and unpaid interest on the debentures and,
following the redemption, all the TIDES will be redeemed by the trust at their
aggregate liquidation amount plus accrued and unpaid distributions on the TIDES.
However, if at the time there is available to us or the trust the opportunity to
eliminate, within a 90-day period, the tax event by taking some ministerial
action or pursuing some other reasonable measure that, in our sole judgment,
will have no adverse effect on us, the trust or the holders of the TIDES and
will involve no material cost, either we or the trust will pursue such measure
in lieu of redemption. In lieu of the foregoing options, we will also have the
option of causing the TIDES to remain outstanding and pay additional sums on the
debentures as described below in the "Description of Debentures--Additional
Sums" section of this prospectus.
A tax event will occur upon the receipt by the property trustee of an
opinion of a nationally recognized independent tax counsel experienced in such
matters to the effect that, on or after the date of original issuance of the
TIDES, as a result of:
o any amendment to or change, including any announced prospective
change (provided that a tax event will not occur more than 90
days before the effective date of any such prospective change),
in the laws of the U.S. or any political subdivision or taxing
authority thereof or therein,
o any judicial decision or official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including
any notice or announcement of intent to adopt such procedures or
regulations, or
o any amendment to or change in the administrative position or
interpretation of any judicial decision or official
administrative pronouncement, ruling, regulatory procedure,
notice or announcement, or judicial decision that differs from
the previously generally accepted position, in each case, by any
legislative body, court, governmental agency or regulatory body,
irrespective of the manner in which such amendment or change is
made known, which amendment or change is effective or such
amendment or change is announced,
there is more than an insubstantial risk that:
o if the debentures are held by the property trustee, (a) the trust
is, or will be within 90 days of the date of the opinion, subject
to U.S. federal income tax with respect to interest accrued or
received on the debentures or subject to more than a de minimis
amount of other taxes, duties or other governmental charges or
(b) any portion of interest payable by us to the trust on the
debentures is not, or within 90 days of the date of the opinion
will not be, deductible by us in whole or in part for U.S.
federal income tax purposes, or
o with respect to debentures that are no longer held by the
property trustee, any portion of interest payable by us on the
debentures is not, or within 90 days of the date of the opinion
will not be, deductible by us in whole or in part for U.S.
federal income tax purposes.
Investment Company Event
If an investment company event occurs and is continuing, we will cause
the trustees to dissolve the trust and, after satisfaction of liabilities to
creditors of the trust as required by applicable law, cause the debentures to be
distributed to the holders of the TIDES in liquidation of the trust within 90
days following the occurrence of the investment company event.
An investment company event will occur upon the receipt by the property
trustee of an opinion of nationally recognized independent securities counsel to
the effect that on or after the date of original issuance of the TIDES, as a
result of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, the trust is or will be considered an investment
company that is required to be registered under the Investment Company Act of
1940.
The distribution by us of the debentures will effectively result in the
cancellation of the TIDES.
Liquidation of the Trust and Distribution of the Debentures
We have the right at any time to dissolve the trust and, after
satisfaction of liabilities to creditors of the trust as required by applicable
law, cause an equivalent principal amount of the debentures to be distributed to
the holders of the TIDES in liquidation of the trust.
In addition, the trust will automatically dissolve upon the first to
occur of:
o specified events of bankruptcy, dissolution or liquidation of
Continental,
o our election to distribute all of the debentures to the holders
of the TIDES and the common securities in exchange for all of the
TIDES and common securities in accordance with the terms of the
TIDES and common securities,
o redemption of all the TIDES and common securities as described
under "--Mandatory Redemption" above,
o conversion of all outstanding TIDES and the trust's common
securities as described under "--Conversion Rights" above,
o November 15, 2050, the expiration of the trust's term, and
o a decree of judicial dissolution of the trust.
If an early dissolution occurs as described in the first, second or
sixth bullet points above, the trustees will liquidate the trust as
expeditiously as possible by distributing, after satisfaction of liabilities to
the trust's creditors as required by applicable law, to the holders of the TIDES
and common securities an equivalent principal amount of debentures. However, if
the distribution of debentures is not practical, the holders of TIDES will be
entitled to receive out of the assets of the trust available for distribution to
holders of TIDES, an amount equal to the aggregate liquidation amount of the
TIDES plus accrued and unpaid distributions of the TIDES to the date of payment.
If this amount can be paid only in part because the trust has insufficient
assets available to pay the full amount, then the amounts payable directly by
the trust on the TIDES will be paid on a pro rata basis. We, as holder of the
common securities, will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the TIDES. However, if an event of
default under the indenture or declaration of trust has occurred and is
continuing, the TIDES will have a priority over the common securities with
respect to any distributions.
On and after the liquidation date fixed for any distribution of
debentures to holders of the TIDES and common securities:
o the TIDES will no longer be deemed to be outstanding,
o DTC or its nominee, as the record holder of the TIDES, will
receive a registered global certificate or certificates
representing the debentures to be delivered upon such
distribution with respect to TIDES held by DTC or its nominee,
and
o any certificates representing TIDES not held by DTC or its
nominee will be deemed to represent debentures having a principal
amount equal to the liquidation amount of such TIDES and bearing
accrued and unpaid interest in an amount equal to the accumulated
and unpaid distributions on such TIDES until certificates are
presented to the administrative trustees or their agent for
cancellation, whereupon we will issue to such holder, and the
debenture trustee will authenticate, a certificate representing
the debentures.
Subordination of Common Securities
Payment on the TIDES will be made pro rata with payments on the common
securities based on the liquidation amount of the securities. However, if on a
distribution date or redemption date, as the case may be, an event of default
under the indenture or declaration of trust has occurred and is continuing, no
payment may be made on the common securities.
In the case of any event of default under the declaration of trust
resulting from an event of default under the indenture, we, as holder of the
common securities, will be deemed to have waived any right to act with respect
to any such event of default under the declaration of trust until the effect of
all such events of default have been cured, waived or otherwise eliminated.
Until all of the events of default under the declaration of trust have been
cured, waived or otherwise eliminated, the property trustee will act solely on
behalf of the holders of the TIDES and not on our behalf, and only the holders
of the TIDES will have the right to direct the property trustee to act on their
behalf.
Events of Default; Notice
Any one of the following events constitutes an event of default under
the declaration of trust:
o the occurrence of an event of default under the indenture,
o default by the trust in the payment of any distribution when it
becomes due and payable, and continuation of such default for a
period of 30 days (subject to the deferral of any due date in the
case of a deferral period),
o default by the trust in the payment of any redemption price of
any TIDES when it becomes due and payable,
o default in the performance, or breach, in any material respect,
of any other covenant or warranty of the trustees in the
declaration of trust, and continuation of such default or breach
for a period of 60 days after there has been given written notice
of the breach by the holders of at least 25% in aggregate
liquidation amount of the outstanding TIDES, or
o the occurrence of certain events of bankruptcy or insolvency with
respect to the property trustee and our failure to appoint a
successor property trustee within 60 days thereof.
We and the administrative trustees are required to file annually with
the property trustee a certificate as to whether or not we are in compliance
with all the conditions and covenants applicable to us under the declaration of
trust.
Removal of Trustees
Unless an event of default under the indenture occurs and is
continuing, we may remove any trustee at any time. If an event of default under
the indenture has occurred and is continuing, the property trustee and the
Delaware trustee may be removed at that time only by the holders of a majority
in liquidation amount of the outstanding TIDES. The holders of the TIDES do not
have the right to appoint, remove or replace the administrative trustees. We
have the exclusive right, as the holder of the common securities, to appoint,
remove or replace the administrative trustees. A resignation or removal of the
Delaware trustee or the property trustee and an appointment of a successor
trustee will not be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the declaration of trust.
Co-trustees and Separate Property Trustee
Unless an event of default under the indenture has occurred and is
continuing, at any time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the trust's
property may at the time be located, we, as the holder of the common securities,
and the administrative trustees may appoint one or more persons either to act as
a co-trustee, jointly with the property trustee, of all or any part of the
trust's property, or to act as separate trustee of any of the trust's property.
If an event of default under the indenture has occurred and is continuing, the
property trustee alone will have the power to make the appointment.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below or as otherwise set forth in the declaration of trust. The trust
may, with the consent of the administrative trustees and without the consent of
the holders of the TIDES, the property trustee or the Delaware trustee, merge
with or into, consolidate, amalgamate or be replaced by, or convey, transfer or
lease its properties and assets substantially as an entirety to, a trust
organized under the laws of any state of the United States or the District of
Columbia if:
o if the trust is not the surviving entity, the successor entity
either (a) expressly assumes all of the obligations of the trust
with respect to the TIDES or (b) substitutes for the TIDES other
securities having substantially the same terms as the TIDES so
long as the successor securities rank the same as the TIDES,
o a trustee of the successor entity possessing the same powers and
duties as the property trustee as the holder of the debentures is
appointed,
o the TIDES or any successor securities are listed, or any
successor securities will be listed upon notification of
issuance, on any national securities exchange or other
organization on which the TIDES are then listed or quoted, if
any,
o the transaction does not cause the TIDES (including any successor
securities) to be downgraded by any nationally recognized
statistical rating agency then rating the TIDES,
o the transaction does not adversely affect the rights, preferences
and privileges of the holders of the TIDES (including any
successor securities) in any material respect,
o the successor entity has a purpose substantially identical to
that of the trust,
o prior to the transaction, we receive an opinion from independent
counsel experienced in such matters to the effect that (a) the
successor entity will be treated as a grantor trust for U.S.
federal income tax purposes, (b) following the transaction,
neither the trust nor the successor entity will be required to
register as an investment company under the 1940 Act, and (c) the
transaction will not adversely affect the limited liability of
the holders of the trust securities (including any successor
securities),
o we or any permitted successor or assignee will own all of the
common securities of the successor entity and will guarantee the
obligations of the successor entity under the successor
securities at least to the extent provided by the guarantee, and
o the transaction is not a taxable event for holders of the TIDES.
Notwithstanding the foregoing, the trust will not, except with the
consent of holders of 100% in liquidation amount of the TIDES and common
securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to, any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if the transaction would cause the trust or
the successor entity to be classified as an association taxable as a
corporation, or substantially increase the likelihood that the trust or the
successor entity would not be classified as a grantor trust for U.S. federal
income tax purposes.
Voting Rights; Amendment of the Declaration
Except as provided below and under the "Description of
Guarantee--Amendments and Assignment" section of this prospectus and as
otherwise required by law and the declaration of trust, the holders of the TIDES
have no voting rights.
In addition to the rights of the holders of TIDES to enforce payment to
the trust of the principal or interest on the debentures described in the
"Description of Debentures--Enforcement of Certain Rights by Holders of TIDES"
section of this prospectus, if an event of default under the indenture occurs
and is continuing or we default under the guarantee with respect to the TIDES,
then the holders of the TIDES will be entitled by the majority vote of the
holders to appoint a special trustee. Any holder of TIDES other than us and our
affiliates will be entitled to nominate a special trustee. Not later than 30
days after the right to appoint a special trustee arises, the trustees will
convene a meeting of the holders of the TIDES for the purpose of appointing a
special trustee. If the trustees fail to convene the meeting within the 30-day
period, the holders of not less than 10% of the aggregate liquidation amount of
the outstanding TIDES will be entitled to convene the meeting. Any appointed
special trustee will cease to be a special trustee if the event that caused the
appointment is cured. Regardless of the appointment of a special trustee, we
will retain all rights under the indenture.
We, the property trustee and the administrative trustees may amend the
declaration of trust without the consent of the holders of the TIDES:
o to cure any ambiguity, correct or supplement any provision in the
declaration of trust that may be inconsistent with any other
provision of the declaration of trust, or to make provisions with
respect to ministerial matters or questions arising under the
declaration of trust, which are not inconsistent with the other
provisions of the declaration of trust, or
o to modify, eliminate or add to any provisions of the declaration
of trust to the extent as is necessary to ensure that (a) the
trust will not be taxable as a corporation and will continue to
be classified for U.S. federal income tax purposes as a grantor
trust at all times that any TIDES or common securities are
outstanding or (b) the trust will not be required to register as
an "investment company" under the 1940 Act.
However, in the case described in the first bullet point above, the
action must not adversely affect in any material respect the interests of any
holder of TIDES.
For amendments not described above, we and the trustees may only amend
the declaration of trust if:
o we obtain the consent of holders representing not less than a
majority of the aggregate liquidation amount of TIDES
outstanding, and
o the trustees receive an opinion of counsel that the amendment
will not affect the trust's status as a grantor trust for U.S.
federal income tax purposes or the trust's exemption from being
an "investment company" under the 1940 Act.
In addition, the declaration of trust may not be amended without the
consent of each holder of TIDES to:
o change or adversely affect the amount or timing of any
distribution on the TIDES, or
o restrict the right of a holder of TIDES to sue to enforce the
payment of a distribution.
So long as any debentures are held by the trust, the trustees will not:
o direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or executing
any trust or power conferred on the property trustee with respect
to the debentures,
o waive any past default that is waivable under the indenture,
o exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the debentures,
or
o consent to any amendment, modification or termination of the
indenture or the debentures, where the consent is required,
without, in each case, obtaining the prior approval of the holders of a majority
in aggregate liquidation amount of all outstanding TIDES.
However, where a consent under the indenture would require the consent
of each holder of debentures affected by the consent, the property trustee may
not give such consent without the prior consent of each holder of the TIDES. The
trustees will not revoke any action previously authorized or approved by a vote
of the holders of the TIDES except by subsequent vote of the holders. The
property trustee will notify each holder of TIDES of any notice of default with
respect to the debentures. In addition to obtaining the foregoing approvals of
the holders of the TIDES, prior to taking any of the foregoing actions, the
trustees will obtain an opinion of counsel experienced in these matters that the
action will not affect the trust's status as a grantor trust for U.S. federal
income tax purposes on account of the action.
Any required approval of holders of TIDES may be given at a meeting of
the holders of TIDES convened for that purpose or by a written consent. Notice
of any meeting at which holders of TIDES are entitled to vote will be given to
each holder of record of TIDES in the manner set forth in the declaration of
trust.
No vote or consent of the holders of TIDES is required for the trust to
redeem and cancel the TIDES in accordance with the declaration of trust.
Even though holders of the TIDES may be entitled to vote or consent
under any of the circumstances described above, any of the TIDES that are owned
by Continental, the trustees or any affiliate of Continental or any trustee,
will, for purposes of any vote or consent, be treated as if they were not
outstanding.
Expenses and Taxes
In the indenture, we have agreed to pay all present and future costs,
expenses, debts and other obligations, including taxes, other than withholding
taxes, of the trust. However, these costs, expenses, debts and obligations do
not include payment obligations of the trust to the holders of the TIDES.
Form, Book-Entry Procedures and Transfer
TIDES sold to "qualified institutional buyers" as defined in Rule 144A
under the Securities Act were issued in the form of a fully registered global
certificate. The global certificate was deposited on the date of original
issuance of the TIDES with DTC and registered in the name of Cede & Co., as
nominee of DTC. Except as set forth below, the global certificate may be
transferred, in whole and not in part, only to DTC or another nominee of DTC.
Investors may hold their beneficial interests in the global certificate directly
through DTC if they have an account with DTC or indirectly through organizations
that have accounts with DTC.
DTC has advised us 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 New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of institutions that have accounts with DTC, known as participants,
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's book-entry system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, whether directly or
indirectly.
Upon the issuance of the global certificate, DTC credited, on its
book-entry registration and transfer system, the principal amount of the global
certificate to the accounts of participants. The accounts credited were
designated by the initial purchasers. Ownership of beneficial interests in the
global certificate will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
certificate will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by DTC and its participants. The
laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of securities in definitive form. These limits and laws
may impair a person's ability to transfer or pledge beneficial interests in the
global certificate.
So long as DTC or its nominee is the registered holder and owner of the
global certificate, DTC or its nominee, as the case may be, will be considered
the sole legal owner and holder of the TIDES represented by the certificate for
all purposes of the declaration of trust, the guarantee and the indenture.
Except as described below, owners of beneficial interests in the global
certificate will not be entitled to have the TIDES represented by the global
certificate registered in their names, will not receive or be entitled to
receive physical delivery of certificated TIDES in definitive form and will not
be considered to be the owners or holders of any TIDES under the declaration of
trust, the guarantee or the indenture. We understand that under existing
industry practice, in the event an owner of a beneficial interest in the global
certificate desires to take any action that DTC, as the holder of the global
certificate, is entitled to take, DTC would authorize the participants to take
such action, and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of amounts with respect to the TIDES represented by the global
certificate registered in the name of and held by DTC or its nominee will be
made to DTC or its nominee, as the case may be, as the registered owner and
holder of the global certificate.
We expect that DTC or its nominee, upon receipt of payment of amounts
with respect to the global certificate, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the liquidation amount of the global certificate as shown on the records of DTC
or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global certificate held through such participants
will be governed by standing instructions and customary practices and will be
the responsibility of such participants. Neither the trust nor we have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the global
certificate or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests or for any other aspect of the relationship
between participants or the relationship between such participants and the
owners of beneficial interests in DTC and its participants or the relationship
between such participants and the owners of beneficial interests in the global
certificate owning through such participants.
Unless and to the extent they are exchanged in whole or in part for
certificated TIDES in definitive form, the global certificate may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global certificate 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.
Neither the trust nor we will be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
TIDES, and we and the trust may conclusively rely on, and will be protected in
relying on, instructions from DTC for all purposes (including with respect to
the registration and delivery, and their respective liquidation amounts, of the
TIDES to be issued).
The information in this prospectus concerning DTC and DTC's book-entry
system has been obtained from sources that we believe to be reliable. Neither
the trust nor we will have any responsibility for the performance by DTC or its
participants of their respective obligations as described in this prospectus or
under the rules and procedures governing their respective operations.
Certificated TIDES
The TIDES represented by the global certificate are exchangeable for
certificated TIDES in definitive form only if:
o DTC notifies us or the trust that it is unwilling or unable to
continue as depositary for the global certificate or if at any
time DTC ceases to be a clearing agency registered under the
Exchange Act,
o we, or the trust, in our discretion at any time determine not to
have all of the TIDES evidenced by the global certificate, or
o a default entitling the holders of the TIDES to accelerate the
maturity of the TIDES has occurred and is continuing.
Payments and Paying Agency
Payments in respect of the global certificate will be made to DTC. DTC
will credit the relevant accounts at DTC on the applicable distribution dates.
For any TIDES that are not held by DTC, payment will be made by check mailed to
the address of the holder entitled to payment as the address appears on the
register. The paying agent is currently the property trustee. The paying agent
will be permitted to resign upon 30 days' written notice to the property
trustee, the administrative trustees and us. In the event that the property
trustee is no longer willing to be the paying agent, the administrative trustees
will appoint a successor, which will be a bank or trust company acceptable to
the administrative trustees and to us, to act as paying agent.
The property trustee has informed the trust that so long as it serves
as paying agent for the TIDES, it anticipates that information regarding
distributions on the TIDES, including payment date, record date and redemption
information, will be made available through Wilmington Trust Company.
Registrar, Conversion Agent and Transfer Agent
The property trustee acts as registrar and conversion agent for the
TIDES. The property trustee acts as initial transfer agent for certificated
TIDES and may designate additional or substitute transfer agents at any time.
Registration of transfers of certificated TIDES will be effected without charge
by or on behalf of the trust upon payment of any tax or other government charges
that may be imposed in relation to the transfer. The trust is not required to
register the transfer of or exchange certificated TIDES during the period
beginning at the opening of business 15 days before any selection of
certificated TIDES to be redeemed and ending at the close of business on the day
of that selection or any certificated TIDES called for redemption.
Information Concerning the Property Trustee
The property trustee, other than during the occurrence and continuance
of an event of default, undertakes to perform only the duties that are
specifically described in the declaration of trust. During the existence of an
event of default under the declaration of trust, the property trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
property trustee is under no obligation to exercise any of the powers vested in
it by the declaration of trust at the request of any holder of TIDES unless it
is offered reasonable indemnity against any costs, expenses and liabilities that
might be incurred by the property trustee. If no event of default has occurred
and is continuing and the property trustee is required to decide between
alternative causes of action, construe ambiguous provisions in the declaration
of trust or is unsure of the application of any provision of the declaration of
trust, and the matter is not one on which holders of the TIDES or the common
securities are entitled under the declaration of trust to vote, then the
property trustee will take such action as is directed by us. If we do not direct
the property trustee to take action, the property trustee will take the action
that it deems advisable and in the best interests of the holders of the TIDES
and common securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
Miscellaneous
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
o the trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act,
o the trust will not be classified as an association taxable as a
corporation for U.S. federal income tax purposes or in a way that
would substantially increase the risk that the trust would be
classified as other than a grantor trust for U.S. federal income
tax purposes, and
o the debentures will be treated as our indebtedness for U.S.
federal income tax purposes.
In this connection, we and the administrative trustees are authorized
to take any action, not inconsistent with applicable law, the certificate of
trust or the declaration of trust, that we and the administrative trustees
determine in our discretion to be necessary or desirable for these purposes, as
long as the action does not materially adversely affect the interests of the
holders of the TIDES and common securities. Holders of the TIDES and common
securities have no preemptive or similar rights. The trust may not borrow money
or issue debt or mortgage or pledge any of its assets.
Governing Law
The declaration of trust and the TIDES are governed by and construed in
accordance with the laws of the State of Delaware.
DESCRIPTION OF DEBENTURES
We issued the debentures under an indenture between us and Wilmington
Trust Company, as trustee. The indenture is qualified under the Trust Indenture
Act and incorporates certain provisions of the Trust Indenture Act. We have
summarized selected provisions of the indenture and the debentures. This summary
is not complete, and is subject to and is qualified in its entirety by reference
to all of the provisions of the indenture. The form of indenture is filed as an
exhibit to the registration statement of which this prospectus is a part.
General
Concurrently with the issuance of the TIDES and common securities, the
trust invested the proceeds in debentures issued by us. The debentures bear
interest at the rate of 6% per annum from November 10, 2000. Interest is payable
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year, beginning February 15, 2001, to the person in whose name each debenture is
registered, subject to certain exceptions, at the close of business on the first
day of the month of the applicable interest payment date. It is anticipated
that, until the liquidation of the trust, each debenture will be registered in
the name of the trust and held by the property trustee for the benefit of the
holders of the TIDES and common securities.
The amount of interest payable for any period is computed on the basis
of the number of days elapsed in a 360-day year consisting of 12 30-day months.
If an interest payment date is not a business day, then we will make the payment
of the interest on the next day that is a business day, without any additional
interest or other payment due to the delay.
Accrued interest that is not paid on the applicable interest payment
date will bear additional interest compounded quarterly from the relevant
interest payment date. The term "interest" as used in this prospectus includes
quarterly interest payments, interest on quarterly interest payments not paid on
the applicable interest payment date, special interest (as described in the
"Registration Rights" section of this prospectus) and additional sums (as
described in "--Additional Sums"), as applicable.
Unless previously redeemed or repurchased in accordance with the
indenture, the debentures will mature on November 15, 2030.
The debentures are unsecured and rank junior and are subordinate in
right of payment to all of our senior obligations and effectively subordinated
to all existing and future liabilities of our subsidiaries. The indenture does
not limit the incurrence or issuance of other secured or unsecured debt by us or
any of our subsidiaries, including senior obligations.
Option to Extend Interest Payment Date
We can, on one or more occasions, defer interest payments on the
debentures for up to 20 consecutive quarterly periods unless an event of default
under the indenture has occurred and is continuing. Thus, we will not be
obligated to pay interest on the debentures during a deferral period. We do not
currently intend to defer interest payments on the debentures.
We may extend a deferral period prior to the period's termination.
However, we may not extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods or
the maturity date of the debentures. On the interest payment date occurring at
the end of each deferral period, we will pay to the holders of debentures all
accrued and unpaid interest on the debentures, together with interest on that
interest at the stated annual rate, compounded quarterly, to the extent
permitted by applicable law. Once we make all interest payments due on the
debentures, we can commence a new deferral period, subject to the same
limitations. Consequently, there could be multiple deferral periods of varying
lengths throughout the term of the debentures. During a deferral period,
interest will continue to accrue and holders of the debentures (and holders of
the TIDES while the TIDES are outstanding) will be required to recognize
interest income for U.S. federal income tax purposes. Please read the "Tax
Consequences--U.S. Holders--Interest Income and Original Issue Discount" section
of this prospectus.
We will be subject to restrictions during a deferral period on our
ability to pay dividends on our capital stock or to make payments on other debt
securities that are on a parity with or junior to the debentures. Please read
the "--Restrictions on Payments" section of this prospectus.
We must give the property trustee, the administrative trustees and the
debenture trustee notice of our election to begin a deferral period at least ten
days before the record date for the distributions on the TIDES that would have
been payable except for the election to begin or extend the deferral period. The
property trustee will give notice of our election to begin or extend a new
deferral period to the holders of the TIDES.
Redemption
Repayment at Maturity, Redemption of Debentures
The debentures must be repaid at their stated maturity, unless earlier
redeemed. The circumstances in which we may redeem the debentures prior to their
stated maturity are described below. Upon the repayment in full at maturity or
redemption (other than following the distribution of the debentures to the
holders of the TIDES and common securities), the trust will apply the proceeds
from the repayment or redemption to redeem, at the applicable redemption price,
an equivalent liquidation amount of TIDES and common securities.
Optional Redemption
We have the right to redeem the debentures in whole or in part, at any
time on or after November 20, 2003, upon not less than 20 nor more than 60 days'
notice, at a redemption price equal to the following prices per $50 principal
amount of debentures, plus accrued and unpaid interest thereon, if redeemed
during the 12-month period ending November 19:
Price Per $50
Year Principal Amount
---- ----------------
2004............................ $51.50
2005............................ $51.00
2006............................ $50.50
2007 and thereafter............. $50.00
In the event of any rnot be required:
o to issue, register the transfer of or exchange any debenture
during a period beginning at the opening of business 15 days
before any selection of debentures for redemption and ending at
the close of business on the earliest date on which the notice of
redemption is deemed to have been given to all holders of
debentures to be redeemed, and
o to register the transfer of or exchange any debentures selected
for redemption, in whole or in part, except the unredeemed
portion of any debenture being redeemed in part.
In no event will we optionally redeem the debentures during a deferral
period. Accordingly, prior to optionally redeeming the debentures, all interest
accrued and unpaid (together, in the case of a deferral period, with interest
thereon, to the extent permitted by law) to the interest payment date
immediately preceding the optional redemption date will be paid in full.
Tax Event Redemption
We may also, under limited circumstances within 90 days of the
occurrence and continuation of a tax event, redeem the debentures in whole, but
not in part, at the aggregate principal amount of the debentures plus accrued
and unpaid interest on the debentures to the date of redemption. Please read the
"Description of TIDES--Tax Event or Investment Company Event Redemption or
Distribution" section of this prospectus.
If we are permitted to consummate the tax event redemption described
above and desire to do so, we must mail notice to holders of TIDES at least 20
days but not more than 60 days before the redemption date.
Additional Sums
If the property trustee is the sole holder of all debentures and the
trust is required to pay any additional taxes, duties, assessments or other
governmental charges as a result of a tax event or otherwise, we will pay as
additional amounts on the debentures, referred to in this prospectus as
"additional sums," such amounts as are required so that the distributions
payable by the trust to holders of TIDES and common securities will not be
reduced as a result of the additional taxes, duties, assessments or other
governmental changes.
Restrictions on Payments
If any of the following occur:
o an event of default under the indenture,
o we are in default in our payment obligations under the guarantee,
or
o we have given notice of our election of a deferral period as
provided in the indenture and have not rescinded the notice, or a
deferral period is continuing,
then, we covenant that we will not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of our capital stock other than stock dividends paid by us
which consist of stock of the same class as that on which the
dividend is being paid,
o make any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any of our debt securities that
rank pari passu with or junior in interest to the debentures, or
o make any guarantee payments with respect to any guarantee by us
of the debt securities of any of our subsidiaries if the
guarantee ranks pari passu with or junior in interest to the
debentures.
However, we may:
o declare or pay dividends or distributions in our common stock,
o declare a dividend in connection with the implementation of a
stockholders' rights plan, or issue stock under the plan in the
future, or redeem or repurchase the rights pursuant to the plan,
o make payments under the guarantee,
o purchase shares of our common stock in connection with the
satisfaction by us of our obligations under any employee benefit
plan or any other of our contractual obligations so long as they
do not rank pari passu with or junior in interest to the
debentures,
o do any of the foregoing if it is a result of a reclassification
of our capital stock or the exchange or conversion of one class
or series of our capital stock for another class or series of our
capital stock, or
o purchase fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of that capital
stock or the security being converted or exchanged.
Modification of Indenture
From time to time we and the debenture trustee may, without the consent
of the holders of debentures, amend, waive or supplement the indenture for
specified purposes, including, among other things:
o curing ambiguities, defects or inconsistencies (provided that any
such action does not materially adversely affect the interest of
the holders of debentures or the holders of the TIDES so long as
they remain outstanding), and
o qualifying, or maintaining the qualification of, the indenture
under the Trust Indenture Act.
In addition, we and the debenture trustee, with the consent of the
holders of not less than a majority in principal amount of the outstanding
debentures, can modify the indenture in a manner affecting the rights of the
holders of debentures. However, without the consent of the holder of each
affected debenture, we may not:
o change the stated maturity of the debentures,
o reduce the principal amount of the debentures,
o reduce the rate or extend the time of payment of interest on the
debentures, or
o reduce the percentage of principal amount of debentures the
consent of whose holders is required to amend, waive or
supplement the indenture, or have certain other effects as set
forth in the indenture.
Notwithstanding the provisions described above or in the "--Events of
Default" section of this prospectus, so long as any of the TIDES remain
outstanding, (a) no modification may be made that adversely affects the holders
of the TIDES in any material respect, and no termination of the indenture may
occur, and no waiver of any event of default under the indenture or compliance
with any covenant under the indenture may be effective, without the prior
consent of the holders of at least a majority in aggregate liquidation
preference of TIDES then outstanding unless and until the principal of and any
premium on the debentures and all accrued and unpaid interest thereon has been
paid in full, and (b) where a consent under the indenture would require the
consent of each holder of debentures, no consent will be given by the property
trustee without the prior consent of each holder of the TIDES.
Events of Default
The indenture provides that any one or more of the following described
events with respect to the debentures that has occurred and is continuing
constitutes an event of default under the indenture:
o failure for 30 days to pay any interest on the debentures when
due (subject to the deferral of any due date in the case of a
deferral period),
o failure to pay any principal or premium, if any, on the
debentures when due, whether at maturity, upon redemption, by
declaration of acceleration or otherwise,
o failure to observe or perform certain other covenants contained
in the indenture for 60 days after written notice to us from the
debenture trustee or the holders of at least 25% in aggregate
outstanding principal amount of the debentures,
o our failure to issue and deliver shares of our common stock upon
an election by a holder of TIDES to convert such TIDES,
o certain events of bankruptcy, insolvency or reorganization of our
company, or
o the voluntary or involuntary dissolution, winding-up or
termination of the trust, except in connection with the
distribution of the debentures to the holders of TIDES or common
securities in liquidation of the trust, the redemption of all of
the TIDES and common securities of the trust, or certain mergers,
consolidations or amalgamations, each as permitted by the
declaration of trust.
The holders of a majority in aggregate outstanding principal amount of
the debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the debenture trustee. The debenture
trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the debentures may declare the principal due and payable immediately
upon an event of default under the indenture and, should the debenture trustee
or the holders of debentures fail to make such declaration, the holders of at
least 25% in aggregate liquidation amount of the TIDES will have such right. The
holders of a majority in aggregate outstanding principal amount of the
debentures may annul the declaration and waive the default if the default (other
than the non-payment of the principal of the debentures which has become due
solely by such acceleration) has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the debenture trustee. Should the holders
of debentures fail to annul the declaration and waive the default, the holders
of a majority in aggregate liquidation amount of the TIDES will have such right.
The holders of a majority in aggregate outstanding principal amount of
the debentures affected thereby may, on behalf of the holders of all the
debentures, waive any past default, except a default in the payment of principal
of (or premium, if any) or interest (unless the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the debenture trustee) or
a default in respect of a covenant or provision which under the indenture cannot
be modified or amended without the consent of the holder of each outstanding
debenture. Should the holders of such debentures fail to annul the declaration
and waive such default, the holders of a majority in aggregate liquidation
amount of the TIDES will have such right. We are required to file annually with
the debenture trustee a certificate as to whether or not we are in compliance
with all the conditions and covenants applicable to us under the indenture.
If an event of default under the indenture has occurred and is
continuing, the property trustee will have the right to declare the principal of
and the interest on the debentures, and any other amounts payable under the
indenture, to be due and payable and to enforce its other rights as a creditor
with respect to the debentures.
Enforcement of Certain Rights by Holders of TIDES
If an event of default under the indenture has occurred and is
continuing and is attributable to our failure to pay interest or principal on
the debentures on the date such interest or principal is otherwise payable, a
holder of TIDES may institute a direct action against us. We may not amend the
indenture to remove the right to bring a direct action against us without the
prior written consent of the holders of all of the TIDES. Notwithstanding any
payments made to a holder of TIDES by us in connection with a direct action
against us, we will remain obligated to pay the principal of and interest on the
debentures, and will be subrogated to the rights of the TIDES holders with
respect to payments on the TIDES to the extent of any payments made by us to
such holder in any direct action against us.
The holders of the TIDES are not able to exercise directly any
remedies, other than those set forth in the preceding paragraph, available to
the holders of the debentures unless there is an event of default under the
declaration of trust.
Consolidation, Merger, Sale of Assets and Other Transactions
The indenture provides that we may not consolidate with or merge with
or into any other person or convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person may consolidate with
or merge with or into us or convey, transfer or lease its properties and assets
substantially as an entirety to us, unless:
o in case we consolidate with or merge with or into another person
or convey or transfer our properties and assets substantially as
an entirety to any person, the successor person is organized
under the laws of the United States or any state of the United
States or the District of Columbia, and the successor person
expressly assumes our obligations on the debentures and provides
for conversion rights in accordance with the terms of the
indenture,
o immediately after giving effect to the transaction, no event of
default under the indenture, and no event which, after notice or
lapse of time or both, would become an event of default under the
indenture, will have occurred and be continuing,
o if at the time any TIDES are outstanding, the transaction is
permitted under the declaration of trust and the guarantee and
does not give rise to any breach or violation of the declaration
of trust or the guarantee, and
o other conditions as specified in the indenture are met.
The general provisions of the indenture do not afford holders of the
debentures protection in the event of a highly leveraged or other transaction
involving us that may adversely affect holders of the debentures.
Subordination
In the indenture, we have covenanted and agreed that the debentures
will be subordinate and junior in right of payment to all our senior obligations
to the extent provided in the indenture. Upon any payment or distribution of
assets to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors, marshaling of assets or
any bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of us, the holders of
our senior obligations will first be entitled to receive payment in full before
the holders of debentures will be entitled to receive or retain any payment.
If the maturity of the debentures is accelerated, the holders of all
our senior obligations outstanding at the time of the acceleration will be
entitled to receive payment in full of all amounts due on the senior
obligations, including any amounts due upon acceleration, before the holders of
the debentures will be entitled to receive or retain any payment of the
principal of, and premium and interest, if any, on, the debentures.
In the event that we default in the payment of any principal of, or
premium or interest on, any of our senior obligations, and such default
continues beyond the period of grace, if any, specified in the instrument
evidencing the senior obligations, then, unless and until the default is cured
or waived or ceases to exist or all senior obligations are paid, no direct or
indirect payment may be made or agreed to be made for principal of, and premium
and interest, if any, on, the debentures, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the debentures.
The term "senior obligations" as used in this prospectus means (1) the
principal of, and premium and interest, if any, on all of our debt and (2) any
amount payable in respect of a long-term operating lease of aircraft or aircraft
engines, in each case whether outstanding on the date of execution of the
indenture or thereafter created, assumed or incurred, unless the debt or lease
obligations are expressly stated to rank junior in right of payment to, or pari
passu in right of payment with, the debentures.
However, senior obligations do not include:
o any of our debt which, when incurred and without respect to any
election under Section 1111(b) of the U.S. Bankruptcy Code of
1978, was without recourse to us,
o trade accounts payable and accrued liabilities arising in the
ordinary course of business,
o any of our debt to any of our subsidiaries,
o debt to any of our employees, and
o debt which by its terms is subordinated to trade accounts payable
or accrued liabilities arising in the ordinary course of business
to the extent that payments made to the holders of such debt by
the holders of the debentures as a result of the subordination
provisions of the indenture would be greater than such payments
otherwise would have been as a result of any obligation of such
holders of such debt to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination
provisions to which such debt is subject.
The term "debt" as used in this prospectus means:
o the principal of, and premium and interest, if any, on,
indebtedness for money borrowed, together with all fees,
indemnities and expenses payable under such obligations,
o purchase money and similar obligations,
o obligations under capital leases,
o guarantees, assumptions or purchase commitments relating to, or
other transactions as a result of which we are responsible for
the payment of such indebtedness of others,
o renewals, extensions and refunding of any such indebtedness,
o interest or obligations in respect of any such indebtedness
accruing after the commencement of any insolvency or bankruptcy
proceedings, and
o obligations associated with derivative products such as (a)
securities contracts and foreign currency exchange contracts, (b)
derivative instruments, such as swap agreements (including
interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity
futures contracts and commodity options contracts, and (c)
similar financial instruments.
The indenture places no limitation on the amount of senior obligations
that we or our subsidiaries may incur. At December 31, 2000, our senior
obligations included approximately $3.7 billion of debt and capital lease
obligations. Our senior obligations also included minimum annual commitments
under long-term operating leases of aircraft or aircraft engines.
Structural Subordination
The debentures are effectively junior in right of payment to all of our
subsidiaries' existing or future indebtedness and other liabilities. The
indenture permits our subsidiaries to incur indebtedness and other liabilities
without restriction. Any indebtedness of our subsidiaries effectively ranks
senior to the debentures with respect to such subsidiary's assets. Accordingly,
there might only be a limited amount of assets available to satisfy our
obligations under the debentures and, as a result, the trust's obligations to
holders of the TIDES.
The debentures and the guarantee are exclusively our obligations. Since
our operations are conducted, in part, through our subsidiaries, the cash flow
and the consequent ability to service debt, including our debentures and
guarantee are dependent, in part, upon the earnings of our subsidiaries and the
distribution of those earnings to, or upon loans or other payments of funds by
those subsidiaries to, us. The payment of dividends and the making of loans and
advances to us by our subsidiaries may be subject to statutory or contractual
restrictions, are dependent upon the earnings of those subsidiaries and are
subject to various business considerations.
Any right of ours to receive assets of any of our subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the debentures 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 we are recognized as a creditor of such subsidiary, in which
case our claims would still be subordinate to any security interests in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by us.
Registration and Transfer
The debentures will be represented by one or more global certificates
registered in the name of Cede & Co. as the nominee of DTC if, and only if,
distributed to the holders of the TIDES and the trust's common securities. Until
that time, the debentures will remain registered in the name of and held by the
property trustee. Should the debentures be distributed to holders of the TIDES
and the trust's common securities, beneficial interests in the debentures will
be shown on, and transfers of debentures will be effected only through, records
maintained by participants in DTC. Except as described below, debentures in
certificated form will not be issued in exchange for the global certificates.
A global security will be exchangeable for debentures in certificated
form registered in the names of persons other than Cede & Co. only if:
o DTC notifies us that it is unwilling or unable to continue as a
depositary for the global security or if at any time DTC ceases
to be a clearing agency registered under the Exchange Act,
o we in our sole discretion determine that the global security will
be exchangeable, or
o there shall have occurred and be continuing an event of default
under the indenture.
Payments on debentures held in global form will be made to DTC. For
debentures issued in certificated form, principal and interest will be payable,
the transfer of the debentures will be registrable, and debentures will be
exchangeable for debentures of other denominations of a like aggregate principal
amount, at the corporate office of the debenture trustee in New York, New York,
or at the offices of any paying agent or transfer agent appointed by us,
provided that payment of interest may be made at our option by check mailed to
the address of the persons entitled to payment or by wire transfer.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, please read the "Description of TIDES--Form, Book-Entry
Procedures and Transfer" section of this prospectus. If the debentures are
distributed to the holders of the TIDES and common securities upon the
termination of the trust, the form, book-entry and transfer procedures with
respect to the TIDES as described under the "Description of TIDES--Form,
Book-Entry Procedures and Transfer" section of this prospectus will apply to the
debentures.
Payment and Paying Agents
Payment of the principal of, and premium and interest, if any, on, the
debentures will be made at the office or agency of us maintained for that
purpose in New York, New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. However, at our option, payment of interest may be made (except
in the case of debentures that are held in global form) by check mailed to each
registered holder or by wire transfer. Payment of any interest on any debenture
will be made to the person in whose name the debenture is registered at the
close of business on the record date for such interest, except in the case of
defaulted interest.
Governing Law
The indenture and the debentures are governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
The debenture trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the debenture trustee is under no
obligation to exercise any of the powers vested in it by the indenture at the
request of any holder of debentures, unless offered reasonable indemnity by the
holder against the costs, expenses and liabilities that might be incurred by the
debenture trustee. The debenture trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the debenture trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The guarantee was executed and delivered by us concurrently with the
issuance by the trust of the TIDES for the benefit of holders of TIDES.
Wilmington Trust Company acts as trustee under the guarantee agreement. The
guarantee agreement is qualified under the Trust Indenture Act. We have
summarized below selected provisions of the guarantee agreement. This summary is
not complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the guarantee agreement. The guarantee trustee will
hold the guarantee for the benefit of the holders of the TIDES. The form of
guarantee agreement is filed as an exhibit to the registration statement of
which this prospectus is a part.
General
Under the guarantee agreement, we irrevocably agree to pay in full on a
subordinated basis, to the extent described below, the guarantee payments
described below to the holders of the TIDES regardless of any defense, right of
set-off or counterclaim that the trust may have or assert other than the defense
of payment. The following payments, called the guarantee payments, with respect
to the TIDES, to the extent not paid by or on behalf of the trust, will be
subject to the guarantee:
o any accrued and unpaid distributions required to be paid on the
TIDES, to the extent that the trust has funds on hand available
for payment at such time,
o the applicable redemption price with respect to TIDES called for
redemption, to the extent that the trust has funds on hand
available for payment at such time, and
o upon a voluntary or involuntary dissolution, winding up or
liquidation of the trust, other than in connection with the
distribution of debentures to the holders of the TIDES or the
redemption of all of the TIDES, the lesser of:
o the liquidation distribution, to the extent the trust has
funds available therefor, and
o the amount of assets of the trust remaining available for
distribution to holders of the TIDES upon liquidation of the
trust.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of the TIDES or by causing
the trust to pay the amounts to the holders.
The guarantee is an irrevocable guarantee on a subordinated basis of
the trust's obligations under the TIDES. However, the guarantee applies only to
the extent that the trust has funds sufficient to make such payments, and is not
a guarantee of collection. If we do not make interest payments on the debentures
held by the trust, the trust will not be able to pay distributions on the TIDES
and will not have funds legally available for the distributions.
The guarantee ranks subordinate and junior in right of payment to all
senior obligations. In addition, our obligations under the guarantee are
effectively subordinated to all existing and future liabilities of our
subsidiaries. The guarantee does not limit the incurrence or issuance of other
secured or unsecured debt by us or by our subsidiaries, including senior
obligations.
Taken together, our obligations under the guarantee agreement, the
declaration of trust, the debentures and the indenture, including our obligation
to pay the costs, expenses and other liabilities of the trust other than the
trust's obligations to the holders of the TIDES and common securities, provide,
in the aggregate, a full, irrevocable and unconditional guarantee of all of the
trust's obligations under the TIDES. No single document standing alone or
operating in conjunction with fewer than all the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
trust's obligations under the TIDES.
Status of the Guarantee
The guarantee is a guarantee of payment and not of collection, meaning
the guaranteed party may institute a legal proceeding directly against us to
enforce its rights under the guarantee without first instituting a legal
proceeding against any other person or entity. The guarantee is held for the
benefit of the holders of the TIDES. The guarantee will not be discharged except
by payment of the guarantee payments in full to the extent not paid by the trust
or upon distribution to the holders of the TIDES of the debentures.
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of holders of the TIDES (in which case no vote will be
required), the guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate liquidation amount of the
outstanding TIDES. The manner of obtaining any such approval will be as set
forth under the "Description of TIDES--Voting Rights; Amendment of the
Declaration" section of this prospectus. All guarantees and agreements contained
in the guarantee bind the successors, assigns, receivers, trustees and our
representatives and inure to the benefit of the holders of the TIDES then
outstanding.
Events of Default
An event of default under the guarantee will occur upon our failure to
perform any of our payment or other obligations under the guarantee agreement.
However, except for a failure to make a guarantee payment, we are entitled to
receive notice of the default and cure the default within 60 days after receipt
of the notice. The holders of a majority in aggregate liquidation amount of the
TIDES have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee in respect of the
guarantee or to direct the exercise of any trust or power conferred upon the
guarantee trustee under the guarantee.
Any holder of the TIDES may institute a legal proceeding directly
against us to enforce its rights under the guarantee without first instituting a
legal proceeding against the trust, the guarantee trustee or any other person or
entity.
We, as guarantor, are required to file annually with the guarantee
trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance
of a default by us in performance of the guarantee, undertakes to perform only
the duties that are specifically described in the guarantee. After a default
under the guarantee agreement, the guarantee trustee must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at the request of any holder of the TIDES unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred.
Termination of the Guarantee
The guarantee will terminate as to each holder of TIDES upon:
o full payment of the redemption price and accrued and unpaid
distributions with respect to all TIDES,
o distribution of the debentures held by the trust to the holders
of the TIDES,
o liquidation of the trust, or
o distribution of our common stock to such holder in respect of the
conversion of such holder's TIDES into common stock.
In addition, the guarantee will terminate completely upon full payment
of the amounts payable in accordance with the declaration of trust. The
guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder must restore payment of any sums paid under the
TIDES or the guarantee.
Governing Law
The guarantee agreement is governed by and construed in accordance with
the laws of the State of New York.
RELATIONSHIP AMONG THE TIDES,
THE DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of distributions and other amounts due on the TIDES (to the
extent the trust has funds available for the payment of such distributions) are
irrevocably guaranteed by us to the extent set forth under the "Description of
Guarantee" section of this prospectus. Taken together, our obligations under the
debentures, the indenture, the declaration of trust and the guarantee agreement
provide a full, irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the TIDES. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the trust's obligations under the TIDES. If and to the extent that we do not
make payments on the debentures, the trust will not pay distributions or other
amounts due on the TIDES. The guarantee does not cover payment of distributions
when the trust does not have sufficient funds to pay such distributions. In such
event, the remedy of a holder of TIDES is to institute a direct action against
us under the debentures. Our obligations under the guarantee are subordinate and
junior in right of payment to all our senior obligations.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the debentures, the payments will be sufficient to cover distributions and other
payments due on the TIDES, primarily because:
o the aggregate principal amount or applicable redemption price of
the debentures will be equal to the sum of the aggregate
liquidation amount or applicable redemption price, as applicable,
of the TIDES and common securities,
o the interest rate payable on the debentures and interest and
other payment dates on the debentures will match the distribution
rate and distribution and other payment dates for the TIDES,
o we will pay for all costs, expenses and liabilities of the trust
except the trust's obligations to holders of TIDES and common
securities, and
o the declaration of trust further provides that the trust will not
engage in any activity that is not consistent with its limited
purposes.
Notwithstanding anything to the contrary in the indenture, we have the right to
set off any payment we are otherwise required to make under the indenture to the
extent we have made, or are concurrently on the date of such payment making, any
payment under the guarantee used to satisfy the related payment of indebtedness
under the indenture.
Enforcement Rights of Holders of TIDES
Any holder of TIDES may institute a legal proceeding directly against
us to enforce its rights under the guarantee without first instituting a legal
proceeding against the guarantee trustee, the trust or any other person or
entity and may, under certain circumstances, also institute a legal proceeding
directly against us to recover unpaid amounts under the debentures.
A default or event of default under any of our senior obligations would
not constitute a default or event of default under the declaration of trust.
However, in the event of payment defaults under, or acceleration of, our senior
obligations, the subordination provisions of the indenture provide that no
payments may be made in respect of the debentures until the senior obligations
have been paid in full or any payment default thereunder has been cured or
waived. Failure to make required payments on debentures would constitute an
event of default under the declaration of trust.
Limited Purpose of the Trust
The TIDES evidence a beneficial interest in the trust, and the trust
exists for the sole purpose of issuing the TIDES and common securities and
investing the proceeds of the TIDES and common securities in debentures.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution, winding-up or
liquidation of the trust involving the liquidation of the debentures, after
satisfaction of the liabilities of creditors of the trust as required by
applicable law, the holders of the TIDES and common securities will be entitled
to receive, out of assets held by the trust, the liquidation distribution in
cash. Upon any voluntary or involuntary liquidation or our bankruptcy, the
property trustee, as holder of the debentures, would be a subordinated creditor
of us, subordinated in right of payment to all senior obligations as set forth
in the indenture, but entitled to receive payment in full of principal and
interest, before any of our stockholders receive payments or distributions.
Since we are the guarantor under the guarantee and have agreed to pay for all
costs, expenses and liabilities of the trust, other than the trust's obligations
to the holders of the TIDES and common securities, the positions of a holder of
TIDES and a holder of debentures relative to other creditors and to our
stockholders in the event of liquidation or our bankruptcy are expected to be
substantially the same.
DESCRIPTION OF CAPITAL STOCK
This section contains a description of our capital stock, which
includes our common stock as well as our preferred stock, the terms of which may
affect the common stock. The following summary of the terms of our capital stock
is not meant to be complete and is qualified by reference to our certificate of
incorporation, bylaws and the rights agreement we describe in this section. For
more information, you should read "Where You Can Find More Information."
Our authorized capital stock currently consists of 200 million shares
of common stock and 10 million shares of preferred stock. As of January 22,
2001, we had outstanding 53,401,756 shares of common stock and one share of
Series B preferred stock (the Preferred Stock).
Common Stock
Rights to Dividends and on Liquidation, Dissolution or Winding Up
Common stockholders participate ratably in any dividends or
distributions on the common stock. In the event of any liquidation, dissolution
or winding up of our company, common stockholders are entitled to share ratably
in our assets available for distribution to the stockholders, subject to the
prior rights of holders of any outstanding preferred stock.
Preemptive and Other Subscription Rights
Common stockholders do not have preemptive, subscription, conversion or
redemption rights (other than the anti-dilution rights described under
"--Corporate Governance and Control"), and are not subject to further calls or
assessments.
No Cumulative Voting Rights
Common stockholders do not have the right to cumulate their votes in
the election of directors.
Voting
Holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders, except that voting rights of
non-U.S. citizens are limited as described under "--Limitation on Voting by
Foreign Owners."
Limitation on Voting by Foreign Owners
Our certificate of incorporation provides that shares of capital stock
may not be voted by or at the direction of persons who are not citizens of the
United States unless the shares are registered on a separate stock record.
Applicable restrictions currently require that no more than 25% of our voting
stock be owned or controlled, directly or indirectly, by persons who are not
U.S. citizens, and that our president and at least two-thirds of our directors
or other managing officers be U.S. citizens. For purposes of the certificate of
incorporation, "U.S. citizen" means:
o an individual who is a citizen of the United States,
o a partnership each of whose partners is an individual who is a
citizen of the United States, or
o 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.
Our bylaws provide that no shares will be registered on the foreign
stock record if the amount so registered would exceed the restrictions described
above or adversely affect our operating certificates or authorities.
Registration on the foreign stock record is made in chronological order based on
the date we receive a written request for registration. An affiliate of AXA
Financial, Inc. has requested that all shares beneficially owned by AXA
Financial, Inc. and its affiliates be included on our foreign stock record.
Although we have not to date limited the registration of any shares on this
record, subject to certain factors, the registration of the shares beneficially
owned by AXA Financial, Inc. will preclude the registration, and thus the voting
of, any shares owned by any other Continental stockholders that are not U.S.
citizens.
Preferred Stock Purchase Rights
General
One preferred stock purchase right is currently associated with each
outstanding share of our common stock. Each of these preferred stock purchase
rights entitles the registered holder to purchase from us one one-thousandth of
a share of our Series A junior participating preferred stock at a purchase price
of $200 per one one-thousandth of a share, subject to adjustment.
The preferred stock purchase rights will have anti-takeover effects.
The preferred stock purchase rights could cause substantial dilution to a person
or group that attempts to acquire us and effect a change in the composition of
our board of directors on terms not approved by our board of directors,
including by means of a tender offer at a premium to the market price. Subject
to restrictions and limitations contained in our charter, the preferred stock
purchase rights should not interfere with any merger or business combination
approved by our board of directors because we may redeem the preferred stock
purchase rights at the redemption price prior to the time that a person has
become an acquiring person or amend the preferred stock purchase rights to make
them inapplicable to the approved transaction.
The following summary of the material terms of the preferred stock
purchase rights is not meant to be complete and is qualified by reference to the
rights agreement that governs the issuance of the rights. See "Where You Can
Find More Information."
Evidence and Transferability of Preferred Stock Purchase Rights
The preferred stock purchase rights will be evidenced by the
certificates representing shares of common stock until the earlier to occur of:
o 10 days following a public announcement or public disclosure of
facts made by us or an acquiring person that a person or group of
affiliated or associated persons has become an acquiring person,
which occurs, generally, when that person or group has acquired
beneficial ownership of common stock representing 15% or more of
the total number of votes entitled to be cast by the holders of
common stock, and
o 10 business days, or a later date established by our board of
directors before the time any person or group becomes an
acquiring person, following the commencement of, or the first
public announcement of an intention of any person or group to
make, a tender offer or exchange offer that, if completed, would
result in the beneficial ownership by a person or group of shares
of common stock representing 15% or more of such number of votes.
Until the rights distribution date or the earlier redemption or
expiration of the preferred stock purchase rights:
o the preferred stock purchase rights will only be transferred with
the transfer of shares of common stock,
o certificates representing shares of common stock which become
outstanding after the record date for the intitial distribution
of the rights, will contain a notation incorporating the terms of
the preferred stock purchase rights by reference, and
o the surrender for transfer of any certificate representing shares
of common stock will also constitute the transfer of the
preferred stock purchase rights associated with the shares of
common stock represented by that certificate.
As soon as practicable following the rights distribution date, separate
certificates evidencing the preferred stock purchase rights will be mailed to
holders of record of the shares of common stock as of the close of business on
the rights distribution date and those separate preferred stock purchase rights
certificates alone will evidence the rights.
Exempt Persons
We and certain persons affiliated with us are exempt from the
definition of acquiring person.
An exception to the definition of acquiring person in the rights
agreement permits an institutional investor to be or become the beneficial owner
of our common stock representing 15% or more of the voting power of the common
stock then outstanding, subject to certain limitations described below, without
becoming an acquiring person, as long as the institutional investor continues to
be an institutional investor. Generally, an institutional investor is a person
who, as of January 31, 2000:
o beneficially owned more than 14% of the voting power of our
common stock then outstanding,
o had a Schedule 13G on file with the SEC with respect to its
holdings,
o is principally engaged in the business of managing investment
funds for unaffiliated securities investors,
o acquires the common stock pursuant to trading activities
undertaken in the ordinary course of such person's business not
with the purpose or effect of exercising or influencing control
over us, and
o is not obligated to and does not file a Schedule 13D with respect
to our securities.
If our board of directors determines that a person is no longer an
institutional investor, then this person will be required to as promptly as
practicable divest itself of a sufficient number of shares of common stock so
that this person beneficially owns less than 15% of the voting power of our
common stock then outstanding.
If our board of directors determines that this person does not divest
itself of common shares as required, then this person will be or become an
acquiring person under the rights agreement.
AXA Financial, as an institutional investor under the rights agreement,
is permitted to beneficially own, without triggering the rights under the rights
agreement, so long as it retains its status as a passive institutional investor,
up to 47% of the outstanding shares of common stock through December 31, 2001,
and, after December 31, 2001, the lesser of 47% of the outstanding shares of
common stock and the percentage of common stock reported as beneficially owned
by it in any Schedule 13G filed with the SEC after December 31, 2001 (such that
the percentage permitted to be beneficially owned by it will be reduced (down to
25% of the outstanding shares of common stock) to reflect reductions in its
beneficial ownership percentage resulting from subsequent sales of common stock
or increases in the total number of shares of common stock outstanding).
Exercisability of Rights
The preferred stock purchase rights are not exercisable until the
preferred stock purchase rights distribution date. The preferred stock purchase
rights will expire on November 20, 2008, unless the expiration date is extended
or unless the preferred stock purchase rights are earlier redeemed or exchanged
by us, in each case, as described below.
If any person becomes an acquiring person, each holder of a preferred
stock purchase right (other than preferred stock purchase rights beneficially
owned by the acquiring person, which will be void) will, after the date that any
person became an acquiring person, have the right to receive, upon exercise of
those preferred stock purchase rights at the then current exercise price, that
number of shares of common stock, or cash or other securities or assets in
certain circumstances, having a market value of two times the exercise price of
the preferred stock purchase right. If, at any time on or after the date that
any person has become an acquiring person, we are acquired in a merger or other
business combination transaction or 50% or more of our consolidated assets or
earning power are sold, each holder of a preferred stock purchase right will,
after the date of that transaction, have the right to receive, upon the exercise
of those preferred stock purchase rights at the then current exercise price of
the preferred stock purchase right, that number of shares of common stock of the
acquiring company which at the time of that transaction will have a market value
of two times the exercise price of the preferred stock purchase right.
The purchase price payable, and the number of shares of junior
preferred stock or other securities or property issuable, upon exercise of the
preferred stock purchase rights are subject to adjustment from time to time to
prevent dilution in some circumstances.
Until a preferred stock purchase right is exercised, the holder of a
preferred stock purchase right will have no rights as a stockholder of our
company, including the right to vote or to receive dividends.
From and after the occurrence of an event described in Section
11(a)(ii) of the rights agreement, if rights are or were, at any time on or
after the earlier of (1) the date of such event and (2) the distribution date,
acquired or beneficially owned by an acquiring person or an associate or
affiliate of an acquiring person, such rights shall become void, and any holder
of such rights shall thereafter have no right to exercise such rights.
Terms of Junior Preferred Stock
Shares of junior preferred stock, which may be purchased upon exercise
of the preferred stock purchase rights, will not be redeemable. Each share of
junior preferred stock will be entitled to receive when, as and if declared by
the board of directors, out of funds legally available for the purpose, an
amount per share equal to 1,000 times the cash or non-cash dividend declared per
share of common stock. In the event of liquidation, the holders of the junior
preferred stock will be entitled to receive an aggregate payment equal to 1,000
times the payment made per share of common stock. Each share of junior preferred
stock will have 1,000 votes, together with the common stock. Finally, in the
event of any merger, consolidation or other transaction in which the common
stock is exchanged, each share of junior preferred stock will be entitled to
receive an amount equal to 1,000 times the amount received per share of common
stock. The rights are protected by customary antidilution provisions.
Exchange or Redemption
At any time after any person becomes an acquiring person, and prior to
the acquisition by any person or group of a majority of the voting power, our
board of directors may exchange the rights (other than rights owned by such
acquiring person which have become void), in whole or in part, at an exchange
ratio of one share of common stock per right (subject to adjustment). We may, at
our option, substitute preferred shares or common stock equivalents for common
stock, at the rate of one one-thousandth of a preferred share for each share of
common stock (subject to adjustment). No fractional share of common stock will
be issued and in lieu thereof, an adjustment in cash will be made based on the
market price of the share of common stock on the last trading day prior to the
date of exchange.
At any time prior to any person becoming an acquiring person, our board
of directors, by the required board vote, may redeem the rights in whole, but
not in part, at a redemption price of $.001 per right. The redemption of the
rights may be made effective at the time, on any basis and subject to the
conditions which our board of directors may establish. Immediately upon any
redemption of the rights (or upon a later date specified by our board of
directors in the resolution approving a redemption), the right to exercise the
rights will terminate and the only right of the holders of rights will be to
receive the redemption price. The redemption of the rights may be subject to
certain restrictions and limitations contained in our charter.
Our board of directors, by the required board vote, may amend the terms
of the rights without the consent of the holders of the rights, except that from
the time any person becomes an acquiring person, no amendment may adversely
affect the interests of the holders of the rights (other than the acquiring
person and its affiliates and associates). The right of our board of directors
to amend the rights agreement may be subject to certain restrictions and
limitations contained in our charter.
Preferred Stock
In connection with the amendment to the Northwest Alliance, we issued
Northwest one share of a new series of preferred stock, which we refer to as the
Preferred Stock, for a nominal price. Only one share of Preferred Stock is
authorized for issuance. Our Preferred Stock is not convertible into any other
securities. We are not obligated to redeem or retire the Preferred Stock, but we
have the option to redeem the Preferred Stock upon the occurrence of certain
events described below under "--Redemption."
Ranking. The Preferred Stock ranks junior to all classes of our capital
stock other than the common stock upon liquidation, dissolution or winding up of
our company.
Dividends. No dividends are payable on our Preferred Stock.
Voting Rights
The Preferred Stock gives Northwest the right to block, during the term
of the Northwest Alliance, or if earlier, until the Preferred Stock becomes
redeemable,
o certain business combinations and similar changes of control
transactions involving us and a third party major air carrier,
o certain amendments to our rights plan (or redemption of those
rights),
o any dividend or distribution of all or substantially all of our
assets and
o certain reorganizations and restructuring transactions involving
us.
Redemption
The Preferred Stock is redeemable by us at a nominal price (and the
blocking rights eliminated)
o if Northwest transfers or encumbers the Preferred Stock,
o if there is a change of control of Northwest involving a third
party major air carrier,
o on expiration or termination of the Northwest Alliance (other
than as a result of a breach by us), or
o if Northwest materially breaches its standstill obligations to us
or triggers our rights agreement.
Transfer Restriction Agreement
The holder of the Preferred Stock agrees to the following:
o not to transfer, sell or dispose of (1) our common stock, in the
case of a going private transaction, or (2) capital stock of a
holding company, in the case of the establishment of a new
holding company, to a prohibited transferee, which means any
major air carrier or affiliate who would have upon the occurrence
of such transfer, sale or disposition, beneficial ownership of
25% or more of the capital stock or voting power of our company
upon completion of such transfer, sale or disposition, and
o prior to transferring, selling or disposing of (1) our common
stock, in the case of a going private transaction, or (2) capital
stock of a holding company, in the case of the establishment of a
new holding company, to a transferee that is not a prohibited
transferee, the permitted transferee will execute an agreement
with Northwest identical in all material respects to a transfer
restriction agreement that contains the agreements described in
this subsection.
Corporate Governance and Control
The certificate of incorporation provides that our board of directors
will consist of a number of directors as may be determined from time to time by
the board of directors in accordance with the bylaws. Our board of directors
currently consists of 13 directors elected by common stockholders, subject to
the rights of preferred stockholders to elect additional directors as set forth
in any preferred stock designations.
Business Combinations
Our certificate of incorporation provides that we are not governed by
Section 203 of the General Corporation Law of Delaware which, in the absence of
such provisions, would have imposed additional requirements regarding mergers
and other business combinations.
Procedural Matters
Our bylaws require stockholders seeking to nominate directors or
propose other matters for action at a stockholders' meeting to give us notice
within specified periods in advance of the meeting and to follow certain other
specified procedures.
Change of Control
Northwest's ownership of the Preferred Stock, because of the separate
class vote required pursuant to the terms of the Preferred Stock in any required
vote of our stockholders with respect to some changes of control affecting us,
may have the effect of delaying, deferring or preventing a change of control of
our company.
In addition, the existence of the preferred stock purchase rights may
have the effect of delaying or preventing a change of control of our company.
See "--Preferred Stock Purchase Rights" above.
Limitation of Director Liability and Indemnification
Our certificate of incorporation provides, to the full extent permitted
by Delaware law, that directors will not be liable to us or our stockholders for
monetary damages for breach of fiduciary duty as a director. As required under
current Delaware law, our certificate of incorporation and bylaws currently
provide that this waiver may not apply to liability
o for any breach of the director's duty of loyalty to us or our
stockholders,
o for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law,
o under Section 174 of the Delaware General Corporation Law
(governing distributions to stockholders), or
o 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 any of our directors will be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Our certificate of incorporation further
provides that we will indemnify each of our directors and officers to the full
extent permitted by Delaware law and may indemnify certain other persons as
authorized by the Delaware General Corporation Law. These provisions do not
eliminate any monetary liability of directors under the federal securities laws.
TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax
consequences of the ownership and disposition of the TIDES, but does not purport
to be a complete analysis of all the potential tax considerations relating
thereto. Unless otherwise stated, this summary deals only with TIDES held as
capital assets by holders.
The tax treatment of a holder may vary depending on its particular
situation. This summary does not deal with special classes of holders, such as,
for example, dealers in securities or currencies, banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, tax
exempt organizations, persons holding TIDES as part of a straddle or as part of
a hedging or conversion transaction or other integrated investment, or persons
whose functional currency is not the U.S. dollar. Further, it does not include
any description of alternative minimum tax consequences or the tax laws of any
state, local or foreign government that may be applicable to the TIDES.
This summary is based on the Internal Revenue Code of 1986, the
Treasury Regulations thereunder and administrative and judicial interpretations
thereof as of the date hereof, and all of which are subject to change (possibly
on a retroactive basis). In particular, legislation was proposed by the Clinton
Administration in 1996, 1997, 1998 and 1999 to prohibit or defer an issuer's
ability to deduct interest on certain types of debt instruments. If such
legislation is ultimately enacted, it could limit our ability to deduct interest
with respect to the TIDES, which, in turn, would constitute a "tax event." Upon
the occurrence of a tax event, we may be permitted to redeem the debentures,
which would trigger a redemption of the TIDES. See "Description of TIDES--Tax
Event or Investment Company Event Redemption or Distribution."
The authorities on which this summary is based are subject to various
interpretations, and it is therefore possible that the federal income tax
treatment of the ownership and disposition of the TIDES may differ from the
treatment described below. We have not sought any ruling from the IRS with
respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS will agree with such
statements and conclusions. In addition, the IRS is not precluded from
successfully adopting a contrary position. This summary does not consider the
effect of any applicable foreign, state, local or other tax laws.
As used herein, the term "U.S. Holder" means a beneficial owner of
TIDES that is for U.S. federal income tax purposes: (1) an individual who is a
citizen or resident of the United States, (2) a U.S. domestic corporation, (3)
an estate, the income of which is subject to federal income taxation regardless
of its source, or (4) in general, a trust subject to the primary supervision of
a U.S. court and the control of one or more U.S. persons. A "Foreign Holder" is
any holder of TIDES that is a nonresident alien individual or a foreign
corporation.
Investors are advised to consult their tax advisors as to the tax
consequences of the ownership and disposition of the TIDES, in light of their
particular circumstances, under federal income and estate tax laws and any
applicable state, local, foreign and other tax laws or tax treaties, including
the effects of possible future changes in such laws.
Classification of the Debentures
In the opinion of Cleary, Gottlieb, Steen & Hamilton, under current law
and assuming the accuracy of, and full compliance with, the terms of the
indenture (and certain other documents), and based on certain representations we
have made, the debentures will be treated for U.S. federal income tax purposes
as our indebtedness. By acceptance of a TIDES, each holder agrees to treat the
debentures as our indebtedness.
Classification of the Trust
In the opinion of Cleary, Gottlieb, Steen & Hamilton, under current law
and assuming the accuracy of, and full compliance with, the terms of the trust
agreement and the indenture (and certain other documents), the trust will be
treated for U.S. federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for U.S. federal income tax
purposes, each holder of TIDES will be considered the owner of an undivided
beneficial ownership interest in the debentures, and each U.S. Holder will be
required to include in its gross income any interest (or original issue discount
accrued) with respect to its allocable share of those debentures. By acceptance
of a TIDES, each holder agrees to treat the TIDES as an undivided ownership
interest in the debentures. See "--U.S. Holders--Interest Income and Original
Issue Discount."
An opinion of counsel is not binding on the IRS or the courts.
Prospective investors should note that no rulings have been or are expected to
be sought from the IRS with respect to any of these issues and no assurance can
be given that the IRS will not take contrary positions. Moreover, no assurance
can be given that any of the opinions expressed herein will not be challenged by
the IRS or, if challenged, that such challenge will not be successful.
U.S. Holders
Interest Income and Original Issue Discount
As a result of our option to defer the payment of interest on the
debentures, U.S. Holders of TIDES are required to recognize interest income in
accordance with the "original issue discount" rules of the Code. Accordingly,
each U.S. Holder of TIDES, including a U.S. Holder that uses the cash method of
accounting, generally will be required to recognize its pro rata share of
interest income on the debentures as it accrues in accordance with a constant
yield method based on a compounding of interest, over the entire term of the
debentures. U.S. Holders will be required to recognize accrued interest income
regardless of whether distributions are made on the TIDES, and regardless of
whether we exercise our option to extend any interest payment period. Subject to
the market discount and acquisition premium rules discussed below, the amount of
interest income that will be recognized in any quarter will approximately equal
the amount of interest that accrues on the debentures in the quarter at the
stated interest rate. Actual distributions of stated interest will not be
separately reported as taxable income. Consequently, during a deferral period, a
holder will be required to include accrued interest in gross income even though
we have not made any actual cash payments.
A U.S. Holder's initial tax basis for its pro rata share of the
debentures will be equal to the U.S. Holder's purchase price paid for its TIDES
and will be increased by the accrued interest includible in the holder's gross
income and reduced by the amount of distributions or other payments received by
the holder on the TIDES. No portion of the amounts received on the TIDES will be
eligible for the dividends received deduction.
Market Discount
If you purchase a TIDES at a price that is lower than the adjusted
issue price (as defined below) of the TIDES' pro rata share of the debentures,
by 0.25% or more of the adjusted issue price multiplied by the number of
remaining whole years to maturity, the debentures will be considered to bear
"market discount" in your hands. In this case, any gain that you realize on the
disposition of the TIDES generally will be treated as ordinary interest income
to the extent of the market discount that accrued on the related debentures
during your holding period. In addition, you may be required to defer the
deduction of a portion of the interest paid on any indebtedness that you
incurred or continued to purchase or carry the TIDES. In general, market
discount will be treated as accruing ratably over the term of the debentures,
or, at your election, under a constant yield method. Special rules apply if you
convert TIDES into our common stock. See "--Conversion of TIDES into Common
Stock."
You may elect to include market discount in gross income currently as
it accrues (on either a ratable or constant yield basis), in lieu of treating a
portion of any gain realized on a sale of the TIDES as ordinary income. If you
elect to include market discount on a current basis, the interest deduction
deferral rule described in the preceding paragraph will not apply. If you do
make such an election, it will apply to all market discount debt instruments
that you acquire on or after the first day in the first taxable year to which
the election applies. The election may not be revoked without the consent of the
IRS.
The "adjusted issue price" of a debenture will equal the original
purchase price paid for the debenture, increased by the accrued interest
includible in the holder's gross income and reduced by the distributions or
other payments we have made on the debenture.
Acquisition Premium
If you purchase a TIDES at a price that is greater than the adjusted
issue price of the TIDES' pro rata share of the debentures, the amount of
interest income you are required to accrue will be reduced to take into account
the "acquisition premium." The daily amount of interest income you are otherwise
required to accrue will be reduced by an amount equal to the product of (1) such
daily portion and (2) a fraction, the numerator of which is the amount of the
acquisition premium and the denominator of which is the sum of the interest
income (including original interest income) for all days on or after you
purchase the TIDES.
Deferral of Interest Payment Period
U.S. Holders of TIDES will be required to include accrued (but unpaid)
interest in income with respect to their pro rata share of the debentures during
a deferral period. Therefore, a U.S. Holder who sells TIDES during such a
deferral period will not be entitled to any cash relating to accrued but unpaid
interest (such cash will be paid to the holder of record at the end of the
deferral period), but will be required to include such interest in income.
Distribution of Debentures
A distribution by the trust of the debentures as described under the
caption "Description of TIDES--Liquidation of the Trust and Distribution of the
Debentures" will result in the holder receiving directly its pro rata share of
the debentures previously held indirectly through the trust. Such a transaction
will be nontaxable to the holder, who will receive such debentures with a
holding period and tax basis equal to the holding period and adjusted tax basis
such U.S. Holder was considered to have had in its pro rata share of the
underlying debentures prior to such distribution. A U.S. Holder will include
interest income in respect of the debentures received from the trust in the
manner described above under the caption "--Interest Income and Original Issue
Discount."
Disposition of the TIDES
Upon a sale, exchange or other disposition of TIDES (including a
distribution of cash in redemption of a U.S. Holder's TIDES, and repayment of
the underlying debentures, but excluding a distribution of debentures and the
conversion of the TIDES into common stock), a holder will be considered to have
disposed of all or part of such holder's pro rata share of the debentures, and
will recognize gain or loss equal to the difference between (1) the amount of
cash proceeds and the fair market value of any property received on the sale,
exchange or other disposition (except to the extent such amount is attributable
to accrued interest income not previously included in income (which is taxable
as ordinary income) or is treated as ordinary income pursuant to the market
discount rules) and (2) the holder's adjusted tax basis in its pro rata share of
the underlying debentures deemed disposed of. Such gain or loss will be capital
gain or loss and generally will be long-term capital gain or loss if the TIDES
have been held by the holder for more than one year. Holders are advised to
consult their tax advisors as to the federal income tax treatment of a capital
gain or loss.
The TIDES may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying debentures. A holder
who disposes of the TIDES between record dates for payments of distributions
thereon or during an interest deferral period will nevertheless be required to
include in income accrued but unpaid interest on the debentures through the date
of disposition, and to add such amount to its adjusted tax basis in its pro rata
share of the underlying debentures deemed disposed of. Accordingly, such a
holder will recognize a capital loss to the extent the selling price (which may
not fully reflect the value of accrued but unpaid interest) is less than the
holder's adjusted tax basis (which will include accrued but unpaid interest).
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for federal income tax purposes. Therefore, it is
possible that the holder will not be able to offset such accrued but unpaid
interest income against any such capital loss (although such capital loss could
be used to offset capital gains of such holder).
Conversion of TIDES into Common Stock
A U.S. holder generally will not recognize income, gain or loss upon
the conversion, through the conversion agent, of debentures into our common
stock. A holder will, however, recognize gain upon the receipt of cash in lieu
of a fractional share of our common stock equal to the amount of cash so
received less such holder's tax basis in such fractional share (except to the
extent such gain is treated as ordinary income pursuant to the market discount
rules). A holder who converts TIDES into our common stock (1) will take a tax
basis in such stock that, in general, is equal to such holder's tax basis in the
TIDES delivered to the conversion agent for exchange, less the basis allocated
to any fractional share for which cash is received, and (2) the holding period
of such stock generally will include the holding period of the TIDES delivered
to the conversion agent for exchange, except (in the case of both (1) and (2))
possibly with respect to any of our common stock received in respect of accrued
but unpaid interest.
Pursuant to the market discount rules, in the event that you convert
TIDES into our common stock, any gain on the sale, exchange or other disposition
of the common stock generally will be treated as ordinary income to the extent
of the market discount that accrued on the related debentures before you
converted the TIDES.
Adjustment of Conversion Price
Tax regulations promulgated under Section 305 of the Code could treat
holders of TIDES as receiving a constructive distribution upon certain
circumstances in which the conversion rate of the debentures is adjusted.
Accordingly, a reduction in the conversion price for the debentures may, under
certain circumstances, result in deemed dividend income to holders of TIDES to
the extent of our current or accumulated earnings and profits. Holders of TIDES
are advised to consult their tax advisors as to the federal income tax
consequences of adjustments in the conversion rate of TIDES.
Information Reporting and Backup Withholding
The trust will report the interest accrued during the year with respect
to the debentures, and any gross proceeds received by the trust from the
retirement or redemption of the debentures, annually to the holders of record of
the TIDES and to the IRS. The trust currently intends to deliver such reports to
holders of record not later than January 31st following each calendar year. It
is anticipated that persons who hold TIDES as nominees for beneficial owners
will report the required tax information to beneficial owners on Form 1099.
Payments made on, and proceeds from the sale of, TIDES, any debentures
distributed by the trust or any of our common stock received on conversion may
be subject to 31% backup withholding unless the holder complies with certain
identification requirements or otherwise qualifies for exemption. Backup
withholding is not an additional tax. Any withheld amounts will generally be
refunded or credited against the holder's federal income tax liability, provided
the required information is timely filed with the IRS.
Foreign Holders
Interest Income and Original Issue Discount
A Foreign Holder of a TIDES or the debentures will not be subject to
withholding of U.S. federal income tax with regard to its interest income and
original issue discount, provided that, with respect to payment of interest:
o the Foreign Holder does not actually or constructively own 10% or
more of the combined voting power of all classes of stock of the
Issuer,
o the Foreign Holder is not a controlled foreign corporation that
is related to us through stock ownership, and
o the beneficial owner satisfies certain documentary evidence
requirements for establishing that it is a Foreign Holder.
In the event that the TIDES were characterized as stock or other equity
of our company, payments to a holder could be characterized as dividends and be
subject to a 30% withholding tax or such lesser amount as may be provided under
an applicable treaty. If a Foreign Holder is treated as receiving a deemed
dividend as a result of an adjustment of the conversion price of the debentures,
as described above under "U.S. Holders--Adjustment of the Conversion Price,"
such deemed dividend will be subject to a 30% withholding tax (or a lesser
amount under an applicable treaty). However, if such dividend income is
effectively connected with the conduct of a trade or business of the Foreign
Holder in the United States, then such income will be subject to the regular
U.S. federal income tax rules.
Disposition of the TIDES or Debentures
A holder of a TIDES or the debentures that is a Foreign Holder will not
be subject to U.S. federal income tax on any gain realized on the sale, exchange
or redemption of the TIDES or the debentures, unless:
o such gain is effectively connected with the conduct by the holder
of a trade or business in the United States, or
o in the case of gain realized by an individual Foreign Holder, the
Foreign Holder is present in the United States for 183 days or
more in the taxable year of the sale and either (A) such gain or
income is attributable to an office or other fixed place of
business maintained in the United States by such holder or (B)
such holder has a tax home in the United States.
Conversion of TIDES into Common Stock
A Foreign Holder generally will not recognize income, gain or loss upon
the conversion, through the conversion agent, of debentures into our common
stock. Such holder will, however, realize gain upon the receipt of cash in lieu
of a fractional share of our common stock equal to the amount of cash so
received less such holder's tax basis in such fractional share. The tax
consequences of such gain will be the same as described above under the caption
"--Foreign Holders--Disposition of the TIDES or Debentures."
In general, dividends paid to Foreign Holders on our common stock are
subject to U.S. federal income tax at a rate of 30% (unless a U.S. withholding
tax treaty applies to reduce or eliminate withholding). However, if such
dividend income is effectively connected with the conduct of a trade or business
of the Foreign Holder in the United States, then such income is subject to the
regular U.S. federal income tax rules.
Information Reporting and Backup Withholding
Payments made on, and proceeds from the sale of, TIDES, any debentures
distributed by the trust, or any of our common stock received on conversion may
be subject to 31% backup withholding and information reporting unless a Foreign
Holder complies with certain documentation requirements or otherwise qualifies
for an exemption.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit
plan subject to ERISA should consider the fiduciary standards of ERISA in the
context of the plan's particular circumstances before authorizing an investment
in the TIDES. Accordingly, among other factors, the fiduciary should consider
whether the investment would satisfy the prudence and diversification
requirements of ERISA, whether the investment could result in an improper
delegation of fiduciary authority and whether the investment would be consistent
with the documents and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit plans, as
well as individual retirement accounts and Keogh plans subject to Section 4975
of the Code, from engaging in certain transactions involving "plan assets" with
persons who are "parties in interest" under ERISA or "disqualified persons"
under the Code with respect to such plans. A violation of these "prohibited
transaction" rules may result in an excise tax or other liabilities under ERISA
and/or Section 4975 of the Code for such persons, unless exemptive relief is
available under an applicable statutory or administrative exemption. Employee
benefit plans that are governmental plans (as defined in Section 3(32) of
ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign
plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation issued by the United States Department of Labor, or
DOL, the assets of the trust would be deemed to be "plan assets" of a plan for
purposes of ERISA and Section 4975 of the Code if "plan assets" of the plan were
used to acquire an equity interest in the trust and no exception were applicable
under the plan assets regulation. An "equity interest" is defined under the plan
assets regulation as any interest in an entity other than an instrument that is
treated as indebtedness under applicable local law and that has no substantial
equity features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the plan assets regulation, the
assets of the trust would not be deemed to be "plan assets" of investing plans
if, immediately after the most recent acquisitions of any equity interest in the
trust, less than 25% of the value of each class of equity interests in the trust
were held by plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and entities
holding assets deemed to be "plan assets" of any plan (collectively, "benefit
plan investors"). We cannot assure that the value of the TIDES held by benefit
plan investors will be less than 25% of the total value of such TIDES at the
time of purchase or otherwise and the level of benefit investor participation
will not be monitored.
Certain transactions involving the trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a plan if the TIDES were acquired with "plan assets" of
such plan and assets of the trust were deemed to be "plan assets" of plans
investing in the trust. For example, if we are a party in interest with respect
to an investing plan (either directly or by reasons of our ownership of our
subsidiaries), extensions of credit between the trust and us (as represented by
the debentures and the guarantee) would likely be prohibited by Section
406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless exemptive
relief were available under an applicable administrative exemption (see below).
Because the assets of the trust may be considered "plan assets" for ERISA
purposes as a result of a plan's acquisition and holding of TIDES, a plan
fiduciary should consider (a) whether powers which potentially may be exercised
by any person or entity with respect to the trust or its assets would result in
such person or entity being potentially deemed to be a fiduciary and, therefore,
a party in interest with respect to a plan acquiring or holding TIDES and (b) if
so, whether such acquisition and holding could result in a delegation of
fiduciary authority which is impermissible under the plan's governing
instruments or any investment management agreement with the plan. In making such
determination, a plan fiduciary should note that prior to a default, the
trustees will have only limited custodial and ministerial authority with respect
to the assets of the trust.
The DOL has issued a number of prohibited transaction class exemptions
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the TIDES. Those class exemptions
include PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 95-60 (for certain transactions involving insurance company
general accounts), PTCE 91-38 (for certain transactions involving bank
collective investments funds), PTCE 90-1 (for certain transactions involving
insurance company separate accounts) and PTCE 84-14 (for certain transactions
determined by qualified professional asset managers).
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of section 4975
of the Code, may, nevertheless be subject to state or other Federal laws that
are substantially similar to the foregoing provisions of ERISA, and the Code.
Fiduciaries of such plans should consult with their counsel before purchasing
any TIDES.
By its purchase of any TIDES (or any interest therein), the purchaser
thereof will be deemed to have represented either that (a) it is not a plan or
other entity whose underlying assets are subject to ERISA and/or Section 4975 of
the Code, or a governmental or church plan which is subject to any Federal,
state or local law that is substantially similar to the provisions of Section
406 of ERISA or Section 4975 of the Code or (b) its purchase and holding of a
TIDES will not result in a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code (or, in the case of a governmental or
church plan, a violation of any substantially similar Federal, state or local
law). Further, the fiduciaries of any plan or plan assets entity which may
purchase or hold TIDES will be deemed as a result of such acquisition or holding
to have (a) directed the trust to invest in the debentures, (b) authorized and
directed any of the actions taken or which may be taken with respect to the
trust, the debentures and the TIDES by any of the trustees, the debenture
trustee, the guarantee trustee or us as contemplated by the indenture, the
debentures or the guarantee and (c) to have appointed the trustees.
Due to the complexity of these rules and the penalties that may be
imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering purchasing
the TIDES on behalf of or with "plan assets" of any plan consult with their
counsel regarding the potential consequences if the assets of the trust were
deemed to be "plan assets" and to confirm that such investment will not
constitute or result in a prohibited transaction or any other violation of an
applicable requirement of ERISA.
REGISTRATION RIGHTS
We and the trust entered into a registration agreement with the initial
purchasers of the TIDES for the benefit of the holders of the TIDES wherein we
and the trust agreed, at our sole expense, to use our best efforts to keep
effective the shelf registration statement, of which this prospectus is a part,
for two years or such other period as required under Rule 144(k) of the
Securities Act or any successor rule hereto or, if earlier, such time as all of
the applicable securities have been sold thereunder.
We will provide to each holder for whom the registration statement was
filed copies of this prospectus, which is a part of the registration statement,
and take certain other actions as are required to permit unrestricted resales of
the securities. A holder that sells securities pursuant to this registration
statement is required to be named as a selling security holder in the related
prospectus and to deliver a 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 agreement
that are applicable to such a holder (including certain indemnification rights
and obligations).
If we or the trust fail to keep the registration statement, of which
this prospectus is a part, continuously effective and usable (subject to some
exceptions) for the period required by the registration agreement, then
additional interest, referred to in this prospectus as special interest, will
accrue on the debentures, and corresponding special distributions will accrue on
the TIDES and common securities, in each case from and including the day
following the registration default to but excluding the day on which the
registration default has been cured or has been deemed to have been cured.
Special interest and special distributions will be paid in cash quarterly in
arrears on each interest payment date commencing with the first interest payment
date following the applicable registration default and will accrue at a rate so
that the interest rate or distribution rate, as the case may, will be increased
0.50% per annum of the principal amount or liquidation amount, as applicable.
Following the cure of a registration default, special interest and special
distributions will cease to accrue with respect to the applicable registration
default.
Each security contains a legend to the effect that the holder of the
security, by its acceptance of the security, is deemed to have agreed to be
bound by the provisions of the registration agreement.
The registration agreement is governed by, and construed in accordance
with, the laws of the State of New York. This summary of the registration
agreement is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration agreement. A form of the
registration agreement is filed as an exhibit to the registration statement of
which this prospectus is a part.
SELLING HOLDERS
The TIDES were originally issued by the trust and sold by Credit Suisse
First Boston Corporation and UBS Warburg LLC in a transaction exempt from the
registration requirements of the Securities Act, to persons reasonably believed
by such initial purchasers to be "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act). The holders named below and their
transferees, pledgees, donees or successors, which we refer to as the selling
holders, may from time to time offer and sell pursuant to this prospectus any or
all of the TIDES, and any common stock issued upon conversion of the TIDES.
The following table sets forth information, as of February 6, 2001,
with respect to the selling holders of the TIDES and the respective number of
TIDES beneficially owned by each selling holder that the selling holder may
offer using this prospectus.
Principal Amount of TIDES Number of Shares of Common Number of Shares of Common
Beneficially Owned and Stock Owned Prior to the Stock Offered by this
Selling Holder Offered by this Prospectus Offering (1) Prospectus (1)(2)
-------------- -------------------------- ------------ -----------------
AIG SoundShore
Holdings Ltd................. 154,000 128,333 128,333
========= ========= =========
AIG SoundShore
Strategic Holding Fund Ltd... 66,000 55,000 55,000
========= ========= =========
Evergreen Equity Income
Fund......................... 160,000 133,333 133,333
========= ========= =========
Lipper Convertibles, L.P....... 750,000 625,000 625,000
Kellner, DiLeo & Co. .......... 15,000 12,500 12,500
Morgan Stanley & Co............ 25,000 20,833 20,833
========= ========= =========
R(2) Investments, LDC.......... 200,000 166,666 166,666
========= ========= =========
Subtotal................. 1,370,000 1,141,665 1,141,665
========= ========= =========
Unnamed holders of TIDES or
any future transferees,
pledgees, donees or
successors of or from
any such named holder
(3)(4)..................... 3,630,000 3,025,002 3,025,002
========= ========= =========
Total.................... 5,000,000 4,166,667 4,166,667
- ------------------
(1) Comprises the shares of common stock into which the TIDES held by such
selling holder are convertible at the initial conversion price. The
conversion price and the number of shares of common stock issuable upon
conversion of the TIDES are subject to adjustment under certain
circumstances. Accordingly, the number of shares of common stock issuable
upon conversion of the TIDES may increase or decrease from time to time.
Fractional shares will not be issued upon conversion of the TIDES; rather,
cash will be paid in lieu of fractional shares, if any.
(2) Assumes the offering of such shares by such selling holder pursuant to the
registration statement of which this prospectus forms a part.
(3) No such holder may offer TIDES or common stock pursuant to the
registration statement of which this prospectus forms a part until such
holder is included as a selling holder in a supplement to this prospectus.
(4) Assumes that the unnamed holders of TIDES or common stock or any future
transferees, pledgees, donees or successors of or from any such named
holder do not beneficially own any common stock other than the common
stock issuable upon conversion of the TIDES at the initial conversion
price.
None of the selling holders has, or within the past three years has
had, any position, office or other material relationship with the trust or us or
any of its or our predecessors or affiliates.
Because the selling holders may, pursuant to this prospectus, offer all
or some portion of the TIDES or common stock they presently hold, no estimate
can be given as to the amount of the TIDES or shares of common stock that will
be held by the selling holders upon termination of any such sales. In addition,
some or all of the selling holders identified above may have sold, transferred
or otherwise disposed of all or a portion of their TIDES or common stock since
the date on which they provided the information regarding their TIDES or common
stock, in transactions exempt from the registration requirements of the
Securities Act.
Only selling holders identified above who beneficially own the TIDES or
common stock set forth opposite each such selling holder's name in the foregoing
table on the effective date of the registration statement of which this
prospectus forms a part may sell such TIDES or common stock pursuant to the
registration statement. We may from time to time include additional selling
holders in supplements to this prospectus.
We will pay the expenses of registering the TIDES and common stock
being offered by this prospectus.
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 offered 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 by them and any underwriter, broker/dealer or agent may be deemed to
be underwriting discounts and commissions under the Securities Act.
The offered securities may be sold by the selling holders 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. Such prices will be determined by the selling holders. The
sale of the offered securities may be effected in transactions (which may
involve crosses or block transactions) (1) on any national securities exchange
or quotation service on which the offered securities may be listed or quoted at
the time of sale, (2) in the over-the-counter market, (3) otherwise than on such
exchanges or in the over-the-counter market or (4) through the writing of
options. At the time a particular offering of the offered securities is made, if
required, a prospectus supplement will be distributed which will set forth the
names of the selling holders, the aggregate amount and type of offered
securities being offered, and, to the extent required, 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.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the offered securities may be limited in its
ability to engage in market activities with respect to such securities. In
addition and without limiting the foregoing, each selling holder 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. All of the foregoing may
affect the marketability of the offered securities.
Pursuant to the registration agreement, we will pay all expenses of the
registration of the offered securities, including, without limitation, SEC
filing fees and expenses of compliance with state securities or "blue sky" laws.
The selling holders will pay any underwriting discounts and selling commissions.
The selling holders will be indemnified by us and the trust, jointly and
severally, against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith. We and the trust 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.
Pursuant to the registration agreement, we are required to use our best
efforts to keep the registration statement, of which this prospectus is a part,
continuously effective for a period of two years from its effective date or such
shorter period that will terminate upon the earlier of the date on which the
offered securities shall have been sold pursuant to the registration statement
or the date on which the offered securities are permitted to be freely sold or
distributed to the public pursuant to any exemption from the registration
requirements of the Securities Act (including in reliance on Rule 144(k) but
excluding in reliance on Rule 144A under the Securities Act). Notwithstanding
these obligations, we may, under certain circumstances, postpone or suspend the
filing or the effectiveness of the registration statement (or any amendments or
supplements thereto) or the sale of offered securities under the registration
statement.
LEGAL MATTERS
Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the trust
and us, will pass on certain matters of Delaware law relating to the validity of
the TIDES. The validity of the guarantee, the debentures and the common stock
issuable upon conversion of the TIDES, as well as certain tax matters, will be
passed on by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 2000 as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in the registration
statement of which this prospectus is a part. Our financial statements and
schedule are incorporated by reg=ference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
[CONTINENTAL LOGO]
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection
with the distribution of the securities covered by this Registration Statement.
Continental Airlines, Inc. (the "Company") will bear all of these expenses
except as otherwise indicated.
Registration fee....................................... $62,500
Fees and expenses of accountants....................... *
Fees and expenses of legal counsel..................... *
Fees and expenses of Trustee and counsel............... *
Printing and engraving expenses........................ *
Miscellaneous.......................................... *
--------
Total......................................... $ *
========
-------------
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation and By-Laws 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 shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed actions, 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 the person 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 the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person 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 the person's 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 the person 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 the person's
conduct was unlawful.
(b) A corporation shall have the power to 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 the
person 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 the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person 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
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a present or former director or
officer 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, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person 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 present or former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard of conduct set
forth in subsections (a) and (b) of this section. Such determination shall be
made, with respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
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 undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by former directors and officers or other employees
and agents may be so paid upon such terms and conditions, if any, as the
corporation 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 such person's 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 such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person 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 of 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 such person 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 any 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 such person 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 Company's Certificate of Incorporation and By-Laws 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
Company's Certificate of Incorporation provides 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 a
Director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the GCL,
as so amended."
The Company maintains directors' and officers' liability
insurance.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act or the Exchange Act as indicated
in parenthesis:
Exhibit Description
- ------- -----------
4.1 Amended and Restated Certificate of Incorporation of the Company,
including Exhibit A thereto containing the Certificate of
Designation of Series A Junior Participating Preferred Stock
(incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 2000).*
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2000).*
4.3 Specimen of Class B common stock certificate of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No. 33-68870)).*
4.4 Certificate of Designation of Series B Preferred Stock
(incorporated by reference to Exhibit 3.1(b) to the Company's
Annual Report on Form 10-K for the year ended December 31,
2000).*
4.5 Form of Series B Preferred Stock Certificate (incorporated by
reference to Exhibit 3.1(c) to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000).*
4.6 Certificate of Trust of Continental Airlines Finance Trust II,
dated November 6, 2000, filed with the Secretary of State of the
State of Delaware.
4.7 Declaration of Trust of Continental Airlines Finance Trust II,
dated as November 6, 2000, by the Company, as trustee.
4.8 Amended and Restated Declaration of Trust of Continental Airlines
Finance Trust II, dated as of November 10, 2000 among the
Company, as sponsor, Wilmington Trust Company, as property
trustee, and the administrative trustees.
4.9 Indenture for the 6% Convertible Junior Subordinated Debentures,
dated as of November 10, 2000 between the Company, as issuer, and
Wilmington Trust Company, as trustee.
4.10 Form of Continental Airlines Finance Trust 6% Convertible
Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)SM (included in Exhibit 4.8).
4.11 Form of Continental Airlines, Inc. 6% Convertible Junior
Subordinated Debentures due 2030 (included in Exhibit 4.9).
4.12 Convertible Preferred Securities Guarantee, dated as of November
10, 2000, between the Company, as guarantor, and Wilmington Trust
Company, as guarantee trustee.
4.13 Common Securities Guarantee, dated as of November 10, 2000, by
the Company, as guarantor.
4.14 Amended and Restated Rights Agreement, dated as of November 15,
2000, between the Company and ChaseMellon Shareholder Services,
LLC, including as Exhibit B the Form of Right Certificate
(incorporated by reference to Exhibit 99.11 to the Company's
Current Report on Form 8-K dated November 15, 2000).*
5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton as to the validity
of the securities registered.
5.2 Opinion of Morris, Nichols, Arsht & Tunnell as to certain matters
of Delaware law.
8.1 Opinion of Cleary, Gottlieb, Steen & Hamilton as to certain tax
matters.
10.1 Registration Rights Agreement, dated as of November 10, 2000, by
and among Continental Airlines Finance Trust II, the Company and
Credit Suisse First Boston Corporation and UBS Warburg LLC.
12.1 Statement Regarding Computation of Ratios.
23.1 Consent of Ernst & Young LLP, independent accountants.
23.2 Consent of Cleary, Gottlieb, Steen & Hamilton (included in the
opinions filed as Exhibits 5.1 and 8.1).
23.3 Consent of Morris, Nichols, Arsht & Tunne (included in the
opinion filed as Exhibit 5.2).
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as indenture
trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as property
trustee under the Amended and Restated Declaration of Trust.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as preferred
guarantee trustee under the Preferred Securities Guarantee.
- --------------------
* Previously filed.
Item 17. Undertakings
(a) The undersigned registrants hereby undertake:
(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 statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee", table in the effective
registration statement; and
(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 the undertakings set forth in clauses (i) and
(ii) above do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those clauses is contained in periodic
reports filed with or furnished to the Securities and Exchange
Commission by the Company 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 deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that Is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934;
and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus
is sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim
financial information.
(4) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310
of the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrants certify that they have reasonable grounds to believe that they
meet all of the requirements for filing on Form S-3 and have duly caused this
registration statement to be signed on their behalf by the undersigned,
thereunto duly authorized in the City of Houston, State of Texas, February 7,
2001.
CONTINENTAL AIRLINES, INC.
By: /s/ Lawrence W. Kellner
----------------------------------
Name: Lawrence W. Kellner
Title: Executive Vice President
and Chief Financial Officer
CONTINENTAL AIRLINES FINANCE TRUST II
By: /s/ Gerald Laderman
----------------------------------
Name: Gerald Laderman
Title: Administrative Trustee
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 February 7, 2001.
SIGNATURE TITLE
* Chairman of the Board, Chief Executive
----------------------- Officer (Principal Executive Officer)
Gordon M. Bethune and Director
* Executive Vice President and Chief
----------------------- Financial Officer
Lawrence W. Kellner (Principal Financial Officer)
*
----------------------- Staff Vice President and Controller
Chris T. Kenny (Principal Accounting Officer)
*
----------------------- Director
Thomas J. Barrack, Jr.
*
----------------------- Director
David Bonderman
*
----------------------- President, Chief Operating Officer and
Gregory D. Brenneman Director
*
----------------------- Director
Kirbyjon H. Caldwell
*
----------------------- Director
Patrick Foley
*
----------------------- Director
Douglas H. McCorkindale
*
----------------------- Director
George G. C. Parker
*
----------------------- Director
Richard W. Pogue
*
----------------------- Director
William S. Price III
*
----------------------- Director
Donald L. Sturm
*
----------------------- Director
Karen Hastie Williams
*
----------------------- Director
Charles A. Yamarone
*By: /s/ Scott R. Peterson
-----------------------
Name: Scott R. Peterson
Attorney in Fact
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 February 7, 2001.
SIGNATURE TITLE
/s/ Gerald Laderman
------------------------ Administrative Trustee
Gerald Laderman
/s/ Lawrence W. Kellner
------------------------ Administrative Trustee
Lawrence W. Kellner
EXHIBIT INDEX
Exhibit Description
- ------- -----------
4.1 Amended and Restated Certificate of Incorporation of the Company,
including Exhibit A thereto containing the Certificate of
Designation of Series A Junior Participating Preferred Stock
(incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 2000).*
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2000).*
4.3 Specimen of Class B common stock certificate of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No 33-68870)).*
4.4 Certificate of Designation of Series B Preferred Stock
(incorporated by reference to Exhibit 3.1(b) to the Company's
Annual Report on Form 10-K for the year ended December 31,
2000).*
4.5 Form of Series B Preferred Stock Certificate (incorporated by
reference to Exhibit 3.1(c) to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000).*
4.6 Certificate of Trust of Continental Airlines Finance Trust II,
dated November 6, 2000, filed with the Secretary of State of the
State of Delaware.
4.7 Declaration of Trust of Continental Airlines Finance Trust II,
dated as November 6, 2000, by the Company, as trustee.
4.8 Amended and Restated Declaration of Trust of Continental Airlines
Finance Trust II, dated as of November 10, 2000 among the
Company, as sponsor, Wilmington Trust Company, as property
trustee, and the administrative trustees.
4.9 Indenture for the 6% Convertible Junior Subordinated Debentures,
dated as of November 10, 2000 between the Company, as issuer, and
Wilmington Trust Company, as trustee.
4.10 Form of Continental Airlines Finance Trust 6% Convertible
Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)SM (included in Exhibit 4.8).
4.11 Form of Continental Airlines, Inc. 6% Convertible Junior
Subordinated Debentures due 2030 (included in Exhibit 4.9).
4.12 Convertible Preferred Securities Guarantee, dated as of November
10, 2000, between the Company, as guarantor, and Wilmington Trust
Company, as guarantee trustee.
4.13 Common Securities Guarantee, dated as of November 10, 2000, by
the Company, as guarantor.
4.14 Amended and Restated Rights Agreement, dated as of November 15,
2000, between the Company and ChaseMellon Shareholder Services,
LLC, including as Exhibit B the Form of Right Certificate
(incorporated by reference to Exhibit 99.11 to the Company's
Current Report on Form 8-K dated November 15, 2000).*
5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton as to the validity
of the securities registered.
5.2 Opinion of Morris, Nichols, Arsht & Tunnell as to certain matters
of Delaware law.
8.1 Opinion of Cleary, Gottlieb, Steen & Hamilton as to certain tax
matters.
10.1 Registration Rights Agreement, dated as of November 10, 2000, by
and among Continental Airlines Finance Trust II, the Company and
Credit Suisse First Boston Corporation and UBS Warburg LLC.
12.1 Statement Regarding Computation of Ratios.
23.1 Consent of Ernst & Young LLP, independent accountants.
23.2 Consent of Cleary, Gottlieb, Steen & Hamilton (included in the
opinions filed as Exhibits 5.1 and 8.1).
23.3 Consent of Morris, Nichols, Arsht & Tunnell (included in the
opinion filed as Exhibit 5.2).
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as indenture
trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as property
trustee under the Amended and Restated Declaration of Trust.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as preferred
guarantee trustee under the Preferred Securities Guarantee.
- --------------------
* Previously filed.
CERTIFICATE OF TRUST
OF
CONTINENTAL AIRLINES FINANCE TRUST II
This Certificate of Trust is being executed as of November 6, 2000 for
the purpose of creating a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C.ss.ss. 3801 et seq. (the "Act").
The undersigned hereby certify as follows:
1. Name: The name of the business trust is Continental Airlines Finance
Trust II (the "Trust").
2. Delaware Trustee. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. Effective. The Certificate of Trust shall be effective immediately
upon filing in the Office of the Secretary of State of the State of Delaware.
4. Counterparts. This Certificate of Trust may be executed in one or
more counterparts.
IN WITNESS WHEREOF, the undersigned, being all of the trustees
of the Trust, have duly executed this Certificate of Trust as of the day and
year first above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ W. Chris Sponenberg
---------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
/s/ Lawrence W. Kellner
--------------------------------------
Lawrence W. Kellner, as Trustee
/s/ Jeffrey A. Smisek
--------------------------------------
Jeffrey A. Smisek, as Trustee
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of November 6, 2000, between
Continental Airlines, Inc., a Delaware corporation, as Sponsor, Wilmington Trust
Company, a Delaware banking corporation, as Delaware Trustee, and Lawrence W.
Kellner and Jeffery A. Smisek, as Administrative Trustees (collectively with the
Delaware Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree as
follows:
1. The trust created hereby (the "Trust") shall be known as
"Continental Airlines Finance Trust II", in which name the Trustees, or the
Sponsor to the extent provided herein, may conduct the business of the Trust,
make and execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. The Trustees hereby acknowledge receipt of such amount
from the Sponsor, which amount shall constitute the initial trust estate. The
Trustees hereby declare that they will hold the trust estate for the Sponsor. It
is the intention of the parties hereto that the Trust created hereby constitute
a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
ss.ss. 3801 et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust in the office
of the Secretary of State of the State of Delaware in the form attached hereto.
The Trust is hereby established by the Sponsor and the Trustees for the purposes
of (i) issuing preferred securities ("Preferred Securities") representing
undivided beneficial interests in the assets of the Trust in exchange for cash
and investing the proceeds thereof in debt securities of the Sponsor, (ii)
issuing and selling common securities ("Common Securities" and, together with
the Preferred Securities, "Trust Securities") representing undivided beneficial
interests in the assets of the Trust to the Sponsor in exchange for cash and
investing the proceeds thereof in additional debt securities of the Sponsor and
(iii) engaging in such other activities as are necessary, convenient or
incidental thereto.
3. Concurrent with the first issuance of any Trust Securities by the
Trust, the Sponsor and the Trustees intend to enter into an amended and restated
Declaration of Trust, satisfactory to each such party and having substantially
the terms described in the offering circular (as referred to below), to provide
for the contemplated operation of the Trust created hereby and the issuance of
the Preferred Securities and the Common Securities referred to therein. Prior to
the execution and delivery of such amended and restated Declaration of Trust,
the Trustees shall not have any duty or obligation hereunder or with respect to
the trust estate, except as otherwise required by applicable law or as may be
necessary to obtain, prior to such execution and delivery, any licenses,
consents or approvals required by applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, as the sponsor of the Trust, as applicable, (i) to prepare and
distribute one or more offering circulars on behalf of the Trust, including any
necessary or desirable amendments thereto (including any exhibits contained
therein or forming a part thereof), relating to the Preferred Securities of the
Trust and, as applicable, certain other securities; (ii) to prepare and file
with the Private Offering, Resales and Trading through Automatic Linkages
(PORTAL) Market ("PORTAL") and execute on behalf of the Trust a listing
application and all other applications, statements, certificates, agreements and
other instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed and continue to be listed on PORTAL; (iii) to prepare
and file and execute, in each case on behalf of the Trust, such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or "blue
sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may
deem necessary or desirable; (iv) to negotiate the terms of, and execute on
behalf of the Trust, such underwriting or purchase agreements with one or more
underwriters, purchasers, dealers or agents relating to the Preferred Securities
as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (v)
to execute on behalf of the Trust any and all documents, papers and instruments
as may be desirable in connection with any of the foregoing. It is hereby
acknowledged and agreed that in connection with any execution, filing or
document referred to in clauses (i)-(iii) above, (A) any Administrative Trustee
(or his attorneys-in-fact and agents or the Sponsor as permitted herein) is
authorized on behalf of the Trust to file and execute such document on behalf of
the Trust and (B) the Delaware Trustee shall not be required to join in any such
filing or execute on behalf of the Trust any such document unless required by
the rules and regulations of PORTAL or state securities or blue sky laws, and in
such case only to the extent so required.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be three (3) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided, however, that the number of Trustees shall in no
event be less than three (3); and provided, further, however, that to the extent
required by the Business Trust Act, one Trustee shall either be a natural person
who is a resident of the State of Delaware or, if not a natural person, an
entity that has its principal place of business in the State of Delaware and
meets any other requirements imposed by applicable law. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
Trustee at any time. Any Trustee may resign upon thirty days prior notice to the
Sponsor; provided, however, that the Delaware Trustee may resign immediately
upon notice to the Sponsor if the Delaware Trustee is required to join in any
filing or execute on behalf of the Trust any document pursuant to the provisions
of paragraph 4 hereof and, upon giving such notice, the Delaware Trustee shall
not be required to join in any such filing or execute on behalf of the Trust any
such document; provided, further, however, that no resignation of the Delaware
Trustee shall be effective until a successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
7. To the fullest extent permitted by applicable law, the Sponsor
agrees to indemnify (i) the Delaware Trustee, (ii) any affiliate of the Delaware
Trustee, and (iii) any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Delaware
Trustee (each of the persons or entities in (i) through (iii) being referred to
as an "Indemnified Person") for, and to hold each Indemnified Person 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 the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation
to indemnify as set forth in this paragraph 7 shall survive the termination of
this Declaration. The Delaware Trustee shall not have any of the powers or
duties of the trustees set forth herein, except as required under the Business
Trust Act. The Delaware Trustee shall be a trustee hereunder for the sole and
limited purpose of fulfilling the requirements of Section 3807(a) of the
Business Trust Act.
8. The Trust may terminate without issuing any Trust Securities at the
election of the Sponsor.
9. This Declaration shall be governed by the laws of the State of
Delaware, without regard to conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
CONTINENTAL AIRLINES, INC.,
as Sponsor
By: /s/ Gregory Brenneman
-----------------------------------------
Name: Gregory Brenneman
Title: President
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ W. Chris Sponenberg
------------------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
/s/ Lawrence W. Kellner
------------------------------------------
Lawrence W. Kellner, as Trustee
/s/ Jeffery A. Smisek
------------------------------------------
Jeffery A. Smisek, as Trustee
EXECUTION COPY
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
of
CONTINENTAL AIRLINES FINANCE TRUST II
Dated as of November 10, 2000
================================================================================
TABLE OF CONTENTS
ARTICLE I INTERPRETATION AND DEFINITIONS......................................1
Section 1.01 Definitions.................................................1
ARTICLE II TRUST INDENTURE ACT................................................9
Section 2.01 Trust Indenture Act; Application............................9
Section 2.02 Lists of Holders of Securities..............................9
Section 2.03 Reports by the Property Trustee.............................9
Section 2.04 Periodic Reports to Property Trustee.......................10
Section 2.05 Evidence of Compliance with Conditions Precedent...........10
Section 2.06 Events of Default; Waiver..................................10
Section 2.07 Event of Default; Certain Notices..........................12
ARTICLE III ORGANIZATION.....................................................12
Section 3.01 Name.......................................................12
Section 3.02 Office.....................................................12
Section 3.03 Purpose....................................................13
Section 3.04 Authority..................................................13
Section 3.05 Title to Property of the Trust.............................13
Section 3.06 Powers and Duties of the Administrative Trustees...........14
Section 3.07 Prohibition of Actions by the Trust and the Trustees.......16
Section 3.08 Powers and Duties of the Property Trustee..................17
Section 3.09 Certain Duties and Responsibilities of the Property
Trustee....................................................19
Section 3.10 Certain Rights of Property Trustee.........................20
Section 3.11 Delaware Trustee...........................................22
Section 3.12 Execution of Documents.....................................23
Section 3.13 Not Responsible for Recitals or Issuance of Securities.....23
Section 3.14 Duration of Trust..........................................23
Section 3.15 Mergers....................................................23
ARTICLE IV SPONSOR...........................................................25
Section 4.01 Sponsor's Purchase of Common Securities....................25
Section 4.02 Responsibilities of the Sponsor............................25
Section 4.03 Guarantee of Payment of Trust Obligations..................25
ARTICLE V TRUSTEES...........................................................26
Section 5.01 Number of Trustees.........................................26
Section 5.02 Delaware Trustee...........................................26
Section 5.03 Property Trustee; Eligibility..............................27
Section 5.04 Qualifications of Administrative Trustees and Delaware
Trustee Generally..........................................27
Section 5.05 Initial Trustees...........................................27
Section 5.06 Appointment, Removal and Resignation of Trustees...........28
Section 5.07 Vacancies among Trustees...................................30
Section 5.08 Effect of Vacancies........................................31
Section 5.09 Meetings...................................................31
Section 5.10 Delegation of Power........................................31
Section 5.11 Merger, Conversion, Consolidation or Succession to
Business...................................................32
ARTICLE VI DISTRIBUTIONS.....................................................32
Section 6.01 Distributions..............................................32
ARTICLE VII ISSUANCE OF SECURITIES...........................................32
Section 7.01 General Provisions Regarding Securities....................32
Section 7.02 Execution and Authentication...............................33
Section 7.03 Form and Dating............................................34
Section 7.04 Registrar, Paying Agent and Conversion Agent...............36
Section 7.05 Paying Agent to Hold Money in Trust........................36
Section 7.06 Replacement Securities.....................................36
Section 7.07 Outstanding Preferred Securities...........................37
Section 7.08 Preferred Securities in Treasury...........................37
Section 7.09 Temporary Securities.......................................37
Section 7.10 Cancellation...............................................38
ARTICLE VIII DISSOLUTION AND TERMINATION OF TRUST............................38
Section 8.01 Termination of Trust.......................................38
ARTICLE IX TRANSFER AND EXCHANGE.............................................39
Section 9.01 General....................................................39
Section 9.02 Transfer Procedures and Restrictions.......................40
Section 9.03 Deemed Security Holders....................................47
Section 9.04 [Reserved].................................................47
Section 9.05 Notices to Clearing Agency.................................47
Section 9.06 Appointment of Successor Clearing Agency...................47
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS..........................................................47
Section 10.01 Liability..................................................47
Section 10.02 Exculpation................................................48
Section 10.03 Fiduciary Duty.............................................48
Section 10.04 Indemnification............................................49
Section 10.05 Outside Businesses.........................................50
ARTICLE XI ACCOUNTING........................................................50
Section 11.01 Fiscal Year................................................50
Section 11.02 Certain Accounting Matters.................................50
Section 11.03 Banking....................................................51
Section 11.04 Withholding................................................51
ARTICLE XII AMENDMENTS AND MEETINGS..........................................51
Section 12.01 Amendments.................................................51
Section 12.02 Meetings of the Holders of Securities; Action by
Written Consent............................................52
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE........53
Section 13.01 Representations and Warranties of Property Trustee.........53
Section 13.02 Representations and Warranties of Delaware Trustee.........54
ARTICLE XIV REGISTRATION RIGHTS..............................................55
Section 14.01 Registration Rights........................................55
ARTICLE XV MISCELLANEOUS.....................................................55
Section 15.01 Notices....................................................55
Section 15.02 Governing Law..............................................56
Section 15.03 Intention of the Parties...................................57
Section 15.04 Headings...................................................57
Section 15.05 Successors and Assigns.....................................57
Section 15.06 Partial Enforceability.....................................57
Section 15.07 Counterparts...............................................58
ANNEX I Terms of 6% Convertible Preferred Securities and 6%
Convertible Common Securities...................................I-1
Exhibit A-1 Form of Preferred Security....................................A-1-1
Exhibit A-2 Form of Common Security.......................................A-2-1
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310 (a) ..................................................... 5.03(a)
310 (c) ..................................................... Inapplicable
311 (c) ..................................................... Inapplicable
312 (a) ..................................................... 2.02(a)
312 (b) ..................................................... 2.02(b)
313 ..................................................... 2.03
314 (a) ..................................................... 2.04
314 (b) ..................................................... Inapplicable
314 (c) ..................................................... 2.05
314 (d) ..................................................... Inapplicable
314 (f) ..................................................... Inapplicable
315 (a) ..................................................... 3.09(a), 3.09(b)
315 (c) ..................................................... 3.09(a)
315 (d) ..................................................... 3.09(b)
316 (a) ..................................................... Annex I
316 (c) ..................................................... 3.06(e)
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
AMENDED AND RESTATED DECLARATION OF TRUST
OF
CONTINENTAL AIRLINES FINANCE TRUST II
November 10, 2000
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of November 10, 2000, by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Continental
Airlines, Inc., a Delaware corporation, as trust sponsor (the "Sponsor"), and by
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust (as defined below) issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established
Continental Airlines Finance Trust II (the "Trust") under the Business Trust Act
(as hereinafter defined) pursuant to a Declaration of Trust dated as of November
6, 2000 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on November 6, 2000, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as herein after defined);
and
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.01 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in this
Declaration, and any capitalized term not defined in this Declaration shall have
the meaning assigned thereto in the Indenture;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections,
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Administrative Action" has the meaning set forth in the definition of
"Tax Event".
"Administrative Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Appointment Event" means an event defined in the terms of the
Preferred Securities, as set forth in Annex I, which entitles the Holders of a
Majority in liquidation amount of the Preferred Securities to appoint a Special
Trustee.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Beneficiaries" has the meaning set forth in Section 4.03(a).
"Book Entry Interest" means a beneficial interest in a global
certificate, ownership and transfers of which shall be maintained and made
through book entries by a Depositary as described in Section 7.03.
"Business Day" means any day other than a Saturday or a Sunday, a day
on which banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to remain closed, or a day on
which the corporate trust office of the Property Trustee or the Debenture
Trustee is closed for business.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a certificate in global or definitive form
representing a Common Security or a Preferred Security.
"Closing Date" means November 10, 2000.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Commission" means the Securities and Exchange Commission as from time
to time constituted, created, or, if at any time after execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Securities" has the meaning specified in Section 7.01(a).
"Common Securities Guarantee" means the guarantee agreement to be dated
as of November 10, 2000 of the Sponsor in respect of the Common Securities.
"Conversion Agent" has the meaning set forth in Section 7.04.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Event of Default" in respect of the Securities means an
Event of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Debenture Issuer" means the Sponsor in its capacity as issuer of the
Debentures.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee, in the
form attached to the Indenture as Exhibit A.
"Delaware Trustee" has the meaning set forth in Section 5.02.
"Deferral Period" has the meaning set forth in the Indenture.
"Definitive Preferred Securities" means any Preferred Securities in
definitive form issued by the Trust.
"Depositary" means The Depository Trust Company, the initial clearing
agency, until a successor shall be appointed pursuant to Section 9.06, and
thereafter means such successor Depositary.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"Event of Default" means:
(i) a Debenture Event of Default; or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days (subject to the deferral of any due
date in the case of a Deferral Period); or
(iii) default by the Trust in the payment of any
Redemption Price of any Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Trustees in the
Declaration (other than a covenant or warranty, a default in the
performance of which or the breach of which is addressed in clause (ii)
or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or
certified mail, to the defaulting Trustee or Trustees by the holders of
at least 25% in aggregate liquidation amount of the outstanding
Preferred 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" under the Declaration; or
(v) the failure of the Sponsor to appoint a successor
Property Trustee in the manner required by Section 5.06(c).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Global Preferred Securities" means Rule 144A Global Preferred
Securities and/or Unrestricted Global Preferred Securities, as the context
requires.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of November 10, 2000, between
the Debenture Issuer and the Debenture Trustee, as it may be amended from time
to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.06(g).
"Like Amount" means (i) with respect to a redemption of Preferred
Securities, Preferred Securities having an aggregate liquidation amount equal to
that portion of the principal amount of Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Preferred Securities based upon the relative liquidation amounts of
such classes and the proceeds of which will be used to pay the applicable
Redemption Price of the Preferred Securities and (ii) with respect to a
distribution of Debentures to holders of Preferred Securities in connection with
a dissolution or liquidation of the Trust, Debentures having a principal amount
equal to the aggregate liquidation amount of the Securities of the Holder to
whom such Debentures are distributed.
"List of Holders" has the meaning set forth in Section 2.02(a).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise of all outstanding Securities of the relevant class).
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Obligations" means any costs, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders of any Securities or other
similar interests in the Trust the amounts due such Holders pursuant to the
terms of the Securities or such other similar interests, as the case may be.
"Offering Circular" means the confidential offering circular, dated as
of November 6, 2000, relating to the issuance by the Trust of Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(i) a statement that each officer signing the
Certificate has read the covenant or condition and the definition
relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(iii) a statement that each such officer has made
such examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such officer, such condition or covenant has been complied with.
"Optional Closing Date" has the meaning assigned to such term in the
Purchase Agreement.
"Participants" has the meaning set forth in Section 7.03(b).
"Paying Agent" has the meaning specified in Section 7.04.
"Person" means a legal person, including any individual, corporation,
estate, company, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities" has the meaning specified in Section 7.01(a).
"Preferred Securities Guarantee" means the guarantee agreement to be
dated as of November 10, 2000, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant or
as an indirect participant, in each case in accordance with the rules of such
Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.03.
"Property Trustee Account" has the meaning set forth in Section
3.08(c).
"Purchase Agreement" has the meaning set forth in Section 7.03.
"Quorum" means a majority of the Administrative Trustees or, if there
are only two Administrative Trustees, both of them.
"Redemption Price" has the meaning set forth in Annex I.
"Registrar" has the meaning set forth in Section 7.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated November 10, 2000, among the Sponsor, the Trust, and the
Purchasers named in the Purchase Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
vice-president, any assistant vice-president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any other officer in
the Corporate Trust Department of the Property 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 that officer's knowledge of
and familiarity with the particular subject.
"Restricted Preferred Securities" shall include the Rule 144A Global
Preferred Securities.
"Restricted Securities Legend" has the meaning specified in Section
9.02(j).
"Rule 144A Global Preferred Security" has the meaning specified in
Section 7.03(a).
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Custodian" means the custodian with respect to the Rule
144A Global Preferred Security and any other Preferred Security in global form.
"Securities Guarantees" means the Preferred Securities Guarantee and
the Common Securities Guarantee.
"Special Trustee" means a trustee appointed by the Holders of a
Majority in liquidation amount of the Preferred Securities in accordance with
Section 5.06(a)(ii)(B).
"Sponsor" means Continental Airlines, Inc., a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section 5.06.
"Successor Property Trustee" has the meaning set forth in Section 5.06.
"Super Majority" has the meaning set forth in Section 2.06(a)(ii).
"Tax Event" means the Property Trustee shall have received an opinion
of nationally-recognized independent tax counsel to the Sponsor (reasonably
acceptable to the Trustees) experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, as a result of (i) any amendment to or change
(including any announced prospective change (which shall not include a proposed
change), provided that a Tax Event shall not occur more than 90 days before the
effective date of any such prospective change) in the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (ii) any judicial decision or official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (iii) any amendment to
or change in the administrative position or interpretation of any Administrative
Action or judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment or change is
made known, which amendment or change is effective or such Administrative Action
or decision is announced, in each case, on or after the date of original
issuance of the Debentures or the issue date of the Preferred Securities issued
by the Trust, there is more than an insubstantial risk that (a) if the
Debentures are held by the Property Trustee, (I) the Trust is, or will be within
90 days of the date of such opinion, subject to United States Federal income tax
with respect to interest accrued or received on the Debentures or subject to
more than a de minimis amount of other taxes, duties or other governmental
charges as determined by such counsel, or (II) any portion of interest payable
by the Sponsor to the Trust on the Debentures is not, or within 90 days of the
date of such opinion will not be, deductible by the Sponsor in whole or in part
for United States Federal income tax purposes or (b) with respect to Debentures
which are no longer held by the Property Trustee, any portion of interest
payable by the Sponsor on the Debentures is not, or within 90 days of the date
of such opinion will not be, deductible by the Sponsor in whole or in part for
United States Federal income tax purposes.
"10% in liquidation amount of the Securities" means, except as provided
in the terms of the Preferred Securities or by the Trust Indenture Act, Holders
of outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, representing 10% of
the aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise) of all outstanding Securities of the
relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Unrestricted Global Preferred Security" has the meaning set forth in
Section 9.02(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration, which are
incorporated by reference in and made part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.02 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide the Property Trustee (i) within 14 days after
each record date for payment of Distributions, a list, in such form as the
Property Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Administrative Trustees on behalf of the Trust
shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by the Sponsor and the Administrative Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
its capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 2001, the
Property Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.04 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.05 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.06 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the Event of
Default:
(i) is caused by a Debenture Event of Default that is
not waivable under the Indenture, the Event of Default under the
Declaration shall also not be waivable;
(ii) is caused by a Debenture Event of Default that
requires the consent or vote of greater than a majority in principal
amount of the holders of the Debentures (a "Super Majority") to be
waived under the Indenture, the Event of Default under the Declaration
may only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Preferred Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
(iii) is the result of a default by the Trust in the
payment of any Distribution when it becomes due and payable, which
default has continued for 30 days (subject to the deferral of any due
date in the case of a Default Period), the Event of Default shall not
be waivable; or
(iv) is the result of a default by the Trust in the
payment of any Redemption Price of any Preferred Security when it
becomes due and payable, the Event of Default shall not be waivable.
The foregoing provisions of this Section 2.06(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
Upon such waiver, any such default shall cease to exist, and any Event
of Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of an Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the Event of Default is
caused by a Debenture Event of Default that:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.06(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority
to be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.06(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until the effects of all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.06(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.06(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.06(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.07 Event of Default; Certain Notices.
(a) The Property Trustee shall, within ten business days after
the occurrence of an Event of Default actually known to the Property Trustee,
(i) transmit by mail, first-class postage prepaid, to the Holders of the
Securities, and (ii) transmit by any means provided for in this Declaration to
the Administrative Trustees and the Sponsor, notices of all defaults actually
known to the Property Trustee, unless such defaults have been cured before the
giving of such notice (the term "defaults" for the purposes of this Section
2.07(a) being hereby defined to be an Event of Default, not including any
periods of grace and irrespective of the giving of any notice); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures or in the payment of any sinking fund
installment established for the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.01(1) and 5.01(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice.
(c) The Property Trustee shall, within five business days
after receipt by it of any notice pursuant to Section 3.13 of the Indenture,
transmit by mail, first-class postage prepaid, to the Holders of the Securities,
a copy of such notice.
ARTICLE III
ORGANIZATION
SECTION 3.01 Name.
The Trust is named "Continental Airlines Finance Trust II," as such
name may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
SECTION 3.02 Office.
The address of the principal office of the Trust is c/o Continental
Airlines, Inc., 1600 Smith Street, Houston, Texas 77002, Attention: Chief
Financial Officer. On ten Business Days' written notice to the Holders of
Securities, the Administrative Trustees may designate another principal office.
SECTION 3.03 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the proceeds from such sale to acquire the Debentures,
(b) distributing payments received on the Debentures to the Holders of the
Securities and (c) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States Federal income
tax purposes as a grantor trust.
SECTION 3.04 Authority.
(a) Subject to the limitations provided in this Declaration
and to the specific duties of the Property Trustee, the Administrative Trustees
shall have exclusive and complete authority to carry out the purposes of the
Trust. An action taken by the Administrative Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.
(b) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to any
matter over which the Administrative Trustees have power to act, any power of
the Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.06.
SECTION 3.05 Title to Property of the Trust.
Except as provided in Section 3.08 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.06 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have, together (except in the case of
paragraphs (a), (b) and (c) of this Section 3.06) with any Special Trustee
holding office pursuant to Section 5.06, if any, the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to simultaneous issuances of both Preferred Securities and
Common Securities on the Closing Date and any Optional Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) assist in the preparation of the Offering
Circular and a preliminary offering circular, in each case prepared by
the Sponsor, in relation to the offering and sale of Preferred
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to execute and file with the Commission,
at such time as determined by the Sponsor, a registration statement
filed on Form S-3 prepared by the Sponsor, including any amendments
thereto, in relation to the Preferred Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Preferred Securities
in any State or foreign jurisdiction in which the Sponsor has
determined to qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the Private Offerings, Resale and Trading through
Automated Linkages ("PORTAL") Market and, at such time, if any, as
determined by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing or
quotation of the Preferred Securities;
(iv) to execute and deliver letters, documents, or
instruments with The Depository Trust Company relating the Preferred
Securities;
(v) execute and file with the Commission, at such
time as determined by the Sponsor, a registration statement on Form
8-A, including any amendments thereto, prepared by the Sponsor relating
to the registration of the Preferred Securities under Section 12 of the
Exchange Act; and
(vi) execute and enter into the Purchase Agreement,
Registration Rights Agreement and other related agreements providing
for the sale of the Preferred Securities and to provide any
certificates or other documents in connection with such agreements;
(c) to acquire the Debentures with the proceeds of the sale of
the Preferred Securities and the Common Securities; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Tax Event; provided that the
Administrative Trustees (and Special Trustee, if any) shall consult with the
Sponsor and the Property Trustee before taking or refraining from taking any
Ministerial Action in relation to a Tax Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of the Securities
and this Declaration;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.08(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of
the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar
and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such existence
is necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration
or with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.06, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United
States federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the Debenture
Issuer for United States federal income tax purposes,
provided that such action does not materially adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust.
The Administrative Trustees must exercise the powers set forth in this
Section 3.06 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.03, and the Administrative Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.03.
Subject to this Section 3.06, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.08.
Any expenses incurred by the Administrative Trustee (or the Special
Trustee, if any) pursuant to this Section 3.06 shall be reimbursed by the
Debenture Issuer.
SECTION 3.07 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Property Trustee) on behalf of the Trust shall not, engage in any activity other
than as required or authorized by this Declaration. In particular, the Trust
shall not and the Trustees (including the Property Trustee) shall cause the
Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other
than loans represented by the Debentures;
(v) possess any power or otherwise act in such a way
as to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in the Declaration or
Annex I hereto, (A) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under Section
5.13 of the Indenture, (C) exercise any right to rescind or annul any
declaration that the principal of all the Debentures shall be due and
payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required
unless, in the case of each action described in clause (A), (B), (C) or
(D), the Trust shall have received an opinion of counsel to the effect
that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not
be classified as a grantor trust.
SECTION 3.08 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.06. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Property Trustee,
deposit such funds into the Property Trustee Account and make payments
to the Holders of the Preferred Securities and Holders of the Common
Securities from the Property Trustee Account in accordance with Section
6.01. Funds in the Property Trustee Account shall be held uninvested
until disbursed in accordance with this Declaration;
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities to the
extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by
the Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as so directed as
shall be necessary or appropriate to effect the distribution of the
Debentures to Holders of Securities upon the occurrence of certain
special events (as may be defined in the terms of the Securities)
arising from a change in law or a change in legal interpretation or
other specified circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant to
the terms of the Securities.
(e) The Property Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; provided, however, that if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Sponsor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Preferred Securities may institute a legal proceeding directly
for enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Securities. In connection with such Direct
Action, the Debenture Issuer shall be subrogated to the rights of such Holder of
Preferred Securities with respect to payments on the Preferred Securities to the
extent of any payment made by the Sponsor to such Holder of Preferred Securities
in such Direct Action. In addition, if the Property Trustee fails to enforce its
rights under the Debentures (other than rights arising from an Event of Default
described in the immediately preceding sentence) after any Holder of Preferred
Securities shall have made a written request to the Property Trustee to enforce
such rights, such Holder of Preferred Securities may, to the fullest extent
permitted by law, institute a Direct Action to enforce such rights. Except as
provided in the preceding sentences, the Holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed
and has accepted that appointment in accordance with Section 5.06.
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee will act as Paying Agent and
Registrar in Wilmington, Delaware to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(i) Subject to this Section 3.08, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.06.
(j) The Property Trustee must exercise the powers set forth in
this Section 3.08 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.03, and the Property Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.03.
SECTION 3.09 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.06), the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default
and after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Property Trustee shall be determined solely by the express
provisions of this Declaration and the Property Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part
of the Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property 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 not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require
the Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers;
(v) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the Debentures
and the Property Trustee Account shall be to deal with such property in
a similar manner as the Property Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree with the Sponsor. Money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant to
Section 3.08(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible
for monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor shall
the Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.09:
(i) the Property Trustee may rely conclusively and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any
action hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see
to any recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of
its choice or other experts and the advice or opinion of such counsel
and experts with respect to legal matters or advice within the scope of
such experts' area of expertise 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 accordance with such
advice or opinion. Such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Property Trustee security
satisfactory to the Property Trustee, against the costs, expenses
(including its reasonable attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested in
writing by the Property Trustee, provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Declaration;
(vii) the Property 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, security, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of its
powers hereunder or perform any of its duties hereunder either directly
or by or through agents or attorneys and the Property 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;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this
Declaration the Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder the Property Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such remedy,
right or action, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property 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 this Declaration.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.02, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this
Declaration. Except as set forth in Section 5.02, the Delaware Trustee shall be
a Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.06; provided that, the registration statement
referred to in Section 3.06(b)(i), including any amendments thereto, shall be
signed by a majority of the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall exist until November 15, 2050.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c) of this Declaration and Section 3 and 4 of the terms of the
Securities as set forth in Annex I attached hereto.
(b) The Trust may, with the consent of a majority of the
Administrative Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Property Trustee, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State or the District of Columbia; provided that:
(i) if the Trust is not the surviving entity, the
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations
of the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") as long as
the Successor Securities rank, with respect to participation
in the profits and distributions and payments upon
liquidation, redemption and otherwise at least as high as the
Preferred Securities rank with respect to participation in the
profits and dividends and payments upon liquidation redemption
and otherwise;
(ii) the Debenture Issuer appoints a Trustee of such
Successor Entity possessing the same powers and duties of the Property
Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
any other organization on which the Preferred Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the powers, preferences and other
special rights of the Holders of the Preferred Securities (including
any Successor Securities) in any material respect;
(vi) such Successor Entity has a purpose
substantially identical to that of the Trust;
(vii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel (reasonably acceptable to the
Property Trustee) to the Trust experienced in such matters to the
effect that:
(A) the Successor Entity will be treated as
a grantor trust for United States federal income tax purposes;
(B) following such merger, consolidation,
amalgamation or replacement, neither the Sponsor nor the
Successor Entity will be required to register as an Investment
Company; and
(C) such merger, consolidation, amalgamation
or replacement will not adversely affect the limited liability
of the Holders of the Securities (including any Successor
Securities); and
(viii) the Sponsor provides a guarantee to the
Holders of the Successor Securities with respect to the Successor
Entity having substantially the same terms as the Preferred Securities
Guarantee; and
(ix) such merger, consolidation, amalgamation or
replacement is not a taxable event for holders of the Preferred
Securities.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.01 Sponsor's Purchase of Common Securities.
On the Closing Date and any Optional Closing Date the Sponsor will
purchase an amount of Common Securities issued by the Trust such that the
aggregate liquidation amount of such Common Securities purchased by the Sponsor
shall at such date equal at least 3% of the total capital of the Trust.
SECTION 4.02 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Circular and to prepare for filing
by the Trust with the Commission the Shelf Registration Statement, including any
amendments thereto;
(b) to determine the States and foreign jurisdictions in which
to take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States and foreign jurisdictions;
(c) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust an application to PORTAL and to the New York
Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing or quotation of the Preferred Securities;
(d) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust with the Commission a registration statement on
Form 8-A relating to the registration of the Preferred Securities under Section
12 of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement,
Registration Rights Agreement and other related agreements providing for the
sale of the Preferred Securities.
SECTION 4.03 Guarantee of Payment of Trust Obligations.
(a) Subject to the terms and conditions of this Section 4.03,
the Sponsor hereby irrevocably and unconditionally guarantees to each Person to
whom the Trust is now or hereafter becomes indebted or liable (the
"Beneficiaries") the full payment, when and as due, of any and all Obligations
to such Beneficiaries.
(b) The agreement of the Sponsor in Section 4.03(a) is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
(c) The agreement of the Sponsor set forth in Section 4.03(a)
shall terminate and be of no further force and effect upon the later of (a) the
date on which full payment has been made of all amounts payable to all Holders
of all the Preferred Securities (whether upon redemption, liquidation, exchange
or otherwise) and (b) the date on which there are no Beneficiaries remaining;
provided, however, that such agreement shall continue to be effective or shall
be reinstated, as the case may be, if at any time any Holder of Preferred
Securities or any Beneficiary must restore payment of any sums paid under the
Preferred Securities, under any Obligation, under the Preferred Securities
Guarantee or under this Agreement for any reason whatsoever. Such agreement is
continuing, irrevocable, unconditional and absolute.
ARTICLE V
TRUSTEES
SECTION 5.01 Number of Trustees.
Subject to Section 5.02, the number of Trustees shall initially be four
(4), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities:
(i) the number of Trustees may be increased or
decreased, except as provided in Sections 5.01(b)(ii) and
5.06(a)(ii)(B) with respect to the Special Trustee, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities;
and
(ii) the number of Trustees shall be increased
automatically by one (1) if an Appointment Event has occurred and is
continuing and the Holders of a Majority in liquidation amount of the
Preferred Securities appoint a Special Trustee in accordance with
Section 5.06(a)(ii).
SECTION 5.02 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall either be (i) a natural person who is at least 21 years of age
and a resident of the State of Delaware, or (ii) an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, provided that, if the Property Trustee has its
principal place of business in the State of Delaware and otherwise meets the
requirements of applicable law, then the Property Trustee shall also be the
Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.03 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.03(a)(ii), 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.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.03(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.06(e).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section 310(b) of the Trust Indenture Act)
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.04 Qualifications of Administrative Trustees and Delaware Trustee
Generally.
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.05 Initial Trustees.
The initial Administrative Trustees shall be:
Lawrence W. Kellner
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Facsimile No.: (713) 324-2687
Gerald Laderman
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Facsimile No.: (713) 324-2687
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
SECTION 5.06 Appointment, Removal and Resignation of Trustees.
(a) Except as provided otherwise in Section 5.06(b) and
5.06(d), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities:
(A) other than in respect to a Special
Trustee, by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities or by written consent,
unless a Debenture Event of Default shall have occurred and be
continuing, in which event the Property Trustee and the
Delaware Trustee may only be removed by the Holders of a
Majority in liquidation amount of the Preferred Securities,
voting as a class at a meeting of the Holders of the Preferred
Securities or by written consent; and
(B) if an Appointment Event has occurred and
is continuing, one (1) additional trustee (the "Special
Trustee"), who shall have the same rights, powers and
privileges as an Administrative Trustee, may be appointed by
vote of the Holders of a Majority in liquidation amount of the
Preferred Securities, voting as a class at a meeting of the
Holders of the Preferred Securities, and such Special Trustee
may only be removed (otherwise than by the operation of
Section 5.06(e)), by vote of the Holders of a Majority in
liquidation amount of the Preferred Securities voting as a
class at a meeting of the Holders of the Preferred Securities.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.06(a) until a successor Property Trustee
meeting the requirements of Section 5.03 (a "Successor Property Trustee") has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrative Trustees
and the Sponsor.
(c) The Holders of a Majority in liquidation amount of the
Common Securities shall remove the Property Trustee by written instrument upon:
(i) the entry or a decree or order by a court having
jurisdiction in the premises adjudging the Property Trustee as bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Property Trustee under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Property Trustee 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
(ii) the institution by the Property Trustee of
proceedings to be adjudicated a bankrupt or insolvent, or the consent
by it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Property Trustee 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 and its willingness to be
adjudicated a bankrupt, or the taking of corporate action by the
Property Trustee in furtherance of any such action.
The Sponsor shall appoint a Successor Property Trustee within 60 days of such an
event.
(d) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.06(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Trustees and the Sponsor.
(e) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation,
provided that a Special Trustee shall only hold office while an Appointment
Event is continuing and shall cease to hold office immediately after the
Appointment Event pursuant to which the Special Trustee was appointed and all
other Appointment Events cease to be continuing. Any Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as
the Property Trustee shall be effective:
(A) until a Successor Property Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities;
(ii) no such resignation of the Trustee that acts as
the Delaware Trustee shall be effective until a Successor Delaware
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and delivered to
the Trust, the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of a Special Trustee shall
be effective until the 60th day following delivery of the instrument of
resignation of the Special Trustee to the Sponsor and the Trust or such
later date specified in such instrument during which period the Holders
of the Preferred Securities shall have the right to appoint a successor
Special Trustee as provided in this Section 5.06.
(f) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.06.
(g) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.06 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation or removal, at the cost of the Sponsor the resigning
Property Trustee or Delaware Trustee, resigning or being removed as applicable,
may petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe, appoint a
Successor Property Trustee or Successor Delaware Trustee, as the case may be.
(h) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.07 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.01, or if the number of Trustees
is increased pursuant to Section 5.01, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Administrative
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.06.
SECTION 5.08 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul, dissolve or terminate the Trust.
Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of a Administrative
Trustee in accordance with Section 5.06, the Administrative Trustees in office,
regardless of their number, shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Declaration.
SECTION 5.09 Meetings.
Meetings of the Administrative Trustees shall be held from time to time
upon the call of any Administrative Trustee. Regular meetings of the
Administrative Trustees may be held at a time and place fixed by resolution of
the Administrative Trustees. Notice of any meetings of the Administrative
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile or overnight courier) not less than 24 hours before such meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Administrative Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Administrative Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Administrative Trustees may be taken at a
meeting by vote of a majority of the Administrative Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting and without prior notice
by the written consent of a majority of the Administrative Trustees.
In the event there is only one Administrative Trustee, any and all
action of such Administrative Trustee shall be evidenced by a written consent of
such Administrative Trustee. In the event a Special Trustee is holding office
pursuant to Section 5.06, such Special Trustee shall have the same rights as an
Administrative Trustee with respect to participation in a meeting of the
Administrative Trustees.
SECTION 5.10 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.06, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee, as
the case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such Person shall be otherwise
qualified and 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.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.01 Distributions.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in their respective terms. If and to
the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Sums (as
defined in the Indenture)) premium and principal on the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed, to the extent funds are available for
that purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.01 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the Trust
issue one class of convertible preferred securities, designated as 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)SM, representing undivided beneficial interests in the assets of the
Trust (the "Preferred Securities"), having such terms as are set forth in Annex
I and one class of convertible common securities, liquidation amount $50,
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities"), having such terms as are set forth in Annex I. The Trust
shall have no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities. The Trust shall issue
no Securities in bearer form.
(b) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable, subject to Section 10.01 with respect to the
Common Securities.
(d) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
(e) Every Person, by virtue of having become a Holder or a
Preferred Securities Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have covenanted to treat the Debentures as
indebtedness and the Securities as evidence of an indirect beneficial ownership
interest in the Debentures.
SECTION 7.02 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by
one Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
Trustee before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who signed such
Securities had not ceased to be such Administrative Trustee; and any Securities
may be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of delivery of the Declaration any such person was not such
a Administrative Trustee.
(b) One Administrative Trustee shall sign the Preferred
Securities and the Common Securities for the Trust by manual or facsimile
signature.
A Preferred Security shall not be valid until authenticated by the
manual or facsimile signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the Preferred Security
has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative Trustee,
the Property Trustee shall authenticate the Preferred Securities for original
issue by executing the Property Trustee's certificate of authentication
contained in the form of Preferred Securities attached hereto as Exhibit A-1.
The aggregate number of Preferred Securities outstanding at any time shall not
exceed the number set forth in the terms in Annex I hereto except as provided in
Section 7.06.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Preferred Securities. An authenticating agent may
authenticate Preferred Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Company or an Affiliate.
SECTION 7.03 Form and Dating.
The Preferred Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates may be printed, lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the Administrative Trustees, as
evidenced by their execution thereof. The Securities may have letters, numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust
is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust). The Trust at the direction of
the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the
Property Trustee in writing. Each Preferred Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
The Preferred Securities are being offered and sold by the Trust
pursuant to a Purchase Agreement relating to the Preferred Securities, dated
November 6, 2000, among the Trust, the Sponsor and the Purchasers named therein
(the "Purchase Agreement").
(a) Global Securities. Preferred Securities offered and sold
to Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A under the
Securities Act ("Rule 144A") as provided in the Purchase Agreement, shall be
issued in the form of one or more permanent global Securities in definitive,
fully registered form without distribution coupons with the appropriate global
legends, ERISA legend and Restricted Securities Legend set forth in Exhibit A-1
hereto (each, a "Rule 144A Global Preferred Security"), which shall be deposited
on behalf of the purchasers of the Preferred Securities represented thereby with
the Property Trustee, at its Wilmington, Delaware office, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by an Administrative Trustee on behalf of the Trust
and authenticated by the Property Trustee as provided herein. The number of
Preferred Securities represented by the Rule 144A Global Preferred Security may
from time to time be increased or decreased by adjustments made on the records
of the Property Trustee and the Depositary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.03(b) shall apply
only to the Rule 144A Global Preferred Securities and such other Preferred
Securities in global form as may be authorized by the Trust to be deposited with
or on behalf of the Depositary.
An Administrative Trustee on behalf of the Trust shall execute and the
Property Trustee shall, in accordance with this Section 7.03, authenticate and
deliver initially one or more Rule 144A Global Preferred Securities that (a)
shall be registered in the name of Cede & Co. or other nominee of such
Depositary and (b) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's written instructions or held by the Trustee as
custodian for the Depositary.
Members of, or participants in, the Depositary ("Participants") shall
have no rights under this Declaration with respect to any Rule 144A Global
Preferred Security held on their behalf by the Depositary or by the Property
Trustee as the custodian of the Depositary or under such Rule 144A Global
Preferred Security, and the Depositary may be treated by the Trust, the Property
Trustee and any agent of the Trust or the Property Trustee as the absolute owner
of such Rule 144A Global Preferred Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Rule 144A Global
Preferred Security.
(c) Certificated Securities. Except as provided in Section
7.03(d), owners of beneficial interests in the Rule 144A Global Preferred
Security will not be entitled to receive physical delivery of certificated
Preferred Securities.
(d) A Global Preferred Security deposited with the Depositary
or with the Property Trustee as custodian for the Depositary pursuant to this
Section 7.03 shall be transferred to the beneficial owners thereof in the form
of certificated Preferred Securities only if such transfer complies with Section
9.02 and (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Preferred Security or if at any time
such Depositary ceases to be a "clearing agency" registered under the Exchange
Act, at a time when the Depositary is required to be so registered to act as
such depositary, (ii) the Sponsor on behalf of the Trust in its sole discretion
determines that such Global Preferred Security shall be so exchangeable, or
(iii) an Event of Default has occurred and is continuing.
(e) Any Global Preferred Security that is transferable to the
beneficial owners thereof in the form of certificated Preferred Securities
pursuant to this Section 7.03 shall be surrendered by the Depositary to the
Property Trustee located in Wilmington, Delaware, to be so transferred, in whole
or from time to time in part, without charge, and the Property Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Preferred Security, an equal aggregate liquidation amount of Preferred
Securities of authorized denominations in the form of certificated Preferred
Securities. Any portion of a Global Preferred Security transferred pursuant to
this Section shall be registered in such names as the Depositary shall direct.
Any Preferred Security in the form of certificated Preferred Securities
delivered in exchange for an interest in the Rule 144A Global Preferred Security
shall, except as otherwise provided by Section 9.01, bear the Restricted
Securities Legend set forth in Exhibit A hereto.
(f) Subject to the provisions of Section 7.03(e), the
registered holder of a Global Preferred Security may grant proxies and otherwise
authorize any person, including Participants and persons that may hold interests
through Participants, to take any action which a holder is entitled to take
under this Declaration or the Securities.
(g) In the event of the occurrence of any of the events
specified in Section 7.03(d), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Securities in definitive,
fully registered form without distribution coupons.
SECTION 7.04 Registrar, Paying Agent and Conversion Agent.
The Trust shall maintain in Wilmington, Delaware (i) an office or
agency where Preferred Securities may be presented for registration of transfer
or for exchange ("Registrar"), (ii) an office or agency where Preferred
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Preferred Securities and of their
transfer and exchange. The Trust may appoint the Registrar, the Paying Agent and
the Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Conversion Agent without prior notice to any Holder. The Trust shall notify
the Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Conversion Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Conversion Agent. The Trust shall act as Paying Agent, Registrar, co-registrar,
and Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent, and Conversion Agent for the Preferred Securities.
SECTION 7.05 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of principal or distribution on the Securities, and will notify
the Property Trustee if there are insufficient funds. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee. The Trust at any time may require
a Paying Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.06 Replacement Securities.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, an Administrative Trustee on behalf of the Trust shall issue
and, with respect to the Preferred Securities, the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. If required by the Property Trustee
or the Trust, an indemnity bond must be sufficient in the judgment of both to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Sponsor may charge
for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased by the
Sponsor pursuant to Article III hereof, the Sponsor in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
SECTION 7.07 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the Preferred
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Preferred Security is replaced, paid or purchased pursuant to
Section 7.06 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Security is held by a protected purchaser.
If Preferred Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them cease to accumulate.
A Preferred Security does not cease to be outstanding because one of
the Trustees, the Trust, the Sponsor or an Affiliate of the Sponsor or Trustees
holds the Security.
SECTION 7.08 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Preferred Securities owned
by the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be,
shall be disregarded and deemed not to be outstanding, except that for the
purposes of determining whether the Property Trustee shall be fully protected in
relying on any such direction, waiver or consent, only Securities which the
Property Trustee actually knows are so owned shall be so disregarded.
SECTION 7.09 Temporary Securities.
Until definitive Securities are ready for delivery, an Administrative
Trustee may prepare and, in the case of the Preferred Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
an Administrative Trustee considers appropriate for temporary Securities.
Without unreasonable delay, an Administrative Trustee shall prepare and deliver
to the Property Trustee Preferred Securities in certificated form (other than in
the case of Preferred Securities in global form) and thereupon any or all
temporary Preferred Securities (other than any such Preferred Securities in
global form) may be surrendered in exchange therefor, at the office of the
Registrar, and the Property Trustee shall authenticate and deliver an equal
aggregate liquidation amount of definitive Preferred Securities in certificated
form in exchange for temporary Preferred Securities (other than any such
Preferred Securities in global form).
SECTION 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall
forward to the Property Trustee any Preferred Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Property Trustee shall promptly cancel all Preferred Securities, surrendered for
registration of transfer, redemption, conversion, exchange, payment, replacement
or cancellation and shall return such canceled Preferred Securities to the
Administrative Trustees. The Trust may not issue new Preferred Securities to
replace Preferred Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any holder has converted.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.01 Termination of Trust.
(a) The Trust shall dissolve upon the earliest to occur of the
following:
(i) the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) the filing of a certificate of dissolution or
its equivalent with respect to the Holder of the Common Securities or
the Sponsor; the revocation of the charter of the Holder of the Common
Securities or the Sponsor and the expiration of 90 days after the date
of revocation without a reinstatement thereof;
(iii) the written direction of the Sponsor, as the
Holder of the outstanding Common Securities, to the Property Trustee to
dissolve the Trust and distribute a Like Amount of Debentures to
Holders of the Securities in accordance with the terms of the
Securities;
(iv) all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(v) the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor or the Trust;
(vi) upon the distribution of the Class B Common
Stock (as defined in the Indenture) of the Sponsor to Holders of all
outstanding Securities upon conversion of all such Securities;
(vii) the expiration of the term of the Trust as set
forth in Section 3.14 hereof; or
(viii) before the issuance of any Securities, with
the consent of all the Administrative Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.01(a) and after satisfaction of liabilities of
creditors of the Trust as provided by applicable law, any one of the Trustees
(each of whom is hereby authorized to take such action) shall file a certificate
of cancellation with the Secretary of State of the State of Delaware terminating
the Trust and, upon such filing, the respective obligations and responsibilities
of the Trustees and the Trust created and continued hereby, shall terminate.
(c) The provisions of Sections 3.09, 4.03, 10.01(b), 10.04,
the last sentence of Section 3.06 and Article X shall survive the termination of
the Trust.
ARTICLE IX
TRANSFER AND EXCHANGE
SECTION 9.01 General.
(a) Where Preferred Securities are presented to the Registrar
or a co-registrar with a request to register a transfer or to exchange them for
an equal number of Preferred Securities represented by different certificates,
the Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met. To permit registrations of transfers
and exchanges, the Administrative Trustee in accordance with this Declaration
shall execute and deliver and the Property Trustee shall authenticate Preferred
Securities at the Registrar's request.
(b) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the Sponsor or
as otherwise permitted by Article VIII of the Indenture; provided that, any such
transfer is subject to the condition precedent that the transferor obtain the
written opinion of nationally recognized independent counsel experienced in such
matters that such transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United
States federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
(c) The Administrative Trustees shall provide for the
registration of Securities and of transfers of Securities, which will be
effected without charge but only upon payment (with such indemnity as the
Administrative Trustees or Property Trustee may require) in respect of any tax
or other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Securities, the Administrative
Trustees shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each Security
surrendered for registration of transfer shall be canceled in accordance with
Section 7.10. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
(d) The Trust shall not be required (i) to issue, register the
transfer of, or exchange, Preferred Securities during a period beginning at the
opening of business 15 days before the day of any selection of Preferred
Securities for redemption set forth in the terms of the Securities as set forth
in Annex I hereto and ending at the close of business on the day of selection,
or (ii) to register the transfer or exchange of any Preferred Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Preferred Security being redeemed in part.
(e) All Preferred Securities issued upon any transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Preferred Securities surrendered upon such transfer or exchange.
Section 9.02 Transfer Procedures and Restrictions.
(a) General. Subject to Sections 9.02(b) and 9.02(j)(ii), if
Preferred Securities are issued upon the transfer, exchange or replacement of
Preferred Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted Securities
Legend on Preferred Securities, the Preferred Securities so issued shall bear
the Restricted Securities Legend, or the Restricted Securities Legend shall not
be removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such satisfactory evidence, which may include an opinion of
counsel, as may be reasonably required by the Company, that (i) neither the
legend nor the restrictions on transfer set forth therein are required to ensure
that transfers thereof comply with the provisions of Rule 144A or Rule 144 under
the Securities Act or (ii) that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction of an
Administrative Trustee on behalf of the Trust, shall authenticate and deliver
Preferred Securities that do not bear the Restricted Securities Legend.
(b) Transfers After Effectiveness of Shelf Registration
Statement. After the effectiveness of a Shelf Registration Statement for any
Preferred Securities, all requirements pertaining to Restricted Securities
Legends on any Preferred Security included within such Shelf Registration
Statement will cease to apply, and beneficial interests in a Preferred Security
in global form without Restricted Securities Legends will be available to
transferees of such Preferred Securities, upon directions to transfer such
Holder's beneficial interest in the Rule 144A Global Preferred Security. After
the effectiveness of the Shelf Registration Statement, the Administrative
Trustees shall execute and deliver and the Property Trustee shall authenticate a
Preferred Security in global form without the Restricted Securities Legend (the
"Unrestricted Global Preferred Security") to deposit with the Depositary to
evidence transfers of beneficial interests from the Rule 144A Global Preferred
Security.
(c) [Reserved]
(d) Transfer and Exchange of Definitive Preferred Securities.
When Definitive Preferred Securities are presented to the Registrar or
co-Registrar
(x) to register the transfer of such Definitive
Preferred Securities; or
(y) to exchange such Definitive Preferred Securities
for an equal number of Definitive Preferred Securities of another
denomination,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to an
Administrative Trustee on behalf of the Trust and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Definitive Preferred Securities
that are Restricted Preferred Securities, and are being transferred or
exchanged (x) pursuant to an effective registration statement under the
Securities Act or (y) pursuant to, and in compliance with, clause (A)
or (B) below:
(A) if such Restricted Preferred Securities
are being delivered to the Registrar by a Holder for
registration in the name of such Holder, without transfer,
such Holder shall deliver a certification to that effect (in
the form set forth on the reverse of the Preferred Security);
or
(B) if such Restricted Preferred Securities
are being transferred pursuant to an exemption from
registration in accordance with Rule 144A or Rule 144 under
the Securities Act such Holder shall deliver: (i) a
certification to that effect (in the form set forth on the
reverse of the Preferred Security) and (ii) if the Trust or
Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in
the Restricted Securities Legend.
Definitive Preferred Securities that are transferred to QIBs in
accordance with Rule 144A under the Securities Act must take delivery of their
interests in the Preferred Securities in the form of a beneficial interest in
the Rule 144A Global Preferred Security in accordance with Section 9.02(e).
(e) Restrictions on Transfer of a Definitive Preferred
Security for a Beneficial Interest in a Global Preferred Security. A Definitive
Preferred Security may not be exchanged for a beneficial interest in a Global
Preferred Security except upon satisfaction of the requirements set forth below.
Upon receipt by the Property Trustee of a Definitive Preferred Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee, together with (i) written instructions
directing the Property Trustee to make, or to direct the Depositary to make, an
adjustment on its books and records with respect to such Global Preferred
Security to reflect an increase in the number of the Preferred Securities
represented by the Global Preferred Security, and (ii) if such Definitive
Preferred Security is a Restricted Preferred Security, certification, in the
form provided on the reverse of the Preferred Security, to the effect that such
Definitive Preferred Security is being transferred to a QIB in accordance with
Rule 144A under the Securities Act, then the Property Trustee shall cancel such
Definitive Preferred Security and cause, or direct the Depositary to cause, the
aggregate number of Preferred Securities represented by the Global Preferred
Security to be increased accordingly. If no Global Preferred Securities are then
outstanding, the Administrative Trustee shall execute and deliver and the
Property Trustee shall authenticate, upon written order of any Administrative
Trustee, an appropriate number of Preferred Securities in global form.
(f) Transfer and Exchange of Global Preferred Securities. The
transfer and exchange of Global Preferred Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Declaration (including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depositary therefor.
(g) Transfer of a Beneficial Interest in a Global Preferred
Security for a Definitive Preferred Security.
(i) The transfer of a beneficial interest in a Rule
144A Global Preferred Security in exchange for a Definitive Preferred
Security will require the delivery by the transferee of a transfer
certificate in the form set forth in Exhibit A-1.
(ii) Definitive Preferred Securities issued in
exchange for a beneficial interest in a Global Preferred Security
pursuant to this Section 9.02(g) shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to
instructions from its Participants or indirect participants or
otherwise, shall instruct the Property Trustee. The Property Trustee
shall deliver such Preferred Securities to the Persons in whose names
such Preferred Securities are so registered in accordance with the
instructions of the Depositary.
(h) Restrictions on Transfer and Exchange of Global Preferred
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in Section 7.03), a Global Preferred Security may not
be transferred as a whole except by the Depositary to a nominee of 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.
(i) [Reserved].
(j) Legend.
(i) Except as permitted by the following paragraph
(ii), each Preferred Security certificate evidencing the Global
Preferred Securities and the Definitive Preferred Securities (and all
Preferred Securities issued in exchange therefor or substitution
thereof) shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND ANY
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES ISSUED
UPON EXCHANGE FOR THIS SECURITY AND ANY CLASS B
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY
NOT BE OFFERED, SOLD, PLEDGED, ENCUMBERED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
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 BY ITS ACCEPTANCE HEREOF
AGREES FOR THE BENEFIT OF THE TRUST AND CONTINENTAL
AIRLINES, INC. THAT (A) THIS SECURITY AND ANY
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES ISSUABLE
UPON EXCHANGE THEREFOR AND ANY CLASS B COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i)
TO THE COMPANY, (ii) INSIDE THE UNITED STATES TO A
PERSON WHOM 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, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (iv) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OR (v) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(i) THROUGH (v) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER REPRESENTS THAT IT (1)
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT, IS
AWARE THAT THE SALE TO IT IS BEING MADE IN RELIANCE
ON RULE 144A AND IS ACQUIRING THE SECURITIES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE
QUALIFIED INSTITUTIONAL BUYERS AND THAT IT EXERCISES
SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT OR (2) ACQUIRED SUCH SECURITY IN A
TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER
THE SECURITIES ACT."
(ii) Upon any sale or transfer of a Restricted
Preferred Security (including any Restricted Preferred Security
represented by a Global Preferred Security) pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act the Registrar shall permit the holder thereof to
exchange such Restricted Preferred Security for an interest in the
Unrestricted Global Preferred Security.
(iii) Each Preferred Security certificate evidencing
the Global Preferred Securities and the Definitive Preferred Securities
(and all Preferred Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form, unless otherwise determined by the Sponsor in
accordance with applicable law:
"BY ITS PURCHASE HEREOF OR ANY INTEREST THEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED
EITHER THAT (A) IT IS NOT A PLAN OR OTHER ENTITY
WHOSE UNDERLYING ASSETS ARE SUBJECT TO ERISA AND/OR
SECTION 4975 OF THE CODE, OR A GOVERNMENTAL OR
CHURCH PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE OR (B) ITS PURCHASE AND HOLDING OF A
TIDES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL
OR CHURCH PLAN, A VIOLATION OF ANY SUBSTANTIALLY
SIMILAR FEDERAL, STATE OR LOCAL LAW). FURTHER, THE
FIDUCIARIES OF ANY PLAN OR PLAN ASSETS ENTITY WHICH
MAY PURCHASE OR HOLD THESE SECURITIES WILL BE DEEMED
AS A RESULT OF SUCH ACQUISITION OR HOLDING TO HAVE
(A) DIRECTED THE TRUST TO INVEST IN THE DEBENTURES,
(B) AUTHORIZED AND DIRECTED ANY OF THE ACTIONS TAKEN
OR WHICH MAY BE TAKEN WITH RESPECT TO THE TRUST, THE
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES AND THESE
SECURITIES BY ANY OF THE TRUSTEES, THE DEBENTURE
TRUSTEE, THE GUARANTEE TRUSTEE OR US AS CONTEMPLATED
BY THE INDENTURE, THE DEBENTURES OR THE GUARANTEE
AND (C) TO HAVE APPOINTED THE TRUSTEES."
(iv) Preferred Securities issued in the form of one
or more permanent Global Preferred Securities shall bear a legend in
substantially the following form, unless otherwise determined by the
Sponsor in accordance with applicable law:
[Include if Preferred Security is in global form and The Depository
Trust Company is the Depositary--]
"THIS CERTIFICATE IS A PREFERRED GLOBAL SECURITY
WITHIN THE MEANING OF THE DECLARATION HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY" OR "DTC")
OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE 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) MAY
BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (55 WATER STREET,
NEW YORK, NEW YORK), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR 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."
[Include if Preferred Security is in global form--]
"TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW."
(k) Cancellation or Adjustment of Global Preferred Security.
At such time as all beneficial interests in a Global Preferred Security have
either been exchanged for Definitive Preferred Securities to the extent
permitted by the Declaration or redeemed, repurchased or cancelled in accordance
with the terms of this Declaration, such Global Preferred Security shall be
returned to the Depositary for cancellation or retained and cancelled by the
Property Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Preferred Security is exchanged for Definitive Preferred
Securities, Preferred Securities represented by such Global Preferred Security
shall be reduced and an adjustment shall be made on the books and records of the
Property Trustee (if it is then the Securities Custodian for such Global
Preferred Security) with respect to such Global Preferred Security, by the
Property Trustee or the Securities Custodian, to reflect such reduction.
(l) [Reserved]
(m) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility
or obligation to any beneficial owner of a Global Preferred Security, a
Participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
Participant thereof, with respect to any ownership interest in the
Preferred Securities or with respect to the delivery to any
Participant, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Preferred
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Preferred Securities
shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of a
Global Preferred Security). The rights of beneficial owners in any
Global Preferred Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Property Trustee may conclusively rely and shall be
fully protected in relying upon information furnished by the Depositary
or agent thereof with respect to its Participants and any beneficial
owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Preferred Security (including any transfers between or among
Depositary Participants or beneficial owners in any Global Preferred
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Declaration, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
SECTION 9.03 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust, the Trustees,
the Registrar or a co-registrar shall have actual or other notice thereof.
SECTION 9.04 [Reserved].
SECTION 9.05 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, the Trustees shall, in the case of
any Global Preferred Security, give all such notices and communications
specified herein to be given to the Preferred Security Holders to the
Depositary, and shall have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.06 Appointment of Successor Clearing Agency.
If the Depositary elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Preferred Securities.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
OR OTHERS
SECTION 10.01 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities the Sponsor shall not be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for
all of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.02 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.03 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.04 Indemnification.
(a) To the fullest extent permitted by applicable law, the
Debenture Issuer shall indemnify and hold harmless each Indemnified Person from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Trust or any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by this Declaration, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including reasonable legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Debenture Issuer prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Debenture Issuer of an undertaking by or on behalf of the Indemnified Person
to repay such amount if it shall be determined that the Indemnified Person is
not entitled to be indemnified as authorized in Section 10.4(a). The
indemnification shall survive the termination of this Declaration or the
resignation or removal of the Property Trustee or the Delaware Trustee, as the
case may be.
SECTION 10.05 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.03(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived therefrom and
the pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. None of the Sponsor, any
Covered Person, the Delaware Trustee, or the Property Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial or
other transaction with the Sponsor or any Affiliate of the Sponsor, or may act
as depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.01 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.02 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year by a firm of independent certified public accountants
selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss.
(c) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Administrative
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.03 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.
SECTION 11.04 Withholding.
The Administrative Trustees on behalf of the Trust shall comply with
all withholding requirements under United States federal, state and local law.
The Administrative Trustees on behalf of the Trust shall request, and the
Holders shall provide to the Trust, such forms or certificates as are necessary
to establish an exemption from withholding with respect to each Holder, and any
representations and forms as shall reasonably be requested by the Administrative
Trustees on behalf of the Trust to assist it in determining the extent of, and
in fulfilling, its withholding obligations. The Administrative Trustees shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust (at the
written direction of one of the Administrative Trustees of the Trust) may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.01 Amendments.
(a) This Declaration may be amended from time to time by the
Sponsor, the Property Trustee and the Administrative Trustees, without the
consent of the Holders of the Securities, (i) to cure any ambiguity, correct or
supplement any provision in the Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to ministerial
matters or questions arising under the Declaration, which shall not be
inconsistent with the other provisions of the Declaration, or (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall be
necessary to ensure that the Trust will not be taxable as a corporation or will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an "investment company" under the Investment
Company Act; provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests of any Holder
of Securities, and any such amendments of the Declaration shall become effective
when notice thereof is given to the Holders of the Securities.
(b) Except as provided in (c) below, this Declaration may be
amended by the Trustees and the Sponsor with (i) the consent of Holders
representing not less than a Majority in liquidation amount of the outstanding
Preferred Securities, and (ii) receipt by the Trustees of an opinion of counsel
to the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status as
a grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the Investment Company
Act.
(c) Without the consent of each holder of Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Securities of a specified
date or (ii) restrict the right of a Holder of Securities to institute suit for
the enforcement of any such payment on or after such date.
SECTION 12.02 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration, the
terms of the Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading. The Administrative
Trustees shall call a meeting of the Holders of such class if directed to do so
by the Holders of at least 25% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Administrative
Trustees one or more requests in a writing stating that the signing Holders of
Securities wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of Securities calling a
meeting shall specify in writing the Certificates held by the Holders of
Securities exercising the right to call a meeting and only those Securities
represented by the Certificates so specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting and without
prior notice if a consent in writing setting forth the action so taken
is signed by the Holders of Securities owning not less than the minimum
aggregate liquidation amount of Securities that would be necessary to
authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting shall be given
to the Holders of Securities entitled to vote who have not consented in
writing. The Administrative Trustees may specify that any written
ballot submitted to the Holders for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity
of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Administrative Trustees or by such other
Person that the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred Securities are then
listed or trading, provide otherwise, the Administrative Trustees, in
their sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.01 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, at the
Closing Date and at each Optional Closing Date, if any, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with corporate power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration
by the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the Declaration.
(e) The Property Trustee, pursuant to this Declaration, shall
hold legal title to, and an ownership interest on behalf of the Holders of the
Securities, in the Debentures and agrees that, except as expressly provided or
contemplated by this Declaration, it will not create, incur or assume, or suffer
to exist any mortgage, pledge, hypothecation, encumbrance, lien or other charge
or security interest upon the Debentures.
SECTION 13.02 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, at the
Closing Date and at each Optional Closing Date, if any, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with corporate power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. The Declaration has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration
by the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.01 Registration Rights.
The Holders of the Preferred Securities, the Debentures, the Preferred
Securities Guarantee and the shares of Class B Common Stock of the Sponsor
issuable upon conversion of the Securities are entitled to the benefits of a
Registration Rights Agreement as set forth in the Purchase Agreement and the
Indenture.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01 NOTICES.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the Securities):
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(b) if given to the Property Trustee, at the mailing address
set forth below (or such other address as the Property Trustee may give notice
of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(c) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as the Delaware Trustee may give notice
of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.02 Governing Law.
THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE
APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE
LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT
RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE
FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR
SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST
BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY
FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS
PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE
ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS
OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST
INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER OF
HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER
STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES
THAT ARE INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES OR AUTHORITIES AND
POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS DECLARATION.
SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST.
SECTION 15.03 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 15.04 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.05 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.06 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.07 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ Gerald Laderman
-----------------------------------------
as Administrative Trustee
/s/ Lawrence W. Kellner
-----------------------------------------
as Administrative Trustee
WILMINGTON TRUST COMPANY, as
Delaware Trustee
By: /s/ W. Chris Sponenberg
-------------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
WILMINGTON TRUST COMPANY, as
Property Trustee
By: /s/ W. Chris Sponenberg
-------------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
CONTINENTAL AIRLINES, INC.,
as Sponsor and Debenture Issuer
By: /s/ Gerald Laderman
-------------------------------------
Name: Gerald Laderman
Title: Senior Vice President
Finance
ANNEX I
TERMS OF 6% CONVERTIBLE PREFERRED SECURITIES
TERM INCOME DEFERRABLE EQUITY SECURITIES (TIDES)SM
6% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust, dated as of November 10, 2000 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or the Indenture (as defined in the
Declaration) or, if not defined in the Declaration or Indenture, as defined in
the Offering Circular (as defined in the Declaration):
1. Designation and Number.
(a) "Preferred Securities." 5,000,000 Preferred Securities of the Trust
with an aggregate liquidation preference with respect to the assets of the Trust
of Two-Hundred Fifty Million Dollars ($250,000,000), and a liquidation amount
with respect to the assets of the Trust of $50 per Preferred Security, are
hereby designated for the purposes of identification only as "6% Convertible
Preferred Securities, Term Income Deferrable Equity Securities (TIDES) )SM" (the
"Preferred Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form attached hereto as
Exhibit A-1, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange or other organization on which the Preferred Securities
are listed.
(b) "Common Securities." 154,640 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Seven
Million Seven-Hundred Thirty-Two Thousand Dollars ($7,732,000) and a liquidation
amount with respect to the assets of the Trust of $50 per Common Security, are
hereby designated for the purposes of identification only as "6% Convertible
Common Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form attached
hereto as Exhibit A-2, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 6% (the "Coupon Rate") of the stated liquidation amount of $50 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one quarter
will bear interest thereon compounded quarterly at the Coupon Rate (to the
extent permitted by applicable law), subject to adjustment in the event of a
Registration Default, as described in the Declaration. The term "Distributions"
as used herein includes such quarterly distributions, additional distributions
on quarterly distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of their original issuance and will be payable quarterly in
arrears, on the following dates, which dates correspond to the interest payment
dates on the Debentures: February 15, May 15, August 15 and November 15 of each
year, commencing on February 15, 2001, except as otherwise described below. The
Sponsor has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Deferral Period. Prior to three Business
Days before a Regular Record Date fixed for a Payment Resumption Date (as
defined in the Indenture), the Sponsor may further extend such Deferral Period;
provided that such Deferral Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
maturity (whether at the stated maturity or by declaration of acceleration, call
for redemption or otherwise) of the Debentures under the Indenture. Payments of
accrued Distributions will be payable to Holders as they appear on the books and
records of the Trust on the Regular Record Date for the relevant Payment
Resumption Date. Upon the termination of any Deferral Period and the payment of
all amounts then due, the Sponsor may commence a new Deferral Period, subject to
the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. The relevant record dates shall be on the
1st day of the month of the relevant payment dates, except as otherwise
described in this Annex I to the Declaration. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of Preferred Securities being held in book-entry form through The Depository
Trust Company (the "Depositary") will be made as described under the heading
"Description of TIDES--Form, Book-Entry Procedures and Transfer" in the Offering
Circular. The relevant record dates for the Common Securities shall be the same
record dates as for the Preferred Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Sponsor having failed to make a payment under the Debentures, will
cease to be payable to the Person in whose name such Securities are registered
on the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, with
respect to any Redemption Date, if such Business Day is in the next succeeding
calendar year, such Redemption Date shall be the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
(d) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Class B Common Stock pursuant to the terms of
the Securities as forth in this Annex I to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided that
Holders of Securities at the close of business on any record date for the
payment of Distributions will be entitled to receive the Distributions payable
on such Securities on the corresponding payment date notwithstanding the
conversion of such Securities into Class B Common Stock following such record
date.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution of the Trust,
the Trust shall be liquidated by the Trustees as expeditiously as the Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law (including, without
limitation, by paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act), to the Holders of the Securities a Like Amount of Debentures, unless
such distribution would not be practical as determined by the Administrative
Trustees, in which event such Holders will be entitled to receive out of the
assets of the Trust available for distribution to holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law (including,
without limitation, by paying or making reasonable provision to pay all claims
and obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act), an amount equal to, in the case of Holders of Preferred Securities,
the aggregate liquidation amount thereof plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Preferred Securities shall be paid on a Pro Rata (as defined below) basis in
accordance with paragraph 9. The Holder of the Common Securities will be
entitled to receive distributions upon any such liquidation Pro Rata with the
Holders of the Preferred Securities, except as provided in paragraph 10.
4. Redemption and Distribution.
(a) Upon the repayment or payment of the Debentures in whole or in
part, whether at maturity or upon redemption or otherwise (other than following
any distribution of the Debentures to the Holders), the proceeds from such
repayment or redemption shall be simultaneously applied to redeem, on a Pro Rata
basis, a Like Amount of Securities, on the redemption date, in an amount per
Security equal to the applicable redemption price, which redemption price will
be equal to (i) the liquidation amount of each of the Securities plus any
accrued and unpaid Distributions thereon (A) in the case of the repayment of the
Debentures at stated maturity, or (B) in the case of a redemption of the
Debentures in certain limited circumstances set forth in the Indenture upon the
occurrence of a Tax Event or (ii) in the case of an Optional Redemption on or
after November 15, 2003, the Optional Redemption Price (as defined in the
Indenture), payable in cash (as applicable, the "Redemption Price"). Holders
will be given not less than 20 nor more than 60 days' notice of such redemption.
Upon the repayment of the Debentures at maturity or upon any acceleration,
earlier redemption or otherwise, the proceeds from such repayment will be
applied to redeem the Securities, in whole, upon not less than 30 nor more than
60 days' notice.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed Pro Rata and
the Preferred Securities to be redeemed will be as described in Paragraph
4(f)(ii) below.
(c) The Sponsor, as the Holder of the outstanding Common Securities,
shall have the right at any time (including, without limitation, upon the
occurrence of a Tax Event or Investment Company Act Event) to dissolve the Trust
and, after satisfaction of the creditors of the Trust, cause a Like Amount of
the Debentures to be distributed to the Holders of the Securities upon
liquidation of the Trust, provided that the Administrative Trustees shall have
received a No Recognition Opinion (as defined below) prior to the dissolution of
the Trust.
(d) If, at any time, a Tax Event shall occur and be continuing the
Sponsor shall cause the Administrative Trustees to dissolve the Trust and, after
satisfaction of creditors of the Trust (including, without limitation, by paying
or making reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Business Trust Act), cause Debentures to
be distributed to the Holders of the Securities in liquidation of the Trust
within 90 days following the occurrence of such Tax Event (the "90 Day Period");
provided, however, that such dissolution and distribution shall be conditioned
on (i) the Trustees' receipt of an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Trustees) experienced in
such matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
of the Securities will not recognize any income, gain or loss for United States
federal income tax purposes as a result of such liquidation and distribution of
Debentures, and (ii) the Sponsor being unable to avoid such Tax Event within the
90 day period by taking some ministerial action or pursuing some other
reasonable measure that, in the sole judgment of the Sponsor, will have no
adverse effect on the Trust, the Sponsor or the Holders of the Securities and
will involve no material cost ("Ministerial Action").
If (i) the Sponsor has received an opinion (a "Redemption Tax Opinion")
of a nationally recognized independent tax counsel (reasonably acceptable to the
Trustees) experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that the Sponsor would be precluded from
deducting the interest on the Debentures for United States federal income tax
purposes, even after the Debentures were distributed to the Holders of
Securities upon liquidation of the Trust as described in this paragraph 4(d), or
(ii) the Trustees shall have been informed by such tax counsel that it cannot
deliver a No Recognition Opinion, the Sponsor shall have the right, upon not
less than 20 nor more than 60 days' notice, and within 90 days following the
occurrence of such Tax Event, to redeem the Debentures in whole (but not in
part) for cash, for the principal amount plus accrued and unpaid interest
thereon and, following such redemption, all the Securities will be redeemed by
the Trust at the liquidation amount of $50 per Security plus accrued and unpaid
Distributions thereon; provided, however, that, if at the time there is
available to the Sponsor or the Trust the opportunity to eliminate, within the
90 Day Period, the Tax Event by taking some Ministerial Action, the Trust or the
Sponsor will pursue such Ministerial Action in lieu of redemption.
In lieu of the foregoing options, the Company shall also have the
option of causing the Securities to remain outstanding and pay Additional Sums
on the Debentures.
"Tax Event" means that the Property Trustee shall have received an
opinion of a nationally recognized independent tax counsel to the Sponsor
(reasonably acceptable to the Trustees) experienced in such matters (a
"Dissolution Tax Opinion") to the effect that, as a result of (i) any amendment
to, or change (including any announced prospective change (which shall not
include a proposed change), provided that a Tax Event shall not occur more than
90 days before the effective date of any such prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority therefor or therein, (ii) any judicial decision
or official administrative pronouncement, ruling, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (iii) any amendment to
or change in the administrative position or interpretation of any Administrative
Action or judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment or change is
made known, which amendment or change is effective or such Administrative Action
or decision is announced, in each case, on or after the date of original
issuance of the Debentures or the issue date of the Preferred Securities issued
by the Trust, there is more than an insubstantial risk that (a) if the
Debentures are held by the Property Trustee, (I) the Trust is, or will be within
90 days of the date of such opinion, subject to United States federal income tax
with respect to interest accrued or received on the Debentures or subject to
more than a de minimis amount of other taxes, duties or other governmental
charges as determined by such counsel, or (II) any portion of interest payable
by the Sponsor to the Trust on the Debentures is not, or within 90 days of the
date of such opinion will not be, deductible by the Sponsor in whole or in part
for United States federal income tax purposes or (b) with respect to Debentures
which are no longer held by the Property Trustee, any portion of interest
payable by the Sponsor on the Debentures is not, or within 90 days of the date
of such opinion will not be, deductible by the Sponsor in whole or in part for
United States federal income tax purposes.
If an Investment Company Event (as hereinafter defined) shall occur and
be continuing, the Sponsor shall cause the Trustees to dissolve the Trust and,
after satisfaction of liabilities of the creditors of the Trust as provided by
applicable law (including, without limitation, by paying or making reasonable
provision to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act), cause the Debentures to be
distributed to the Holders of the Securities in liquidation of the Trust within
90 days following the occurrence of such Investment Company Event.
"Investment Company Event" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), to the effect that the Trust is or will
be considered an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after the date of the Offering Circular.
After the date fixed for any distribution of Debentures: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Depositary or
its nominee (or any successor Depositary or its nominee), as record Holder of
Preferred Securities represented by global certificates, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Preferred Securities held by
the Depositary or its nominee (or any successor Depositary or its nominee), will
be deemed to represent Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with accrued and
unpaid interest equal to accrued and unpaid Distributions on such Securities
until such certificates are presented to the Sponsor or its agent for transfer
or reissuance.
(e) The Securities will not be redeemed unless all accrued and unpaid
Distributions have been paid on all Securities for all quarterly Distribution
periods terminating on or before the date of redemption.
(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by an Administrative
Trustee on behalf of the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 20 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of
a redemption, will be the date fixed for redemption of the Debentures.
For purposes of the calculation of the date of redemption or exchange
and the dates on which notices are given pursuant to this paragraph
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect
in the Redemption/Distribution Notice or in the mailing of either
thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the
name of and held of record by the Depositary (or any successor
Depositary) or any nominee, the distribution of the proceeds of such
redemption will be made to each Participant (or Person on whose behalf
such nominee holds such securities) in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and an
Administrative Trustee on behalf of the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this paragraph 4 (which notice
will be irrevocable), then (A) with respect to Preferred Securities
held in book-entry form, by 12:00 noon, New York City time, on the
redemption date, to the extent funds are available, with respect to
Preferred Securities held in global form, the Property Trustee will
deposit irrevocably with the Depositary (or successor Depositary) funds
sufficient to pay the amount payable on redemption with respect to such
Preferred Securities and will give the Depositary irrevocable
instructions and authority to pay the amount payable on redemption to
the Holders of such Preferred Securities, and (B) with respect to
Preferred Securities issued in certificated form and Common Securities,
to the extent funds are available, the Property Trustee will
irrevocably deposit with the Paying Agent funds sufficient to pay the
amount payable on redemption to the Holders of such Securities and will
give the Paying Agent irrevocable instructions and authority to pay the
amount payable on redemption to the Holders thereof upon surrender of
their certificates. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, then on the date of such
deposit, all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such
Securities to receive the redemption price, but without interest on
such redemption price, and such Securities will cease to be
outstanding. Neither the Administrative Trustees nor the Property
Trustee shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If
any date fixed for redemption of Securities is not a Business Day, then
payment of the amount payable on such date will be made on the next
succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force
and effect as if made on such date fixed for redemption. If payment of
the redemption price in respect of any Securities is improperly
withheld or refused and not paid either by the Trust or by the Sponsor
as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue at the then
applicable rate, from the original redemption date to the date of
payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the amount
payable upon redemption (other than for purposes of calculating any
premium).
(iv) Redemption/Distribution Notices shall be sent by
the Administrative Trustees on behalf of the Trust to (A) in the case
of Preferred Securities held in book-entry form, the Depositary and, in
the case of Securities held in certificated form, the Holders of such
certificates and (B) in respect of the Common Securities, the Holder
thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws),
the Sponsor or any of its subsidiaries may at any time and from time to
time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
5. Conversion Rights.
The Holders of Securities shall have the right at any time prior to
5:00 p.m. New York City Time on the Business Day immediately preceding the
earlier of November 15, 2030 and the date fixed for redemption of the
Securities, at their option, to cause the Conversion Agent to convert
Securities, on behalf of the converting Holders, into shares of Class B Common
Stock, par value $.01 per share, of the Sponsor (including any class or classes
of shares resulting from any reclassification or reclassifications thereof, the
"Class B Common Stock") in the manner described herein on and subject to the
following terms and conditions:
(a) The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Class B Common Stock pursuant
to the Holder's direction to the Conversion Agent to exchange such Securities
for a portion of the Debentures theretofore held by the Trust on the basis of
one Security per $50 principal amount of Debentures, and immediately convert
such amount of Debentures into fully paid and nonassessable shares of Class B
Common Stock at an initial conversion price of $60 per share of Class B Common
Stock per $50 principal amount of Debentures (which is equivalent to an initial
conversion ratio of approximately 0.8333 shares of Class B Common Stock per $50
principal amount of Debentures), subject to certain adjustments set forth in the
Indenture.
(b) In order to convert Securities into Class B Common Stock the Holder
shall submit to the Conversion Agent at the office referred to above an
irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Class B Common Stock should be issued and (ii) direct the
Conversion Agent (a) to exchange such Securities for a portion of the Debentures
held by the Trust (at the price specified in the preceding paragraph) and (b) to
immediately convert such Debentures on behalf of such Holder, into Class B
Common Stock (at the conversion price specified in the preceding paragraph). The
Conversion Agent shall notify the Trust of the Holder's election to exchange
Securities for a portion of the Debentures held by the Trust and the Trust
shall, upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance with this
Section. The Conversion Agent shall thereupon notify the Sponsor of the Holder's
election to convert such Debentures into shares of Class B Common Stock. Holders
of Securities at the close of business on a Distribution record date will be
entitled to receive the Distribution payable on such Securities on the
corresponding Distribution payment date notwithstanding the conversion of such
Securities following such record date but prior to such distribution payment
date. Except as provided above, neither the Trust nor the Sponsor will make, or
be required to make, any payment, allowance or adjustment upon any conversion on
account of any accumulated and unpaid Distributions accrued on the Securities,
whether or not in arrears, (including any Additional Amounts accrued thereon)
surrendered for conversion, or on account of any accumulated and unpaid
dividends on the shares of Class B Common Stock issued upon such conversion,
except to the extent that such shares are held of record on the record date for
any such distributions. Securities shall be deemed to have been converted
immediately prior to the close of business on the day on which a Notice of
Conversion relating to such Securities is received by the Trust in accordance
with the foregoing provision (the "Conversion Date"). The Person or Persons
entitled to receive the Class B Common Stock issuable upon conversion of the
Debentures 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 Sponsor shall issue and deliver at the office of the
Conversion Agent a certificate or certificates for the number of full shares of
Class B Common Stock issuable upon such conversion, together with the cash
payment, if any, in lieu of any fraction of any share to the Person or Persons
entitled to receive the same, unless otherwise directed by the Holder in the
notice of conversion and the Conversion Agent shall distribute such certificate
or certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints
Wilmington Trust Company "Conversion Agent" for the purpose of effecting the
conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
Section and (ii) to convert all or a portion of the Debentures into Class B
Common Stock and thereupon to deliver such shares of Class B Common Stock in
accordance with the provisions of this Section and to deliver to the Trust a new
Debenture or Debentures for any resulting unconverted principal amount.
(d) No fractional shares of Class B Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be paid
in cash by the Sponsor to the Trust, which in turn will make such payment to the
Holder or Holders of Securities so converted.
(e) The Sponsor shall at all times reserve and keep available out of
its authorized and unissued Class B Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Class B Common Stock as shall from time to time be
issuable upon the conversion of all the Debentures then outstanding.
Notwithstanding the foregoing, the Sponsor shall be entitled to deliver upon
conversion of Debentures, shares of Class B Common Stock reacquired and held in
the treasury of the Sponsor (in lieu of the issuance of authorized and unissued
shares of Class B Common Stock), so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances. Any shares
of Class B Common Stock issued upon conversion of the Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The Trust shall
deliver the shares of Class B Common Stock received upon conversion of the
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding taxes.
Each of the Sponsor and the Trust shall prepare and shall use its best efforts
to obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the Class B Common Stock
(and all requirements to list the Class B Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the Sponsor
to lawfully issue Class B Common Stock upon conversion of the Debentures and to
lawfully deliver the Class B Common Stock to each Holder upon conversion of the
Securities.
(f) The Sponsor will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Class B Common Stock on conversion
of Debentures and the delivery of the shares of Class B Common Stock upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax 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 in
which the Securities so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Sponsor the amount of any such tax, or has established to the satisfaction of
the Sponsor that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities set forth
in this Annex I to the Declaration or in the Declaration itself or otherwise
require the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
6. Voting Rights--Preferred Securities.
(a) Except as provided under paragraphs 6(b) and 8, in the Business
Trust Act and as otherwise required by law, the Declaration and the Indenture,
the Holders of the Preferred Securities will have no voting rights.
(b) In addition to the rights of the Holders of the Preferred
Securities with respect to the enforcement of payment of principal and interest
on the Debentures set forth herein, in the Declaration or in the Indenture, if
(i) a Debenture Event of Default occurs and is continuing or (ii) the Company
defaults under the Guarantee (each of (i) and (ii) being an "Appointment
Event"), then the Holders of the Preferred Securities, acting as a single class,
will be entitled by the vote of a Majority in liquidation amount of the
Preferred Securities to appoint a Special Trustee in accordance with Section
5.06(a)(ii)(B) of the Declaration. Any Holder of Preferred Securities (other
than the Sponsor, or any entity directly or indirectly controlling or controlled
by or under direct or indirect common control with the Sponsor) will be entitled
to nominate any Person to be appointed as Special Trustee. Not later than 30
days after such right to appoint a Special Trustee arises, the Trustees will
convene a meeting for the purpose of appointing a Special Trustee. If the
Trustees fail to convene such meeting within such 30-day period, the Holders of
not less than 10% in aggregate liquidation amount of the Preferred Securities
will be entitled to convene such meeting in accordance with Section 12.02 of the
Declaration. The record date for such meeting will be the close of business on
the Business Day that is one Business Day before the day on which notice of the
meeting is sent to the Holders. The provisions of the Declaration relating to
the convening and conduct of the meetings of the Holders will apply with respect
to any such meeting.
Any Special Trustee so appointed shall cease to be a Special Trustee if
the Appointment Event pursuant to which the Special Trustee was appointed and
all other Appointment Events cease to be continuing. A Special Trustee may be
removed without cause at any time by vote of the Holders of a Majority in
liquidation amount of the Preferred Securities at a meeting of the Holders of
the Preferred Securities or by written consent in accordance with Section
5.06(a)(ii)(B) of the Declaration. The Holders of 10% in liquidation amount of
the Preferred Securities will be entitled to convene such a meeting in
accordance with Section 12.02 of the Declaration. The record date for such
meeting will be the close of business on the Business Day which is one Business
Day before the day on which the notice of meeting is sent to Holders.
Notwithstanding the appointment of a Special Trustee, the Sponsor shall retain
all rights under the Indenture, including the right to defer payments of
interest by extending the interest payment period on the Debentures.
Subject to the requirements set forth in this paragraph, the Holders of
a majority in liquidation amount of the Preferred Securities, voting separately
as a class may, and the Trustees shall not, without obtaining the prior approval
of the Holders of a Majority in aggregate liquidation amount of all outstanding
Preferred Securities (i) direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee under the Indenture, or
executing any trust or power conferred upon the Property Trustee with respect to
the Debentures, (ii) waive any past default and its consequences that is
waivable under Section 5.13 of the Indenture or otherwise, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent shall be
required, provided, however, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a majority of the
Holders in principal amount of Debentures affected thereby (a "Super Majority"),
the Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation preference of
the Preferred Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The Property Trustee
shall not, and none of the other Trustees shall in any event, revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities, except by a subsequent vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or the Debenture Trustee
as set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Preferred Securities under this
paragraph unless the Property Trustee has obtained an opinion of tax counsel to
the effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes.
If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption on the redemption date), then
a Holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such Holder (a "Direct Action") of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder on or after the
respective due date specified in the Debentures. Except as provided in the
preceding sentence, the Holders of Preferred Securities will not be able to
exercise directly any other remedy available to the Holders of the Debentures.
In connection with any Direct Action, the Debenture Issuer will be subrogated to
the rights of such Holder of Preferred Securities under the Declaration to the
extent of any payment made by the Debenture Issuer to such Holder of Preferred
Securities in such Direct Action.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
without notice pursuant to written consent. The Administrative Trustees will
cause a notice of any meeting at which Holders of Preferred Securities are
entitled to vote, to be mailed to each Holder of record of Preferred Securities.
Each such notice will include a statement setting forth the following
information (i) the date of such meeting, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
7. Voting Rights--Common Securities.
(a) Except as provided under paragraphs 7(b), (c) and 8, in the
Business Trust Act and as otherwise required by law and the Declaration, the
Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee, subject to the exclusive right of the Holders of the Preferred
Securities to appoint, remove or replace a Special Trustee.
(c) Subject to Section 2.06 of the Declaration and only after the Event
of Default with respect to the Preferred Securities has been cured, waived, or
otherwise eliminated and subject to the requirements of the second to last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the Property
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with respect
to the Debentures, (ii) waive any past default and its consequences that is
waivable under Section 5.13 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable, provided that, where a consent or action under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the direction
of the Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. Pursuant to this paragraph 7(c),
the Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities, except by a
subsequent vote of the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee as set forth above,
the Property Trustee shall not take any action in accordance with the directions
of the Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action the Trust will not fail to be classified as a grantor trust for
United States federal income tax purposes. If the Property Trustee fails to
enforce its rights, as holder of the Debentures, under the Indenture, any Holder
of Common Securities may, to the fullest extent permitted by law and after a
period of 30 days has elapsed from such Holder's written request to the Property
Trustee to enforce such rights, institute a legal proceeding directly against
the Sponsor, to enforce the Property Trustee's rights, as holder of the
Debentures, under the Indenture, without first instituting any legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or without notice
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.01 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Administrative Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or rights of the Securities, whether by
way of amendment to the Declaration or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than as described in Section 8.01
of the Declaration, then the Holders of outstanding Securities will be entitled
to vote on such amendment or proposal (but not on any other amendment or
proposal) and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities, voting together as a single class, provided, however, that, the
rights of Holders of Preferred Securities under Article V of the Declaration to
appoint, remove or replace a Special Trustee shall not be amended without the
consent of each Holder of Preferred Securities; and provided further that if any
amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or only the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by at least
the same proportion in aggregate stated liquidation preference of the
Securities; provided, however, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this paragraph 8(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
Distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, on any Distribution Date or redemption date
an Event of Default under the Declaration has occurred and is continuing, in
which case no payment of any Distribution on, or amount payable upon redemption
of, any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all
outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the amount payable upon redemption
of the Preferred Securities, the full amount of such amount in respect of all
outstanding Preferred Securities shall have been made or provided for, and all
funds available to the Property Trustee shall first be applied to the payment in
full in cash of all Distributions on, or the amount payable upon redemption of
Preferred Securities then due and payable.
10. Ranking.
The Preferred Securities rank pari passu and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.
11. Acceptance of Securities Guarantees and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture which
are incorporated by reference herein and which include, among other things,
provisions relating to certain rights of the Holders of the Preferred Securities
all as set forth therein.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or similar
rights to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
[Include the following Restricted Securities Legend on all Restricted Preferred
Securities, including Rule 144A Global Preferred Securities, unless otherwise
determined by the Sponsor in accordance with applicable law--
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND ANY
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES (THE
"DEBENTURES") ISSUED UPON EXCHANGE FOR THIS SECURITY
AND ANY CLASS B COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF MAY NOT BE OFFERED, SOLD,
PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED OR
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. 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 BY ITS ACCEPTANCE HEREOF
AGREES FOR THE BENEFIT OF CONTINENTAL AIRLINES, INC.
(THE "COMPANY") AND THE TRUST THAT (A) THIS SECURITY
AND ANY DEBENTURES ISSUABLE UPON EXCHANGE THEREOF
AND ANY CLASS B COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (i) TO THE COMPANY,
(ii) INSIDE THE UNITED STATES TO A PERSON WHOM 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, (iii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv)
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(v) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (i)
THROUGH (v) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER REPRESENTS THAT IT (1)
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT, IS
AWARE THAT THE SALE TO IT IS BEING MADE IN RELIANCE
ON RULE 144A AND IS ACQUIRING THE SECURITIES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE
QUALIFIED INSTITUTIONAL BUYERS AND THAT IT EXERCISES
SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT OR (2) ACQUIRED SUCH SECURITY IN A
TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER
THE SECURITIES ACT]
[Include on Preferred Security, unless otherwise
determined by the Sponsor in accordance with
applicable law--
BY ITS PURCHASE HEREOF OR ANY INTEREST THEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED
EITHER THAT (A) IT IS NOT A PLAN OR OTHER ENTITY
WHOSE UNDERLYING ASSETS ARE SUBJECT TO ERISA AND/OR
SECTION 4975 OF THE CODE, OR A GOVERNMENTAL OR
CHURCH PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE OR (B) ITS PURCHASE AND HOLDING OF A
TIDES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL
OR CHURCH PLAN, A VIOLATION OF ANY SUBSTANTIALLY
SIMILAR FEDERAL, STATE OR LOCAL LAW). FURTHER, THE
FIDUCIARIES OF ANY PLAN OR PLAN ASSETS ENTITY WHICH
MAY PURCHASE OR HOLD THESE SECURITIES WILL BE DEEMED
AS A RESULT OF SUCH ACQUISITION OR HOLDING TO HAVE
(A) DIRECTED THE TRUST TO INVEST IN THE DEBENTURES,
(B) AUTHORIZED AND DIRECTED ANY OF THE ACTIONS TAKEN
OR WHICH MAY BE TAKEN WITH RESPECT TO THE TRUST, THE
DEBENTURES AND THESE SECURITIES BY ANY OF THE
TRUSTEES, THE DEBENTURE TRUSTEE, THE GUARANTEE
TRUSTEE OR US AS CONTEMPLATED BY THE INDENTURE, THE
DEBENTURES OR THE GUARANTEE AND (C) TO HAVE
APPOINTED THE TRUSTEES.]
[Include if Preferred Security is in global form and
The Depository Trust Company is the Depositary--
THIS SECURITY IS A PREFERRED GLOBAL SECURITY WITHIN
THE MEANING OF THE DECLARATION HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY" OR "DTC") OR A
NOMINEE OF THE DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION AND NO TRANSFER OF THIS SECURITY (OTHER
THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (55 WATER STREET,
NEW YORK, NEW YORK), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR 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.]
[Include if Preferred Security is in global form--
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.]
Certificate Number P-1
Number of Preferred Securities _____________
CUSIP NO. 270-796-207
Preferred Securities of
Continental Airlines Finance Trust II
6% Convertible Preferred Securities
Term Income Deferrable Equity Securities (TIDES)SM*
(liquidation amount $50 per Convertible Preferred Security)
Continental Airlines Finance Trust II, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
- ------------------------------------
(the "Holder")
is the registered owner of preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDESSM)* (liquidation amount $50 per Convertible Preferred Security) (the
"Preferred Securities"). Subject to the terms of the Declaration (as defined
below), the Preferred Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of November 10, 2000, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Reference is hereby made to select provisions of the Preferred
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
- ------------
* The terms Term Income Deferrable Equity Securities (TIDES)" and TIDES" are
registered servicemarks of Credit Suisse First Boston Corporation.
Unless the Property Trustee's Certificate of Authentication hereon has
been properly executed, these Preferred Securities shall not be entitled to any
benefit under the Declaration or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_____________day of _________________.
Continental Airlines Finance Trust II
By:
------------------------------------
Name:
Title:
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated:
Wilmington Trust Company,
as Property Trustee
By:
-----------------------------------
Authorized Signature
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of 6% (the "Coupon Rate") of the stated liquidation amount of $50
per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such quarterly distributions, additional distributions on
quarterly distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Preferred
Securities will be cumulative, will accrue from the date of their original
issuance and will be payable quarterly in arrears, on February 15, May 15,
August 15 and November 15 of each year, commencing on February 15, 2001, to
Holders of record at the close of business on the 1st day of the month of the
applicable payment date, which payment dates shall correspond to the interest
payment dates (each an "Interest Payment Date") on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Deferral Period. Prior to the termination
of any such Deferral Period, the Debenture Issuer may further extend such
Deferral Period; provided that such Deferral Period together with all such
previous and further deferrals thereof may not exceed 20 consecutive quarters or
extend beyond the maturity (whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise) of the Debentures under the
Indenture. Payments of accrued Distributions will be payable on an Interest
Payment Date elected by the Company to Holders as they appear on the books and
records of the Trust on the record date fixed for such Interest Payment Date.
Upon the termination of any Deferral Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Deferral Period, subject to the
above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Class B Common
Stock, through (i) the exchange of Preferred Securities for a portion of the
Debentures and (ii) the immediate conversion of such Debentures into Class B
Common Stock, in the manner and according to the terms set forth in the
Declaration.
CONVERSION REQUEST
To: Wilmington Trust Company
as Property Trustee of
Continental Airlines Finance Trust II
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Class B Common Stock of Continental Airlines, Inc. (including
any class or classes of shares resulting from any reclassification or
reclassifications thereof, the "Class B Common Stock") in accordance with the
terms of the Amended and Restated Declaration of Trust (the "Declaration"),
dated as of November 10, 2000, by Lawrence W. Kellner and Gerald Laderman, as
Administrative Trustees, Wilmington Trust Company, as Delaware Trustee,
Wilmington Trust Company, as Property Trustee, Continental Airlines, Inc., as
Sponsor, and by the Holders, from time to time, of undivided beneficial
interests in the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Preferred Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Preferred Securities set
forth as Annex I to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Class B Common Stock (at the
conversion rate specified in the terms of the Preferred Securities set forth as
Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance
with the terms of the Declaration and the Preferred Securities, agrees to be
bound by the terms of the Registration Rights Agreement relating to the Class B
Common Stock issuable upon conversion of the Preferred Securities.
Date:
in whole __________ in part __________
Number of Preferred Securities to be converted: ___________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Class B Common Stock are to be
issued, along with the address or addresses of such person or persons:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-----------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-----------------------------------------
Signature Guarantee:*
- ------------
* (Signature must be guaranteed by an "eligible guarantor institution" that is,
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security on the books of the Trust. The agent
may substitute another to act for him or her.
Date:
Signature:
---------------------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate) Signature Guarantee:*
- ------------
* (Signature must be guaranteed by an "eligible guarantor institution" that is,
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.) *(Signature must be guaranteed by
an "eligible guarantor institution" that is, a bank, stockbroker, savings and
loan association or credit union meeting the requirements of the Registrar,
which requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.)
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF RESTRICTED
PREFERRED SECURITIES
This certificate relates to _____________ Preferred Securities held in (check
applicable space) ____ book-entry or ____ definitive form by the undersigned.
(A) The undersigned (check one box below):
[ ] has requested the Property Trustee by written order to deliver in
exchange for its beneficial interest in the Rule 144A Global Preferred
Security held by the Depositary a Preferred Security or Preferred
Securities in definitive, registered form in such number equal to its
beneficial interest in such Rule 144A Global Preferred Security (or the
number thereof indicated above); or
[ ] has requested the Property Trustee by written order to exchange its
Preferred Security in definitive registered form for an interest in the
Rule 144A Global Preferred Security held by the Depositary in such
number equal to number of Preferred Securities in definitive registered
form so held; or
[ ] has requested the Property Trustee by written order to exchange or
register the transfer of a Preferred Security or Preferred Securities.
(B) The undersigned confirms that such Securities are being (check one box
below):
(1) [ ] acquired for the undersigned's own account, without transfer (in
satisfaction of Section 9.02(d)(ii)(A) of the Declaration); or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) [ ] transferred pursuant to Rule 144 of the Securities Act of 1933; or
(4) [ ] transferred pursuant to an effective registration statement under the
Securities Act.
Unless one of the boxes in (B) above is checked, the Property Trustee will
refuse to register any of the Preferred Securities evidenced by this certificate
in the name of any person other than the registered Holder thereof; provided,
however, that if box (3) or (4) is checked, the Property Trustee may require,
prior to registering any such transfer of the Preferred Securities such legal
opinions, certifications and other information as the Trust has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144 under such
Act.
-------------------------------
Signature
Signature Guarantee:*
-----------------------------------------
Signature must be guaranteed Signature
-----------------------------------------
Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing these Preferred
Securities for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Trust as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
------------------
NOTICE: To be executed by an executive officer
- ------------
* (Signature must be guaranteed by an "eligible guarantor institution" that is,
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
EXHIBIT A-2
FORM OF COMMON SECURITY
[FORM OF FACE OF SECURITY]
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.]
[OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A
RELATED PARTY (AS DEFINED IN THE DECLARATION) OF CONTINENTAL AIRLINES FINANCE
TRUST II.]
Certificate Number C-1
Number of Common Securities ______________
Common Securities
of
Continental Airlines Finance Trust II
6% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
Continental Airlines Finance Trust II, a statutory business trust
created under the laws of the State of Delaware (the "Trust"), hereby certifies
that
- --------------------------------------------------------------------------------
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 6% Convertible Common Securities (liquidation amount $50 per
Convertible Common Security) (the "Common Securities"). Subject to the terms of
the Declaration (as defined below), the Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of November 10, 2000, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Common Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Reference is hereby made to select provisions of the Common Securities
set forth on the reverse hereof, which select provisions shall for all purposes
have the same effect as if set forth at this place.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States federal
income tax purposes the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_______ day of ______________.
-----------------------------------------
Continental Airlines Finance Trust II
By:
-------------------------------------
solely in his capacity as trustee and
not in his individual capacity
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 6% (the "Coupon Rate") of the stated liquidation amount of $50 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used herein
includes quarterly distributions, additional distributions on quarterly
distributions not paid on the applicable Distribution Date, Special
Distributions and Additional Sums, as applicable. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of their original
issuance and will be payable quarterly in arrears, on February 15, May 15,
August 15 and November 15 of each year, commencing on February 15, 2001, to
Holders of record one (1) day prior to such payment dates, which payment dates
shall correspond to the interest payment dates (each, an "Interest Payment
Date") on the Debentures. The Debenture Issuer has the right under the Indenture
to defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding 20 consecutive quarters
(each a "Deferral Period") and, as a consequence of such deferral, Distributions
will also be deferred. Despite such deferral, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded quarterly during any such Deferral Period.
Prior to the termination of any such Deferral Period, the Debenture Issuer may
further extend such Deferral Period; provided that such Deferral Period together
with all such previous and further deferrals thereof may not exceed 20
consecutive quarters or extend beyond the maturity (whether at the stated
maturity or by declaration of acceleration, call for redemption or otherwise) of
the Debentures under the Indenture. Payments of accrued Distributions will be
payable on an Interest Payment Date elected by the Company to Holders as they
appear on the books and records of the Trust on the record date fixed for such
Interest Payment Date. Upon the termination of any Deferral Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Deferral Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of Class B
Common Stock, through (i) the exchange of Common Securities for a portion of the
Debentures and (ii) the immediate conversion of such Debentures into Class B
Common Stock, in the manner and according to the terms set forth in the
Declaration.
CONVERSION REQUEST
To: Wilmington Trust Company,
as Property Trustee of
Continental Airlines Finance Trust II
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Class B Common Stock of CONTINENTAL AIRLINES, INC. (the "Class
B Common Stock") in accordance with the terms of the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of November 10, 2000, by
Lawrence W. Kellner and Gerald Laderman, as Administrative Trustees, Wilmington
Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property
Trustee, Continental Airlines, Inc., as Sponsor, and by the Holders, from time
to time, of undivided beneficial interests in the Trust to be issued pursuant to
the Declaration. Pursuant to the aforementioned exercise of the option to
convert these Common Securities, the undersigned hereby directs the Conversion
Agent (as that term is defined in the Declaration) to (i) exchange such Common
Securities for a portion of the Debentures (as that term is defined in the
Declaration) held by the Trust (at the rate of exchange specified in the terms
of the Common Securities set forth as Annex I to the Declaration) and (ii)
immediately convert such Debentures on behalf of the undersigned, into Class B
Common Stock (at the conversion rate specified in the terms of the Common
Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance
with the terms of the Declaration and the Common Securities, agrees to be bound
by the terms of the Registration Rights Agreement relating to the Class B Common
Stock issuable upon conversion of the Common Securities.
Date:
in whole _________ in part _________
Number of Common Securities to be converted: _____________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Class B Common Stock are to be
issued, along with the address or addresses of such person or persons
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature Guarantee:*
--------------------------------
- ------------
*(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
Signature:
-----------------------------
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature Guarantee:*
--------------------------------
- ------------
* (Signature must be guaranteed by an "eligible guarantor institution" that is,
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
EXECUTION COPY
================================================================================
CONTINENTAL AIRLINES, INC.
TO
WILMINGTON TRUST COMPANY
Trustee
INDENTURE
Dated as of November 10, 2000
$296,392,000
6% Convertible Junior Subordinated
Debentures Due 2030
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........2
SECTION 1.01 Definitions............................................2
SECTION 1.02 Compliance Certificates and Opinions..................11
SECTION 1.03 Form of Documents Delivered to Trustee................11
SECTION 1.04 Acts of Holders; Record Dates.........................12
SECTION 1.05 Notices, Etc., to Trustee and the Company.............14
SECTION 1.06 Notice to Holders; Waiver.............................14
SECTION 1.07 Conflict with Trust Indenture Act.....................15
SECTION 1.08 Effect of Headings and Table of Contents..............15
SECTION 1.09 Successors and Assigns................................15
SECTION 1.10 Separability Clause...................................15
SECTION 1.11 Benefits of Indenture.................................15
SECTION 1.12 Governing Law.........................................15
SECTION 1.13 Legal Holidays........................................15
ARTICLE II SECURITY FORMS................................................16
SECTION 2.01 Forms Generally.......................................16
SECTION 2.02 Initial Issuance to Property Trustee..................16
SECTION 2.03 Additional Provisions Required in
Global Security.......................................18
SECTION 2.04 Issuance of Global Securities to Holders..............19
ARTICLE III THE SECURITIES...............................................20
SECTION 3.01 Title and Terms.......................................20
SECTION 3.02 Denominations.........................................21
SECTION 3.03 Execution, Authentication, Delivery
and Dating............................................21
SECTION 3.04 Temporary Securities..................................22
SECTION 3.05 Global Securities.....................................22
SECTION 3.06 Registration, Transfer and Exchange
Generally; Certain Transfers
and Exchanges.........................................23
SECTION 3.07 Mutilated, Destroyed, Lost and
Stolen Securities.....................................26
SECTION 3.08 Payment of Interest; Interest
Rights Preserved......................................27
SECTION 3.09 Persons Deemed Owners.................................28
SECTION 3.10 Cancellation..........................................29
SECTION 3.11 Right of Set Off......................................29
SECTION 3.12 CUSIP Numbers.........................................29
SECTION 3.13 Extension of Interest Payment Period;
Notice of Extension...................................29
SECTION 3.14 Paying Agent, Security Registrar and
Conversion Agent......................................30
ARTICLE IV SATISFACTION AND DISCHARGE....................................31
SECTION 4.01 Satisfaction and Discharge of Indenture...............31
SECTION 4.02 Application of Trust Money............................32
ARTICLE V REMEDIES.......................................................32
SECTION 5.01 Events of Default.....................................32
SECTION 5.02 Acceleration of Maturity;
Rescission and Annulment..............................33
SECTION 5.03 Collection of Indebtedness and Suits for
Enforcement by Trustee................................34
SECTION 5.04 Trustee May File Proofs of Claim......................35
SECTION 5.05 Trustee May Enforce Claims Without
Possession of Securities..............................36
SECTION 5.06 Application of Money Collected........................36
SECTION 5.07 Limitation on Suits...................................36
SECTION 5.08 Unconditional Right of Holders to Receive
Principal and Interest and to Convert.................37
SECTION 5.09 Restoration of Rights and Remedies....................37
SECTION 5.10 Rights and Remedies Cumulative........................37
SECTION 5.11 Delay or Omission Not Waiver..........................38
SECTION 5.12 Control by Holders....................................38
SECTION 5.13 Waiver of Past Defaults...............................38
SECTION 5.14 Undertaking for Costs................................39
SECTION 5.15 Waiver of Stay or Extension Laws......................39
SECTION 5.16 Enforcement by Holders of Preferred Securities........39
ARTICLE VI THE TRUSTEE...................................................40
SECTION 6.01 Certain Duties and Responsibilities..................40
SECTION 6.02 Notice of Defaults...................................40
SECTION 6.03 Certain Rights of Trustee............................41
SECTION 6.04 Not Responsible for Recitals or
Issuance of Securities................................42
SECTION 6.05 May Hold Securities...................................42
SECTION 6.06 Money Held in Trust..................................42
SECTION 6.07 Compensation and Reimbursement.......................42
SECTION 6.08 Disqualification; Conflicting Interests..............43
SECTION 6.09 Corporate Trustee Required; Eligibility..............43
SECTION 6.10 Resignation and Removal; Appointment of Successor....44
SECTION 6.11 Acceptance of Appointment by Successor...............45
SECTION 6.12 Merger, Conversion, Consolidation
or Succession to Business............................45
SECTION 6.13 Preferential Collection of Claims Against Company.....45
SECTION 6.14 Co-trustees and Separate Trustees.....................46
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............47
SECTION 7.01 Company to Furnish Trustee
Names and Addresses of Holders........................47
SECTION 7.02 Preservation of Information;
Communications to Holders.............................47
SECTION 7.03 Reports by Trustee....................................48
SECTION 7.04 Reports by Company....................................48
SECTION 7.05 Tax Reporting.........................................48
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........48
SECTION 8.01 Company May Consolidate, Etc. Only on Certain Terms...48
SECTION 8.02 Successor Substituted.................................49
ARTICLE IX SUPPLEMENTAL INDENTURES.......................................50
SECTION 9.01 Supplemental Indentures Without Consent of Holders....50
SECTION 9.02 Supplemental Indentures with Consent of Holders.......51
SECTION 9.03 Execution of Supplemental Indentures..................52
SECTION 9.04 Effect of Supplemental Indentures.....................52
SECTION 9.05 Conformity with Trust Indenture Act...................52
SECTION 9.06 Reference in Securities to Supplemental Indentures....52
ARTICLE X COVENANTS; REPRESENTATIONS AND WARRANTIES......................53
SECTION 10.01 Payment of Principal and Interest....................53
SECTION 10.02 Maintenance of Office or Agency......................53
SECTION 10.03 Money for Security Payments to Be Held in Trust......53
SECTION 10.04 Statement by Officers as to Default..................54
SECTION 10.05 Limitation on Dividends;
Transactions with Affiliates;
Covenants as to the Trust............................54
SECTION 10.06 Payment of Expenses of the Trust.....................55
SECTION 10.07 Registration Rights..................................56
ARTICLE XI REDEMPTION OF SECURITIES......................................57
SECTION 11.01 Optional Redemption..................................57
SECTION 11.02 Tax Event Redemption.................................57
SECTION 11.03 Selection by Trustee of Securities
to Be Redeemed.......................................58
SECTION 11.04 Notice of Redemption.................................58
SECTION 11.05 Deposit of Redemption Price..........................59
SECTION 11.06 Securities Payable on Redemption Date................59
SECTION 11.07 Securities Redeemed in Part..........................60
ARTICLE XII SUBORDINATION OF SECURITIES..................................61
SECTION 12.01 Agreement to Subordinate.............................61
SECTION 12.02 Default on Senior Obligations........................61
SECTION 12.03 Liquidation; Dissolution; Bankruptcy.................61
SECTION 12.04 Subrogation..........................................63
SECTION 12.05 Trustee to Effectuate Subordination..................64
SECTION 12.06 Notice by the Company................................64
SECTION 12.07 Rights of the Trustee; Holders of
Senior Obligations...................................65
SECTION 12.08 Subordination May Not Be Impaired....................65
ARTICLE XIII CONVERSION OF SECURITIES....................................66
SECTION 13.01 Conversion Rights....................................66
SECTION 13.02 Conversion Procedures................................66
SECTION 13.03 Conversion Price Adjustments.........................68
SECTION 13.04 Reclassification, Consolidation,
Merger or Sale of Assets.............................73
SECTION 13.05 Notice of Adjustments of Conversion Price............74
SECTION 13.06 Prior Notice of Certain Events.......................74
SECTION 13.07 Adjustments in Case of Fundamental Changes...........75
SECTION 13.08 Dividend or Interest Reinvestment Plans..............78
SECTION 13.09 Certain Additional Rights............................78
SECTION 13.10 Restrictions on Common Stock
Issuable Upon Conversion.............................79
SECTION 13.11 Trustee Not Responsible for Determining
Conversion Price or Adjustments......................79
ARTICLE XIV IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS........................80
SECTION 14.01 No Recourse..........................................80
EXHIBIT A Form of Security
Certain Sections of this Indenture relating to Sections 310
through 318 of the Trust Indenture Act of 1939:
Trust Indenture Act Indenture
Section Section
------- -------
Section 310 (a) (1).................................... 6.09
(a) (2).................................... 6.09
(a) (3).................................... Not Applicable
(a) (4).................................... Not Applicable
(b)........................................ 6.08, 6.10
Section 311 (a)........................................ 6.13
(b)........................................ 6.13
Section 312 (a)........................................ 7.01
7.02(a)
(b)........................................ 7.02(b)
(c)........................................ 7.02(c)
Section 313 (a)........................................ 7.03(a)
(a) (4).................................... 7.03(a)
(b)........................................ 7.03(a)
(c)........................................ 7.03(a)
(d)........................................ 7.03(b)
Section 314 (a)........................................ 7.04
(b)........................................ Not Applicable
(c) (1).................................... 1.02
(c) (2).................................... 1.02
(c) (3).................................... Not Applicable
(d)........................................ Not Applicable
(e)........................................ 1.02
Section 315 (a)........................................ 6.01
6.03
(b)........................................ 6.02
(c)........................................ 6.01
(d)........................................ 6.01
(e)........................................ 5.14
Section 316 (a)(1)(A).................................. 5.02
5.12
(a)(1)(B).................................. 5.13
(a) (2).................................... Not Applicable
(b)........................................ 5.08
(c)........................................ 1.04(c)
Section 317 (a) (1).................................... 5.03
(a) (2).................................... 5.04
(b)........................................ 1.03
Section 318 (a)........................................ 1.07
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
This INDENTURE, dated as of November 10, 2000, between Continental
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), and Wilmington Trust Company, a
Delaware banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS Continental Airlines Finance Trust II, a Delaware business
trust (the "Trust"), formed under the Amended and Restated Declaration of Trust
among the Company, as Sponsor, Wilmington Trust Company, as property trustee
(the "Property Trustee"), and Wilmington Trust Company, as Delaware trustee (the
"Delaware Trustee"), and Lawrence W. Kellner and Gerald Laderman, as trustees
(together with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees"), dated as of November 10, 2000, (the "Declaration"), pursuant to the
Purchase Agreement (the "Purchase Agreement") dated November 6, 2000, among the
Company, the Trust and the Initial Purchasers named therein, will issue and sell
up to 5,000,000 of its 6% Convertible Preferred Securities, Term Income
Deferrable Equity Securities (TIDES) ("Preferred Securities") (or up to
5,750,000 of its Preferred Securities to the extent the over-allotment option is
exercised in full) with a liquidation amount of $50 per Preferred Security,
having an aggregate liquidation amount with respect to the assets of the Trust
of up to $250,000,000 (or up to $287,500,000 to the extent the over-allotment
option is exercised in full);
WHEREAS the trustees of the Trust, on behalf of the Trust, will execute
and deliver to the Company Common Securities evidencing an ownership interest in
the Trust, registered in the name of the Company, in an aggregate amount equal
to three percent of the capitalization of the Trust, equivalent to up to 154,640
of its 6% Common Securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") (or up to 177,840 Common
Securities to the extent the over-allotment option is exercised in full), with a
liquidation amount of $50 per Common Security, having an aggregate liquidation
amount with respect to the assets of the Trust of up to $7,732,000 (or up to
$8,892,000 to the extent the over-allotment option is exercised in full);
WHEREAS the Trust will use the proceeds from the sale of the Preferred
Securities and the Common Securities to purchase from the Company the 6%
Convertible Junior Subordinated Debentures Due 2030 (the "Securities") in an
aggregate principal amount of up to $257,732,000 (or up to $296,392,000 to the
extent the over-allotment option is exercised in full);
WHEREAS the Company is guaranteeing the payment of distributions on the
Trust Securities and payment of the Redemption Price (as defined herein) and
payments on liquidation with respect to the Trust Securities, to the extent
provided in the Common Securities Guarantee Agreement, dated as of November 10,
2000, between the Company and the Trust, and the Preferred Securities Guarantee
Agreement, dated as of November 10, 2000, between the Company and Wilmington
Trust Company, as Guarantee Trustee, for the benefit of the holders of the Trust
Securities from time to time;
WHEREAS the Company has duly authorized the creation of an issue of the
Securities 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;
WHEREAS, so long as the Trust is a Holder of Securities and any
Preferred Securities are outstanding, the Declaration provides that the holders
of Preferred Securities may cause the Conversion Agent (as defined herein) to
(i) exchange such Preferred Securities for Securities held by the Trust and (ii)
immediately convert such Securities into Class B Common Stock (as defined
herein); and
WHEREAS all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as defined herein) thereof, it is mutually agreed,
for the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
SECTION 1.01 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; and
(4) 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, has the meaning specified
in Section 1.04.
"Additional Payments" means Compounded Interest and Additional Sums, if
any.
"Additional Sums" has the meaning specified in Section 3.01.
"Adjusted Reference Market Price" has the meaning specified in Section
13.07(a)(i).
"Adjusted Relevant Price" has the meaning specified in Section
13.07(a)(i).
"Administrative Action" has the meaning specified in the definition of
Tax Event in this Section 1.01.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Conversion Price" has the meaning specified in Section
13.01.
"Applicable Rate" means the rate at which the Securities accrue
interest and the corresponding Trust Securities accrue distributions, which in
the absence of a Registration Default shall mean 6%. In the event of a
Registration Default, the Applicable Rate shall be increased in accordance with
the provisions of Section 10.07 hereof.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution 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, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in New York, New York or Wilmington, Delaware
are authorized or required by law or executive order to remain closed, or a day
on which the corporate trust office of the Property Trustee or the Trustee is
closed for business.
"Class B Common Stock" means Class B common stock, par value $.01 per
share, of the Company (or shares of any class or classes resulting from any
reclassification or reclassifications thereof).
"Closing Price" has the meaning specified in Section 13.07(b).
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Securities" has the meaning specified in the Second Recital to
this instrument.
"Common Stock Fundamental Change" has the meaning specified in Section
13.07(b).
"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 President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Company Transaction" has the meaning specified in Section 13.04.
"Compounded Interest" has the meaning specified in Section 3.13.
"Conversion Agent" means the Person appointed to act on behalf of the
holders of Preferred Securities in effecting the conversion of Preferred
Securities as and in the manner set forth in the Declaration and Section 13.02
hereof.
"Conversion Date" has the meaning specified in Section 13.02.
"Corporate Trust Office" means the principal office of the Trustee in
Wilmington, Delaware, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is Rodney
Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001.
"Declaration" means the Amended and Restated Declaration of Trust among
the Company, as Sponsor, Wilmington Trust Company, as Property Trustee and as
Delaware Trustee, and Lawrence W. Kellner and Gerald Laderman, as Administrative
Trustees, dated as of November 10, 2000, as amended from time to time.
"Debt" means (i) the principal of and premium and interest, if any, on
indebtedness for money borrowed, together with all fees, indemnities and
expenses payable under such obligations, (ii) purchase money and similar
obligations, (iii) obligations under capital leases, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Company is responsible for the payment of, such indebtedness
of others, (v) renewals, extensions and refunding of any such indebtedness, (vi)
interest or obligations in respect of any such indebtedness accruing after the
commencement of any insolvency or bankruptcy proceedings and (vii) obligations
associated with derivative products such as (a) securities contracts and foreign
currency exchange contracts, (b) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts, and (c) similar financial instruments.
"Defaulted Interest" has the meaning specified in Section 3.08.
"Deferral Period" has the meaning specified in Section 3.13.
"Deferral Notice" has the meaning specified in Section 3.13.
"Delaware Trustee" has the meaning given it in the First Recital of
this instrument.
"Depositary" means The Depository Trust Company, or any successor
thereto.
"Dissolution Tax Opinion" has the meaning specified in the definition
of Tax Event in this Section 1.01.
"Entitlement Date" has the meaning specified in Section 13.07(b).
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Expiration Date" has the meaning specified in Section 1.04(d).
"Expiration Time" has the meaning specified in Section 13.03(vi).
"Fundamental Change" has the meaning specified in Section 13.07(b).
"Global Security" means a Security issued in the form prescribed in
Section 2.03, issued to the Depositary or its nominee, and registered in the
name of the Depositary or its nominee.
"Guarantee" means, collectively, the Common Securities Guarantee
Agreement, dated as of November 10, 2000, between the Company and the Trust, as
amended from time to time, and the Preferred Securities Guarantee Agreement,
dated as of November 10, 2000, between the Company and Wilmington Trust Company,
as Guarantee Trustee, as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"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.
"Initial Conversion Price" has the meaning specified in Section 13.01.
"Initial Purchasers", with respect to the Preferred Securities, means
Credit Suisse First Boston Corporation and UBS Warburg LLC.
"Interest Payment Date" has the meaning specified in Section 3.01.
"Issuer Trustees" has the meaning specified in the First Recital of
this Indenture.
"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 or otherwise.
"90 Day Period" has the meaning specified in Section 11.02.
"NNM" means the National Market System of the National Association of
Securities Dealers, Inc., or any successor national automated interdealer
quotation system.
"Non-Stock Fundamental Change" has the meaning specified in Section
13.07(b).
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Issuer Trustees)
experienced in such matters, which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any income, gain or loss for United States Federal
income tax purposes as a result of the liquidation of the Trust and the
distribution of the Securities to the holders of the Preferred Securities.
"Notice of Conversion" means the notice to be given by a Holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Securities for Securities and to convert such Securities
into Class B Common Stock on behalf of such holder.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 10.04 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the Trustee.
"Optional Redemption" has the meaning specified in Section 11.01.
"Optional Redemption Price" has the meaning specified in Section 11.01.
"Optional Redemption Ratio" has the meaning specified in Section
13.07(b).
"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 whose payment
or redemption money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust 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; 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 3.08,
converted into Class B Common Stock pursuant to Section 13.01, 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
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 fully protected in conclusively relying 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.
"Payment Resumption Date" has the meaning set forth in Section 3.13.
"Person" means a legal person, including any individual, corporation,
estate, company, partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof or any other entity of whatever
nature.
"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 3.07 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.
"Preferred Securities" has the meaning specified in the First Recital
to this instrument.
"Property Trustee" has the meaning specified in the First Recital to
this instrument.
"Purchase Agreement" has the meaning specified in the First Recital to
this instrument.
"Purchased Shares" has the meaning specified in Section 13.03(vi).
"Purchaser Stock Price" has the meaning specified in Section 13.07(b).
"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.
"Redemption Tax Opinion" means an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the Issuer Trustees)
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Securities for United States Federal income tax purposes, even
after the Trust was liquidated and the Securities were distributed to the
holders of the Preferred Securities.
"Reference Date" has the meaning specified in Section 13.03(iv).
"Reference Market Price" has the meaning specified in Section 13.07(b).
"Registration Default" has the meaning specified in Section 10.07.
"Registration Rights Agreement" has the meaning specified in Section
10.07.
"Regular Record Date" has the meaning specified in Section 3.01.
"Relevant Price" has the meaning specified in Section 13.07(b).
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer, the controller or any assistant controller or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Preferred Securities" means each Preferred Security
required to bear the restricted securities legend required by Section 9.02(j) of
the Declaration.
"Restricted Securities" means each Security required to bear a
Restricted Securities Legend pursuant to Section 2.02 hereof.
"Restricted Securities Legend" has the meaning specified in Section
2.02.
"Securities" has the meaning specified in the Third Recital to this
instrument.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.06.
"Senior Obligations" means (i) all Debt of the Company and (ii) any
amount payable in respect of a long-term operating lease of aircraft or aircraft
engines, in each case, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, except such Debt or lease
obligations that are expressly stated to rank junior in right of payment to, or
pari passu in right of payment with, the Securities; provided, however, that
Senior Obligations shall not be deemed to include (a) any Debt of the Company
which, when incurred and without respect to any election under Section 1111(b)
of the United States Bankruptcy Code of 1978, was without recourse to the
Company, (b) trade accounts payable and accrued liabilities arising in the
ordinary course of business, (c) any Debt of the Company to any of its
Subsidiaries, (d) Debt to any employee of the Company and (e) Debt which by its
terms is subordinated to trade accounts payable or accrued liabilities arising
in the ordinary course of business to the extent that payments made to the
holders of such Debt by the Holders of the Securities as a result of the
subordination provisions of the Indenture would be greater than such payments
otherwise would have been as a result of any obligation of such holders of such
Debt to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject.
"Shelf Registration Statement" has the meaning specified in Section
10.07.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.08.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal, together with any
accrued and unpaid interest (including Compounded Interest), of such Security or
such installment of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Tax Event" means the receipt by the Property Trustee of an opinion of
a nationally recognized independent tax counsel to the Company experienced in
such matters (a "Dissolution Tax Opinion") to the effect that, as a result of
(a) any amendment to or change (including any announced prospective change
(which shall not include a proposed change), provided that a Tax Event shall not
occur more than 90 days before the effective date of any such prospective
change) in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any judicial
decision or official administrative pronouncement, ruling, regulatory procedure,
notice or announcement, including any notice or announcement of intent to adopt
such procedures or regulations (an "Administrative Action") or (c) any amendment
to or change in the administrative position or interpretation of any
Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment or change is made known, which amendment or change is effective or
such Administrative Action or decision is announced, in each case, on or after
the date of original issuance of the Securities or the issue date of the
Preferred Securities issued by the Trust, there is more than an insubstantial
risk that (x) if the Securities are held by the Property Trustee, (i) the Trust
is, or will be within 90 days of the date of such opinion, subject to United
States Federal income tax with respect to interest accrued or received on the
Securities or subject to more than a de minimis amount of other taxes, duties or
other governmental charges as determined by such counsel, or (ii) any portion of
interest payable by the Company to the Trust on the Securities is not, or within
90 days of the date of such opinion will not be, deductible by the Company in
whole or in part for United States Federal income tax purposes or (y) with
respect to Securities which are no longer held by the Property Trustee, any
portion of interest payable by the Company on the Securities is not, or within
90 days of the date of such opinion will not be, deductible by the Company in
whole or in part for United States Federal income tax purposes.
"Trading Day" has the meaning specified in Section 13.07(b).
"Trust" has the meaning specified in the First Recital to this
instrument.
"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.
"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.
"Trust Securities" has the meaning specified in the Second Recital to
this instrument.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
SECTION 1.02 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act or reasonably requested by the Trustee in connection with such
application or request. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
applicable requirements of the Trust Indenture Act and any other applicable
requirement set forth in this Indenture. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Indenture 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 each such individual, he has
made or caused to be 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 1.03 Form of Documents Delivered to 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 his 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 1.04 Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(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 acknowledgments 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. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee or the Company, as the case may be, deems
sufficient.
(c) 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 of Outstanding Securities entitled to give, make 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 7.01) 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.
(d) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any notice of default, (ii) any declaration of acceleration
referred to in Section 5.02, (iii) any request to institute proceedings referred
to in Section 5.07(2) or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the date set by the Trustee by
which any such determination shall be made (the "Expiration Date") by Holders of
the requisite principal amount of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.06.
(e) The ownership of Securities shall be proved by the Security
Register.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security 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.
(g) Without limiting the foregoing, a Holder entitled hereunder to give
or take any such action with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which who may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 1.05 Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) The Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to:
Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
SECTION 1.06 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 1.07 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 such 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.
SECTION 1.08 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 1.09 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 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities 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 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Obligations, the holders of Preferred
Securities (to the extent provided herein) and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or conversion of the Securities need not be made on such date, but may
be made on the next succeeding Business Day (except that, with respect to any
Redemption Date, if such Business Day is in the next succeeding calendar year,
such Redemption Date shall be the immediately preceding Business Day) with the
same force and effect as if made on the Interest Payment Date or Redemption
Date, or at the Stated Maturity or on such last day for conversion, provided
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE II
SECURITY FORMS
SECTION 2.01 Forms Generally.
The Securities and the Trustee's certificates of authentication shall
be substantially in the form of Exhibit A which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A to the Trustee in writing.
Each Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Exhibit A are part of the terms of
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Securities shall be typewritten or 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, as evidenced by their execution of such
Securities.
SECTION 2.02 Initial Issuance to Property Trustee.
The Securities initially issued to the Property Trustee of the Trust
shall be in the form of one or more individual certificates in definitive, fully
registered form without distribution coupons and shall bear the following legend
(the "Restricted Securities Legend") unless the Company determines otherwise in
accordance with applicable law:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS
SECURITY AND ANY CLASS B COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED, ENCUMBERED OR
OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. 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 BY ITS ACCEPTANCE HEREOF AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND ANY
CLASS B COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO
THE COMPANY, (ii) INSIDE THE UNITED STATES TO A PERSON WHOM
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, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
(iv) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (v)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (i) THROUGH (v) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER REPRESENTS THAT IT (1) IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT, IS AWARE THAT THE SALE TO IT IS BEING MADE IN RELIANCE ON
RULE 144A AND IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL
BUYERS AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH
RESPECT TO EACH SUCH ACCOUNT OR (2) ACQUIRED SUCH SECURITY IN
A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE
SECURITIES ACT."
In addition, any Security issued hereunder shall, in addition to the
Restricted Securities Legend, bear a legend in substantially the following form:
"BY ITS PURCHASE OF ANY SECURITIES (OR ANY INTEREST HEREIN),
THE PURCHASER HEREOF WILL BE DEEMED TO HAVE REPRESENTED EITHER
THAT (A) IT IS NOT A PLAN OR OTHER ENTITY WHOSE UNDERLYING
ASSETS ARE SUBJECT TO ERISA AND/OR SECTION 4975 OF THE CODE,
OR A GOVERNMENTAL OR CHURCH PLAN WHICH IS SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO
THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE OR (B) ITS PURCHASE AND HOLDING OF THE SECURITIES (AND
ANY CLASS B COMMON STOCK ISSUABLE UPON CONVERSION HEREOF) WILL
NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE
CASE OF A GOVERNMENTAL OR CHURCH PLAN, A VIOLATION OF ANY
SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW)."
SECTION 2.03 Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the
provisions contained in Section 2.02, bear a legend in substantially the
following form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY" OR
"DTC") OR A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND NO TRANSFER OF
THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (55 WATER STREET, NEW YORK, NEW YORK) TO
CONTINENTAL AIRLINES, INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO
A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO BELOW."
SECTION 2.04 Issuance of Global Securities to Holders.
The Securities may be represented by one or more Global Securities
registered in the name of the Depositary or its nominee if, and only if, the
Securities are distributed to the Holders of the Trust Securities. Until such
time, the Securities shall be registered in the name of and held by the Property
Trustee. Securities distributed to Holders of book-entry Trust Securities shall
be distributed in the form of one or more Global Securities registered in the
name of the Depositary or its nominee, and deposited with the Security
Registrar, as custodian for such Depositary, or held by such Depositary for
credit by the Depositary to the respective accounts of the beneficial owners of
the Securities represented thereby (or such other accounts as they may direct).
Securities distributed to Holders of Trust Securities other than book-entry
Trust Securities shall not be issued in the form of a Global Security or any
other form intended to facilitate book-entry trading in beneficial interests in
such Securities.
ARTICLE III
THE SECURITIES
SECTION 3.01 Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is limited to the sum of $296,392,000 except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to Section 3.04, 3.05,
3.06, 3.07, 9.06, 11.07 or 13.02.
The Securities shall be known and designated as the "6% Convertible
Junior Subordinated Debentures Due 2030" of the Company. Their Stated Maturity
shall be November 15, 2030, and they shall bear interest at the Applicable Rate,
from November 10, 2000 or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, as the case may be,
payable quarterly (subject to deferral as set forth herein), in arrears, on
February 15, May 15, August 15 and November 15 (each an "Interest Payment Date")
of each year, commencing February 15, 2001, until the principal thereof is paid
or made available for payment, and they shall be paid to the Persons in whose
name the Securities are registered at the close of business on the regular
record date for such interest installment, which shall be the close of business
on the first day of the month in which the applicable Interest Payment Date (the
"Regular Record Date") falls. Interest will compound quarterly and will accrue
at the Applicable Rate on any interest installment in arrears for more than one
quarter or during an extension of an interest payment period as set forth in
Section 3.13 hereof.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full quarterly period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in such a 30-day month. In the event
that any date on which interest is payable on the Securities is not a Business
Day, then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date.
If at any time (including upon the occurrence of a Tax Event) while the
Property Trustee is the Holder of all the Securities, the Trust or the Property
Trustee is required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will pay
as additional amounts ("Additional Sums") on the Securities held by the Property
Trustee, such additional amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after paying such
taxes, duties, assessments or other governmental charges will be equal to the
amounts the Trust and the Property Trustee would have received had no such
taxes, duties, assessments or other governmental charges been imposed.
The principal of and interest on the Securities shall be payable at the
office or agency of the Company in New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at any time that the Property Trustee is not the sole holder of
the Securities, payment of interest may, at the option of the Company, be made
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or by wire transfer.
The Securities shall be redeemable as provided in Article XI hereof.
The Securities shall be subordinated in right of payment to Senior
Obligations as provided in Article XII hereof.
The Securities shall be convertible as provided in Article XIII hereof.
SECTION 3.02 Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and integral multiples thereof.
SECTION 3.03 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 President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures 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 for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall manually authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
No Security 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 by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 3.04 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
make available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 3.05 Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary advises the Trustee in writing that such
Depositary is no longer willing or able to continue as a Depositary with respect
to such Global Security, and no successor depositary shall have been appointed,
or if at any time the Depositary ceases to be a "clearing agency" registered
under the Exchange Act, at a time when the Depositary is required to be so
registered to act as such depositary, (ii) the Company in its sole discretion
determines that such Global Security shall be so exchangeable or (iii) there
shall have occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Security Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or canceled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or equal to the principal amount of such other Security
to be so exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Security
Registrar, whereupon the Trustee shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security by the Depositary, accompanied by
registration instructions and, to the extent required by Section 3.06, a
Restricted Securities Certificate, the Trustee shall, subject to Section 3.05(b)
and as otherwise provided in this Article III, authenticate and make available
for delivery any Securities issuable in exchange for such Global Security (or
any portion thereof) in accordance with the instructions of the Depositary. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interest pursuant to the rules and procedures of
the Depositary. Accordingly, any such owner's beneficial interests in a Global
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its Agent Members. Neither the Trustee nor the Security Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(e) The rights of the beneficial interests in a Global Security shall
be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.06 Registration, Transfer and Exchange Generally;
Certain Transfers and Exchanges.
(a) The Company shall cause to be kept at the corporate offices of the
Trustee in New York, New York or at the offices of any Paying Agent or transfer
agent appointed by the Company a register (the register maintained in such
office and in any other office or agency designated pursuant to Section 10.02
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 Securities and of transfers of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.02 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 Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the 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 entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) 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.
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 3.04, 3.05, 9.06, 11.09 or 13.01 not involving any
transfer.
Neither the Company nor the Trustee shall be required (i) in the case
of a partial redemption of the Securities, to issue, register the transfer of or
exchange any Security during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 11.04 and ending at the close of business
on the day of such mailing or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
(b) Transfer and Exchange Procedures and Restrictions. The Securities
may not be transferred except in compliance with the Restricted Securities
Legend unless otherwise determined by the Company in accordance with applicable
law. Upon any distribution of the Securities to the holders of the Trust
Securities in accordance with the Declaration, the Company and the Trustee shall
enter into a supplemental indenture pursuant to Section 9.01(6) to provide for
transfer procedures and restrictions with respect to the Securities
substantially similar to those contained in the Declaration to the extent
applicable in the circumstances existing at the time of such distribution.
Notwithstanding any other provision of the Indenture, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 3.06(b) shall be made only in accordance with this Section
3.06(b).
(1) Non-Global Security to Global Security. If the Holder of a
Security (other than a Global Security) wishes at any time to transfer all
or any portion of such Security to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Global Security, such
transfer may be effected only in accordance with the provisions of this
clause (b)(1) and subject to the rules and procedures of the Depositary.
Upon receipt by the Security Registrar of (A) such Security as provided in
Section 3.06(a) and instructions satisfactory to the Security Registrar
directing that a beneficial interest in the Global Security in a specified
principal amount not greater than the principal amount of such Security be
credited to a specified Agent Member's account and (B) the assignment form
attached to the Security duly executed by such Holder or such Holder's
attorney duly authorized in writing, then the Security Registrar shall
cancel such Security (and issue a new Security in respect of the
untransferred portion thereof) as provided in Section 3.06(a) and increase
the aggregate principal amount of the Global Security by the specified
principal amount as provided in Section 3.05(c).
(2) Non-Global Security to Non-Global Security. A Security that is not
a Global Security may be transferred, in whole or in part, to a Person who
takes delivery in the form of another Security that is not a Global
Security as provided in Section 3.06(a); provided, that if such Security to
be transferred in whole or in part is a Restricted Security, the Security
Registrar shall have received the assignment form attached to the Security
duly executed by the transferor Holder or such Holder's attorney duly
authorized in writing.
(3) Exchanges between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.05.
(c) Restricted Securities Legend.
(1) Except as set forth below, all Securities shall bear the
Restricted Securities Legend set forth in Section 2.02.
(2) A Security (other than a Global Security) that does not bear a
Restricted Securities Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof that bears such legend if, in
the Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the written direction of the Company in
the form of an Officers' Certificate, shall countersign and deliver such a
new Security.
(3) Notwithstanding the foregoing provisions of this Section 3.06(c),
a successor Security of a Security that does not bear a Restricted
Securities Legend shall not bear such form of legend unless the Company has
reasonable cause to believe that such successor Security is a "restricted
security" within the meaning of Rule 144 under the Securities Act, in which
case the Trustee, at the written direction of the Company in the form of an
Officers' Certificate, shall countersign and deliver a new Security bearing
a Restricted Securities Legend in exchange for such successor Security.
(4) Upon any sale or transfer of a Restricted Security (including any
Restricted Security represented by a Global Security) pursuant to an
effective registration statement under the Securities Act or pursuant to
Rule 144 under the Securities Act after such registration ceases to be
effective: (A) in the case of any Restricted Security that is a definitive
Security, the Security Registrar shall permit the Holder thereof to
exchange such Restricted Security for a definitive Security that does not
bear the Restricted Securities Legend and shall rescind any restriction on
the transfer of such Restricted Security; and (B) in the case of any
Restricted Security that is represented by a Global Security, the Security
Registrar shall permit the Holder of such Global Security to exchange such
Global Security for another Global Security that does not bear the
Restricted Securities Legend.
(5) If Restricted Securities are being presented or surrendered for
transfer or exchange then there shall be (if so required by the Trustee),
(A) if such Restricted Securities are being delivered to the Security
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect; or (B) if such
Restricted Securities are being transferred, a certification from the
transferor as to the compliance with the restrictions set forth in the
Restricted Securities Legend.
SECTION 3.07 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, 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 and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.08 Payment of Interest; Interest Rights Preserved.
Interest on any 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.
Any interest on any 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 Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date (as defined below) 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 Security and the date of the proposed payment (which notice shall
be sufficiently in advance of such date of proposed payment to permit the
Trustee to timely take the actions contemplated by this Section 3.08), 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. Thereupon the Trustee
shall fix a special record date (the "Special Record Date") for the payment
of such Defaulted Interest which 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 shall promptly notify the Company of such Special
Record Date and, 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 at his 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 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).
(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, if so
listed, upon such notice as may be required by such exchange (or by the
Trustee if the Securities are not listed), 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 provided
that any such payment will be made in coin or currency of the United States
of America which at the time of payment is a legal tender for payment of
public and private debt.
Subject to the foregoing provisions of this Section, 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 interest (including in each such case Compounded
Interest), which were carried by such other Security.
In the case of any Security which is converted on or after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any 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 that 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 that is converted prior to any Regular Record Date, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
(including Additional Payments) on the Securities being converted, which shall
be deemed to be paid in full.
SECTION 3.09 Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 3.08) 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. No holder of any beneficial interest in any Global
Security held on its behalf by a Depositary shall have any rights under this
Indenture with respect to such Global Security, and such Depositary may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company or the
Trustee from giving effect to any written certification, proxy, or other
authorization furnished by a Depositary or impair, as between the Depositary and
such holders 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.
SECTION 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy the
certificates representing such canceled Securities.
SECTION 3.11 Right of Set Off.
Notwithstanding anything to the contrary in this Indenture, the Company
shall have the right to set off any payment it is otherwise required to make
hereunder to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
SECTION 3.12 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
SECTION 3.13 Extension of Interest Payment Period; Notice of Extension.
(a) So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of the Securities,
from time to time to defer payments of interest (including Additional Payments,
if any,) by extending any interest payment period for successive periods not
exceeding 20 consecutive quarters for each such period (a "Deferral Period");
provided that no Deferral Period may extend beyond the Stated Maturity of the
Securities. To the extent permitted by applicable law, interest, the payment of
which has been deferred because of the extension of the interest payment period
pursuant to this Section 3.13, will bear interest thereon at the Applicable Rate
compounded quarterly for each quarter of the Deferral Period ("Compounded
Interest"). On the applicable Payment Resumption Date, the Company shall pay all
interest then accrued and unpaid on the Securities, including any Compounded
Interest that shall be payable to the Holders of the Securities in whose names
the Securities are registered in the Security Register on the Regular Record
Date fixed for such Payment Resumption Date. A Deferral Period shall terminate
upon the payment by the Company of all interest then accrued and unpaid on the
Securities (together with interest thereon accrued at an annual rate equal to
the Applicable Rate, compounded quarterly, to the extent permitted by applicable
law). Before the termination of any Deferral Period, the Company may further
extend such period as provided in paragraph (b) of this Section 3.13, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters or extend beyond the Stated Maturity of the
Securities. Upon the termination of any Deferral Period, and subject to the
foregoing requirements, the Company may elect to begin a new Deferral Period. No
interest shall be due and payable during a Deferral Period except on the Payment
Resumption Date as determined pursuant to paragraph (b) of this Section 3.13.
There is no limitation on the number of times that the Company may elect to
begin a Deferral Period.
(b) The Company shall give the Holders of the Securities and the
Trustee written notice (a "Deferral Notice") of its selection of a Deferral
Period at least ten days prior to the record date for any distributions that
would have been payable on the Securities except for the decision to begin or
extend a Deferral Period. The Trustee shall give notice of the Company's
decision to begin or extend a Deferral Period to the Holders of the Securities.
On or prior to the Regular Record Date immediately preceding the Interest
Payment Date on which the Company elects to pay all interest then accrued and
unpaid on the Securities, including Compound Interest (the "Payment Resumption
Date"), the Company shall give the Holder of the Security and the Trustee
written notice that the Deferral Period will end on such Payment Resumption
Date. Notwithstanding the provision of such notice, the Company may elect to
further extend the Deferral Period, subject to the limitations set forth in
Section 3.13(a), by providing the Holder of the Security and the Trustee with a
new Deferral Notice not less than three Business Days prior to the Regular
Record Date immediately preceding the previously scheduled Payment Resumption
Date. The Company may elect to pay all interest then accrued and unpaid on the
Securities, including Compound Interest, on an Interest Payment Date prior to
its most recently established Payment Resumption Date provided that the Company
gives the Holder of the Security and the Trustee a new Deferral Notice setting
forth the revised Payment Resumption Date at least three Business Days prior to
the Regular Record Date for such revised Payment Resumption Date.
(c) The quarter in which any Deferral Notice is given pursuant to
paragraph (b) hereof shall be counted as one of the 20 quarters permitted in the
maximum Deferral Period permitted under paragraph (a) hereof.
SECTION 3.14 Paying Agent, Security Registrar and Conversion Agent.
The Trustee will initially act as Paying Agent, Security Registrar and
Conversion Agent. The Company may change any Paying Agent, Security Registrar,
co-registrar or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on written demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.06 and (ii) Securities 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 10.03) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will 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 notice of
redemption by the Trustee in the name, and at the expense, of the
Company
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest (including Compounded Interest) 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 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
SECTION 4.02 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03, all
money deposited with the Trustee pursuant to Section 4.01 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 4.01 (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 V
REMEDIES
SECTION 5.01 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article XII 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 upon any Security,
including any Additional Payments, when it becomes due and payable, and
continuance of such default for a period of 30 days (subject to the
deferral of any due date in the case of a Deferral Period); or
(2) default in the payment of the principal of any Security when due,
whether at its Maturity, upon redemption, by declaration of acceleration or
otherwise; or
(3) default in the observation or performance, in any material
respect, of any covenant of the Company in this Indenture (other than a
covenant a default in the performance of which or the breach of which is
elsewhere in this Section specifically dealt with), and continuance of such
default 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 25% in aggregate outstanding principal
amount of the Securities a written notice specifying such default and
requiring it to be remedied; or
(4) failure by the Company to issue and deliver Class B Common Stock
upon an election to convert the Securities into Class B Common Stock; or
(5) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company as 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 bankruptcy, insolvency, reorganization or other
similar law, or appointing a 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 institution by the Company of voluntary proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing of
any such petition or to the appointment of a 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 and its
willingness to be adjudicated a bankrupt, or the taking of corporate action
by the Company in furtherance of any such action; or
(7) the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Securities to holders of Preferred Securities in liquidation or redemption
of their interests in the Trust, (ii) the redemption of all of the
outstanding Preferred Securities of the Trust or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration.
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and 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 Outstanding
Securities and any other amounts payable hereunder (including any Additional
Payments) to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders); provided that, if the Property
Trustee is the sole Holder of the Securities and if upon an Event of Default,
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities fail to declare the principal of all the Securities to be
immediately due and payable, the holders of at least 25% in aggregate
liquidation amount of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration such principal and all accrued interest shall become immediately due
and payable. Upon any such declaration such principal amount (or specified
amount) of and the accrued interest (including any Additional Payments) on all
the Securities shall then become immediately due and payable; provided that the
payment of principal and interest on such Securities (including Additional
Payments) shall remain subordinated to the extent provided in Article XII.
At any time after such a 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 provided in this Article hereinafter, the Holders of a majority
in aggregate principal amount of the Outstanding Securities or of a majority in
liquidation amount of Preferred Securities, as the case may be, 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 Compounded Interest) on
all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Securities, and
(C) 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 non-payment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
The Company is required to file annually with the Trustee a certificate
as to whether or not the Company is in compliance with all the conditions and
covenants applicable to it under this Indenture.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.03 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
Compounded Interest) on any Security when such interest 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 any
Security at the Stated Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Payments) and,
to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest (including any Additional Sums),
at the rate borne by the Securities, and, in addition thereto, all amounts owing
to the Trustee under Section 6.07.
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, and 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 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 5.04 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it and
any predecessor Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.05 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities 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 all the amounts owing to the Trustee and any
predecessor Trustee under Section 6.07, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
SECTION 5.06 Application of Money Collected.
Subject to Article XII, any money collected by the Trustee pursuant to
this Article 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 or interest (including any Additional Payments), upon presentation of
the Securities 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 and any
predecessor Trustee under Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Payments) on
the Securities 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 for principal and interest (including any
Compounded Interest), respectively; and
THIRD: The balance, if any, to the Company.
SECTION 5.07 Limitation on Suits.
Subject to Section 5.08, no Holder of any Security 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 aggregate 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 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 Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.08 Unconditional Right of Holders to Receive Principal
and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 3.08) interest
(including any Additional Payments) on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to convert such Security in accordance with Article XIII
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. Other than as described in the preceding sentence, Holders shall not
have the right to exercise directly any remedies available to the Holders of the
Securities unless there is a default under the Declaration.
SECTION 5.09 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the 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 in the last paragraph of
Section 3.07, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 5.12 Control by Holders.
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;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
(3) subject to Section 6.01, the Trustee need not take any action that
might involve the Trustee in personal liability or be unduly prejudicial to
the Holders not joining therein.
SECTION 5.13 Waiver of Past Defaults.
Subject to Section 9.02 hereof, the Holders of not less than a majority
in principal amount of the Outstanding Securities may on behalf of the Holders
of all the Securities waive any past default hereunder and its consequences,
except a default
(1) in the payment of the principal of, premium, if any, or interest
(including any Additional Payments) on any Security (unless such default
has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been
deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected;
provided, however, that if the Securities are held by the Property Trustee, such
waiver shall not be effective until the holders of a majority in liquidation
amount of the Preferred Securities shall have consented to such waiver; and
provided, further, that if the consent of the Holder of each outstanding
Security is required, such waiver shall not be effective until each holder of
the Preferred Securities shall have consented to such waiver.
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. If the Holders of a
majority in principal amount of the Outstanding Securities fail to waive such
Event of Default, the holders of a majority in liquidation amount of the
Preferred Securities shall have such right. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.14 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee or in
any suit for the enforcement of the right to receive the principal of and
interest (including any Additional Payments) on any Security or to convert any
Security in accordance with Article XIII.
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.
SECTION 5.16 Enforcement by Holders of Preferred Securities.
Notwithstanding anything to the contrary contained herein, if an Event
of Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Securities on the
date such interest or principal is otherwise payable, the Company acknowledges
that, in such event, a holder of Preferred Securities may institute a legal
proceeding directly for enforcement of payment to such Holder of the principal
of or interest on the Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Securities. The Company may not amend this Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of all the
holders of Preferred Securities. Notwithstanding any payment made to such holder
of Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of and interest on the
Securities (including Additional Payments, if any) held by the Trust or the
Property Trustee and the Company shall be subrogated to the rights of the holder
of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action.
ARTICLE VI
THE TRUSTEE
SECTION 6.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default, 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.
(b) In case an Event of Default has occurred and is continuing, and is
known to the Trustee, 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 person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) Notwithstanding the foregoing, (i) the duties and responsibilities
of the Trustee shall be as provided by the Trust Indenture Act and (ii) 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. 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 6.02 Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder
known to the Trustee as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 5.01(3), no such notice to Holders 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 6.03 Certain Rights of Trustee.
Subject to the provisions of Section 6.01:
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) 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 may be sufficiently evidenced by a Board Resolution;
(c) 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;
(d) the Trustee may consult with counsel of its choice 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;
(e) 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 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;
(f) 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, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to reasonable
examination of the books, records and premises of the Company, personally or by
agent or attorney; the reasonable expense of every such investigation shall be
paid by the Company or, if paid by the Trustee, shall be repaid by the Company
upon demand, except any such expense as may be attributable to the Trustee's
negligence or bad faith;
(g) 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;
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence or willful
misconduct, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; and
(i) the Trustee shall not be charged with knowledge of any default or
Event of Default hereunder unless a Responsible Officer of the Trustee shall
have knowledge of the default or Event of Default.
SECTION 6.04 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, 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 or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of the Securities or the proceeds thereof.
SECTION 6.05 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent.
SECTION 6.06 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 6.07 Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such reasonable
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, fees, 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 any predecessor Trustee 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 and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall notify the Company promptly of any claim asserted against
the Trustee for which it may seek indemnity. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel; provided that the Company will not be required to pay such
fees and expenses if it assumes the Trustee's defense and there is no
conflict of interest between the Company and the Trustee in connection with
such defense. The Company need not pay for any settlement made without its
written consent. The Company need not reimburse any expense or indemnify
against any loss or liability to the extent incurred by the Trustee through
its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 6.07, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the satisfaction or discharge of this Indenture.
The provisions of this Section 6.07 shall survive the termination of
this Indenture.
SECTION 6.08 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
interest 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 6.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and has its Corporate Trust
Office in Wilmington, Delaware. If such Person 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 Person 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.
SECTION 6.10 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 under Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee 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 to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months; or
(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder; or
(3) 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 may remove the Trustee, or (ii) subject
to Section 5.14, any Holder 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. 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, 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 and accepted appointment in the manner hereinafter provided, any Holder
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 written notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11 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; provided, that on 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 required to more fully and
certainly vest in and confirm 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 qualified and eligible under
this Article.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder; provided such Person
shall be otherwise qualified and 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 6.13 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).
SECTION 6.14 Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal requirements
of any applicable jurisdiction, the Company and the Trustee shall have power to
appoint, and, upon the written request of the Trustee or of the Holders of at
least 25% in principal amount of the Securities then Outstanding, the Company
shall for such purpose join with the Trustee in the execution and delivery of
all instruments and agreements necessary or proper to appoint one or more
Persons approved by the Trustee either to act as co-trustee, jointly with the
Trustee, or to act as separate trustee, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Company does not join in such appointment within 30 days after the receipt by it
of a request so to do, or if an Event of Default shall have occurred and be
continuing, the Trustee alone shall have power to make such appointment.
Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to confirm to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Company.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following conditions:
(a) the Securities shall be authenticated and delivered, and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely, by
the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed either by the
Trustee or by the Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee;
(c) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Company, may accept the resignation of or remove
any co-trustee or separate trustee appointed under this Section, and, if an
Event of Default shall have occurred and be continuing, the Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Company. Upon the written request of the
Trustee, the Company shall join with the Trustee in the execution and delivery
of all instruments and agreements, necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee, or any other such
trustee hereunder; and
(e) any notice from the Holders of Securities delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than [January 15] and [July 15] in each
year, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of a date not more than 15 days prior to the
delivery thereof; and
(b) at such other times as the Trustee may 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 7.02 Preservation of Information; Communications 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 7.01 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 7.01 upon receipt of a new list so furnished.
(b) 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 7.03 Reports by Trustee.
(a) The Trustee shall transmit by first-class mail 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. Reports required to be transmitted at stated
intervals of not more than 12 months shall be transmitted within 60 days after
May 15 of each year commencing May 15, 2001.
(b) 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 7.04 Reports by Company.
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 Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 7.05 Tax Reporting.
The Company shall provide to the Trustee on a timely basis such
information as the Trustee requires to enable the Trustee to prepare and file
any form required to be submitted by the Company with the Internal Revenue
Service and the Holders relating to original issue discount, including, without
limitation, Form 1099-0ID or any successor form.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01 Company May Consolidate, Etc. Only on Certain Terms.
The Company shall not consolidate with or merge with or into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and no Person shall consolidate with or merge with or
into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge with or into
another Person or convey, transfer or lease all or substantially all of its
properties and assets on a consolidated basis to any Person, the Person
formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance, transfer or lease, all or
substantially all of the properties and assets of the Company on a
consolidated basis 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 reasonably satisfactory to
the Trustee, the due and punctual payment of the principal of and interest
(including any Additional Payments) on all the Securities 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 XIII;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) if at the time any Preferred Securities are outstanding, such
consolidation or merger or conveyance, transfer or lease of assets of the
Company is permitted under, and does not give rise to any breach or
violation of, the Declaration or the Guarantee; and
(4) the Company has delivered 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.
SECTION 8.02 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 on a consolidated
basis to any Person in accordance with Section 8.01, 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 and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, 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, in form satisfactory to the
Trustee, 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 of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article XIII; or
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions of
this Indenture; provided, that such action pursuant to this clause (4)
shall not adversely affect the interests of the Holders of the Securities
or, so long as any of the Preferred Securities shall remain outstanding,
the holders of the Preferred Securities;
(5) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(6) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any,
to be placed on Securities, and all other matters required pursuant to
Section 3.06(b) or otherwise necessary, desirable or appropriate in
connection with the issuance of Securities to holders of Preferred
Securities in the event of a distribution of Securities by the Trust if a
Tax Event or Investment Company Event (as defined in the Declaration)
occurs and is continuing.
SECTION 9.02 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, 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 under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) extend the Stated Maturity of the principal of, or any installment
of interest (including any Additional Payments) on, such Security, or
reduce the principal amount thereof, or reduce the rate or extend the time
for payment of interest thereon, or reduce any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, such Security or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or adversely affect the right to convert such
Security as provided in Article XIII (except as permitted by Section
9.01(3)), or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders;
provided that this clause (1) shall not be construed to limit the
application of Section 3.13,
(2) 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 any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
Notwithstanding anything to the contrary in this Indenture or the
Declaration, if the Property Trustee is the sole holder of the Securities, so
long as any of the Preferred Securities remains outstanding, no amendment shall
be made that adversely affects the holders of such Preferred Securities, and no
termination of this Indenture shall occur, and no waiver of any Event of Default
or compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of the percentage of the aggregate liquidation
amount of such Preferred Securities then outstanding which is at least equal to
the percentage of aggregate stated principal amount of the Outstanding
Securities as shall be required under this Indenture to effect any such
amendment, termination or waiver.
It shall not be necessary for any Act of Holders 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.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
SECTION 9.03 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 trust created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.01) 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. 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 9.04 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
shall be bound thereby.
SECTION 9.05 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 9.06 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 Trustee and the
Company, 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.
ARTICLE X
COVENANTS; REPRESENTATIONS AND WARRANTIES
SECTION 10.01 Payment of Principal and Interest.
The Company 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 and this Indenture.
SECTION 10.02 Maintenance of Office or Agency.
The Company will maintain in the United States an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, exchange or conversion, and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Securities may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the United States for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 10.03 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of 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 or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and 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,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or 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 (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
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 or interest on any
Security and remaining unclaimed for two years after such principal 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 any such Security 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.
SECTION 10.04 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the
material terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) 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 10.05 Limitation on Dividends; Transactions with Affiliates;
Covenants as to the Trust.
(a) If at such time (x) there shall have occurred an Event of Default,
(y) the Company shall be in default with respect to its payment of any
obligations under the Guarantee or (z) the Company shall have given notice of
its election to begin a Deferral Period as provided herein and shall not have
rescinded such notice, or such Deferral Period shall be continuing, the Company
covenants that the Company shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) other than stock dividends which consist of stock of the same
class as that on which the dividends are being paid, (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Securities or (iii) make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu with or junior in interest to the Securities
(in each case, other than (A) dividends or distributions in Class B Common
Stock, (B) any declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(C) payments under the Guarantee, (D) purchases or acquisitions of shares of the
Class B Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plan or any other contractual obligation
of the Company (other than a contractual obligation ranking pari passu with or
junior in interest to the Securities), (E) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock or (F) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged).
(b) The Company also covenants and agrees (i) for so long as the
Preferred Securities remain outstanding, (a) to maintain directly or indirectly
100% ownership of the Common Securities, provided that certain successor Persons
in transactions which are permitted by Article VIII may succeed to the Company's
ownership of the Common Securities, (b) not to voluntarily terminate, wind-up or
liquidate the Trust, except in connection with (I) a distribution of the
Securities to the holders of the Trust Securities in liquidation of the Trust,
(II) the redemption of all Trust Securities or (III) certain mergers,
consolidations or amalgamations permitted by the Declaration, and (c) not to
convert Securities except pursuant to a notice of conversion delivered to the
Conversion Agent by a Holder or by a holder of Preferred Securities, (ii) to use
its reasonable efforts, consistent with the terms and provisions of the
Declaration, to cause the Trust to remain classified as a grantor trust and not
taxable as a corporation for United States federal income tax purposes, (iii) to
maintain the reservation for issuance of the number of shares of Class B Common
Stock that would be required from time to time upon the conversion of all the
Securities then outstanding, (iv) to deliver shares of Class B Common Stock upon
an election by a Holder to convert such Securities (or by a holder of Preferred
Securities to convert such securities) into or for Class B Common Stock, and (v)
to honor all obligations relating to the conversion or exchange of Preferred
Securities into or for Class B Common Stock or Securities.
SECTION 10.06 Payment of Expenses of the Trust.
In connection with the offering, sale and issuance of the Securities to
the Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the offering, sale
and issuance of the Securities, including commissions to the Initial Purchasers
payable pursuant to the Purchase Agreement and compensation of the Trustee under
the Indenture in accordance with the provisions of Section 6.07 of the
Indenture;
(b) be responsible for and pay for all debts and obligations (other
than with respect to the Trust Securities) of the Trust, pay for all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the offering, sale and issuance of
the Trust Securities (including commissions to the Initial Purchasers in
connection therewith), the fees and expenses of the Property Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
SECTION 10.07 Registration Rights.
The holders of the Preferred Securities, the Securities, the Guarantee
and the shares of Class B Common Stock of the Company issuable upon conversion
of the Securities (collectively, the "Registrable Securities") are entitled to
the benefits of a Registration Rights Agreement, dated as of November 10, 2000,
among the Company, the Trust and the Initial Purchasers (the "Registration
Rights Agreement"). Pursuant to the Registration Rights Agreement the Company
and the Trust have agreed for the benefit of the holders of the Registrable
Securities that (i) they will, at the Company's sole expense, prior to 90 days
after the First Closing Date (as defined in the Registration Rights Agreement),
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Registrable Securities, (ii) they
will use their best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act prior to 180 days after the First
Closing Date and (iii) they will use their best efforts to maintain such
Registration Statement continuously effective under the Securities Act (subject
to certain exceptions under the Registration Rights Agreement) until the second
anniversary of the effectiveness of the Shelf Registration Statement or such
other period as shall be required under Rule 144(k) thereunder or any successor
rule or regulation thereto or such earlier date as is provided in the
Registration Rights Agreement. If the Company fails to comply with either of
clauses (ii) or (iii) above, subject to certain exceptions provided in the
Registration Rights Agreement, (a "Registration Default") then, at such time,
the Applicable Rate will increase by 50 basis points (.50%). Such increase will
remain in effect from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults
have been cured, on which date the interest rate on the Securities will revert
to the interest rate originally borne by the Securities.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01 Optional Redemption.
The Company shall have the right to redeem the Securities (an "Optional
Redemption") in whole or in part, at any time or from time to time on or after
November 20, 2003, at a Redemption Price (the "Optional Redemption Price") equal
to the prices per $50 principal amount of Securities set forth in the following
table, plus accrued and unpaid interest, including Additional Payments, if any,
to the Redemption Date, if redeemed during the 12-month period ending on
November 19:
Price Per $50
Year Principal Amount
------------ ----------------
2004.......... $51.50
2005.......... $51.00
2006.......... $50.50
2007.......... $50.00
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, any accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date. The Company shall not exercise its Optional Redemption
right during a Deferral Period unless all accrued and unpaid interest, including
Additional Payments, if any, to the Interest Payment Date immediately preceding
the Redemption Date shall have been paid in full on or before the date on which
notice of such redemption has been given.
SECTION 11.02 Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(1) the Company has received a Redemption Tax Opinion; or
(2) the Issuer Trustees shall have been informed by nationally
recognized independent tax counsel (reasonably acceptable to the Issuer
Trustees) experienced in such matters that a No Recognition Opinion cannot be
delivered,
then the Company shall have the right upon not less than 20 days, nor more than
60 days, notice to the Holders of the Securities to redeem the Securities in
whole, but not in part, for cash at $50 per $50 principal amount of the
Securities plus accrued and unpaid interest, including Additional Payments, if
any, to the Redemption Date, within 90 days following the occurrence of such Tax
Event (the "90 Day Period"); provided, however, that if, at the time there is
available to the Company or the Trust the opportunity to eliminate, within the
90 Day Period, the Tax Event by taking some ministerial action, including, but
not limited to, filing a form or making an election, or pursuing some other
similar reasonable measure which, in the sole judgment of the Company, will have
no adverse effect on the Company, the Trust or the Holders of the Preferred
Securities and will involve no material cost, then the Company or the Trust
shall pursue such ministerial action or other measure in lieu of redemption; and
provided further that the Company shall have no right to redeem the Securities
while the Trust is pursuing any ministerial action or other similar measure
pursuant to its obligations under the Declaration.
If the Company opts not to redeem the Securities pursuant to this
Section 11.02, the Company shall be required to pay Additional Sums in respect
of the Securities pursuant to Section 3.01 for so long as (i) a Tax Event has
occurred and is continuing and (ii) the Property Trustee is the sole Holder of
the Securities.
SECTION 11.03 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee by such method as the Trustee shall deem fair and appropriate, from
the Outstanding Securities not previously called for redemption. Such selection
method may provide for the selection for redemption of portions (equal to $50 or
any integral multiple thereof) of the principal amount of the Securities.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
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 11.04 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption given pursuant to this Article XI shall
identify the Securities to be redeemed (including, if relevant, CUSIP number)
and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(4) the place or places where such Securities are to be surrendered
for payment of the Redemption Price,
(5) the date on which the right to convert the Securities to be
redeemed will terminate and the places where such Securities may be
surrendered for conversion, and
(6) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Securities to be redeemed.
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 request, by the
Trustee in the name and at the expense of the Company.
SECTION 11.05 Deposit of Redemption Price.
Prior to 12:00 noon on any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money 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.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any 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 or any Predecessor Security to receive interest as provided in the
last paragraph of Section 3.08) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.
SECTION 11.06 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 and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price; provided, however, that
installments of interest 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 at the close of business on the
relevant Record Dates according to the terms and the provisions of Section 3.08.
In the event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, with the same force and effect as if
made on such date.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.
SECTION 11.07 Securities Redeemed in Part.
(a) In the event of any redemption in part, the Company shall not be
required (i) to issue, register the transfer of or exchange any Security during
a period beginning at the opening of business 15 days before the date of the
mailing of a notice of redemption of Securities selected for redemption and
ending at the close of business on the earliest date on which the notice of
resumption is deemed to have been given to all Holders of Securities to be
redeemed and (ii) to register the transfer of or exchange any Securities so
selected for redemption, in whole or in part, except for the unredeemed portion
of any Securities being redeemed in part.
(b) If a partial redemption of the Securities would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred Securities are
listed, the Company shall not be permitted to effect such partial redemption and
may only redeem the Securities in whole.
(c) Any Security which is to be redeemed only in part shall be
surrendered at a place of payment therefor (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 Security without service charge, a new 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 Security so surrendered. If a Global Security is surrendered, such new
Security will (subject to Section 3.06) also be a new Global Security.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.01 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Securities by such
Holder's acceptance thereof likewise covenants and agrees, that all Securities
shall be issued subject to the provisions of this Article XII; and each Holder
of a Security, whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions. The payment by the
Company of the principal of, premium, if any, and interest (including Additional
Payments) on all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Obligations, whether outstanding at the
date of this Indenture or thereafter incurred; provided, however, that no
provision of this Article XII shall prevent the occurrence of any default or
Event of Default hereunder.
SECTION 12.02 Default on Senior Obligations.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Obligations continuing beyond the period of grace, if any, specified in
the instrument evidencing such Senior Obligations, unless and until such default
shall have been cured or waived or shall have ceased to exist, and in the event
that the maturity of any Senior Obligations has been accelerated because of a
default, then no payment shall be made by the Company with respect to the
principal of (including redemption payments), premium, if any, or interest on
the Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 12.02, subject to Section 12.06, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Obligations or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Obligations may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Obligations (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Obligations and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Obligations.
SECTION 12.03 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts (including principal, premium, if
any, and interest) due or to become due upon all Senior Obligations (including
any interest accruing subsequent to the filing of a petition for bankruptcy
regardless of whether such interest is an allowed claim in the bankruptcy
proceeding) shall first be paid in full in cash, or payment thereof provided for
in money in accordance with and to the extent permitted by the terms of such
Senior Obligations, before any payment is made on account of the principal (and
premium, if any) or interest on the Securities; and upon any such dissolution or
winding up or liquidation or reorganization, any payment by the Company, 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 the Trustee
would be entitled, except for the provisions of this Article XII, 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 by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Obligations (pro rata to such holders on the
basis of the respective amounts of Senior Obligations held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Obligations may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Obligations in
full, in cash or in money's worth in accordance with and to the extent permitted
by the terms of such Senior Obligations, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Obligations, before
any payment or distribution is made to the Holders of Securities or to the
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing shall be received by the
Trustee or the Holders of the Securities before all Senior Obligations is paid
in full in cash, or provision is made for such payment in money in accordance
and to the extent permitted by the terms of such Senior Obligations subject to
Section 12.06, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Obligations or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Obligations may have been issued, and their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Obligations remaining unpaid to the extent necessary to pay such Senior
Obligations in full in cash or in money's worth in accordance with and to the
extent permitted by the terms of such Senior Obligations, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Obligations.
For purposes of this Article XII, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XII with respect
to the Securities to the payment of all Senior Obligations which may at the time
be outstanding; provided that (i) such Senior Obligations is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Obligations are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company with or into,
another Person or the liquidation or dissolution of the Company following the
conveyance, transfer or lease of all or substantially all its properties and
assets on a consolidated basis to another Person upon the terms and conditions
provided for in Article VIII hereof shall not be deemed a dissolution, winding
up, liquidation or reorganization for the purposes of this Section 12.03 if such
other Person shall, as a part of such consolidation, merger, conveyance,
transfer or lease, comply with the conditions stated in Article VIII hereof.
Nothing in Section 12.02 or in this Section 12.03 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.07 hereof.
SECTION 12.04 Subrogation.
Subject to the prior payment in full of all Senior Obligations in cash
or in money's worth in accordance with and to the extent permitted by the terms
of such Senior Obligations, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of such Senior Obligations to receive
payments or distributions of cash, property or securities of the Company, as the
case may be, applicable to such Senior Obligations until the principal of (and
premium, if any) and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Obligations of any cash, property or securities to which the Holders
of the Securities or the Trustee would be entitled except for the provisions of
this Article XII, and no payment pursuant to the provisions of this Article XII,
to or for the benefit of the holders of such Senior Obligations by Holders of
the Securities or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Obligations, and the Holders of the Securities, be
deemed to be a payment by the Company to or on account of such Senior
Obligations. It is understood that the provisions of this Article XII are and
are intended solely for the purposes of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of such Senior
Obligations on the other hand.
Nothing contained in this Article XII or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Obligations, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company, as the
case may be, other than the holders of Senior Obligations, nor shall anything
herein or therein prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article XII of the
holders of such Senior Obligations in respect of cash, property or securities of
the Company, as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article XII, the Trustee, subject to the provisions of Section 6.03, and
the Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution, winding
up, liquidation or reorganization proceedings are pending, or a certificate of
the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Obligations and
other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XII.
SECTION 12.05 Trustee to Effectuate Subordination.
Each Holder of Securities by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article XII and appoints the Trustee as such Holder's attorney-in-fact for
any and all such purposes.
SECTION 12.06 Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company which would prohibit the making
of any payment of monies to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article XII. Notwithstanding the provisions
of this Article XII or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XII unless and until a
Responsible Officer of the Trustee shall have received written notice thereof at
the Corporate Trust Office of the Trustee from the Company or a holder or
holders of Senior Obligations or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 6.03 hereof, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 12.06 at least five Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which it was
received, and shall not be affected by any notice to the contrary which may be
received by it within five Business Days prior to such date.
The Trustee, subject to the provisions of Section 6.03, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Obligations (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of such Senior Obligations or a trustee on behalf of any such holder or holders.
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
Obligations to participate in any payment or distribution pursuant to this
Article XII, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Obligations
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the right of
such Person under this Article XII, 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 12.07 Rights of the Trustee; Holders of Senior Obligations.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XII in respect of any Senior Obligations at any
time held by it, to the same extent as any other holder of Senior Obligations,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Obligations of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are set forth in this Article XII, and no implied covenants or
obligations with respect to the holders of such Senior Obligations shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of such Senior Obligations and, subject to the
provisions of Section 6.03, the Trustee shall not be liable to any holder of
such Senior Obligations if it shall pay over or deliver to Holders of
Securities, the Company or any other Person money or assets to which any holder
of such Senior Obligations shall be entitled by virtue of this Article XII or
otherwise, unless such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
SECTION 12.08 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Obligations to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Obligations may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the holders of the Securities
and without impairing or releasing the subordination provided in this Article
XII or the obligations hereunder of the Holders of the Securities to the holders
of Senior Obligations, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Obligations, or otherwise amend or supplement in any manner
such Senior Obligations or any instrument evidencing the same or any agreement
under which such Senior Obligations is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
such Senior Obligations; (iii) release any Person liable in any manner for the
collection of such Senior Obligations; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.01 Conversion Rights.
Subject to and upon compliance with the provisions of this Article, the
Securities are convertible, at the option of the Holder, at any time prior to
5:00 p.m. New York City time on the Business Day immediately preceding November
15, 2030 into fully paid and nonassessable shares of Class B Common Stock at an
initial conversion price of $60 principal amount of Securities per share of
Class B Common Stock (the "Initial Conversion Price") for each $50 in aggregate
principal amount of Securities (equal to an initial conversion ratio of
approximately 0.8333 shares of Class B Common Stock for each $50 in aggregate
principal amount of Securities). The conversion price in effect at any given
time is known as the "Applicable Conversion Price" and is subject to adjustment
as described in this Article XIII. A Holder of Securities may convert any
portion of the principal amount of the Securities into that number of fully paid
and nonassessable shares of Class B Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing the principal
amount of the Securities to be converted by the Applicable Conversion Price. In
case a Security or portion thereof is called for redemption, such conversion
right in respect of the Security or portion so called shall expire at the close
of the Business Day immediately preceding the corresponding Redemption Date,
unless the Company defaults in making the payment due upon redemption.
SECTION 13.02 Conversion Procedures.
(a) In order to convert all or a portion of the Securities, the Holder
thereof shall deliver to the Conversion Agent an irrevocable Notice of
Conversion setting forth the principal amount of Securities to be converted,
together with the name or names, if other than the Holder, in which the shares
of Class B Common Stock should be issued upon conversion and, if such Securities
are definitive Securities, surrender to the Conversion Agent the Securities to
be converted, duly endorsed or assigned to the Company or in blank. In addition,
a holder of Preferred Securities may exercise its right under the Declaration to
convert such Preferred Securities into Class B Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent (i) to exchange such Preferred Security for a portion of the Securities
held by the Trust (at an exchange rate of $50 principal amount of Securities for
each Preferred Security) and (ii) to immediately convert such Securities, on
behalf of such holder, into Class B Common Stock of the Company pursuant to this
Article XIII and, if such Preferred Securities are in definitive form,
surrendering such Preferred Securities, duly endorsed or assigned to the Company
or in blank. So long as any Preferred Securities are outstanding, the Trust
shall not convert any Securities except pursuant to a Notice of Conversion duly
executed and delivered to the Conversion Agent by a holder of Preferred
Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder will be
entitled to receive the interest payable on the subsequent Interest Payment Date
on the portion of Securities to be converted notwithstanding the conversion
thereof prior to such Interest Payment Date. Except as otherwise 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, and the Company shall not make nor be required to make any
other payment, adjustment or allowance with respect to accrued but unpaid
interest on the Securities being converted, which shall be deemed to be paid in
full. Each conversion shall be deemed to have been effected immediately prior to
the close of business on the day on which the Notice of Conversion was received
(the "Conversion Date") by the Conversion Agent from the Holder or from a holder
of the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Class B Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Class B Common Stock as of the Conversion Date and such Person or Persons
will cease to be a record Holder or record Holders of the Securities on that
date; provided, however, that if the transfer books of the Company Class B
Common Stock shall be closed on said Conversion Date, the Company shall not be
required to issue any shares on such conversion until the date on which such
transfer books shall be reopened and such Person or Persons shall not be deemed
to have become the holder or holders of record of such shares until the date on
which such transfer books shall be reopened, but such conversion shall
nevertheless be effected when such transfer books shall be reopened at the
Conversion Price in effect on and otherwise as the date on which such Security
shall have been surrendered to and such Notice of Conversion received by the
Company as aforesaid. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Class B Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the Person or Persons entitled to receive
the same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) Subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 3.08 and the second paragraph of clause (a) of Section 13.02, the
Company's delivery upon conversion of the whole number of shares of Class B
Common Stock into which the Securities are convertible (together with the cash
payment, if any, in lieu of fractional shares) shall be deemed to satisfy the
Company's obligation to pay the principal amount at Maturity of the portion of
Securities so converted and any unpaid interest (including Additional Payments)
accrued on such Securities at the time of such conversion.
(c) No fractional shares of Class B Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the
Securities or Preferred Securities, as the case may be, were duly surrendered to
the Conversion Agent for conversion, or, if such day is not a Trading Day, on
the next Trading Day, and the Conversion Agent in turn will make such payment,
if any, to the Holder of the Securities or the holder of the Preferred
Securities so converted.
(d) In the event of the conversion of any Security in part only, a new
Security or Securities for the unconverted portion thereof will be issued in the
name of the Holder thereof upon the cancellation thereof in accordance with
Section 3.06.
(e) In effecting the conversion transactions described in this Section,
the Conversion Agent is acting as agent of the holders of Preferred Securities
(in the exchange of Preferred Securities for Securities) and as agent of the
Holders of Securities (in the conversion of Securities into Class B Common
Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (x) if the Trust exists, (i) to
exchange Securities held by or on behalf of the Trust from time to time for
Preferred Securities in connection with the conversion of such Preferred
Securities in accordance with this Article XIII and (ii) to convert all or a
portion of the Securities into Class B Common Stock and thereupon to deliver
such shares of Class B Common Stock in accordance with the provisions of this
Article XIII and to deliver to the Trust a new Security or Securities for any
Securities held by the Holders and not converted in connection with the
conversion of such Securities in accordance with this Article XIII and (y) if
the Trust has been dissolved and the Securities have been distributed to the
holders of the Preferred Securities, to convert all or a portion of the
Securities into Class B Common Stock and thereupon to deliver such shares of
Class B Common Stock in accordance with the provisions of this Article XIII and
to deliver to such Holders a new Security or Securities for any resulting
unconverted principal amount.
(f) All shares of Class B Common Stock delivered upon any conversion of
Restricted Securities shall bear a restrictive legend substantially in the form
of the legend required to be set forth on such Securities and shall be subject
to the restrictions on transfer provided in such legend and in Section 3.06(b)
hereof. Neither the Trustee nor the Conversion Agent shall have any
responsibility for the inclusion or content of any such restrictive legend on
such Class B Common Stock; provided, however, that the Trustee or the Conversion
Agent 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 to such Conversion Agent certificates for such Class B Common
Stock, written notice that the Securities delivered for conversion are
Restricted Securities.
SECTION 13.03 Conversion Price Adjustments.
The Applicable Conversion Price shall be subject to adjustment (without
duplication) from time to time as follows:
(i) In case the Company shall pay a dividend or make a distribution on
the Class B Common Stock exclusively in Class B Common Stock, the
Applicable 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 Applicable Conversion Price by a fraction of which the numerator shall
be the number of shares of Class B 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. For the purposes of this
subparagraph (i), the number of shares of Class B Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.
The Company shall not pay any dividend or make any distribution exclusively
in Class B Common Stock on shares of any class or series of capital stock
of the Company held in the treasury of the Company. In the event that such
dividend or distribution is not so paid or made, the Applicable Conversion
Price shall again be adjusted to be the Applicable Conversion Price which
would then be in effect if such dividend or distribution had not occurred.
(ii) In case the Company shall pay or make a dividend or other
distribution on its Class B Common Stock consisting exclusively of, or
shall otherwise issue to all holders of its Class B Common Stock, rights or
warrants, in each case entitling the holders thereof to subscribe for or
purchase shares of Class B Common Stock at a price per share less than the
current market price per share (determined as provided in subparagraph
(vii)) of the Class B Common Stock on the date fixed for the determination
of stockholders entitled to receive such rights or warrants, the Applicable
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
Applicable Conversion Price by a fraction of which the numerator shall be
the number of shares of Class B Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares
of Class B Common Stock which the aggregate of the offering price of the
total number of shares of Class B 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 Class B Common Stock outstanding at the
close of business on the date fixed for such determination plus the number
of shares of Class B Common Stock so offered for subscription or purchase,
such reduction to become effective immediately prior to the opening of
business on the day following the date fixed for such determination. To the
extent that rights are not so issued or shares of Class B Common Stock are
not so delivered after the expiration of such rights or warrants, the
Applicable Conversion Price shall be readjusted to the Applicable
Conversion Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants
had not been fixed. For the purposes of this subparagraph (ii), the number
of shares of Class B Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. In case any rights or warrants
referred to in this subparagraph (ii) in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Company, the Applicable
Conversion Price shall be readjusted at the time of such expiration to the
conversion price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Class B Common Stock shall be
subdivided into a greater number of shares of Class B Common Stock, the
Applicable Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced and, conversely, in case outstanding shares of
Class B Common Stock shall each be combined into a smaller number of shares
of Class B Common Stock, the Applicable Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
prior to the opening of business on the day following the day upon which
such subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case
the Company shall, by dividend or otherwise, distribute to all holders of
its Class B Common Stock evidences of its indebtedness, shares of any class
or series of capital stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph (ii) of this
Section 13.03, any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in subparagraph (i) of this
Section 13.03), the Applicable Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Applicable
Conversion Price in effect immediately prior to the effectiveness of the
Applicable Conversion Price reduction contemplated by this subparagraph
(iv) by a fraction of which the numerator shall be the current market price
per share (determined as provided in subparagraph (vii) of this Section
13.03) of the Class B Common Stock on the date fixed for the determination
of stockholders entitled to receive such distribution (the "Reference
Date") less the fair market value (as determined in good faith by the Board
of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), on the Reference Date, of the
portion of the evidences of indebtedness, shares of capital stock, cash and
assets so distributed applicable to one share of Class B Common Stock and
the denominator shall be such current market price per share of the Class B
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the Reference Date. In the event
that such dividend or distribution is not so paid or made, the Applicable
Conversion Price shall again be adjusted to be the Applicable Conversion
Price which would then be in effect if such dividend or distribution had
not occurred. For purposes of this subparagraph (iv), 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
Applicable Conversion Price reduction required by this subparagraph (iv))
immediately followed by (2) a dividend or distribution of such shares of
Class B Common Stock or such rights or warrants (making any further
Applicable Conversion Price reduction required by subparagraph (i) or (ii)
of this Section 13.03), except 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 (i) of this Section 13.03.
(v) In case the Company shall pay or make a dividend or other
distribution on its Class B Common Stock exclusively in cash (excluding (x)
cash dividends to the extent that they do not exceed the per share amount
of the smallest of the immediately four preceding quarterly cash dividends
(as adjusted to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 13.03),
and (y) cash dividends to the extent that the annualized per share amount
thereof does not exceed 15% of the current market price per share of the
Class B Common Stock on the Trading Day next preceding the date of
declaration of such dividend, the Applicable Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying
the Applicable Conversion Price in effect immediately prior to the
effectiveness of the Applicable Conversion Price reduction contemplated by
this subparagraph (v) by a fraction of which the numerator shall be the
current market price per share (determined as provided in subparagraph
(vii) of this Section 13.03) of the Class B Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed
and not excluded as provided applicable to one share of Class B Common
Stock and the denominator shall be such current market price per share of
the Class B Common Stock, such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for
the payment of such distribution; provided, however, that in the event the
portion of the cash so distributed applicable to one share of Class B
Common Stock is equal to or greater than the current market price per share
(as defined in subparagraph (vii) of this Section 13.03) of the Class B
Common Stock on the record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of
Securities shall have the right to receive upon conversion the amount of
cash such Holder would have received had such Holder converted each
Security immediately prior to the record date for the distribution of the
cash. In the event that such dividend or distribution is not so paid or
made, the Applicable Conversion Price shall again be adjusted to be the
Applicable Conversion Price which would then be in effect if such record
date had not been fixed.
(vi) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion
of the Company's Class B 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 Class B 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 resolution of the
Board of Directors) 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 subparagraph (vii) of this Section 13.03)
of the Class B Common Stock on the Trading Day next succeeding the
Expiration Time, the Applicable Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Applicable
Conversion Price in effect immediately prior to the effectiveness of the
Applicable Conversion Price reduction contemplated by this subparagraph
(vi) by a fraction of which the numerator shall be the number of shares of
Class B Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the current market price per
share (determined as provided in subparagraph (vii) of this Section 13.03)
of the Class B 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 product of the number of shares of Class B Common
Stock outstanding (less any Purchased Shares) at the Expiration Time and
the current market price per share (determined as provided in subparagraph
(vii) of this Section 13.03) of the Class B 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. In the event that such tender or exchange offer is not
made, the Applicable Conversion Price shall again be adjusted to be the
Applicable Conversion Price which would then be in effect if such record
date had not been fixed.
(vii) For the purpose of any computation under subparagraphs (ii),
(iv), (v) and (vi) of this Section 13.03, the current market price per
share of Class B Common Stock on any date in question shall be deemed to be
the average of the daily Closing Prices of the Class B Common Stock for the
ten consecutive Trading Days prior to the earlier of the day in question
and, if applicable, the day before the "ex" date with respect to the
issuance or distribution requiring such computation; provided, however,
that if another event occurs that would require an adjustment pursuant to
subparagraphs (i) through (vi) of this Section 13.03, inclusive, the Board
of Directors may make such adjustments to the Closing Prices during such
five Trading Day period as it deems appropriate to effectuate the intent of
the adjustments in this Section 13.03, in which case any such determination
by the Board of Directors shall be set forth in a Board Resolution and
shall be conclusive. For purposes of this paragraph, the term "ex" date,
(1) when used with respect to any issuance or distribution, means the first
date on which the Class B Common Stock is quoted regular way on the New
York Stock Exchange Composite Tape or on such successor securities exchange
on which the Class B Common Stock may be quoted or listed or in the
relevant market from which the Closing Prices were obtained without the
right to receive such issuance or distribution, and (2) when used with
respect to any tender or exchange offer means the first date on which the
Class B Common Stock is quoted regular way on such securities exchange or
in such market after the Expiration Time of such offer.
(viii) The Company may make such reductions in the Applicable
Conversion Price, in addition to those required by subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of this Section 13.03, as it considers to be
advisable to avoid or diminish any income tax to holders of Class B Common
Stock or rights to purchase Class B Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.
(ix) There shall also be no adjustment of the Applicable Conversion
Price in case of the issuance of any Class B Common Stock (or securities
convertible into or exchangeable for Class B Common Stock), except as
specifically described above. If any action would require adjustment of the
Applicable Conversion Price, pursuant to more than one of the anti-dilution
provisions set forth in this Article XIII, only one adjustment shall be
made and such adjustment shall be the amount of adjustment that has the
highest absolute value to Holders. Furthermore, no adjustment in the
Applicable Conversion Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Applicable Conversion
Price; provided, however, that any adjustments which by reason of this
sentence are not required to be made shall be carried forward and taken
into account in determining whether any subsequent adjustment shall be
required.
SECTION 13.04 Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification of
the Class B Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination of the Class B Common Stock), (b) 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 a
reclassification, conversion, exchange or cancellation of outstanding shares of
Class B Common Stock of the Company), (c) any sale or transfer of all or
substantially all of the assets of the Company or (d) any compulsory share
exchange) (each of the events in the preceding clauses (a) through (d) being
referred to as a "Company Transaction"), in each case, as a result of which
shares of Class B Common Stock shall be converted into the right to receive
other securities, cash or other property, then lawful provision shall be made as
part of the terms of such Company Transaction whereby the Holder of each
Security then outstanding shall have the right thereafter to convert such
Security only into (i) in the case of any Company Transaction other than a
Common Stock Fundamental Change, the kind and amount of securities, cash and
other property receivable upon the consummation of the Company Transaction by a
holder of that number of shares of Class B Common Stock into which such Security
was convertible immediately prior to such transaction, after giving effect to
any adjustment in the Applicable Conversion Price required by the provisions of
Section 13.07(a)(i), and (ii) in the case of a Company Transaction involving a
Common Stock Fundamental Change, common stock of the kind received by holders of
Class B Common Stock as a result of such Common Stock Fundamental Change in an
amount determined pursuant to the provisions of Section 13.07(a)(ii). Holders of
the Securities shall have no voting rights with respect to any Company
Transaction described in this Section 13.04.
The Company or the Person formed by such consolidation or resulting
from such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article XIII. The above provisions shall similarly apply to
successive transactions of the foregoing type.
SECTION 13.05 Notice of Adjustments of Conversion Price.
Whenever the Applicable Conversion Price is adjusted as herein
provided:
(a) the Company shall compute the adjusted Applicable Conversion Price
and shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Applicable Conversion Price
and showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee, the Conversion
Agent, the Property Trustee and the transfer agent for the Preferred Securities
and the Securities; and
(b) a notice stating the Applicable Conversion Price has been adjusted
and setting forth the adjusted Applicable Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of Preferred
Securities and the Securities at their last addresses as they appear upon the
stock transfer books of the Company and the books and records of the Trust,
respectively.
SECTION 13.06 Prior Notice of Certain Events.
In case:
(i) the Company shall (1) declare any dividend (or any other
distribution) on its Class B Common Stock, other than (A) a dividend
payable in shares of Class B Common Stock or (B) a dividend payable in cash
that would not require an adjustment pursuant to Section 13.03(iv) or (v)
or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to Section 13.03(vi);
(ii) the Company shall authorize the granting to all holders of Class
B Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Class B Common Stock (other than a
subdivision or combination of the outstanding Class B Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company shall
be required, or of the sale or transfer of all or substantially all of the
assets of the Company or of any compulsory share exchange whereby the Class
B Common Stock is converted into other securities, cash or other property;
or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (a) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent for the Preferred Securities, and shall cause
to be mailed to the holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the books and records of the Trust, or (b)
shall cause to be mailed to all Holders at their last addresses as they shall
appear in the Security Register, at least fifteen days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record (if any) is to be taken for the purpose of such dividend,
distribution, rights or warrants or, if a record is not to be taken, the date as
of which the holders of Class B Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Class B
Common Stock of record shall be entitled to exchange their shares of Class B
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 13.07 Adjustments in Case of Fundamental Changes.
(a) Notwithstanding any other provision in this Article XIII to the
contrary, in the case of any Company Transaction involving a Fundamental Change,
the Applicable Conversion Price will be adjusted immediately after such
Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the Applicable
Conversion Price of the Securities shall thereupon become the lower of (A)
the Applicable Conversion Price in effect immediately prior to such
Non-Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Article XIII, and (B) the result
obtained by multiplying the greater of the Relevant Price or the then
applicable Reference Market Price by the Optional Redemption Ratio (such
product shall hereinafter be referred to as the "Adjusted Relevant Price"
or the "Adjusted Reference Market Price", as the case may be); and
(ii) in the case of a Common Stock Fundamental Change, the Applicable
Conversion Price of the Securities in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Article XIII, shall thereupon be
adjusted by multiplying such Applicable Conversion Price by a fraction of
which the numerator shall be the Purchaser Stock Price and the denominator
shall be the Relevant Price; provided, however, that in the event of a
Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Class B Common Stock is common stock
of the successor, acquiror or other third party (and cash, if any, is paid
only with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all of the
Class B Common Stock shall have been exchanged for, converted into or
acquired for common stock (and cash with respect to fractional interests)
of the successor, acquiror or other third party, the Applicable Conversion
Price of the Securities in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by multiplying such
Applicable Conversion Price by a fraction of which the numerator shall be
one and the denominator shall be the number of shares of common stock of
the successor, acquiror, or other third party received by a stockholder for
one share of Class B Common Stock as a result of such Common Stock
Fundamental Change.
(b) Definitions. The following definitions shall apply to terms used in
this Article XIII:
(1) "Closing Price" of any security on any day shall mean on any day
the last reported sale price of such security on such day, or in case no
sale takes place on such day, the average of the closing bid and asked
prices in each case on the principal national securities exchange on which
such securities are listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the NNM or, if
such securities are not listed or admitted to trading on any national
securities exchange or quoted on the NNM, 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 by the Company for such purpose.
(2) "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors) of the consideration received by holders of Class B
Common Stock consists of common stock that for each of the ten consecutive
Trading Days immediately prior to the Entitlement Date has been admitted
for listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the NNM; provided, however, that
a Fundamental Change shall not be a Class B Common Stock Fundamental Change
unless either (i) the Company continues to exist after the occurrence of
such Fundamental Change and the outstanding Preferred Securities continue
to exist as outstanding Preferred Securities, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding Securities are
converted into or exchanged for debentures of a corporation succeeding to
the business of the Company, which debentures have terms substantially
similar to those of the Securities.
(3) "Entitlement Date" shall mean the record date for determination of
the holders of Class B Common Stock entitled to receive securities, cash or
other property in connection with a Non-Stock Fundamental Change or a
Common Stock Fundamental Change or, if there is no such record date, the
date upon which holders of Class B Common Stock shall have the right to
receive such securities, cash or other property.
(4) "Fundamental Change" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially
all of the Class B Common Stock shall be exchanged for, converted into,
acquired for or constitute solely the right to receive securities, cash or
other property (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of a plan
involving more than one such transaction or event, for purposes of
adjustment of the Applicable Conversion Price, such Fundamental Change
shall be deemed to have occurred when substantially all of the Class B
Common Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash or
other property, but the adjustment shall be based upon the highest weighted
average per share consideration that a holder of Class B Common Stock could
have received in such transactions or events as a result of which more than
50% of the Class B Common Stock of the Company shall have been exchanged
for, converted into, or acquired for or constitute solely the right to
receive securities, cash or other property.
(5) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(6) "Optional Redemption Ratio" means a fraction of which the
numerator shall be $50 and the denominator will be the then current
Optional Redemption Price or, prior to November 20, 2003, an amount per
Security determined by the Company in its sole discretion, after
consultation with an investment banking firm, to be the equivalent of the
hypothetical redemption price that would have been applicable if the
Securities had been redeemable during such period.
(7) "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the ten
(10) consecutive Trading Days prior to and including the Entitlement Date,
as adjusted in good faith by the Board of Directors to appropriately
reflect any of the events referred to in subparagraphs (i), (ii), (iii),
(iv), (v) and (vi) of Section 13.03.
(8) "Reference Market Price" shall initially mean on the date of
original issuance of the Securities, $32.67 (which is an amount equal to
66-2/3% of the last reported sale price for the Class B Common Stock on the
New York Stock Exchange Composite Tape on November 6, 2000) and, in the
event of any adjustment to the Applicable Conversion Price, other than as a
result of a Non-Stock Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to the
Applicable Conversion Price after giving effect to any such adjustment
shall always be the same as the ratio of $32.67 to the Initial Conversion
Price.
(9) "Relevant Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Class B Common Stock receive
only cash, the amount of cash received by a stockholder for one share of
Class B Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the average of
the daily Closing Prices of the Class B Common Stock for the ten (10)
consecutive Trading Days prior to and including the Entitlement Date, in
each case, as adjusted in good faith by the Company to appropriately
reflect any of the events referred to in subparagraphs (i), (ii), (iii),
(iv), (v) and (vi) of Section 13.03.
(10) "Trading Day" shall mean a day on which securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
SECTION 13.08 Dividend or Interest Reinvestment Plans.
(a) Notwithstanding the foregoing provisions, the issuance of any
shares of Class B Common Stock pursuant to any present or future plan providing
for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of Class B
Common Stock under any such plan, and the issuance of any shares of Class B
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Company or pursuant to any option
issued, shall not be deemed to constitute an issuance of Class B Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies.
(b) There shall also be no adjustment of the Applicable Conversion
Price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article XIII.
SECTION 13.09 Certain Additional Rights.
Notwithstanding any other provision of this Article XIII to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including, without limitation, any rights distributed pursuant to
any stockholder rights plan) shall be deemed not to have been distributed for
purposes of this Article XIII if the Company makes proper provision so that each
Holder who converts a Security (or any portion thereof) after the date fixed for
determination of stockholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the shares of Class B
Common Stock issuable upon such conversion, the amount and kind of such
distributions that such Holder would have been entitled to receive if such
Holder had, immediately prior to such determination date, converted such
Security into Class B Common Stock.
SECTION 13.10 Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Class B Common Stock to be issued upon conversion of a
Security in respect of Restricted Preferred Securities (as defined in the
Declaration) shall bear such restrictive legends as the Company may provide in
accordance with applicable law.
(b) If shares of Class B Common Stock to be issued upon conversion of a
Security in respect of Restricted Preferred Securities are to be registered in a
name other than that of the Holder of such Preferred Security, then the Person
in whose name such shares of Class B Common Stock are to be registered must
deliver to the Conversion Agent a certificate satisfactory to the Company and
signed by such Person, as to compliance with the restrictions on transfer
applicable to such Preferred Security. Neither the Trustee nor any Conversion
Agent or Registrar shall be required to register in a name other than that of
the Holder shares of Class B Common Stock or such Preferred Securities issued
upon conversion of any such Security in respect of such Preferred Securities not
so accompanied by a properly completed certificate.
SECTION 13.11 Trustee Not Responsible for Determining Conversion
Price or Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of any Security to determine whether
any facts exist which may require any adjustment of the Applicable Conversion
Price, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or whether any supplemental indenture
needs to be entered into. Neither the Trustee nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Class B Common Stock or of any securities or property, which may at
any time be issued or delivered upon the conversion of any Security; and neither
the Trustee nor any Conversion Agent makes any representation with respect
thereto. Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to make any cash payment or to issue, transfer or
deliver any shares of Class B Common Stock or stock certificates or other
securities or property upon the surrender of any Security for the purpose of
conversion, or, except as expressly herein provided, to comply with any of the
covenants of the Company contained in Article X or this Article XIII.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 14.01 No Recourse.
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom, are hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Securities.
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.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
Dated: November 10, 2000
CONTINENTAL AIRLINES, INC.
By: /s/ Gerald Laderman
--------------------------
Name: Gerald Laderman
Title: Senior Vice President
Finance
WILMINGTON TRUST COMPANY, as Trustee
By: /s/ W. Chris Sponenberg
--------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
EXHIBIT A
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
[Include if a Global Security: THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY" OR "DTC") OR A
NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (55 WATER STREET, NEW YORK, NEW YORK) TO CONTINENTAL AIRLINES, INC. OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC)
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO BELOW.]
[Include Restricted Securities Legend if required under Section 2.02:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY CLASS B COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED, ENCUMBERED OR
OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. 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 BY ITS ACCEPTANCE HEREOF AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND ANY CLASS B COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) TO THE COMPANY, (ii) INSIDE THE UNITED STATES TO A PERSON
WHOM 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, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OR (v) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (v) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER REPRESENTS THAT IT (1) IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT, IS AWARE THAT THE SALE TO IT IS
BEING MADE IN RELIANCE ON RULE 144A AND IS ACQUIRING THE SECURITIES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS AND
THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT
OR (2) ACQUIRED SUCH SECURITY IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT.
BY ITS PURCHASE OF ANY SECURITIES (OR ANY INTEREST HEREIN), THE
PURCHASER HEREOF WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT (A) IT IS NOT A
PLAN OR OTHER ENTITY WHOSE UNDERLYING ASSETS ARE SUBJECT TO ERISA AND/OR SECTION
4975 OF THE CODE, OR A GOVERNMENTAL OR CHURCH PLAN WHICH IS SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR (B) ITS PURCHASE AND HOLDING
OF THE SECURITIES (AND ANY CLASS B COMMON STOCK ISSUABLE UPON CONVERSION HEREOF)
WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL OR CHURCH
PLAN, A VIOLATION OF ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW).
CONTINENTAL AIRLINES, INC.
6% Convertible Junior Subordinated Debenture Due 2030
No. [__] $[__________]
CUSIP No. [__________]
CONTINENTAL AIRLINES, INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called "the Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ____________________, or
registered assigns, the principal sum [indicated on Schedule A hereof](1) [of
Dollars($)](2) on November 15, 2030.
Interest Payment Dates: February 15, May 15, August 15, and November
15, commencing February 15, 2001.
Regular Record Dates: the close of business on the first day of the
month immediately preceding each Interest Payment Date, commencing February 1,
2001.
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.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
- -------------
1 Applicable to Global Securities only.
2 Applicable to certificated Securities only.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
Dated: [____________], 2000
CONTINENTAL AIRLINES, INC.
By:
--------------------------
Name:
Title:
[Seal]
Attest:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
indenture.
Dated: [____________], 2000
WILMINGTON TRUST COMPANY
as Trustee
By:-----------------------
Authorized Signatory
[FORM OF REVERSE OF SECURITY]
CONTINENTAL AIRLINES, INC.
6% Convertible Junior Subordinated Debenture Due 2030(3)
1. Interest. Continental Airlines, Inc., a Delaware corporation (the
"Company"), is the issuer of this 6% Convertible Junior Subordinated Debenture
Due 2030 (the "Security") limited in aggregate principal amount to $[_________],
issued under the Indenture hereinafter referred to. The Company promises to pay
interest on the Securities in cash from November 10, 2000 or from the most
recent interest payment date to which interest has been paid or duly provided
for, quarterly (subject to deferral for up to 20 consecutive quarters as
described in Section 3 hereof) in arrears on February 15, May 15, August 15, and
November 15 of each year (each such date, an "Interest Payment Date"),
commencing February 15, 2001, at the Applicable Rate, plus Additional Sums, if
any, until the principal hereof shall have become due and payable.
The amount of interest payable for any period will be computed on the
basis of twelve 30-day months and a 360-day year. To the extent lawful, the
Company shall pay interest on overdue installments of interest (without regard
to any applicable grace period) at the rate borne by the Securities, compounded
quarterly. Any interest paid on this Security shall be increased to the extent
necessary to pay Additional Sums as set forth in this Security.
2. Additional Sums. The Company shall pay to Continental Airlines
Finance Trust II (and its permitted successors or assigns under the Declaration)
(the "Trust") such additional amounts as may be necessary in order that the
amount of dividends or other distributions then due and payable by the Trust on
the Preferred Securities that at any time remain outstanding in accordance with
the terms thereof shall not be reduced as a result of any additional taxes,
duties, assessments and other governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other taxing
authority.
3. Extension of Interest Payment Period. So long as no Event of Default
has occurred and is continuing, the Company shall have the right, at any time
during the term of this Security, from time to time to defer payments of
interest by extending the interest payment period of such Security for up to 20
consecutive quarters (a "Deferral Period"); provided that no Deferral Period may
extend beyond November 15, 2030. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to Section 3.13 of the Indenture, will bear
interest thereon at the Applicable Rate compounded quarterly for each quarter of
the Deferral Period ("Compounded Interest"). On the applicable Payment
Resumption Date, the Company shall pay all interest then accrued and unpaid on
the Securities, including any Compounded Interest that shall be payable to the
Holders of the Securities in whose names the Securities are registered in the
Security Register on the record date fixed for such Payment Resumption Date.
Before the termination of any Deferral Period, the Company may further extend
such period as provided in the Indenture, provided that such period together
with all such further extensions thereof shall not exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Security. Upon the
termination of any Deferral Period and upon the payment of all Compounded
Interest and Additional Sums (together, "Additional Payments"), if any, then
due, the Company may commence a new Deferral Period, subject to the foregoing
requirements. No interest shall be due and payable during a Deferral Period
except on the applicable Payment Resumption Date.
- ---------------
3 All terms used in this Security which are defined in the Indenture or in
the Declaration referred to herein shall have the meanings assigned to them
in the Indenture or the Declaration, as the case may be.
The Company shall give the Holder of the Security and the Trustee
written notice (a "Deferral Notice") of its selection of a Deferral Period at
least ten days prior to the record date for any distributions that would have
been payable on the Trust Securities except for the decision to begin or extend
such Deferral Period. The Company may elect to pay all interest then accrued and
unpaid on the Securities, including Compound Interest, on an Interest Payment
Date prior to its most recently established Payment Resumption Date, provided
that the Company gives the Holder of the Security and the Trustee a new Deferral
Notice setting forth the revised Payment Resumption Date at least three Business
Days prior to the Regular Record Date for such revised Payment Resumption Date.
The quarter in which any Deferral Notice is given pursuant to the
second paragraph of this Section 3 shall be counted as one of the 20 quarters
permitted in the maximum Deferral Period permitted under the first paragraph of
this Section 3.
4. Method of Payment. 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 installment, which shall be the close of business
on the first day of the month immediately preceding each Interest Payment Date
(the "Regular Record Date"), commencing February 1, 2001. Any such interest not
so punctually paid or duly provided for shall 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 Trustee, notice whereof shall be given to
Holders of Securities not less than ten 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 as may be required by such exchange, all as more fully
provided in said Indenture, provided that any such payment will be made in such
coin or currency of the United States of America which at the time of payment is
a legal tender for payment of public and private debts.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in New York,
New York, in coin or currency of the United States of America which at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at any time that the Property Trustee is not the sole holder of
the Securities, payment of interest may, at the option of the Company, be made
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or by wire transfer.
5. Paying Agent and Security Registrar. The Trustee will act as Paying
Agent, Security Registrar and Conversion Agent. The Company may change any
Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior
notice. The Company or any of its Affiliates may act in any such capacity.
6. Indenture. The Company issued the Securities under an indenture,
dated as of November 10, 2000 (the "Indenture"), between the Company and
Wilmington 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 Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) ("Trust Indenture Act") as in effect on the date of the Indenture.
The Securities are subject to, and qualified by, all such terms, certain of
which are summarized herein, and holders are referred to the Indenture and the
Trust Indenture Act for a statement of such terms. The Securities are unsecured
general obligations of the Company limited to up to $[296,392,000] and
subordinated in right of payment to all existing and future Senior Obligations
of the Company. 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 and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
7. Optional Redemption. The Securities are redeemable at the Company's
option (an "Optional Redemption") in whole or in part, at any time or from time
to time, on or after November 20, 2003, at a Redemption Price equal to prices
per $50 principal amount of Securities set forth in the table below, plus any
accrued and unpaid interest, including Additional Payments, if any, to the
Redemption Date, if redeemed during the 12-month period ending on November 19:
Price Per $50
Year Principal Amount
--------------- ----------------
2004.................... $51.50
2005.................... $51.00
2006.................... $50.50
2007.................... $50.00
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, any accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date.
8. Optional Redemption Upon Tax Event. Subject to the conditions set
forth in the Indenture, the Securities are subject to redemption in whole, but
not in part, if a Tax Event shall occur and be continuing, at any time within 90
days following the occurrence of such Tax Event, at a Redemption Price equal to
$50 per $50 principal amount thereof, plus accrued but unpaid interest,
including Additional Payments, if any, to the Redemption Date. In lieu of the
foregoing, the Company also shall have the option of causing the Securities to
remain outstanding and pay Additional Sums on the Securities.
9. Notice of Redemption. Notice of redemption will be mailed by
first-class mail, postage prepaid, at least 20 days, but not more than 60 days
before the Redemption Date to each Holder of the Securities to be redeemed at
such Holder's address appearing in the Security Register.
10. No Sinking Fund. There are no sinking fund payments with respect to
the Securities.
11. Payment to Registered Holders; Cessation of Interest Accrual Upon
Redemption. If this Security is redeemed subsequent to a Regular Record Date
with respect to any Interest Payment Date specified above and on or prior to
such Interest Payment Date, then any accrued interest will be paid to the person
in whose name this Security is registered at the close of business on such
record date. On or after the Redemption Date, interest will cease to accrue on
the Securities, or portion thereof, called for redemption.
12. Subordination. The payment of the principal of, interest on or any
other amounts due on the Securities is subordinated in right of payment to all
existing and future Senior Obligations (as defined below) of the Company, as
described in the Indenture. Each Holder, by accepting a Security, agrees to such
subordination and authorizes and directs the Trustee on its behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and appoints the Trustee as its attorney-in-fact for such purpose.
"Senior Obligations" means (i) all Debt of the Company and (ii) any
amount payable in respect of a long-term operating lease of aircraft or aircraft
engines, in each case, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, except such Debt or lease
obligations that are expressly stated to rank junior in right of payment to, or
pari passu in right of payment with, the Securities; provided, however, that
Senior Obligations shall not be deemed to include (a) any Debt of the Company
which, when incurred and without respect to any election under Section 1111(b)
of the United States Bankruptcy Code of 1978, was without recourse to the
Company, (b) trade accounts payable and accrued liabilities arising in the
ordinary course of business, (c) any Debt of the Company to any of its
Subsidiaries, (d) Debt to any employee of the Company and (e) Debt which by its
terms is subordinated to trade accounts payable or accrued liabilities arising
in the ordinary course of business to the extent that payments made to the
holders of such Debt by the Holders of the Securities as a result of the
subordination provisions of the Indenture would be greater than such payments
otherwise would have been as a result of any obligation of such holders of such
Debt to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject.
"Debt" means (i) the principal of and premium and interest, if any, on
indebtedness for money borrowed, together with all fees, indemnities and
expenses payable under such obligations, (ii) purchase money and similar
obligations, (iii) obligations under capital leases, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Company is responsible for the payment of, such indebtedness
of others, (v) renewals, extensions and refunding of any such indebtedness, (vi)
interest or obligations in respect of any such indebtedness accruing after the
commencement of any insolvency or bankruptcy proceedings and (vii) obligations
associated with derivative products such as (a) securities contracts and foreign
currency exchange contracts, (b) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts, and (c) similar financial instruments.
13. Conversion. The Holder of any Security has the right, exercisable
at any time prior to 5:00 p.m., New York City time, on November 15, 2030, to
convert the principal amount thereof (or any portion thereof that is an integral
multiple of $50) into shares of Class B Common Stock at the initial conversation
price of $60 per share of Class B Common Stock for each $50 in aggregate
principal amount of Securities (equivalent to an initial conversion rate of
approximately 0.8333 shares of Class B Common Stock for each $50 in aggregate
principal amount of Securities). The conversion price and equivalent conversion
ratio in effect at any time are known as the "Applicable Conversion Price" and
the "Applicable Conversion Ratio," respectively, and are subject to adjustment
under certain circumstances. If a Security is called for redemption, the
conversion right will terminate at the close of business on the Business Day
immediately preceding the corresponding Redemption Date, unless the Company
defaults in making the payment due upon redemption.
To convert a Security, a Holder must (1) complete and sign a conversion
notice substantially in the form attached hereto, (2) surrender the Security to
a Conversion Agent, (3) furnish appropriate endorsements or transfer documents
if required by the Security Registrar or Conversion Agent and (4) pay any
transfer or similar tax, if required. Upon conversion, no adjustment or payment
will be made for interest or dividends, but if any Holder surrenders a Security
for conversion after the close of business on the Regular Record Date for the
payment of an installment of interest and prior to the opening of business on
the next Interest Payment Date, then, notwithstanding such conversion, the
interest payable on such Interest Payment Date will be paid to the registered
Holder of such Security on such Regular Record Date. In such event, such
Security, when surrendered for conversion, need not be accompanied by payment of
an amount equal to the interest payable on such Interest Payment Date on the
portion so converted. The number of shares issuable upon conversion of a
Security is determined by dividing the principal amount of the Security
converted by the Applicable Conversion Price in effect on the Conversion Date.
No fractional shares will be issued upon conversion but a cash adjustment will
be made for any fractional interest. The outstanding principal amount of any
Security shall be reduced by the portion of the principal amount thereof
converted into shares of Class B Common Stock.
14. Registration Rights. The holders of the Preferred Securities, the
Securities, the Guarantee Agreement and the shares of Class B Common Stock of
the Company issuable upon conversion of the Securities (collectively, the
"Registrable Securities") are entitled to the benefits of a Registration Rights
Agreement, dated as of November 10, 2000, among the Company, the Trust and the
Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement the Company and the Trust have agreed for the
benefit of the holders of the Registrable Securities that (i) they will, at the
Company's sole expense, prior to 90 days after the First Closing Date (as
defined in the Registration Rights Agreement), file a shelf registration
statement (the "Shelf Registration Statement") with the Commission with respect
to resales of the Registrable Securities, (ii) they will use their best efforts
to cause such Shelf Registration Statement to be declared effective under the
Securities Act prior to 180 days after the First Closing Date, and (iii) they
will use their best efforts to maintain such Shelf Registration Statement
continuously effective under the Securities Act (subject to certain exceptions
under the Registration Rights Agreement) until the second anniversary of the
effectiveness of the Shelf Registration Statement or such other period as shall
be required under Rule 144(k) thereunder or any successor rule or regulation
thereto or such earlier date as is provided in the Registration Rights
Agreement. If the Company fails to comply with either of clauses (ii) or (iii)
above, subject to certain exceptions provided in the Registration Rights
Agreement, (a "Registration Default") then, at such time, the Applicable Rate
will increase by 50 basis points (.50%). Such increase will remain in effect
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured, on
which date the interest rate on the Securities will revert to the interest rate
originally borne by the Securities.
15. Registration, Transfer, Exchange and Denominations. As provided in
the Indenture and subject to certain limitations therein set forth, the transfer
of this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
New York, New York, 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 hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $50 and integral multiples thereof. 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 cover any tax or other governmental
charge payable in connection therewith. Prior to due presentment of this
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 this Security is
registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary. In the event of redemption or conversion of
this Security in part only, a new Security or Securities for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
16. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of
Securities entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
17. Events of Default and Remedies. The Securities shall have the
Events of Default as set forth in Section 5.01 of the Indenture. Subject to
certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the Holders of at least 25%
in aggregate principal amount of the Outstanding Securities by notice to the
Company and the Trustee may declare all amounts payable on the Securities
(including any Additional Payments) to be due and payable immediately; provided
that, if the Property Trustee is the sole Holder of the Security and if upon an
Event of Default, the Trustee or the Holder of not less than 25% in aggregate
principal amount of the then outstanding Securities fail to declare the
principal of all the Securities to be immediately due and payable, the Holders
of at least 25% in aggregate liquidation amount of Preferred Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration such principal and all accrued interest
shall become immediately due and payable; and provided further that the payment
of principal and interest on such Securities shall remain subordinated to the
extent provided in the Indenture.
In the case of an Event of Default, the holders of a majority in
principal amount of the Outstanding Securities by written notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Securities issued under the
Indenture may direct the Trustee in its exercise of any trust or power. The
Company must furnish annually compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by reference to, and
subject in its entirety by, the more complete description thereof contained in
the Indenture.
18. Amendments, Supplements and Waivers. The Indenture permits, subject
to the rights of the holders of Preferred Securities set forth therein and in
the Declaration and with certain other 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 under the Indenture, at
any time, by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, subject to the
rights of the holders of the Preferred Securities set forth therein and in the
Declaration, 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 upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security. The above description of amendments, supplements and
waivers is qualified by reference to, and subject in its entirety, by the more
complete description thereof contained in the Indenture.
19. Trustee Dealings with the Company. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of the Securities and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not a Trustee, subject to certain limitations provided for
in the Indenture and in the Trust Indenture Act. Any Agent may do the same with
like rights.
20. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder of the Securities by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE SECURITIES.
22. Authentication. The Securities shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
23. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE(4)
- --------------------------------------------------------------------------------
- ----------------
4 (Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
[INCLUDE THE FOLLOWING IF THE SECURITY BEARS A RESTRICTED SECURITIES LEGEND]
In connection with any transfer of any of the Securities evidenced by
this certificate, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW
(1) |_| exchanged for the undersigned's own account without transfer;
or
(2) |_| transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) |_| transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) |_| transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
(5) |_| transferred pursuant to an effective registration statement
under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3) or (4) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:(5)
-----------------------------------
Signature
- -------------------------
5 (Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall be $_______.
The following increases or decreases in the principal amount of this Global
Security have been made:
Amount of decrease
in Principal Amount
of this Global Principal Amount of
Security including Amount of increase this Global Security Signature of
increase upon in Principal Amount following such authorized signatory
exercise of of this Global decrease (or of Trustee or
Date Made over-allotment option Security increase) Securities Custodian
- --------- --------------------- -------- --------- --------------------
ELECTION TO CONVERT
To: Continental Airlines, Inc.
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Class B
Common Stock of Continental Airlines, Inc. in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Security, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Class B Common Stock
issuable upon conversion of the Securities.
Date:___________
in whole __
Portions of Security to be converted ($50 or integral multiples thereof):
$___________________
____________________________________ Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number____________________________________________
________________________________________________________________________________
Signature Guarantee:(6)
________________________________________________________________________________
- -----------------
6 (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
- --------------------------------------------------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
BETWEEN
CONTINENTAL AIRLINES, INC.
AND
WILMINGTON TRUST COMPANY
- --------------------------------------------------------------------------------
CROSS-REFERENCE TABLE(1)
SECTION OF SECTION OF
TRUST INDENTURE ACT GUARANTEE AGREEMENT
OF 1939, as amended
- --------------------------------------------------------------------------------
310(a).......................................................4.01(a)
310(b).................................................4.01(c), 2.08
310(c)..................................................Inapplicable
311(a).......................................................2.02(b)
311(b).......................................................2.02(b)
311(c)..................................................Inapplicable
312(a).......................................................2.02(a)
312(b).......................................................2.02(b)
313.............................................................2.03
314(a)..........................................................2.04
314(b)..................................................Inapplicable
314(c)..........................................................2.05
314(d)..................................................Inapplicable
314(e)..............................................1.01, 2.05, 3.02
314(f)....................................................2.01, 3.02
315(a).......................................................3.01(d)
315(b)..........................................................2.07
315(c)..........................................................3.01
315(d).......................................................3.01(d)
316(a)..............................................1.01, 2.06, 5.04
316(b)..........................................................5.03
316(c)..........................................................8.02
317(a)..................................................Inapplicable
317(b)..................................................Inapplicable
318(a).......................................................2.01(b)
318(b)..........................................................2.01
318(c).......................................................2.01(a)
- ------------
(1) This Cross-Reference Table does not constitute part of the
Guarantee Agreement and shall not affect the interpretation of any of its terms
or provisions.
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions and Interpretation......................................1
SECTION 1.01 Definitions and Interpretation..........................1
ARTICLE II Trust Indenture Act................................................4
SECTION 2.01 Trust Indenture Act; Application........................4
SECTION 2.02 Lists of Holders of Securities..........................4
SECTION 2.03 Reports by the Guarantee Trustee........................5
SECTION 2.04 Periodic Reports to Guarantee Trustee...................5
SECTION 2.05 Evidence of Compliance with Conditions Precedent........5
SECTION 2.06 Event of Default; Waiver................................5
SECTION 2.07 Event of Default; Notice................................5
SECTION 2.08 Conflicting Interests...................................6
ARTICLE III Powers, Duties and Rights of Guarantee Trustee....................6
SECTION 3.01 Powers, Duties and Rights of Guarantee Trustee..........6
SECTION 3.02 Certain Rights of Guarantee Trustee.....................7
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee...9
SECTION 3.04 Compensation; Reimbursement; Indemnity..................9
ARTICLE IV Guarantee Trustee.................................................10
SECTION 4.01 Guarantee Trustee; Eligibility.........................10
SECTION 4.02 Appointment, Removal and Resignation of Guarantee
Trustee................................................10
ARTICLE V GUARANTEE..........................................................11
SECTION 5.01 Guarantee..............................................11
SECTION 5.02 Subordination..........................................11
SECTION 5.03 Waiver of Notice and Demand............................11
SECTION 5.04 Obligations Not Affected...............................12
SECTION 5.05 Rights of Holders......................................12
SECTION 5.06 Guarantee of Payment...................................13
SECTION 5.07 Subrogation............................................13
SECTION 5.08 Independent Obligations................................13
SECTION 5.09 Conversion.............................................13
ARTICLE VI Limitation of Transactions; Subordination.........................14
SECTION 6.01 Limitation of Transactions.............................14
SECTION 6.02 Ranking................................................14
ARTICLE VII TERMINATION......................................................14
SECTION 7.01 Termination............................................14
ARTICLE VIII Indemnification.................................................15
SECTION 8.01 Exculpation............................................15
SECTION 8.02 Indemnification........................................15
ARTICLE IX MISCELLANEOUS.....................................................16
SECTION 9.01 Successors and Assigns.................................16
SECTION 9.02 Amendments.............................................16
SECTION 9.03 Notices................................................16
SECTION 9.04 Benefit................................................17
SECTION 9.05 Governing Law..........................................17
This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee"), dated as
of November 10, 2000, is executed and delivered by Continental Airlines, Inc., a
Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Continental Airlines Finance Trust II, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of November 10, 2000, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to 5,750,000 Preferred Securities, having an aggregate stated liquidation
amount of up to $287,500,000 designated the 6% Convertible Preferred Securities,
Term Income Deferrable Equity Securities (TIDES)SM (liquidation amount $50 per
Preferred Security) (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay on a subordinated basis to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein) except that if a Debenture Event of Default or a Declaration
Event of Default (each as defined herein) (or an event that, with passage of
time, would become such a Debenture Event of Default) shall have occurred and be
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders to receive Guarantee Payments under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.
ARTICLE I
Definitions and Interpretation
SECTION 1.01 Definitions and Interpretation.
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to them in
this Section 1.01; terms defined in the Declaration as at the date of
execution of this Guarantee have the same meaning when used in this
Guarantee unless otherwise defined in this Guarantee;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" are
to this Guarantee as modified, supplemented or amended from time to
time;
(d) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee unless otherwise defined in this
Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Class B Common Stock" means Class B common stock, par value $.01 per
share, of the Guarantor (or shares of any class or classes resulting from any
reclassification or reclassifications thereof).
"Common Securities" means the convertible common securities
(liquidation amount $50 per common security) representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debenture Event of Default" means an Event of Default as defined in
the Indenture.
"Debentures" means the series of convertible junior subordinated debt
securities of the Guarantor designated the 6% Convertible Junior Subordinated
Debentures Due 2030 held by the Property Trustee (as defined in the Indenture)
of the Issuer.
"Declaration Event of Default" means an Event of Default as defined in
the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee; provided, however, that
except with respect to a default in payment of any Guarantee Payment, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
the Preferred Securities, to the extent that the Issuer shall have funds on hand
available therefor at such time, (ii) the applicable Redemption Price (as
defined in the Indenture) with respect to Preferred Securities called for
redemption by the Issuer, to the extent that the Issuer has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders or the redemption of all the
Preferred Securities), the lesser of (a) the aggregate liquidation amount
thereof plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution") to the extent the Issuer has
funds available therefor and (b) the amount of assets of the Issuer remaining
available for distribution to Holders upon liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law.
"Guarantee Trustee" means Wilmington Trust Company until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer of any outstanding Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage in liquidation
amount of the Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of November 10, 2000, among
the Guarantor and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto, pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Holder(s), voting separately as a
class, representing more than 50% of the stated aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise) of all Preferred Securities then outstanding.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Controller, the Secretary or
an Assistant Secretary of such Person, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee shall include:
(i) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(iii) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Guarantee 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 that officer's knowledge of and familiarity with
the particular subject.
"Senior Debt" shall have the meaning set forth in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
Trust Indenture Act
SECTION 2.01 Trust Indenture Act; Application.
(a) This Guarantee is subject to the provisions of the Trust Indenture
Act that are required to be part of this Guarantee, which are incorporated by
reference hereto, and shall, to the extent applicable, be governed by such
provisions; and
(b) If and to the extent that any provision of this Guarantee limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.02 Lists of Holders of Securities.
(a) The Guarantor shall provide the Guarantee Trustee (i) within 14
days after April 15 and September 15 of each year, commencing April 15, 2001, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of such date; provided that
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Guarantee Trustee by the Guarantor, and (ii) at any other time, within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Guarantee Trustee. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03 Reports by the Guarantee Trustee.
Within 60 days after April 15 of each year, commencing April 15, 2001,
the Guarantee Trustee shall provide to the Holders of the Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.04 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.05 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
which relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06 Event of Default; Waiver.
The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent therefrom.
SECTION 2.07 Event of Default; Notice.
(a) The Guarantee Trustee shall, within 30 days after the occurrence of
an Event of Default actually known to the Guarantee Trustee, transmit by mail,
first-class postage prepaid, to the Holders, notices of all Events of Default
known to the Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided that, except in the case of a default in the
payment of a Guarantee Payment, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice.
SECTION 2.08 Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
Powers, Duties and Rights of Guarantee Trustee
SECTION 3.01 Powers, Duties and Rights of Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.05(d) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06) and is known to the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee,
and no implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee 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 not less than a
Majority in liquidation amount of the Preferred Securities, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers.
SECTION 3.02 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor;
(iv) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof);
(v) the Guarantee Trustee may consult with legal counsel of
its selection, and the written advice or opinion of such legal counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted to
be taken by it hereunder in good faith and in accordance with such
advice or opinion. Such legal counsel may be legal counsel to the
Guarantor or any of its Affiliates and may include any of the
Guarantor's employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee from any court of competent jurisdiction;
(vi) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee security and indemnity satisfactory
to the Guarantee Trustee against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be incurred by
it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee;
provided that nothing contained in this Section 3.02(a)(vi) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an Event
of Default known to the Guarantee Trustee, of its obligation to
exercise the rights and powers vested in it by this Guarantee;
(vii) the Guarantee 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, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit; the reasonable expense of
every such investigation shall be paid by the Guarantor or, if paid by
the Guarantee Trustee, shall be repaid by the Guarantor upon request,
except any such expense as may be attributable to the Guarantee
Trustee's negligence or bad faith;
(viii) the Guarantee 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 Guarantee 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;
(ix) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action; it being understood that no third party shall
be required to inquire as to the authority of the Guarantee Trustee to
so act or as to its compliance with any of the terms and provisions of
this Guarantee, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action;
(x) whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request written instructions
from the Holders or, other than with respect to enforcing any remedy or
right or taking any action related thereto, the Guarantor, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such written instructions are received, and (iii) shall be
protected in acting in accordance with such written instructions; and
(xi) the Guarantee Trustee shall not be charged with knowledge
of any default or Event of Default hereunder unless a Responsible
Officer of the Guarantee Trustee shall have knowledge of the default or
Event of Default.
(b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee.
SECTION 3.04 Compensation; Reimbursement; Indemnity.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time such
reasonable compensation as the Guarantor and the Guarantee 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);
and
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Guarantee
Trustee in accordance with the provisions of this Guarantee (including
the reasonable compensation and expenses of its agents and counsel),
except any such expense, disbursement or advance as may be attributable
to its negligence or bad faith.
As security for the performance of the obligations of the Guarantor
under this Section 3.04, the Guarantee Trustee shall have a lien, prior to the
Preferred Securities, upon all the property and funds held or collected by the
Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of the
Guarantor under this Guarantee.
The provisions of this Section 3.04 shall survive the termination of
this Guarantee.
ARTICLE IV
Guarantee Trustee
SECTION 4.01 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.01(a)(ii), 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.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 3.10(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 3.10(b) of the Trust Indenture Act.
SECTION 4.02 Appointment, Removal and Resignation of Guarantee Trustee.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation
of the Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay
to the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.01 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due, in
U.S. dollars regardless of any defense, right of setoff or counterclaim that the
Issuer may have or assert other than the defense of payment. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.02 Subordination.
If a Debenture Event of Default or a Declaration Event of Default (or
an event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under the Common Securities Guarantee
are subordinated to the rights of Holders to receive Guarantee Payments under
this Guarantee.
SECTION 5.03 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
SECTION 5.04 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, the amount payable upon redemption
or the amount payable upon liquidation of the Issuer or any other sums
payable under the terms of the Preferred Securities or the extension of
time for the performance of any other obligation under, arising out of,
or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions that results from the
extension of any interest payment period on the Debentures permitted by
the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.04 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.05 Rights of Holders.
The Guarantor expressly acknowledges that:
(a) This Guarantee will be deposited with the Guarantee
Trustee to be held for the benefit of the Holders.
(b) The Guarantee Trustee has the right to enforce this
Guarantee on behalf of the Holders.
(c) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee.
(d) Any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee,
without first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other Person.
SECTION 5.06 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection.
This Guarantee will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the Issuer)
or upon distribution of Debentures to Holders as provided in the Declaration.
SECTION 5.07 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee and shall have the right to waive payment by the
Issuer pursuant to Section 5.01; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.08 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.04 hereof.
SECTION 5.09 Conversion.
The Guarantor acknowledges its obligation to issue and deliver Class B
Common Stock upon the conversion of the Preferred Securities.
ARTICLE VI
Limitation of Transactions; Subordination
SECTION 6.01 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing a Debenture Event of Default, a Declaration
Event of Default or an event that, with the giving of notice or the lapse of
time or both, would constitute a Debenture Event of Default or a Declaration
Event of Default, or a selection by the Guarantor of a Deferral Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which stock dividends consist of the stock of
the same class as that on which the dividend is being paid), (b) the Guarantor
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Guarantor which
rank pari passu with or junior in interest to the Debentures and (c) the
Guarantor shall not make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor if such
guarantee ranks pari passu with or junior in interest to the Debentures (in each
case, other than (A) dividends or distributions in Class B Common Stock, (B) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (C)
payments under this Guarantee and the Common Securities Guarantee, (D) purchases
or acquisitions of shares of Class B Common Stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit plan
or any other contractual obligation of the Guarantor (other than a contractual
obligation ranking pari passu with or junior in interest to the Debentures), (E)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or conversion of one class or series of the Guarantor's capital stock
for another class or series of the Guarantor's capital stock or (F) the purchase
of fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged).
SECTION 6.02 Ranking.
This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate to all Senior Debt of the Guarantor to the same extent
that the Debentures are subordinated pursuant to the Indenture.
ARTICLE VII
TERMINATION
SECTION 7.01 Termination.
This Guarantee shall terminate upon (i) full payment of the amount
payable upon redemption of all Preferred Securities, (ii) the distribution of
Class B Common Stock to the Holders in respect of the conversion of the
Preferred Securities into Class B Common Stock, (iii) the distribution of the
Debentures to the Holders of all of the Preferred Securities or (iv) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Preferred
Securities or under this Guarantee.
ARTICLE VIII
Indemnification
SECTION 8.01 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.02 Indemnification.
(a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability or expense including taxes (other than taxes based on the income of
such Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 8.02 shall survive the termination of this Guarantee.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.02(a).
(c) No Indemnified Person shall claim or exact any lien or charge
on any Guarantee Payments as a result of any amount due to it under this
Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Successors and Assigns.
All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders.
SECTION 9.02 Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee may only be amended with the prior approval of the
Holders of a Majority in liquidation amount of the Preferred Securities then
outstanding; provided, however, that no amendment that affects the rights,
powers, duties, obligations or immunities of the Guarantee Trustee shall be
effective unless approved in writing by the Guarantee Trustee. The provisions of
Section 12.02 of the Declaration with respect to meetings of holders of the
Securities (as defined in the Declaration) apply to the giving of such approval.
SECTION 9.03 Notices.
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first-class mail, as follows:
(a) if given to the Issuer, in care of the Regular Trustees at
the Issuer's mailing address set forth below (or such other address as
the Issuer may give notice):
Continental Airlines Finance Trust II
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(b) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Administration
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders):
Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(d) If given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04 Benefit.
This Guarantee is solely for the benefit of the Holders and, subject to
Section 3.01(a), is not separately transferable from the Preferred Securities.
SECTION 9.05 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of this Page Intentionally Left Blank]
This GUARANTEE is executed as of the day and year first above written.
CONTINENTAL AIRLINES, INC.
as Guarantor
By /s/ Gerald Laderman
---------------------------------------
Name: Gerald Laderman
Title: Senior Vice President
Finance
WILMINGTON TRUST COMPANY
as Guarantee Trustee
By /s/ W. Chris Sponenberg
---------------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
================================================================================
COMMON SECURITIES GUARANTEE AGREEMENT
DELIVERED BY
CONTINENTAL AIRLINES, INC.
FOR THE BENEFIT OF THE HOLDERS OF COMMON SECURITIES OF
CONTINENTAL AIRLINES FINANCE TRUST II
================================================================================
This COMMON SECURITIES GUARANTEE AGREEMENT (the "Common Securities
Guarantee"), dated as of November 10, 2000, is executed and delivered by
Continental Airlines, Inc., a Delaware corporation (the "Guarantor"), for the
benefit of the Holders (as defined herein) from time to time of the Common
Securities (as defined in the Declaration (as defined herein)) of Continental
Airlines Finance Trust II, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of November 10, 2000, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to 5,750,000 Preferred Securities (as defined in the Declaration), having an
aggregate liquidation amount of up to $287,500,000; and
WHEREAS, pursuant to the Declaration, the Issuer may issue up to
177,836 Common Securities, having an aggregate stated liquidation amount of up
to $7,732,000 designated the 6% Convertible Common Securities (liquidation
amount $50 per each of the Convertible Common Securities) (the "Common
Securities");
WHEREAS as incentive for the Holders to purchase the Common Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Common Securities Guarantee, to pay on a subordinated basis to
the Holders of the Common Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
WHEREAS the Guarantor is also executing and delivering a guarantee
agreement in substantially identical terms to this Common Securities Guarantee
for the benefit of the holders of the Preferred Securities (the "Guarantee")
except that if a Debenture Event of Default or a Declaration Event of Default
(each as defined herein) (or an event that, with passage of time, would become a
Debenture Event of Default) shall have occurred and be continuing, the rights of
Holders of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of holders of Preferred
Securities to receive Guarantee Payments under the Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions and Interpretation.
In this Common Securities Guarantee, unless the context otherwise
requires, the terms set forth below shall have the following meanings.
(a) capitalized terms used in this Common Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.01 of the Guarantee;
(b) terms defined in the Declaration as at the date of execution of
this Common Securities Guarantee have the same meaning when used in this Common
Securities Guarantee unless otherwise defined in this Common Securities
Guarantee or in the Guarantee;
(c) a term defined anywhere in this Common Securities Guarantee has the
same meaning throughout;
(d) all references to "the Common Securities Guarantee" or "this Common
Securities Guarantee" are to this Common Securities Guarantee as modified,
supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to Articles and
Sections are to Articles and Sections of this Common Securities Guarantee unless
otherwise specified; and
(f) a reference to the singular includes the plural and vice versa.
"Class B Common Stock" means Class B common stock, par value $.01 per
share, of the Guarantor (or shares of any class or classes resulting from any
reclassification or reclassifications thereof).
"Debenture Event of Default" means an Event of Default under the
Indenture.
"Declaration Event of Default" means an Event of Default under the
Declaration.
"Guarantee Event of Default" means a default by the Guarantor on any of
its payment or other obligations under the Common Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Common Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions which are required to be paid on such Common Securities, to the
extent that the Issuer shall have funds on hand available therefor at such time,
(ii) the applicable Redemption Price (as defined in the Indenture) with respect
to any Common Securities called for redemption by the Issuer, to the extent that
the Issuer has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders or
the redemption of all the Common Securities), the lesser of (a) the aggregate
liquidation amount thereof plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution") to the extent
the Issuer has funds available therefor and (b) the amount of assets of the
Issuer remaining available for distribution to Holders upon liquidation of the
Issuer after satisfaction of liabilities to creditors of the Issuer as required
by applicable law.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any outstanding Common Securities.
"Senior Debt" shall have the meaning set forth in the Indenture.
ARTICLE II
GUARANTEE
SECTION 2.01 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due, in
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debt regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert other than
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the Holders.
SECTION 2.02 Subordination.
If a Debenture Event of Default or a Declaration Event of Default (or
an event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of Holders of the Common
Securities to receive Guarantee Payments under this Common Securities Guarantee
are subordinated to the rights of holders of Preferred Securities to receive
Guarantee Payments under the Guarantee.
SECTION 2.03 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.04 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Common Securities to be performed or
observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, the amount payable upon redemption, or the amount
payable upon liquidation of the Issuer or any other sums payable under the terms
of the Common Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of Distributions, that
results from the extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Common Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 2.04 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 2.05 Rights of Holders.
The Guarantor expressly acknowledges that any Holder may institute a
legal proceeding directly against the Guarantor to enforce its rights under this
Common Securities Guarantee, without first instituting a legal proceeding
against the Issuer or any other Person.
SECTION 2.06 Guarantee of Payment.
This Common Securities Guarantee creates a guarantee of payment and not
of collection. This Common Securities Guarantee will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer) or upon distribution of Debentures to Holders as
provided in the Declaration.
SECTION 2.07 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Common Securities Guarantee and shall have the right to
waive payment by the Issuer pursuant to Section 2.01; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Common Securities Guarantee, if, at the
time of any such payment, any amounts are due and unpaid under this Common
Securities Guarantee. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 2.08 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.04.
SECTION 2.09 Conversion.
The Guarantor acknowledges its obligation to issue and deliver Class B
Common Stock upon the conversion of the Common Securities.
SECTION 2.10 Events of Default; Waiver.
The Holders of a majority in liquidation amount of Common Securities
may by vote, on behalf of the Holders of all of the Common Securities, waive any
past Guarantee Event of Default and its consequences. Upon such waiver, any such
Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Common Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Guarantee Event of Default or impair any right
consequent thereon.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.01 Limitation of Transactions.
So long as any Common Securities remain outstanding, if (i) there shall
have occurred and be continuing a Debenture Event of Default, a Declaration
Event of Default or an event that, with the giving of notice or the lapse of
time or both, would constitute a Debenture Event of Default or a Declaration
Event of Default or (ii) a selection by the Guarantor of a Deferral Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which consist of the stock of the same class as
that on which the dividend is being paid), (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank pari passu with or
junior in interest to the Debentures and (c) the Guarantor shall not make any
guarantee payments with respect to any guarantee by the Guarantor of the debt
securities of any subsidiary of the Guarantor if such guarantee ranks pari passu
with or junior in interest to the Debentures (in each case, other than (A)
dividends or distributions in Class B Common Stock, (B) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (C) payments under the Guarantee
and the Common Securities Guarantee, (D) purchases or acquisitions of shares of
Class B Common Stock in connection with the satisfaction by the Guarantor of its
obligations under any employee benefit plan or any other contractual obligation
of the Guarantor (other than a contractual obligation ranking pari passu with or
junior in interest to the Debentures), (E) as a result of a reclassification of
the Guarantor's capital stock or the exchange or conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock or (F) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged).
SECTION 3.02 Ranking.
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate to all Senior Debt of the
Guarantor to the same extent that the Debentures (as defined in the Indenture)
are subordinated pursuant to the Indenture.
ARTICLE IV
TERMINATION
SECTION 4.01 Termination.
This Common Securities Guarantee shall terminate upon (i) full payment
of the amount payable upon redemption of the Common Securities, (ii) the
distribution of Class B Common Stock to the Holders in respect of the conversion
of the Common Securities into Class B Common Stock, (iii) the distribution of
the Debentures to the Holders in exchange for all of the Common Securities or
(iv) full payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Common Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Common Securities must restore payment of any
sums paid under the Common Securities or under this Common Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Successors and Assigns.
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
SECTION 5.02 Amendments.
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Common Securities Guarantee may only be amended with the prior approval of the
Holders of a majority in liquidation amount of the outstanding Common
Securities. The provisions of Section 12.02 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
SECTION 5.03 Notices.
All notices provided for in this Common Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Administrative Trustees at
the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders of the Common Securities):
Continental Airlines Finance Trust II
c/o Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Common Securities):
Continental Airlines, Inc.
1600 Smith Street, HQSEO
Houston, Texas 77002
Attention: General Counsel and Chief Financial Officer
Facsimile No.: (713) 324-2687
(c) if given to any Holder of Common Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.04 Benefit.
This Common Securities Guarantee is solely for the benefit of the
Holders and is not separately transferable from the Common Securities.
SECTION 5.05 Governing Law.
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of this Page Intentionally Left Blank]
This COMMON SECURITIES GUARANTEE is executed as of the day and year
first above written.
CONTINENTAL AIRLINES, INC., as
Guarantor
By: /s/ Gerald Laderman
-------------------------------------
Name: Gerald Laderman
Title: Senior Vice President
Finance
[LETTERHEAD OF CLEARY, GOTTLIEB, STEEN & HAMILTON]
Writer's Direct Dial: (212) 225-2520
E-Mail: mryan@cgsh.com
February 7, 2001
Continental Airlines, Inc.
1600 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as special counsel to Continental Airlines, Inc., a
Delaware corporation (the "Company"), and Continental Airlines Finance Trust II,
a statutory business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with the offering pursuant to a registration statement
on Form S-3 (No. 333-[ ]) (the "Registration Statement") of 6% Convertible
Preferred Securities, Term Income Deferrable Equity Securities (the "TIDES")
representing preferred undivided beneficial interests in the assets of the Trust
issued pursuant to an amended and restated declaration of trust dated as of
November 10, 2000 (the "Declaration") by the trustees of the Trust, the Company,
as trust sponsor, and the holders from time to time of undivided beneficial
interests in the Trust. The TIDES are guaranteed by the Company in the manner
and to the extent set forth in a Preferred Securities Guarantee Agreement dated
as of November 10, 2000 (the "Guarantee Agreement") executed by the Company and
Wilmington Trust Company, as trustee for the benefit of the holders from time to
time of the TIDES. The Company owns all the common securities (the "Common
Securities" and, together with the TIDES, the "Trust Securities") representing
undivided beneficial interests in the assets of the Trust issued pursuant to the
Declaration and guaranteed by the Company in the manner and to the extent set
forth in a Common Securities Guarantee Agreement dated as of November 10, 2000
(the "Common Securities Guarantee Agreement" and, together with the Preferred
Securities Guarantee Agreement, the "Guarantee Agreements") executed by the
Company for the benefit of the holders from time to time of the Common
Securities. The Registration Statement registers the offering from time to time
of the TIDES, the Conversion Shares (as defined below), the Guarantee Agreement
and the Debentures (as defined below; collectively, the "Registrable
Securities").
The Trust issued the Trust Securities and invested the proceeds
thereof in an equivalent aggregate principal amount of 6% Convertible Junior
Subordinated Debentures (the "Debentures") of the Company issued under an
indenture dated as of November 10, 2000 (the "Indenture") between the Company
and Wilmington Trust Company, as trustee. The Debentures are convertible into
shares of Class B common stock, par value $.01 per share (the "Class B Common
Stock"), of the Company.
In arriving at the opinions expressed below, we have reviewed
the following documents:
(a) an executed copy of the purchase agreement dated November 6, 2000
(the "Purchase Agreement") among the Company, the Trust and the
initial purchasers named in Schedule A thereto (the "Initial
Purchasers");
(b) the Offering Circular dated November 6, 2000 relating to the
offering of the TIDES;
(c) an executed copy of each of the Guarantee Agreements;
(d) a specimen of the certificates representing the Class B Common
Stock issuable upon conversion of the 6% Convertible Junior
Subordinated Debentures (the "Conversion Shares");
(e) an executed copy of the Indenture;
(f) an executed copy of the Declaration;
(g) the Debentures as executed by the Company;
(h) an executed copy of the Registration Rights Agreement dated
November 10, 2000 among the Company, the Trust and the Initial
Purchasers; and
(i) the documents delivered by the Company and the Trust at the
closing pursuant to the Purchase Agreement, including copies of
the Company's Restated Certificate of Incorporation and Bylaws
certified by the Secretary of State of the State of Delaware and
the corporate secretary of the Company, respectively.
In addition, we have reviewed the originals or copies certified or otherwise
identified to our satisfaction of all such 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 (including, without limitation, the accuracy of the
representations and warranties of the Company and the Trust in the Purchase
Agreement) and (ii) that the certificates representing the Conversion Shares
conform to the specimens thereof that we have reviewed and that the Debentures
were 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:
1. The Indenture is a valid, binding and enforceable agreement of the
Company.
2. The Debentures are the valid, binding and enforceable obligations
of the Company, entitled to the benefits of the Indenture.
3. The Guarantee Agreement is a valid, binding and enforceable
agreement of the Company.
4. The Conversion Shares into which the Debentures are convertible at
the initial conversion price have been duly reserved for issuance upon
conversion and, upon issuance thereof on conversion of the Debentures in
accordance with the Indenture and the terms of the Debentures at conversion
prices at or in excess of the par value of such Conversion Shares, will be
validly issued, fully paid and nonassessable.
Insofar as the foregoing opinions relate to the validity, binding
effect or enforceability of any agreement or obligation of the Company or the
Trust, (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.
The foregoing opinions are limited to the federal law of the United
States of America (other than federal aviation law, as to which we express no
opinion), the law of the State of New York and the General Corporation Law of
the State of Delaware (including the applicable provisions of the Delaware
Constitution and reported judicial decisions interpreting that Law).
We hereby consent to the use of our name in the prospectus
constituting part of the Registration Statement and in any prospectus
supplements related thereto under the heading "Legal Matters" as counsel for the
Company who have passed on the validity of the Registrable Securities being
registered by the Registration Statement and as having prepared this opinion,
and to the use of this opinion as a part (Exhibit 5.1) of the Registration
Statement. In giving such consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Michael L. Ryan
-------------------------------
Michael L. Ryan, a Partner
[Letterhead of Morris, Nichols, Arsht & Tunnell]
February 6, 2001
February 7, 2001
Continental Airlines Finance Trust II
c/o Continental Airlines, Inc.
1600 Smith Street, Dept. HQSEO
Houston, Texas 77002
Re: Continental Airlines Finance Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel to Continental
Airlines Finance Trust II, a Delaware statutory business trust (the "Trust"), in
connection with certain matters relating to the preparation of Registration
Statement No. _______________ (and the Prospectus forming a part thereof) on
Form S-3 filed with the Securities and Exchange Commission (the "Commission") on
February 7, 2001 (the "Registration Statement"), by the Trust and Continental
Airlines, Inc. (the "Company"), relating to the registration with the Commission
of the Preferred Securities of the Trust.
The Preferred Securities have been issued pursuant to (i) a
Purchase Agreement dated as of November 6, 2000 (the "Purchase Agreement") among
the purchasers named therein (the "Purchasers"), the Trust and the Company and
(ii) the Amended and Restated Declaration of Trust of the Trust dated as of
November 10, 2000 (the "Governing Instrument"). Capitalized terms used herein
and not otherwise herein defined are used as defined in the Governing
Instrument.
In rendering this opinion, we have examined and relied upon
copies of the following documents in the forms provided to us: the Certificate
of Trust of the Trust as filed in the Office of the Secretary of State of the
State of Delaware (the "State Office") on November 6, 2000 (the "Certificate");
a Declaration of Trust of the Trust dated as of November 6, 2000 (the "Original
Governing Instrument"); the Governing Instrument; the Indenture dated as of
November 10, 2000 between the Company and Wilmington Trust Company, as Trustee;
the Preferred Securities Guarantee Agreement dated as of November 10, 2000
between the Company and Wilmington Trust Company, as Trustee; the Purchase
Agreement; the Trust's Confidential Offering Circular dated November 6, 2000
relating to the Securities (the "Offering Circular"); the Registration Rights
Agreement dated November 10, 2000 among the Trust, the Company and the
Purchasers; the Registration Statement; and a certification of good standing of
the Trust obtained as of a recent date from the State Office. In such
examinations, we have assumed the genuineness of all signatures, the conformity
to original documents of all documents submitted to us as drafts or copies or
forms of documents to be executed and the legal capacity of natural persons to
complete the execution of documents. We have further assumed for purposes of
this opinion: (i) the due formation or organization, valid existence and good
standing of each entity (other than the Trust) that is a signatory to any of the
documents reviewed by us under the laws of the jurisdiction of its respective
formation or organization; (ii) the due authorization, execution and delivery
by, or on behalf of, each of the signatories thereto of the above-referenced
documents (including, without limitation, the due authorization, execution and
delivery of the Governing Instrument and the Purchase Agreement prior to the
first issuance of Preferred Securities); (iii) that no event has occurred
subsequent to the filing of the Certificate that would cause a dissolution or
liquidation of the Trust under the Original Governing Instrument or the
Governing Instrument, as applicable; (iv) that the activities of the Trust have
been and will be conducted in accordance with the Original Governing Instrument
or the Governing Instrument, as applicable, and the Delaware Business Trust Act,
12 Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that the required
consideration for the Preferred Securities has been paid in accordance with the
terms and conditions of the Governing Instrument, the Offering Circular and the
Purchase Agreement and that the Preferred Securities have otherwise been issued
and sold to, and held or transferred by, the Preferred Securities Holders (and
any subsequent transferee), and all transfers have been made, in accordance with
the terms, conditions, requirements and procedures set forth in the Governing
Instrument, the Offering Circular and the Purchase Agreement; (vi) that the
Sponsor has directed the Administrative Trustees to take the actions
contemplated by Section 3.06(b) of the Governing Instrument; (vii) that none of
the Preferred Securities have been called for redemption, redeemed, converted or
exchanged or canceled (except in connection with a permitted transfer) and all
of the Preferred Securities remain outstanding; and (viii) that the documents
examined by us are in full force and effect, express the entire understanding of
the parties thereto with respect to the subject matter thereof and have not been
amended, supplemented or otherwise modified, except as herein referenced. No
opinion is expressed with respect to the requirements of, or compliance with,
federal or state securities or blue sky laws. We have not reviewed any documents
other than those identified above in connection with this opinion, and we have
assumed that there are no other documents that are contrary to or inconsistent
with the opinions expressed herein. As to any fact material to our opinion,
other than those assumed, we have relied without independent investigation on
the above-referenced documents and certificates and on the accuracy, as of the
date hereof, of the matters therein contained.
Based on and subject to the foregoing, and to the
qualifications set forth below, and limited in all respects to matters of
Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing statutory
business trust in good standing under the laws of the State of Delaware.
2. The Preferred Securities constitute validly issued, fully
paid and nonassessable beneficial interests in the assets of the Trust. We note
that pursuant to Section 11.04 of the Governing Instrument, the Trust may
withhold amounts otherwise distributable to a Preferred Security Holder and pay
over such amounts to the applicable jurisdictions in accordance with federal,
state and local law and any amount withheld will be deemed to have been
distributed to such Holder and that, pursuant to the Governing Instrument,
Preferred Security Holders may be obligated to make payments or provide
indemnity or security under the circumstances set forth therein.
3. Under the Delaware Act and the terms of the Governing
Instrument, each Preferred Security Holder of the Trust, in such capacity, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; provided, however, we express no
opinion with respect to the liability of any Preferred Security Holder who is,
was or may become a named Trustee of the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name under the heading
"LEGAL MATTERS" in the Prospectus. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission thereunder. This opinion speaks only as of the
date hereof and is based on our understandings and assumptions as to present
facts, and on our review of the above-referenced documents and the application
of Delaware law as the same exist as of the date hereof, and we undertake no
obligation to update or supplement this opinion after the date hereof for the
benefit of any person or entity with respect to any facts or circumstances that
may hereafter come to our attention or any changes in facts or law that may
hereafter occur or take effect. This opinion is intended solely for the benefit
of the addressee hereof in connection with the matters contemplated hereby and
may not be relied upon by any other person or entity or for any other purpose
without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Jonathan I. Lessner
--------------------------------
Jonathan I. Lessner
[LETTERHEAD OF CLEARY, GOTTLIEB, STEEN & HAMILTON]
Writer's Direct Dial: (212) 225-2786
E-Mail: yreich@cgsh.com
February 7, 2001
Continental Airlines, Inc.
1600 Smith St.
Houston, Texas 77002
Re: 5,000,000 Term Income Deferrable Equity Securities
(the "TIDES") of Continental Airlines Finance Trust II
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Continental Airlines, Inc., a
Delaware corporation (the "Company"), and Continental Airlines Finance Trust II,
a statutory business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with the Trust and the Company's offering pursuant to a
registration statement on Form S-3 (No. 333-[ ]) (the "Registration Statement")
of the TIDES, representing preferred undivided beneficial interests in the
assets of the Trust (the "TIDES"), the underlying Class B common stock, par
value $0.01 per share, of the Company (the "Common Stock"), the Preferred
Securities Guarantee of the TIDES by the Company (the "Guarantee") and the 6%
Convertible Junior Subordinated Debentures due 2030 of the Company (the
"Subordinated Debentures" and collectively, the "Registrable Securities").
Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Indenture.
In arriving at the opinions expressed below, we have examined and
relied upon the originals or copies, certified or otherwise identified to our
satisfaction, of the declaration of trust of the Trust dated as of November 6,
2000 (the "Declaration of Trust"), the amended and restated declaration of trust
of the Trust dated as of November 10, 2000 (the "Amended and Restated
Declaration of Trust"), certificate as to certain factual matters from the
Company dated November 10, 2000, and the Indenture, and of such records,
documents, instruments and certificates, and we have made such investigations of
law, as we have deemed appropriate as a basis for the opinions expressed below.
We have assumed and have not verified that the signatures on all documents that
we have examined are genuine and that each person signing each such document was
duly authorized to sign such document on behalf of the person or entity
purported to be bound thereby. In addition, for purposes of rendering the
opinions expressed below, we have assumed, without investigation on our part,
that (i) the Declaration of Trust, the Amended and Restated Declaration of Trust
and the Indenture have been duly authorized and validly executed and delivered
by the Company, the Trust and the Trustees and are legal, valid, binding and
enforceable instruments of the Company, the Trust and the Trustees and (ii) each
of the Indenture, the Subordinated Debentures, the Declaration of Trust, the
Indenture, the TIDES and the Guarantee has not been amended in any material
respect and the Trust has at all times been operated in accordance with the
terms of the Declaration of Trust.
Based on the foregoing, we are of the opinion that:
(i) The Trust will be characterized as a grantor trust for U.S.
federal income tax purposes and not as a partnership or as an
association subject to tax as a corporation; and
(ii) The Convertible Junior Subordinated Debentures constitute
indebtedness of the Company.
The opinions expressed above are based on the Internal Revenue Code of
1986, as amended, and other laws and regulations, rulings and decisions in
effect on the date hereof, all of which are subject to change (which change
could apply retroactively).
We hereby consent to the use of our name in the prospectus
constituting part of the Registration Statement under the heading "Tax
Consequences" as counsel for the Company who have passed on the material tax
consequences of the Registrable Securities being registered by the Registration
Statement and as having prepared this opinion, and to the use of this opinion as
a part (Exhibit 8.1) of the Registration Statement. In giving such consent, we
do not thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
We note that this opinion letter speaks only as of the date hereof,
and we assume no obligation to update this opinion letter.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By: /s/ Yaron Z. Reich
------------------------------
Yaron Z. Reich, a Partner
EXECUTION COPY
CONTINENTAL AIRLINES FINANCE TRUST II
6% Convertible Preferred Securities
Term Income Deferrable Equity Securities (TIDES)4
(liquidation amount $50 per each of the TIDES)
guaranteed to the extent set forth
in the Guarantee Agreement by, and
convertible into Class B Common Stock of,
Continental Airlines, Inc.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
November 10, 2000
Credit Suisse First Boston Corporation
UBS Warburg LLC
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
Continental Airlines Finance Trust II, a business trust formed under
the laws of the State of Delaware (the "Trust") by Continental Airlines, Inc., a
Delaware corporation (the "Company"), proposes to issue and sell to you, as
initial purchasers (the "Purchasers"), upon the terms set forth in a purchase
agreement dated November 6, 2000 (the "Purchase Agreement"), among the
Purchasers, the Company and the Trust up to 5,750,000 6% Convertible Preferred
Securities, Term Income Deferrable Equity Securities (TIDES)SM ("TIDES")
(liquidation amount $50 per each of the TIDES) (the "Initial Placement"). The
proceeds of the sale by the Trust of the TIDES and the 6% Convertible Common
Securities, liquidation amount $50 per Common Security (the "Common
Securities"), are to be invested in the Convertible Junior Subordinated
Debentures Due 2030 of the Company (the "Convertible Junior Subordinated
Debentures") having an aggregate principal amount equal to the aggregate
liquidation amount of the TIDES and the Common Securities. The TIDES are
guaranteed by the Company to the extent set forth in the Guarantee Agreement
dated as of November 10, 2000 (the "Guarantee"), between the Company and
Wilmington Trust Company, as trustee, and are convertible into Class B common
stock, par value $.01 per share (together with shares of any class or classes
resulting from any reclassification or reclassifications thereof, "Class B
Common Stock"), of the Company. As an inducement to you to enter into the
Purchase Agreement and in satisfaction of a condition to your obligations
thereunder, the Trust and the Company agree with you, (i) for your benefit and
(ii) for the benefit of the registered holders from time to time of the TIDES
and the Convertible Junior Subordinated Debentures and the record holders of the
Class B Common Stock of the Company issuable upon conversion of the TIDES or the
Convertible Junior Subordinated Debentures (collectively, together with the
Guarantee by the Company of the TIDES, the "Securities"), including the
Purchasers (each of the foregoing a "Holder" and together the "Holders"), as
follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or, if not defined therein, in the Confidential Offering Circular
dated November 6, 2000, in respect of the TIDES or, if not defined therein, in
the Amended and Restated Declaration of Trust dated as of November 10, 2000 (the
"Declaration") relating to the Trust. 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,
and the rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled 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;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in The City of New York or Wilmington,
Delaware are authorized or required by law or executive order to remain closed
or (iii) a day on which the corporate trust office of the Debenture Trustee or
the Property Trustee is closed for business.
"Class B Common Stock" has the meaning set forth in the first paragraph
to this Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning set forth in the first paragraph to this
Agreement.
"Convertible Junior Subordinated Debentures" has the meaning set forth
in the first paragraph to this Agreement.
"Debenture Trustee", "Guarantee Trustee" and "Property Trustee" each
means Wilmington Trust Company, a Delaware banking corporation.
"Electing Holder" has the meaning assigned thereto in Section 2(c)(iii)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Closing Date" has the meaning given such term in the Purchase
Agreement.
"Guarantee" has the meaning set forth in the first paragraph to this
Agreement.
"Holder" and "Holders" each has the meaning set forth in the first
paragraph to this Agreement.
"Initial Placement" has the meaning set forth in the first paragraph to
this Agreement.
"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" means 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 filed pursuant to Rule 415 under the Act, with respect to the terms of
the offering of all or any portion of the Securities covered by such Shelf
Registration Statement, as amended or supplemented by all amendments (including
post-effective amendments) and supplements to the Prospectus.
"Purchase Agreement" has the meaning set forth in the first paragraph
to this Agreement.
"Purchasers" has the meaning set forth in the first paragraph to this
Agreement.
"Registration Default" has the meaning given to such term in Section
7(a) hereof.
"Securities" means the TIDES, the Convertible Junior Subordinated
Debentures, the Class B Common Stock and the Guarantee, individually and
collectively.
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Trust and the Company pursuant to the provisions of Section 2 hereof
filed with the Commission which covers some or all of the 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.
"Special Distributions" has the meaning given such term in Section 7(a)
hereof.
"Special Interest" has the meaning given such term in Section 7(a)
hereof.
"TIDES" has the meaning set forth in the first paragraph to this
Agreement.
"Trust" has the meaning set forth in the first paragraph to this
Agreement.
"Trustee" means the Guarantee Trustee, the Indenture Trustee or the
Property Trustee, as applicable.
"Underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Shelf Registration. (a) The Trust and the Company shall (i) file as
soon as practicable, but in no event more than 90 days after the First Closing
Date, a Shelf Registration Statement covering resales of the TIDES, the
Guarantee, the Convertible Junior Subordinated Debentures and the related
Company Class B Common Stock issuable upon conversion thereof and (ii) use their
best efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act within 180 days after the First Closing Date, provided,
however, that no Holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement or to use the Prospectus
forming a part thereof for resales of Securities unless such holder is an
Electing Holder.
(b) The Trust and the Company shall each use their best efforts (i) to
keep the Shelf Registration Statement continuously effective, subject to Section
7(b) hereof, in order to permit the Prospectus forming part thereof to be usable
by Holders until resale of the Securities are permitted pursuant to Rule 144(k)
under the Securities Act or any successor rule or regulation thereto after the
date the Shelf Registration Statement is declared effective or such shorter
period that will terminate upon the earliest of the following: (A) two years
from the date of the effectiveness of the Shelf Registration Statement, (B) when
all the TIDES covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement, (C) when all Convertible Junior
Subordinated Debentures issued to Holders in respect of TIDES that had not been
sold pursuant to the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or (D) when all shares of Class B Common Stock
issued upon conversion of any such TIDES or any such Convertible Junior
Subordinated Debentures that had not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf Registration
Period") and (ii) after the effectiveness of the Shelf Registration Statement,
promptly upon the request of any Holder that is not then an Electing Holder to
take any action reasonably necessary to register the sale of any Securities of
such Holder and to identify such Holder as a selling securityholder, provided,
however, that nothing in this subparagraph shall relieve such Holder of the
obligation to provide the Trust and the Company with the information required
pursuant to Section 2(c) hereof.
(c) (i) No Holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement as of the date on which the
Commission declares the Shelf Registration Statement effective or on which the
Shelf Registration Statement otherwise becomes effective, and no Holder shall be
entitled to use the Prospectus forming a part thereof for resales of Securities
at any time, unless such holder has provided the Company and the Trust with such
information as they shall reasonably request in order to enable the Company and
the Trust to comply with the applicable requirements of the Securities Act in
connection with offers and sales by such Holder as a selling securityholder in
the Shelf Registration Statement within 30 calendar days from the date on which
any such request is first mailed to such Holder. Each Holder as to which any
Shelf Registration is being effected agrees to furnish promptly to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
(ii) After the date on which the Commission declares the Shelf
Registration Statement effective or on which the Shelf Registration Statement
otherwise becomes effective, the Company and the Trust may, upon the request of
any Holder of Securities that is not then an Electing Holder, take such action
as is necessary to name such Holder as a selling security holder in the Shelf
Registration Statement or to enable such Holder to use the Prospectus forming a
part thereof for resales of Securities if such Holder promptly provides the
Company and the Trust with such information as they shall reasonably request in
order to enable the Company and the Trust to comply with the applicable
requirements of the Securities Act in connection with offers and sales by such
Holder so as to permit such Holder to be so named. Each Holder as to which any
Shelf Registration is being effected agrees to furnish promptly to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
(iii) The term "Electing Holder" shall mean any holder of Securities
that has complied with the requests of the Company and the Trust in accordance
with Section 2(c)(i) or 2(c)(ii) hereof.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a) The Trust and the Company shall furnish to each Purchaser, 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 such Purchaser reasonably may propose.
(b) The Trust and the Company shall take such action as may be
necessary, subject to Section 7(b) hereof, 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, during the Shelf
Registration Period, 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) The Company shall advise each Purchaser and each Electing
Holder and, if requested by such Purchaser or any such Electing Holder in
writing, 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) The Trust and the Company shall advise each Purchaser and each
Electing Holder and, if requested by such Purchaser or any such Electing Holder
in writing, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of any
proceedings for that purpose;
(ii) of the receipt by the Trust or the Company of any notification
with respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening, during the Shelf Registration Period, of any
event (provided that such notice need not specify the nature of such 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.
(3) Written notice pursuant to Sections 3(c)(1)(ii) and
3(c)(2)(i)-(iii) shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made.
(d) The Trust and the Company shall use their reasonable 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) The Trust and the Company shall furnish to each Electing Holder of
Securities, 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 Electing Holder so requests in writing,
all exhibits thereto (including those incorporated by reference).
(f) The Trust and the Company shall, during the Shelf Registration
Period, deliver to each Electing Holder, 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 Electing
Holder may reasonably request; and each of the Trust and the Company consents to
the use of the Prospectus or any amendment or supplement thereto by each of the
Electing Holders in connection with the offering and sale of the Securities
covered by the Prospectus or any amendment or supplement thereto during the
Shelf Registration Period.
(g) Prior to any offering of Securities pursuant to any Shelf
Registration Statement, the Trust and the Company shall register or qualify or
cooperate with the Electing Holders and their respective counsel in connection
with the registration or qualification of such Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such Electing
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
Securities covered by such Shelf Registration Statement; provided, however, that
neither the Trust nor the Company will be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(h) Unless the applicable Securities shall be in book-entry only form,
the Trust and the Company shall cooperate with the Electing Holders to
facilitate the timely preparation and delivery of certificates representing
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 Electing Holders may request in connection the sale of Securities
pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by Section
3(c)(1)(ii) or 3(c)(2)(i) above, the Trust and the Company shall promptly
prepare, subject to Section 7(b) hereof, as soon as possible 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 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 the Trust or
the Company notifies the Electing Holders in accordance with Section 3(c)(3)
above to suspend use of the prospectus until the requisite changes to the
Prospectus have been made, then the Electing Holders shall suspend the use of
the Prospectus until the requisite changes to the Prospectus have been made, and
the period of effectiveness of the Shelf Registration Statement provided for in
Section 2(b) above shall be extended by the number of days from and including
the date of the giving of such notice to and including the date when the
Purchaser and the Electing Holders of the Securities shall have received such
amended or supplemented prospectus pursuant to this Section 3(i).
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and the Company shall provide a CUSIP number for
the TIDES and, in the event of and at the time of any distribution thereof to
Holders, the Convertible Junior Subordinated Debentures, registered under such
Shelf Registration Statement, and provide the applicable Trustee with
certificates for such Securities, in a form eligible for deposit with The
Depository Trust Company.
(k) The Trust and the Company shall comply with all applicable rules
and regulations of the Commission and shall make generally available to their
securityholders (or otherwise provide in accordance with Section 11(a) of the
Securities Act) an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45 days after the end of a 12-month period
(or 90 days, if such period is a fiscal year) beginning with the first month of
the Company's first quarter commencing after the effective date of the
Registration Statement, which statement shall cover such 12-month period.
(l) The Trust and the Company shall cause the Indenture, the
Declaration and the Guarantee to be qualified under the Trust Indenture Act in a
timely manner and containing such changes, if any, as shall be necessary for
such qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(m) The Trust and the Company may require each Electing Holder to
furnish to the Trust and the Company such information regarding the Electing
Holder and the distribution of such Securities as the Trust and the Company may
from time to time reasonably require for inclusion in such Shelf Registration
Statement, and the Trust and the Company may exclude from such registration the
Securities of any Electing Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.
(n) The Trust and the Company shall, if requested, promptly
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 the Trust and the Company do 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 incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
obligated to arrange for more than one underwritten offering during the Shelf
Registration Period as set forth in Section 6 hereof.
(o) The Trust and the Company 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 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) The Trust and the Company shall (i) make reasonably available for
inspection by the Electing Holders, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Electing Holders or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Trust and the Company and its subsidiaries as
shall be requested in connection with the discharge of their due diligence
obligations; (ii) cause the Company's officers, directors and employees and any
relevant Trustees to supply at the Company's expense all relevant information
reasonably requested by such Electing Holders or any such underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement, in
each case, as shall be reasonably necessary to enable such persons to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
provided, however, that any information that is designated in writing by the
Trust and the Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by such Electing 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 obligations of confidentiality; and provided, further, that the
foregoing inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of the Electing Holders and the other parties
entitled thereto by one counsel designated by and on behalf of such Electing
Holders and other parties; (iii) in connection with an underwritten offering
conducted pursuant to Section 6 hereof, make such representations and warranties
to the Electing Holders participating in such underwritten offering and the
underwriters in form, substance and scope as are customarily made by the Company
and the Trust to underwriters in primary underwritten offerings including, but
not limited to, those set forth in the Purchase Agreement; (iv) in connection
with an underwritten offering conducted pursuant to Section 6 hereof, obtain
opinions of counsel to the Trust and the Company (some of which may be given by
the General Counsel of the Company) and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
Managing Underwriters) addressed to each Electing Holder participating in such
offering and the underwriters, if any, covering such matters and with such
exceptions as are customarily covered or taken in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such Electing Holders and underwriters (it being agreed that the matters to be
covered by such opinion shall include, 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, a statement by such
counsel regarding 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)
in connection with an underwritten offering conducted pursuant to Section 6
hereof, obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf Registration
Statement), addressed to each Electing Holder participating in such underwritten
offering and the underwriters, if any, in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
primary underwritten offerings in accordance with Statement of Auditing
Standards No. 72; and (vi) in connection with an underwritten offering conducted
pursuant to Section 6 hereof, deliver such documents and certificates as may be
reasonably requested by 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 similar agreement entered into
by the Trust and the Company. The foregoing actions set forth in clauses (iii),
(iv), (v) and (vi) of this Section 3(p) shall be performed at (A) the execution
of an underwriting agreement with respect to clauses (ii) and (v) only and (B)
each closing under any underwritten offering to the extent required under any
related underwriting or similar agreement.
(q) The Trust and the Company will use their best efforts to cause the
Class B Common Stock relating to such Shelf Registration Statement to be listed
on each securities exchange, over-the-counter market, or respective counterpart
if any, on which any shares of Class B Common Stock are then listed.
(r) The Trust and the Company shall, in the event that any
broker-dealer registered under the Exchange Act shall underwrite any 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
(the "Rules") and the By-Laws of the National Association of Securities Dealers,
Inc. ("NASD")) thereof, whether as a Holder of such 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) if
such Rules or By-Laws, including Schedule E thereto, shall so require, engaging
a "qualified independent underwriter" (as defined in such Schedule) to
participate in the preparation of the Shelf Registration Statement relating to
such Securities, to exercise usual standards of due diligence in respect
thereto, (B) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters 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) The Company will use its best efforts to (a) if the Securities
have been rated prior to the initial sale of such Securities, confirm such
ratings will apply to the Securities covered by the Shelf Registration
Statement, or (b) if the Securities were not previously rated, cause the
Securities covered by the Shelf Registration Statement to be rated with the
appropriate rating agencies, if so requested by Electing Holders of a majority
in aggregate principal amount of Securities covered by such Shelf Registration
Statement, or by the managing underwriters, if any.
(t) The Trust and the Company shall use their best efforts to take all
other steps necessary to effect the registration, offering and sale of the
Securities covered by the Shelf Registration Statement contemplated hereby.
4. Registration Expenses. Except as otherwise provided in Section 6,
the Company shall bear all fees and expenses incurred in connection with the
performance of the obligations of the Company and the Trust under Sections 2 and
3 hereof and shall bear or reimburse the Purchasers for the reasonable fees and
disbursements of not more than one counsel designated by the Company and
reasonably acceptable to the Holders of a majority in principal amount of
Securities in connection with the filing of the Shelf Registration Statement.
5. Indemnification and Contribution. (a) In connection with any Shelf
Registration Statement, the Trust and the Company, jointly and severally, agree
to indemnify and hold harmless each Electing Holder and each person who controls
any such Electing Holder within the meaning of either the Securities Act or the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Electing Holder or any such controlling person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon written
information furnished to the Company by or on behalf of any such Electing Holder
specifically for inclusion therein and; provided, however, that the foregoing
indemnity agreement with respect to the Prospectus shall not inure to the
benefit of any Electing Holder from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities, or to the benefit of
any person controlling such Electing Holder, if a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such Electing
Holder to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of such Securities, if the Company has
previously furnished such quantity of copies thereof to such Electing Holder,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities. This
indemnity agreement will be in addition to any liability which the Company or
the Trust may otherwise have. The Trust and the Company, jointly and severally,
also agree to indemnify or contribute to losses, claims, damages or liabilities
of, as provided in Section 5(d), any underwriters of Securities registered under
the Shelf Registration Statement, their officers, directors, employees and
agents and each person who controls such underwriters on substantially the same
basis as that of the indemnification of the Electing Holders provided in this
Section 5(a) and shall, if requested by any Electing Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
and Section 6 hereof.
(b) Each Electing Holder agrees, severally and not jointly, to
indemnify and hold harmless the Trust and the Company its directors, officers,
employees, trustees, agents and each person, if any, who controls the Company,
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from the Company
to such Electing Holder, but only with reference to such information furnished
to the Company by or on behalf of any such Electing Holder specifically for
inclusion in the Prospectus.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. The indemnifying
party, upon request of the indemnified party, shall, and the indemnifying party
may elect to, retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and the indemnifying party shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (iii) the indemnifying party shall have
failed to retain counsel as required by the prior sentence to represent the
indemnified party within a reasonable amount of time. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 90
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement, unless such
fees and expenses are being disputed in good faith. The indemnifying party at
any time may, subject to the last sentence of this Section 5(c), settle or
compromise any proceeding described in this paragraph at the expense of the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Electing Holders shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Electing Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Electing Holders' respective obligations to contribute pursuant to this
Section 5(d) are several in proportion to the respective aggregate principal
amount of Securities of such Electing Holder that were registered pursuant to a
Shelf Registration Statement.
(e) The Company and the Holders agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation (even if the Electing Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Electing Holder shall be required to indemnify or contribute any
amount in excess of the amount by which the total price at which Certificates
were sold by such Electing Holder exceeds the amount of any damages that such
Electing Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The indemnity and contribution
provisions contained in this Section 5 shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Electing Holder or any person
controlling any Electing Holder or by or on behalf of the Company, its officers
or directors or any person controlling the Company, and (iii) acceptance of and
payment for any of the Offered Securities. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
6. Underwritten Offering. The Holders of Securities covered by the
Shelf Registration Statement who desire to do so may sell such 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 Securities to be included in such
offering; provided, however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company and the
Trust and (ii) the Company shall not be obligated to arrange for more than one
underwritten offering during the Shelf Registration Period. No Holder may
participate in any underwritten offering contemplated hereby unless such Holder
(a) agrees to sell such Holder's 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, (c) at least 30% of the then-outstanding Securities
are included in such underwritten offering, and (d) if such Holder is not then
an Electing Holder, such Holder provides the Company and the Trust with such
information as they shall reasonably request in order to enable the Company and
the Trust to comply with the applicable requirements of the Securities Act in
connection with offers and sales by such Holder as a selling securityholder in
the underwritten offering within a reasonable amount of time before 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.
7. Special Interest and Special Distributions Under Certain
Circumstances. (a) If (i) within 180 days of the First Closing Date the Shelf
Registration Statement has not been declared effective by the Commission, or
(ii) in the event that a Shelf Registration Statement is declared effective by
the Commission, the Company or the Trust fails to keep such Shelf Registration
Statement continuously effective and usable (except as permitted in paragraph
(b) of this Section 7) prior to the end of the Shelf Registration Period (each
such event referred to in clauses (i) and (ii), a "Registration Default"), then
additional interest ("Special Interest") will accrue on the Convertible Junior
Subordinated Debentures outstanding at such time (including in respect of
amounts accruing during any Deferral Period), and corresponding additional
distributions (the "Special Distributions") will accrue on the TIDES outstanding
at such time and the Common Securities outstanding at such time, in each case
from and including the day following such Registration Default to but excluding
the day on which such Registration Default has been cured or has been deemed to
have been cured. Subject to the deferral of interest provisions of the
Convertible Junior Subordinated Debentures and the deferral of distributions
provisions of the TIDES, Special Interest and Special Distributions will be paid
in cash quarterly in arrears on February 15, May 15, August 15 and November 15
commencing with the first such date following the applicable Registration
Default and will accrue at a rate such that the interest rate or distribution
rate, as the case may be, will be increased 0.50% per annum of the principal
amount or liquidation amount, as applicable. Following the cure of a
Registration Default, Special Interest and Special Distributions will cease to
accrue with respect to such Registration Default.
(b) A Registration Default referred to in Section 7(a)(ii) shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related Prospectus if such Registration Default
has occurred solely as a result of (x) the filing of a post-effective amendment
to such Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related Prospectus or (y) the occurrence of other material events or
developments with respect to the Trust or the Company that would need to be
described in such Registration Statement or the related Prospectus and either
(i) the Company shall have determined in good faith that such disclosure is not
in the best interests of the Company and its stockholders or (ii) the Trust and
the Company are proceeding promptly and in good faith to amend or supplement
such Registration Statement and related Prospectus to describe such events;
provided, however, that in any case, if such Registration Default occurs for a
continuous period in excess of 30 days, Special Interest and Special
Distributions shall be payable in accordance with the above paragraph from the
day following the last day of such 30-day period until the date on which such
Registration Default is cured; and provided, further, that there shall be no
more than two such 30-day periods in any 12-month period.
8. Rules 144 and 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, within a reasonable period of time, upon written request
of any Holder of Securities, make publicly available other information so long
as necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Company covenants that it will take such further action as any Holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Company will provide a
copy of this Agreement to prospective purchasers of Securities identified to the
Company by any Purchaser upon request. Upon the request of any Holder of
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
9. Miscellaneous.
(a) Other Registration Rights. The Company 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, 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 Managing Underwriter prior to any reduction in the amount of
Securities to be included.
(b) No Inconsistent Agreements. The Trust and the Company have not, as
of the date hereof, entered into, nor shall they on or after the date hereof,
enter into, any agreement with respect to their securities or otherwise that is
inconsistnt with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(c) 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 the Trust and the Company have
obtained the written consent of the Credit Suisse First Boston Corporation.
(d) 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 courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 9(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture;
(ii) if to the Purchasers, initially at the address set forth in
the Purchase Agreement; and
(iii) if to the Trust or the Company, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
The Purchaser or the Trust and the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(e) 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
the Trust or the Company thereto, subsequent Holders of Securities. The Trust
and the Company hereby agree to extend the benefits of this Agreement to any
Holder of Securities and any such Holder may specifically enforce the provisions
of this Agreement as if an original party hereto.
(f) 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.
(g) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
(i) Severability. In the event that any one of 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.
(j) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Trust, on the one hand, and the Purchasers, on the other hand, and the Holders
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(k) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its Affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
[Remainder of this Page Intentionally Left Blank]
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Purchasers, the Trust and the Company in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES FINANCE TRUST II
By: /s/ Gerald Laderman
----------------------------------
solely in his capacity as trustee
and not in his individual capacity
CONTINENTAL AIRLINES, INC.
By: /s/ Gerald Laderman
----------------------------------
Name: Gerald Laderman
Title: Senior Vice President
Finance
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS WARBURG LLC
By: CREDIT SUISSE FIRST BOSTON CORPORATION
Acting on behalf of itself and as the
representative of the several Purchasers
By: /s/ John Stevenson
-------------------------------------
John Stevenson
Director
CONTINENTAL AIRLINES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS)
Year
Ended
12/31/00 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- --------
Earnings:
Earnings Before Income Taxes,
Minority Interest and $ 570 $ 798 $ 648 $ 639 $ 428 $ 310
Extraordinary Items
Plus:
Interest Expense 251 233 178 166 165 213
Capitalized Interest (57) (55) (55) (35) (5) (6)
Amortization of 16 13 5 3 3 2
Capitalized Interest
Portion of Rent Expense
Representative of
Interest
Expense 778 714 461 400 359 360
-------- -------- -------- -------- -------- --------
1,558 1,703 1,237 1,173 950 879
-------- -------- -------- -------- -------- --------
Fixed Charges:
Preferred Stock Dividends - - - 3 6 12
TIDES Dividends 1 - - - - -
TOPRS Dividends - - 13 14 14 2
Interest Expense 251 233 178 166 165 213
Portion of Rent Expense
Representative of
Interest
Expense 778 714 461 400 359 360
-------- -------- -------- -------- -------- --------
Total Fixed Charges 1,030 947 652 583 544 587
-------- -------- -------- -------- -------- --------
Coverage Adequacy $ 528 $ 756 $ 585 $ 590 $ 406 $ 292
======== ======== ======== ======== ======== ========
Coverage Ratio 1.51 1.80 1.90 2.01 1.75 1.50
======== ======== ======== ======== ======== ========
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. (the "Company") for the registration of its 5,000,000 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES) and to the incorporation by reference therein of our report dated
January 16, 2001 (except Note 16, as to which the date is January 22, 2001) with
respect to the consolidated financial statements and our report dated January
16, 2001 with respect to the financial statement schedule of the Company
included in its Annual Report (Form 10-K) for the year ended December 31, 2000,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Houston, Texas
February 5, 2001
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Gregory D. Brenneman
-------------------------------------
Printed Name: Gregory D. Brenneman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Chris T. Kenny
-------------------------------------
Printed Name: Chris T. Kenny
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Lawrence W. Kellner
-------------------------------------
Printed Name: Lawrence W. Kellner
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Richard W. Pogue
-------------------------------------
Printed Name: Richard W. Pogue
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Douglas H. McCorkindale
-------------------------------------
Printed Name: Douglas H. McCorkindale
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Gordon M. Bethune
-------------------------------------
Printed Name: Gordon M. Bethune
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Thomas J. Barrack, Jr.
-------------------------------------
Printed Name: Thomas J. Barrack, Jr.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ David Bonderman
-------------------------------------
Printed Name: David Bonderman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Kirbyjon H. Caldwell
-------------------------------------
Printed Name: Kirbyjon H. Caldwell
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Patrick Foley
-------------------------------------
Printed Name: Patrick Foley
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ George G. C. Parker
-------------------------------------
Printed Name: George G. C. Parker
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ William S. Price III
-------------------------------------
Printed Name: William S. Price III
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Donald L. Sturm
-------------------------------------
Printed Name: Donald L. Sturm
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Karen Hastie Williams
-------------------------------------
Printed Name: Karen Hastie Williams
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Charles A. Yamarone
-------------------------------------
Printed Name: Charles A. Yamarone
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of Continental Airlines, Inc. (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
(i) do any and all things in the undersigned's name and behalf in the
undersigned's capacity as a director and/or officer of the Company, and to
execute any and all instruments for the undersigned and in the undersigned's
name and capacity as a director and/or officer that such person or persons may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations or requirements of the
Securities and Exchange Commission in connection with that certain shelf
Registration Statement on Form S-3 relating to the offering of those certain 6%
Convertible Preferred Securities, Term Income Deferrable Equity Securities
("TIDES") of Continental Airlines Finance Trust II, the 6% Convertible Junior
Subordinated Debentures due 2030 of the Company related thereto, the Preferred
Securities Guarantee of the TIDES by the Company and the Class B Common Stock of
the Company issuable thereunder (the "Registration Statement"), including
specifically, but not limited to, power and authority to sign for the
undersigned in the capacity as a director and/or officer of the Company the
Registration Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify and confirm
all that such person or persons shall do or cause to be done by virtue hereof,
and (ii) to execute in the name, place and stead of the undersigned the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (and
any amendments thereto), to be filed by the Company under the Securities
Exchange Act of 1934, as amended, as fully and effectively in all respects as
the undersigned could do if personally present.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
on and as of the date set forth below.
Date: February 6, 2001 /s/ Gerald Laderman
-------------------------------------
Printed Name: Gerald Laderman
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(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 of incorporation) (I.R.S. employer
identification no.)
1600 Smith Street
Houston, Texas 770602
(Address of principal executive offices) (Zip Code)
6% Convertible Junior Subordinated Debentures of Continental Airlines Inc.
(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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 7th day
of February, 2001.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Monica M. Henry By: /s/ Bruce L. Bisson
-------------------------------- --------------------------------
Name: Monica M. Henry Name: Bruce L. Bisson
-------------------------- ------------------------------
Title: Assistant Secretary Title: Vice President
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is Wilmington Trust Company
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to receive
a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right
to vote thereon; to invest and deal in and with any of the
moneys of the Corporation upon such securities and in such
manner as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the extent
authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest
therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
Fourth: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article Fourth,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article Fourth), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article Fourth), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article Fourth, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article Fourth), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining assets
of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by
them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article Fourth, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article Fourth and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article Fourth
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agents and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
Fifteenth: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and (c)
of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to in any one or more of clauses (A) through
(E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth
or Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 20, 2000
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The authorized number of directors that shall constitute the
Board of Directors shall be fixed from time to time by or pursuant to a
resolution passed by a majority of the Board within the parameters set by the
Charter of the Bank. No more than two directors may also be employees of the
Company or any affiliate thereof.
Section 2. Except as provided in these Bylaws or as otherwise required
by law, there shall be no qualifications for election or service as directors of
the Company. In addition to any other provisions of these Bylaws, to be
qualified for nomination for Election or appointment to the Board of Directors
each person must have not attained the age of sixty-nine years at the time of
such election or appointment, provided however, the Nominating and Corporate
Governance Committee may waive such qualification as to a particular candidate
otherwise qualified to serve as a director upon a good faith determination by
such committee that such a waiver is in the best interests of the Company and
its stockholders. The Chairman of the Board of Directors shall not be qualified
to continue to serve as a director upon the termination of his or her services
in that office for any reason.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none of
whom shall be an officer of the Company, and shall hold office at the pleasure
of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 4. Associate Directors
(A) Any person who has served as a director may be elected
by the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferable only upon the books of
the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director or officer in his capacity
as a Director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director or officer to
repay all amounts advanced if it should be ultimately determined that the
Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: February 7, 2001 By: /s/ Bruce L. Bisson
---------------------------------
Name: Bruce L. Bisson
---------------------------
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks
and savings banks with state publication requirements.
It has not been approved by any state banking
authorities. Refer to your appropriate state banking
authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- -----------------
Name of Bank City
in the State of DELAWARE, at the close of business on September 30, 2000.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................173,106
Interest-bearing balances................................................0
Held-to-maturity securities...............................................21,442
Available-for-sale securities..........................................1,408,123
Federal funds sold and securities purchased under agreements to resell...482,197
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . 4,325,225
LESS: Allowance for loan and lease losses . . . . . 69,894
LESS: Allocated transfer risk reserve . . . . . . . 0
Loans and leases, net of unearned income, allowance,
and reserve....................................................4,755,331
Assets held in trading accounts................................................0
Premises and fixed assets (including capitalized leases).................121,675
Other real estate owned......................................................597
Investments in unconsolidated subsidiaries and associated companies........1,636
Customers' liability to this bank on acceptances outstanding...................0
Intangible assets..........................................................4,820
Other assets..............................................................65,791
Total assets...........................................................7,034,718
CONTINUED ON NEXT PAGE
LIABILITIES
Deposits:
In domestic offices....................................................5,331,872
Noninterest-bearing . . . . . . . . 1,111,039
Interest-bearing. . . . . . . . . . 4,220,833
Federal funds purchased and Securities sold under agreements to
repurchase..............................................................397,628
Demand notes issued to the U.S. Treasury..................................70,227
Trading liabilities (from Schedule RC-D).......................................0
Other borrowed money:....................................................///////
With original maturity of one year or less.........................675,000
With original maturity of more than one year........................43,000
Bank's liability on acceptances executed and outstanding.......................0
Subordinated notes and debentures..............................................0
Other liabilities (from Schedule RC-G)....................................66,073
Total liabilities......................................................6,583,800
EQUITY CAPITAL
Perpetual preferred stock and related surplus..................................0
Common Stock.................................................................500
Surplus (exclude all surplus related to preferred stock)..................62,118
Undivided profits and capital reserves...................................410,136
Net unrealized holding gains (losses) on available-for-sale
securities............................................................(21,836)
Total equity capital.....................................................450,918
Total liabilities, limited-life preferred stock, and equity capital....7,034,718
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
CONTINENTAL AIRLINES FINANCE TRUST II
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
Delaware Applied For
(State of incorporation) (I.R.S. employer
identification no.)
1600 Smith Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
6% Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)SM of Continental Airlines Finance Trust II
(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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 7th day
of February, 2001.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Monica M. Henry By: /s/ Bruce L. Bisson
-------------------------------- --------------------------------
Name: Monica M. Henry Name: Bruce L. Bisson
-------------------------- ------------------------------
Title: Assistant Secretary Title: Vice President
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is Wilmington Trust Company
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to receive
a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right
to vote thereon; to invest and deal in and with any of the
moneys of the Corporation upon such securities and in such
manner as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the extent
authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest
therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
Fourth: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article Fourth,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article Fourth), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article Fourth), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article Fourth, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article Fourth), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining assets
of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by
them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article Fourth, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article Fourth and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article Fourth
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agents and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
Fifteenth: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and (c)
of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to in any one or more of clauses (A) through
(E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth
or Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 20, 2000
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The authorized number of directors that shall constitute the
Board of Directors shall be fixed from time to time by or pursuant to a
resolution passed by a majority of the Board within the parameters set by the
Charter of the Bank. No more than two directors may also be employees of the
Company or any affiliate thereof.
Section 2. Except as provided in these Bylaws or as otherwise required
by law, there shall be no qualifications for election or service as directors of
the Company. In addition to any other provisions of these Bylaws, to be
qualified for nomination for Election or appointment to the Board of Directors
each person must have not attained the age of sixty-nine years at the time of
such election or appointment, provided however, the Nominating and Corporate
Governance Committee may waive such qualification as to a particular candidate
otherwise qualified to serve as a director upon a good faith determination by
such committee that such a waiver is in the best interests of the Company and
its stockholders. The Chairman of the Board of Directors shall not be qualified
to continue to serve as a director upon the termination of his or her services
in that office for any reason.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none of
whom shall be an officer of the Company, and shall hold office at the pleasure
of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 4. Associate Directors
(A) Any person who has served as a director may be elected
by the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferable only upon the books of
the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director or officer in his capacity
as a Director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director or officer to
repay all amounts advanced if it should be ultimately determined that the
Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: February 7, 2001 By: /s/ Bruce L. Bisson
---------------------------------
Name: Bruce L. Bisson
---------------------------
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks
and savings banks with state publication requirements.
It has not been approved by any state banking
authorities. Refer to your appropriate state banking
authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- -----------------
Name of Bank City
in the State of DELAWARE, at the close of business on September 30, 2000.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................173,106
Interest-bearing balances................................................0
Held-to-maturity securities...............................................21,442
Available-for-sale securities..........................................1,408,123
Federal funds sold and securities purchased under agreements to resell...482,197
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . 4,325,225
LESS: Allowance for loan and lease losses . . . . . 69,894
LESS: Allocated transfer risk reserve . . . . . . . 0
Loans and leases, net of unearned income, allowance,
and reserve....................................................4,755,331
Assets held in trading accounts................................................0
Premises and fixed assets (including capitalized leases).................121,675
Other real estate owned......................................................597
Investments in unconsolidated subsidiaries and associated companies........1,636
Customers' liability to this bank on acceptances outstanding...................0
Intangible assets..........................................................4,820
Other assets..............................................................65,791
Total assets...........................................................7,034,718
CONTINUED ON NEXT PAGE
LIABILITIES
Deposits:
In domestic offices....................................................5,331,872
Noninterest-bearing . . . . . . . . 1,111,039
Interest-bearing. . . . . . . . . . 4,220,833
Federal funds purchased and Securities sold under agreements to
repurchase..............................................................397,628
Demand notes issued to the U.S. Treasury..................................70,227
Trading liabilities (from Schedule RC-D).......................................0
Other borrowed money:....................................................///////
With original maturity of one year or less.........................675,000
With original maturity of more than one year........................43,000
Bank's liability on acceptances executed and outstanding.......................0
Subordinated notes and debentures..............................................0
Other liabilities (from Schedule RC-G)....................................66,073
Total liabilities......................................................6,583,800
EQUITY CAPITAL
Perpetual preferred stock and related surplus..................................0
Common Stock.................................................................500
Surplus (exclude all surplus related to preferred stock)..................62,118
Undivided profits and capital reserves...................................410,136
Net unrealized holding gains (losses) on available-for-sale
securities............................................................(21,836)
Total equity capital.....................................................450,918
Total liabilities, limited-life preferred stock, and equity capital....7,034,718
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(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 of incorporation) (I.R.S. employer
identification no.)
1600 Smith Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Guarantee of 6% Convertible Preferred Securities, Term Income Deferrable
Equity Securities (TIDES)SM by Continental Airlines, Inc.
(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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 7th day
of February, 2001.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Monica M. Henry By: /s/ Bruce L. Bisson
-------------------------------- --------------------------------
Name: Monica M. Henry Name: Bruce L. Bisson
-------------------------- ------------------------------
Title: Assistant Secretary Title: Vice President
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is Wilmington Trust Company
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to receive
a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right
to vote thereon; to invest and deal in and with any of the
moneys of the Corporation upon such securities and in such
manner as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the extent
authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest
therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
Fourth: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article Fourth,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article Fourth), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article Fourth), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article Fourth, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article Fourth), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining assets
of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by
them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article Fourth, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article Fourth and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article Fourth
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agents and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
Fifteenth: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and (c)
of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to in any one or more of clauses (A) through
(E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth
or Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 20, 2000
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The authorized number of directors that shall constitute the
Board of Directors shall be fixed from time to time by or pursuant to a
resolution passed by a majority of the Board within the parameters set by the
Charter of the Bank. No more than two directors may also be employees of the
Company or any affiliate thereof.
Section 2. Except as provided in these Bylaws or as otherwise required
by law, there shall be no qualifications for election or service as directors of
the Company. In addition to any other provisions of these Bylaws, to be
qualified for nomination for Election or appointment to the Board of Directors
each person must have not attained the age of sixty-nine years at the time of
such election or appointment, provided however, the Nominating and Corporate
Governance Committee may waive such qualification as to a particular candidate
otherwise qualified to serve as a director upon a good faith determination by
such committee that such a waiver is in the best interests of the Company and
its stockholders. The Chairman of the Board of Directors shall not be qualified
to continue to serve as a director upon the termination of his or her services
in that office for any reason.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none of
whom shall be an officer of the Company, and shall hold office at the pleasure
of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 4. Associate Directors
(A) Any person who has served as a director may be elected
by the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferable only upon the books of
the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director or officer in his capacity
as a Director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director or officer to
repay all amounts advanced if it should be ultimately determined that the
Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: February 7, 2001 By: /s/ Bruce L. Bisson
---------------------------------
Name: Bruce L. Bisson
---------------------------
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks
and savings banks with state publication requirements.
It has not been approved by any state banking
authorities. Refer to your appropriate state banking
authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- -----------------
Name of Bank City
in the State of DELAWARE, at the close of business on September 30, 2000.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................173,106
Interest-bearing balances................................................0
Held-to-maturity securities...............................................21,442
Available-for-sale securities..........................................1,408,123
Federal funds sold and securities purchased under agreements to resell...482,197
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . 4,325,225
LESS: Allowance for loan and lease losses . . . . . 69,894
LESS: Allocated transfer risk reserve . . . . . . . 0
Loans and leases, net of unearned income, allowance,
and reserve....................................................4,755,331
Assets held in trading accounts................................................0
Premises and fixed assets (including capitalized leases).................121,675
Other real estate owned......................................................597
Investments in unconsolidated subsidiaries and associated companies........1,636
Customers' liability to this bank on acceptances outstanding...................0
Intangible assets..........................................................4,820
Other assets..............................................................65,791
Total assets...........................................................7,034,718
CONTINUED ON NEXT PAGE
LIABILITIES
Deposits:
In domestic offices....................................................5,331,872
Noninterest-bearing . . . . . . . . 1,111,039
Interest-bearing. . . . . . . . . . 4,220,833
Federal funds purchased and Securities sold under agreements to
repurchase..............................................................397,628
Demand notes issued to the U.S. Treasury..................................70,227
Trading liabilities (from Schedule RC-D).......................................0
Other borrowed money:....................................................///////
With original maturity of one year or less.........................675,000
With original maturity of more than one year........................43,000
Bank's liability on acceptances executed and outstanding.......................0
Subordinated notes and debentures..............................................0
Other liabilities (from Schedule RC-G)....................................66,073
Total liabilities......................................................6,583,800
EQUITY CAPITAL
Perpetual preferred stock and related surplus..................................0
Common Stock.................................................................500
Surplus (exclude all surplus related to preferred stock)..................62,118
Undivided profits and capital reserves...................................410,136
Net unrealized holding gains (losses) on available-for-sale
securities............................................................(21,836)
Total equity capital.....................................................450,918
Total liabilities, limited-life preferred stock, and equity capital....7,034,718