CONTINENTAL AIRLINES, INC.
$250,000,000
9 1/2 % Senior Notes due 2001
PURCHASE AGREEMENT
December 4, 1996
Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Continental Airlines, Inc., a
Delaware corporation (the "Company"), proposes to issue and sell
to Xxxxxx Brothers Inc. (the "Initial Purchaser") $250,000,000
aggregate principal amount of its 9 1/2 % Senior Notes due 2001
(the "Notes") on the terms and conditions stated herein. The
Notes are to be issued pursuant to an indenture to be dated as of
December 10, 1996 (the "Indenture") between the Company and the
trustee named therein (the "Trustee").
Capitalized terms used but not defined herein have the
meanings to be assigned to them in the Offering Memorandum (as
defined below) or the Indenture.
The Company understands that the Initial Purchaser
proposes to make an offering of the Notes on the terms, subject
to the conditions and in the manner to be set forth in the
Offering Memorandum and Section 4 hereof, as soon as the Initial
Purchaser deems advisable after this Agreement has been executed
and delivered.
The holders of the Notes will be entitled to the
benefits of a Registration Rights Agreement, in a form reasonably
satisfactory to the Initial Purchaser (the "Registration Rights
Agreement"), pursuant to which the Company will file a
registration statement (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering
the Exchange Notes referred to in such Registration Rights
Agreement (the "Exchange Notes") or the Notes under the
Securities Act.
The Company hereby agrees with the Initial Purchaser
as follows:
2. Representations and Warranties. The Company
represents and warrants to, and agrees with, the Initial Purchaser
that:
(a) In connection with the sale of the Notes, the
Company will prepare a final offering memorandum dated the
date of this Agreement which will contain a description of
the Notes substantially in the form of Annex A hereto and
be in a form reasonably satisfactory to the Initial Purchaser
(such final offering memorandum, in the form first
furnished to the Initial Purchasers for use in connection
with the offering of the Notes, the "Offering Memorandum").
The Company hereby confirms that it has authorized the use
of the Offering Memorandum in connection with the offer and
resale of the Notes by the Initial Purchaser. As of its
date, the Offering Memorandum will not include any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Memorandum
based upon written information furnished to the Company by
the Initial Purchaser.
(b) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and
other) to own, lease and operate its property and to
conduct its business as will be described in the Offering
Memorandum; and the Company is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the condition
(financial or otherwise), business, properties or results
of operations of the Company and its consolidated
subsidiaries taken as a whole (a "Material Adverse
Effect").
(c) Each of Continental Micronesia, Inc., Air
Micronesia Inc. and Continental Express, Inc. (together,
the "Subsidiaries") has been duly incorporated and is an
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its
business as will be described in the Offering Memorandum;
and each Subsidiary is duly qualified to do business as a
foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have
a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued and is fully paid and
nonassessable; and except as will be described in the
Offering Memorandum, each Subsidiary's capital stock owned
by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(d) Except as will be described in the Offering
Memorandum, the Company is not in default in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it may be bound or to
which any of its properties may be subject, except for such
defaults that would not have a Material Adverse Effect. The
execution, delivery and performance of this Agreement and
the Registration Rights Agreement and the consummation of
the transactions contemplated herein and therein have been
duly authorized by all necessary corporate action of the
Company and will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company pursuant to any indenture, loan agreement, con-
tract or other instrument to which the Company is a
party or by which the Company may be bound or to which
any of the property or assets of the Company is
subject which breach, default, lien, charge or encumbrance,
individually or in the aggregate, would have a Material
Adverse Effect, nor will any such execution, delivery or
performance result in any violation of the provisions of
the charter or by-laws of the Company or any statute, any
rule, regulation or order of any governmental agency or
body or any court having jurisdiction over the Company.
(e) No consent, approval, authorization, or order of,
or filing with, any governmental agency or body or any
court is required for the valid authorization execution and
delivery by the Company of this Agreement and the
Registration Rights Agreement and for the consummation of
the transactions contemplated herein and therein, except
such as may be required (i) under the securities or Blue
Sky laws of the various states and (ii) under the
Securities Act of 1933, as amended (the "Securities Act"),
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") or rules of the National Association of
Securities Dealers in connection with the registration of
the Notes or the Exchange Notes under the Securities Act
pursuant to the Registration Rights Agreement.
(f) This Agreement has been duly authorized, executed
and delivered by the Company.
(g) The Registration Rights Agreement will constitute,
when duly executed and delivered by the Company, assuming
that such Registration Rights Agreement has been duly
authorized, executed and delivered by, and constitutes the
legal, valid and binding obligation of, each other party
thereto, the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except
(i) as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereinafter in
effect relating to creditors' rights generally and (ii) as
enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(h) The consolidated financial statements to be
included in the Offering Memorandum, together with the
related notes thereto, present fairly in all material
respects the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the
consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods
specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods
involved, except as otherwise to be stated in the Offering
Memorandum.
(i) The Company is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of Title 49 of
the United States Code, as amended, holding an air carrier
operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the
United States Code, as amended, for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more
cargo. All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued
and are fully paid and non-assessable.
(j) The Notes have been duly authorized by the Company;
when executed, authenticated, issued and delivered in the
manner provided for in the Indenture and sold and paid for
as provided in this Agreement, the Notes will constitute
valid and binding obligations of the Company entitled to
the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and except as
enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in
a proceeding in equity or at law); and the Notes will
conform in all material respects to the description thereof
to be contained in the Offering Memorandum.
(k) Except as will be disclosed in the Offering
Memorandum, the Company and the Subsidiaries have good and
marketable title to all real properties and all other
properties and assets owned by them, in each case free from
liens, encumbrances and defects except where the failure to
have such title would not have a Material Adverse Effect;
and except as will be disclosed in the Offering Memorandum,
the Company and the Subsidiaries hold any leased real or
personal property under valid and enforceable leases with
no exceptions that would have a Material Adverse Effect.
(l) Except as will be disclosed in the Offering
Memorandum, there is no action, suit or proceeding before
or by any governmental agency or body or court, domestic or
foreign, now pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries
or any of their respective properties that could reasonably
be expected to result in a Material Adverse Effect or that
could reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated by
this Agreement or the Registration Rights Agreement; all
pending legal or governmental proceedings to which the
Company is a party or which affect any of its properties
that will not be described in the Offering Memorandum,
including ordinary routine litigation incidental to its
business, are not in the aggregate reasonably expected to
have a Material Adverse Effect.
(m) Except as will be disclosed in the Offering
Memorandum, no labor dispute with the employees of the
Company or any subsidiary exists or to the knowledge of the
Company is imminent that might have a Material Adverse
Effect.
(n) Each of the Company and the Subsidiaries has all
necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all
declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to
conduct its business in the manner to be described in the
Offering Memorandum, except to the extent that the failure
to so obtain or file would not have a Material Adverse
Effect.
(o) The Registration Rights Agreement and the Indenture
conform in all material respects to the descriptions
thereof that will be contained in the Offering Memorandum.
(p) Except as will be disclosed in the Offering
Memorandum, neither the Company nor any of the Subsidiaries
is in violation of any statute, rule, regulation, decision
or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any
environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination,
liability or claim individually or in the aggregate is
reasonably expected to have a Material Adverse Effect; and
the Company is not aware of any pending investigation which
might lead to such a claim.
(q) The accountants that examined and issued an
auditors report with respect to the consolidated financial
statements of the Company to be included in the Offering
Memorandum are independent public accountants within the
meaning of the Securities Act and the regulations
thereunder.
(r) The Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(s) Assuming the accuracy of the representations and
warranties and compliance with the agreements made by the
Initial Purchaser in this Agreement, the offer and sale of
the Notes to the Initial Purchaser in the manner
contemplated by this Agreement will be exempt from the
registration requirement of the Securities Act by reason of
Section 4(2) thereof and Regulation S thereunder; and it is
not necessary to qualify the Indenture under the Trust
Indenture Act in respect of any such offer or sale.
(t) Neither the Company, nor any of its affiliates,
nor any person acting on its behalf (i) has, within the
six-month period prior to the date hereof, offered or sold
in the United States or to any U.S. Person (as such terms
are defined in Regulation S under the Securities Act) the
Notes or any security of the same class or series as the
Notes or (ii) has offered or will offer or sell the Notes
(A) in the United States by means of any form of "general
solicitation" or "general advertising" within the meaning
of Rule 502(c) under the Securities Act or (B) with respect
to any securities sold in reliance on Rule 903 of
Regulation S under the Securities Act, by means of any
"directed selling efforts" within the meaning of Rule
902(b) of Regulation S. The Company has not entered and
will not enter into any contractual arrangement with
respect to the distribution of the Notes except for this
Agreement.
3. Purchase, Sale and Delivery of Notes. On the basis
of the representations, warranties and agreements herein
contained, but subject to the terms and the conditions herein set
forth, the Company agrees to sell to the Initial Purchaser, and
the Initial Purchaser agrees to purchase from the Company,
$250,000,000 aggregate principal amount of Notes, at a purchase
price of 97.50% of the principal amount thereof.
The Company will issue and deliver against payment of
the purchase price the Notes purchased by the Initial Purchaser
hereunder and to be offered and sold by the Initial Purchaser in
reliance on Regulation S (the "Regulation S Notes") in the form
of one or more temporary global securities in registered form
without interest coupons (the "Temporary Regulation S Notes")
which will be deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") for the respective accounts of
the DTC participants for Xxxxxx Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System
("Euroclear"), and Cedel Bank societe anonyme ("Cedel") and
registered in the name of Cede & Co., as nominee for DTC. The
Company will issue and deliver against payment of the purchase
price the Notes to be purchased by the Initial Purchaser
hereunder and to be offered and sold by the Initial Purchaser in
reliance on Rule 144A under the Securities Act (the "144A Notes")
in the form of one or more permanent global securities in
definitive form without interest coupons (the "Restricted Global
Notes") deposited with the Trustee as custodian for DTC and
registered in the name of Cede & Co., as nominee for DTC. The
Regulation S Notes and the 144A Notes shall be assigned separate
CUSIP numbers. Each Restricted Global Note shall include the
legend regarding restrictions on transfer to be set forth under
"Transfer Restrictions" in the Offering Memorandum. Until the
termination of the restricted period (as defined in Regulation S)
with respect to the offering of the Notes, interests in the
Regulation S Notes may only be held by the DTC participants for
Euroclear and Cedel. Interests in any permanent global Notes will
be held only in book entry form through Euroclear, Cedel or DTC,
as the case may be, except in the limited circumstances to be
described in the Offering Memorandum.
Payment for the Notes shall be made by the Initial
Purchaser in federal (same day) funds by official check or checks
or wire transfer to an account previously designated to the
Initial Purchaser by the Company at a bank acceptable to the
Initial Purchaser drawn to the order of the Company at the office
of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
at 10:00 A.M. (New York time), on December 10, 1996, or at such
other time not later than seven full business days thereafter as
the Initial Purchaser and the Company determine, such time being
herein referred to as the "Closing Date", against delivery to the
Trustee as custodian for DTC of (i) the Temporary Regulation S
Note representing all of the Regulation S Notes for the
respective accounts of the DTC participants for Euroclear and
Cedel and (ii) the Restricted Global Note representing all of the
144A Notes. The Temporary Regulation S Notes and the Restricted
Global Notes will be made available for checking at the above
office of Shearman & Sterling at least 24 hours prior to the
Closing Date.
Notwithstanding the foregoing, any Notes sold by the
Initial Purchaser to Institutional Accredited Investors (as
hereinafter defined) pursuant to Section 4(c) shall be issued in
definitive, fully registered form ("Definitive Notes") and shall
bear the legend relating thereto to be set forth under "Transfer
Restrictions" in the Offering Memorandum, but shall be paid for
in the manner set forth in the preceding paragraph. Definitive
Notes shall be registered in such names and in such denominations
as the Initial Purchaser may request not less than two full
business days in advance of the Closing Date.
4. Representations by the Initial Purchasers: Resale
by the Initial Purchasers. (a) The Initial Purchaser represents and
warrants to the Company that it is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(b) The Initial Purchaser acknowledges that the Notes
have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. The Initial Purchaser
represents and agrees that it has offered and sold the Notes and
will offer and sell the Notes (i) as part of their distribution
at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date only (x) to
Qualified Institutional Buyers as defined in Rule 144A ("QIBs")
in compliance with Rule 144A, (y) to a limited number of
Institutional Accredited Investors in accordance with subsection
(c) of this Section 4 and (z) outside the United States to
persons other than U.S. persons ("foreign purchasers"), in
accordance with Rule 903 of Regulation S under the Securities Act
thereof. Accordingly, neither the Initial Purchaser nor its
affiliates, nor any persons acting on its or their behalf, have
engaged or will engage in any directed selling efforts with
respect to the Notes, and the Initial Purchaser, its affiliates
and all persons acting on its or their behalf have complied and
will comply with the offering restrictions requirements of
Regulation S. The Initial Purchaser agrees that, at or prior to
confirmation of sale of the Notes, other than a sale pursuant to
Rule 144A or to an Institutional Accredited Investor, the Initial
Purchaser will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that
purchases the Notes from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered or sold
within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their
distribution at any time and (ii) otherwise until 40
days after the later of the commencement of the
offering and the Closing Date except in either case in
accordance with Regulation S (or Rule 144A, if
available) under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings
given to them by Regulation S.
(c) The Initial Purchaser may offer and sell Notes in
definitive, fully registered form to a limited number of
institutions, each of which is reasonably believed by the Initial
Purchaser to be an "accredited investor" within the meaning of
Rule 501(a)(1), (2), or (3) or (7) under the Securities Act or an
entity in which all of the equity owners are accredited investors
within the meaning of Rule 501(a)(1), (2) or (3) under the
Securities Act (each, an "Institutional Accredited Investor");
provided that each such Institutional Accredited Investor
executes and delivers to the Initial Purchaser and the Company,
prior to the consummation of any sale of Notes to such
Institutional Accredited Investor, an Accredited Investor Letter
in substantially the form to be attached as Appendix III to the
Offering Memorandum (an "Accredited Investor Letter").
(d) The Initial Purchaser represents and agrees that (i)
it has not offered or sold and will not offer or sell any Notes to
persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply
with all applicable provisions of the Financial Services Xxx 0000
with respect to anything done by it in relation to the Notes in,
from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on, and will only issue or pass on, in the
United Kingdom any document received by it in connection with the
issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investments
Advertisements) (Exemptions) Order 1996 or is person to whom such
document may otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that it and each of
its affiliates has not entered and will not enter into any
contractual arrangement with any distributor (as that term is
defined for purposes of Regulation S) with respect to the
distribution of the Notes except with the prior written consent
of the Company.
(f) The Initial Purchaser represents and agrees that
neither it nor any person acting on its behalf has engaged or
will engage in any form of "general solicitation" or "general
advertising," within the meaning of Rule 502(c) under the
Securities Act in connection with any offer or sale of Notes in
the United States. The Initial Purchaser agrees, with respect to
resales made in reliance on Rule 144A of any of the Notes, to
deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that
the resale of such Notes has been made in reliance upon the
exemption from the registration requirements of the Securities
Act provided by Rule 144A.
5. Certain Agreements of the Company. The Company
agrees with the Initial Purchaser that:
(a) The Company will advise the Initial Purchaser
promptly of any proposal to amend or supplement the
Offering Memorandum and will not effect such amendment or
supplementation without the Initial Purchaser's consent,
which consent will not be unreasonably withheld. If, at any
time prior to the completion of the resale of the Notes by
the Initial Purchaser any event occurs as a result of which
the Offering Memorandum as then amended or supplemented
would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading, the Company promptly
will notify the Initial Purchaser of each event and
promptly will prepare, at its own expense, an amendment or
supplement which will correct such statement or omission.
Neither the Initial Purchaser's consent to, nor the Initial
Purchaser's delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of
the conditions set forth in Section 6.
(b) Notwithstanding any provision of paragraph (a) to
the contrary, the Company's obligations under paragraph (a)
shall terminate on the earlier to occur of (i) the
effective date of an exchange offer registration statement
or shelf registration statement with respect to the Notes
filed pursuant to the Registration Rights Agreement and
(ii) the date upon which the Initial Purchaser and its
affiliates cease to hold Notes acquired as part of their
initial distributions, provided that the costs and expenses
of performing such obligations at any time after one year
from the Closing Date shall be paid by the Initial
Purchaser.
(c) The Company will furnish to the Initial Purchaser
copies of the Offering Memorandum and all amendments and
supplements thereto, in each case as soon as available and
in such quantities as the Initial Purchaser reasonably
requests. So long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the
Securities Act, at any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Company will
provide to any holder of such restricted securities, or to
any prospective purchaser of such restricted securities
designated by a holder, upon the request of such holder or
prospective purchaser, any information required to be
delivered to holders and prospective purchasers of the
Notes pursuant to Rule 144A(d)(4) under the Securities Act.
This covenant is intended to be for the benefit of the
holders, and prospective purchasers designated by such
holders, from time to time of such restricted securities.
(d) The Company will arrange for the qualification of
the Notes for sale under the applicable securities or "blue
sky" laws of such jurisdictions in the United States as the
Initial Purchaser reasonably designates and will continue
such qualifications in effect so long as required for the
resale of the Notes by the Initial Purchaser; provided that
the Company will not be required to (i) qualify as a
foreign corporation or as a dealer in securities, (ii) file
a general consent to service of process or (iii) subject
itself to taxation in any such state.
(e) During the period of five years hereafter, the
Company will promptly furnish to the Initial Purchaser upon
request, a copy of its Annual Report on Form 10-K and any
definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to
stockholders.
(f) During the period of three years after the Closing
Date, the Company will, upon request, furnish to the
Initial Purchaser and any holder of Notes a copy of the
restrictions on transfer applicable to the Notes.
(g) During the period of three years after the Closing
Date, the Company will not, and will not permit any of its
affiliates (as defined in Rule 144 under the Securities
Act) to, resell any of the Notes that have been reacquired
by any of them.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including
(i) the preparation, printing and distribution of the Offering
Memorandum and any amendments thereof or supplements thereto,
(ii) the preparation, printing and distribution of this Agree-
ment, the Registration Rights Agreement, the Notes and any Blue
Sky Memorandum or Legal Investment Survey by the Initial
Purchaser's counsel, (iii) the delivery of the Notes, (iv)
the reasonable fees and disbursements of the counsel and
accountants for the Company, (v) the expenses of qualifying
the Notes under state securities laws in accordance with
the provisions of paragraph (d) of this Section, including
filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchaser in connection therewith,
(vi) the fees and expenses of the Trustee and the
reasonable fees and disbursements of its counsel, (vii) any
fees charged by rating agencies for rating the Notes,
(viii) any fees of the National Association of Securities
Dealers, Inc. with respect to admitting the Notes for
trading in the PORTAL market, (ix) all reasonable travel,
lodging and other expenses of the Initial Purchaser and the
Company's officers and employees and any other expenses in
connection with attending or hosting meetings with
prospective purchasers of Notes and (xi) all other expenses
incurred by the Initial Purchaser in connection with the
transactions contemplated by this Agreement.
(i) In connection with the offering, until the Initial
Purchaser shall have notified the Company of the completion
of the resale of the Notes, neither the Company nor any of
its affiliates has bid for or purchased or will bid for or
purchase, either alone or with one or more other persons,
for any account in which it or any of its affiliates has a
beneficial interest any Notes; and neither it nor any of
its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of
raising the price of, the Notes.
6. Conditions of the Obligations of the Initial
Purchaser. The obligations of the Initial Purchaser to purchase
and pay for the Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein
to the accuracy, as of the Closing Date, of the statements of
officers of the Company made in writing pursuant to the
provisions of this Agreement, to the performance by the Company
of its obligations hereunder and to the following additional
conditions precedent:
(a) Subsequent to the date of this Agreement and prior
to the Closing Date,
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review
for a possible change that does not indicate the
direction of the possible change, in the rating
accorded any of the Company's securities (except for
any pass through certificates) by any "nationally
recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under
the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition (financial or otherwise) business, properties
or results of operations, of the Company and its consol-
idated subsidiaries, taken as a whole, from that to be
set forth in the Offering Memorandum that, in your
judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Notes on
the terms and in the manner to be contemplated in the
Offering Memorandum.
(b) The Initial Purchaser shall have received a
letter, dated the Closing Date, of Ernst & Young LLP in
form and substance satisfactory to the Initial Purchaser,
containing statements and information of the type
ordinarily included in accountants "comfort letters".
(c) On the Closing Date, the Initial Purchaser shall
have received:
(1) The favorable opinion, dated as of the
Closing Date, of Cleary, Gottlieb, Xxxxx and Xxxxxxxx,
counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Initial
Purchaser.
(2) The favorable opinion, dated as of the
Closing Date from Xxxxxxx X. Xxxxxx, Executive Vice
President and General Counsel of the Company, in form
and substance reasonably satisfactory to the Initial
Purchaser.
(3) The favorable opinion, dated as of the
Closing Date, of Shearman & Sterling, counsel for the
Initial Purchaser, with respect to the validity of the
Notes, the Offering Memorandum, the exemption from
registration for the offer and sale of the Notes to
the Initial Purchaser and the resales by the Initial
Purchaser as contemplated hereby and other related
matters as the Initial Purchaser may require, and the
Company shall have furnished to such counsel such
documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(d) The Initial Purchaser shall have received a
certificate, dated the Closing Date, of the President or
any Vice President and a principal financial or accounting
officer of the Company in which such officers shall state
that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the
Company in this Agreement are true and correct on and as of
the Closing Date as if made on the Closing Date, that the
Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and that,
subsequent to the dates of the Company's most recent
audited financial statements, there has been no material
adverse change, nor any development or event involving a
prospective material adverse change, in the condition
(financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a
whole, except as will be set forth in or contemplated by
the Offering Memorandum.
(e) At the Closing Date, the Registration Rights
Agreement shall have been duly executed, delivered and be
in full force and effect.
(f) On the Closing Date, the Notes shall be rated not
lower than Ba3 by Xxxxx'x Investors Service, Inc., B by
Standard & Poor's Rating Group and BB- by Duff & Xxxxxx.
The Company will furnish the Initial Purchaser with
such conformed copies of such opinions, certificates, letters and
documents as the Initial Purchaser reasonably requests.
7. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless the Initial Purchaser, and
each Person, if any, who controls such Initial Purchaser within
the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, or is under common control with the
Initial Purchaser, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred by the Initial Purchaser or
any such controlling or affiliated person in connection with
defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material
fact contained in the Offering Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use
therein.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from
the Company to the Initial Purchaser but only with reference to
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use in
the Offering Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) above, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may
be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party
to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay
the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by
the Initial Purchaser in the case of parties indemnified pursuant
to paragraph (a) above and by the Company in the case of parties
indemnified pursuant to paragraph (1)) above. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered
into more than 90 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement, unless such fees
and expenses are being disputed in good faith. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 7 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the
one hand, and the Initial Purchaser, on the other hand, from the
offering of such Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Initial Purchaser on
the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Initial
Purchaser on the other hand in connection with the offering of
such Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Notes
(before deducting expenses) received by the Company and the total
discounts and commissions received by the Initial Purchaser in
respect thereof bear to the aggregate offering price of such
Notes. The relative fault of the Company on the one hand and of
the Initial Purchaser on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or by the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that
it would not be just or equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, the
Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the
Notes resold by it in the initial placement of such Notes were
offered to investors exceeds the amount of any damages that such
Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The indemnity and contribution
provisions contained in this Section 7 and the representations
and warranties of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by
or on behalf of the Initial Purchaser or any person controlling
the Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Notes. The
remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
8. Survival of Certain Representations and
Obligations. The respective indemnities, agreements,
representations, warranties and other statements of the Company
or its officers and of the Initial Purchaser set forth in or made
pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Initial Purchaser, the
Company or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of
and payment for the Notes. If for any reason the purchase of the
Notes by the Initial Purchaser is not consummated, the Company
shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Initial Purchaser pursuant to
Section 7 shall remain in effect. If the purchase of the Notes by
the Initial Purchaser is not consummated for any reason other
than solely because of the occurrence of the termination of the
Agreement pursuant to Section 9 the Company will reimburse the
Initial Purchaser for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) reasonably incurred
by them in connection with the offering of such Notes and comply
with its obligations under Section 5(h).
9. Termination. This Agreement shall be subject to
termination by notice given by the Initial Purchaser to the
Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers,
Inc., (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in
New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak
or escalation of hostilities or any change in financial markets
or any calamity or crisis that, in the Initial Purchaser's
judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event
singly or together with any other such event makes it, in the
Initial Purchaser's judgment, impracticable to market the Notes
on the terms and in the manner to be contemplated in the Offering
Memorandum.
10. Notices. All communications hereunder will be in
writing and, if sent to the Initial Purchaser, will be mailed,
delivered or sent by facsimile transmission to (000) 000-0000 and
confirmed to the Initial Purchaser, at Xxxxxx Brothers Inc.,
Three World Financial Center, New York, N.Y. 10285, Attention:
Xxxxx Xxxxxxxxxxx, or, if sent to the Company, will be mailed,
delivered or sent by facsimile transmission and confirmed to it
at 0000 Xxxxx Xxxxxxx, Xxxxxxx, XX 00000, Attention: Chief
Financial Officer and General Counsel, facsimile number (713)
834- 2687; provided, however, that any notice to the Initial
Purchaser pursuant to Section 7 will be sent by facsimile
transmission, delivered or telegraphed and confirmed to the
Initial Purchaser.
11. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the controlling persons referred to in
Section 7, and no other person will have any right or obligation
hereunder, except as expressly set forth in Section 5(c) hereof
against the Company as if such holders were parties hereto.
12. Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement.
13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company hereby submits to the non-exclusive
jurisdiction of the federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Initial
Purchaser's understanding of our agreement, kindly sign and return
to the Company one of the counterparts hereof, whereupon it will become
a binding agreement between the Initial Purchaser and the Company
in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
The foregoing Purchase
Agreement is hereby confirmed
and accepted as of the date
first above written.
XXXXXX BROTHERS INC.
By:__________________________
Name:
Title:
If the foregoing is in accordance with the Initial
Purchaser's understanding of our agreement, kindly sign and return to
the Company one of the counterparts hereof, whereupon it will become
a binding agreement between the Initial Purchaser and the Company
in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By:____________________________
Name:
Title:
The foregoing Purchase
Agreement is hereby confirmed
and accepted as of the date
first above written.
XXXXXX BROTHERS INC.
By: /s/ Xxxxx Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
