CERTIFICATE OF DESIGNATIONS
OF
SERIES A 8% CUMULATIVE
PREFERRED STOCK
OF
CONTINENTAL AIRLINES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Continental Airlines, Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in its
Restated Certificate of Incorporation, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, its
Board of Directors (the "Board of Directors") adopted resolutions creating a
series of its Preferred Stock, $.01 par value, designated as Series A 8%
Cumulative Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock,
$.01 par value, of the Corporation be, and it hereby is, created, and that
the designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof (in
addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Corporation's Restated
Certificate of Incorporation that are applicable to the Preferred Stock), are
as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as the "Series A 8%
Cumulative Preferred Stock" ("Series A 8% Preferred Stock") and the number of
shares constituting such series shall be 300,000, which number may be
decreased and, but only for purposes of Section 2(b) below, increased by the
Board of Directors without a vote of stockholders; provided, however, that
such number may not be decreased below the number of then currently
outstanding shares of Series A 8% Preferred Stock.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A 8% Preferred Stock, in
preference to the holders of shares of the Corporation's Class A Common
Stock, Class B Common Stock, Class C Common Stock and Class D Common Stock,
each par value $.01 per share (collectively, the "Common Stock"), and to any
other capital stock of the Corporation ranking junior to Series A 8%
Preferred Stock as to payment of dividends, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds of the
Corporation legally available for the payment of dividends, cumulative
dividends payable in cash, subject to Section 2(b), at the annual rate of $8
per share, and, subject to the other provisions of this Section 2, no more.
Dividends payable in respect of the outstanding shares of Series A 8%
Preferred Stock shall begin to accrue and be cumulative from the respective
dates of original issue of such shares (which dates shall be reflected on the
certificates evidencing the same), and shall be payable in quarterly payments
on May 30, August 29, November 29 and March 1 (or, if any such day is not a
Business Day, as defined in Section 8, the Business Day next preceding such
day) in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date" and any dividend not paid on such date in cash or in
additional shares of Series A 8% Preferred Stock as provided herein being
referred to herein as "past due") for each of the fiscal quarters ended March
31, June 30, September 30 and December 31, respectively, commencing in
respect of each share of Series A 8% Preferred Stock on the first Quarterly
Dividend Payment Date which is at least seven days after the date of original
issue thereof; provided, however, that if any applicable dividend payment or
redemption payment is not made on a Quarterly Dividend Payment Date or the
date set for such redemption, respectively, thereafter Series A 8% Preferred
Stock shall accrue additional dividends in respect of all such dividend
payments and redemption payments that are past due and unpaid at (A) an
annual rate of 8% or (B) such lesser rate as may be the maximum rate that is
permitted by applicable law (in either case compounded quarterly), with the
amount of such additional dividends added to accrued dividend payments or
redemption payments, respectively, until all such dividend payments and
redemption payments shall have been paid in full (or declared and funds
sufficient therefor Set Apart for Payment, as defined in Section 8).
(b) Notwithstanding the provisions of Section 2(a) above, any
dividend accumulating through December 31, 1996 (payable March 1, 1997) shall
be declared and paid in additional shares of Series A 8% Preferred Stock, to
the extent legally permissible, in lieu of declaration and payment thereof in
cash. The number of shares of Series A 8% Preferred Stock to be issued in
lieu of cash dividends shall be calculated based on a value of $100 per share
of Series A 8% Preferred Stock. The shares of Series A 8% Preferred Stock
issued shall be fully paid and non-assessable. No certificates for
fractional shares shall be issued, and the Corporation shall round off any
fractional share to the next lower whole share amount. In determining such
fractional shares, the Corporation shall aggregate all shares of Series A 8%
Preferred Stock held by a Registered Holder thereof. The Corporation shall
pay, if there are funds legally available therefor, to each holder in cash an
amount equal to the value (based on a $100 value per share) of any fractional
share not issued in accordance with this Section 2(b).
(c) The amount of dividends payable shall be determined on the
basis of twelve 30-day months and a 360-day year. Dividends paid on the
shares of Series A 8% Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date (a "Regular
Record Date") for the determination of holders of shares of Series A 8%
Preferred Stock entitled to receive payment of a dividend declared thereon,
which record date shall be no more than 60 days nor less than ten days prior
to the date fixed for the payment thereof. Any dividend declared by the
Board of Directors as payable and punctually paid or Set Apart for Payment on
a Quarterly Dividend Payment Date will be paid to the Persons, as defined in
Section 8, in whose names Series A 8% Preferred Stock is registered at the
close of business on the Regular Record Date set with respect to that
Quarterly Dividend Payment Date (the "Registered Holders"). Any dividend not
so paid or Set Apart for Payment shall forthwith cease to be payable to such
Registered Holders and may be paid to the Registered Holders at the close of
business on the record date for the payment of such defaulted dividends and
interest to be fixed by the Board of Directors (a "Special Record Date").
The Board of Directors shall provide Registered Holders of Series A 8%
Preferred Stock not less than 10 days' prior notice of a Special Record Date.
Subject to Section 2(b), all such payments shall be made 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.
(d) The Registered Holder of any shares of Series A 8% Preferred
Stock, upon the Corporation's written request therefor containing a
reasonably complete description of the basis for such request, shall
reimburse the Corporation for any and all withholding tax liabilities
incurred by the Corporation in connection with any dividends paid or
distributions made (including, without limitation, in connection with any
redemption of Series A 8% Preferred Stock) to such holder in respect of
Series A 8% Preferred Stock. Each Registered Holder, by acceptance of the
certificate evidencing such holder's shares of Series A 8% Preferred Stock,
shall be deemed to have agreed to the terms of this Section 2(d).
(e) The holders of shares of Series A 8% Preferred Stock shall not
be entitled to receive any dividends or other distributions in respect of
such shares of Series A 8% Preferred Stock except as provided in these
designations of Series A 8% Preferred Stock.
Section 3. Voting Rights.
(a) So long as any shares of Series A 8% Preferred Stock shall be
outstanding and unless the consent or approval of a greater number of shares
shall then be required by law, without first obtaining the consent or
approval of the holders of at least a majority of the number of then-
outstanding shares of Series A 8% Preferred Stock, voting as a single class,
given in person or by proxy at a meeting at which the holders of such shares
shall be entitled to vote separately as a class, or by written consent, the
Corporation shall not: (i) authorize or create any class or series, or any
shares of any class or series, of stock having any preference or priority as
to dividends or upon redemption, liquidation, dissolution, or winding up over
Series A 8% Preferred Stock ("Senior Stock"); provided, however, that no
such vote shall be required with respect to the authorization or creation by
the Corporation of one or more series of Senior Stock if the proceeds of the
Corporation's issuance of such Senior Stock are sufficient, and are used, to
redeem all outstanding shares of Series A 8% Preferred Stock; (ii) authorize
or create any class or series, or any shares of any class or series, of stock
(other than the Series A 12% Cumulative Preferred Stock) ranking on a parity
(either as to dividends or upon redemption, liquidation, dissolution or
winding up) with Series A 8% Preferred Stock ("Parity Stock"); provided,
however, that no such vote shall be required with respect to the
authorization or creation by the Corporation of one or more new series of
Parity Stock if (A) (x) the aggregate purchase price (excluding transaction-
related expenses) of all shares of each such series is equal to or greater
than the aggregate liquidation preference of all shares of such series, (y)
the aggregate liquidation preference (excluding accrued but unpaid dividends)
of all shares of all such series of Preferred Stock does not exceed $25
million, and (z) shares of any such new series shall be issued only to an
employee stock ownership plan, employee stock ownership trust or other
similar arrangement organized and maintained by the Corporation for the
benefit of its employees or (B) the proceeds of the Corporation's issuance of
such Parity Stock are sufficient, and are used, to redeem all outstanding
shares of Series A 8% Preferred Stock; (iii) reclassify, convert or exchange
any shares of stock of the Corporation into shares of Senior Stock or Parity
Stock; (iv) authorize any security exchangeable for, convertible into, or
evidencing the right to purchase any shares of Senior Stock or Parity Stock;
(v) amend, alter or repeal (by merger or otherwise) the Corporation's
Restated Certificate of Incorporation), as it may be amended from time to
time (the "Restated Certificate of Incorporation" to alter or change the
preferences, rights or powers of Series A 8% Preferred Stock so as to affect
Series A 8% Preferred Stock adversely or (except for purposes of Section 2(b)
above) to increase the authorized number of shares of Series A 8% Preferred
Stock; or (vi) effect the voluntary liquidation, dissolution or winding up of
the Corporation, or the sale, lease, conveyance or exchange of all or
substantially all of the assets, property or business of the Corporation, or
the merger or consolidation of the Corporation with or into any other Person;
provided, however, that, except as otherwise specifically required by the
Restated Certificate of Incorporation, no separate vote of the holders of
Series A 8% Preferred Stock as a class shall be required in the case of such
a merger or consolidation or a sale, lease, conveyance or exchange of all or
substantially all of the assets, property or business of the Corporation (a
"reorganization") if (A)(i) the resulting surviving or acquiring Person will
have after such reorganization no stock either authorized or outstanding
ranking (either as to dividends or upon redemption, liquidation, dissolution
or winding up) prior to, or on a parity with, Series A 8% Preferred Stock or
the stock of the resulting, surviving or acquired Person issued in exchange
therefor (except any stock of the Corporation authorized or outstanding
immediately preceding such reorganization ranking prior to or on a parity
with the Series A 8% Preferred Stock, as aforesaid ("Grandfathered Stock"),
or any stock of the resulting, surviving or acquiring Person containing
substantially the same relative rights and preferences as any Grandfathered
Stock and issued in exchange therefor), and (ii) each holder of shares of
Series A 8% Preferred Stock immediately preceding such reorganization will
receive in exchange therefor the same number of shares of stock, with
substantially the same preferences, rights and powers, of the resulting,
surviving, or acquiring Person, or if the Corporation is the surviving Person
and Series A 8% Preferred Stock remains outstanding, without change to its
preferences, rights and powers, or (B) the Corporation redeems all
outstanding shares of Series A 8% Preferred Stock simultaneously with the
effectiveness of such merger, consolidation or reorganization.
(b) Whenever (i) there shall have occurred nine (9) consecutive
Quarterly Dividend Payment Dates on which dividends payable on shares of
Series A 8% Preferred Stock pursuant to the terms of Section 2(a) shall not
have been paid in cash at the annual rate of $8 per share or in additional
shares of Series A 8% Preferred Stock in accordance with Section 2(b) (a
"Dividend Default"), (ii) the Corporation shall have violated any of the
restrictions in Section 4 and such violation shall be continuing or (iii) the
Corporation shall not have redeemed shares of Series A 8% Preferred Stock
within five days of the date (a "Redemption Date") of any redemption of which
it has given, or is required to give, notice pursuant to Section 5(c),
regardless of whether there shall be funds legally available to effect such
redemption (a "Redemption Default"), thereafter and until the third
consecutive Quarterly Dividend Payment Date on which dividends on Series A 8%
Preferred Stock shall have been paid in cash (or in additional shares of
Series A 8% Preferred Stock in accordance with Section 2(b)) in full (and no
dividend arrearages shall exist on the Series A 8% Preferred Stock)
(hereinafter a cure of such Dividend Default) or such covenant shall have
been complied with, or such redemption shall have been performed or all funds
necessary therefor Set Apart for Payment, as the case may be, the holders of
shares of Series A 8% Preferred Stock shall have the right, notwithstanding
anything to the contrary in the Restated Certificate of Incorporation or By-
Laws of the Corporation (the "By-Laws"), voting together as a single class,
to elect one director. This right to elect a director may be exercised at
any annual meeting or at any special meeting called for such purpose as
hereinafter provided or at any adjournments thereof, or by the written
consent delivered to the Secretary of the Corporation, of the holders of a
majority of all outstanding shares of Series A 8% Preferred Stock as of the
record date of such written consent, until any Dividend Default or Redemption
Default shall have been cured, and any covenant violation shall cease to be
continuing, at which time the term of office of the director so elected shall
terminate automatically. So long as such right to vote continues (and unless
such right has been exercised by written consent of the holders of a majority
of the outstanding shares of Series A 8% Preferred Stock as hereinbefore
authorized), the Secretary of the Corporation may call, and upon the written
request of the holders of record of a majority of the outstanding shares of
Series A 8% Preferred Stock addressed to him or her at the principal office
of the Corporation shall call, a special meeting of the holders of Series A
8% Preferred Stock for the election of a director as provided herein. Such
meeting shall be held within 30 days after delivery of such notice to the
Secretary, at the place and upon the notice provided by law and in the By-
Laws or in the notice of meeting. No such special meeting or adjournment
thereof shall be held on a date less than 30 days before any annual meeting
of stockholders or any special meeting in lieu thereof. If at any such
annual or special meeting or any adjournment thereof the holders of a
majority of the then outstanding shares of Series A 8% Preferred Stock
entitled to vote in such election shall be present or represented by proxy,
or if the holders of the majority of the outstanding shares of Series A 8%
Preferred Stock shall have acted by written consent in lieu of a meeting with
respect thereto, then the authorized number of directors shall be increased
by one and the holders of Series A 8% Preferred Stock, voting as a class,
shall be entitled to elect the additional director. The absence of a quorum
of the holders of any other class or series of capital stock of the
Corporation at any such annual or special meeting shall not affect the
exercise by the holders of Series A 8% Preferred Stock of their voting
rights. The director so elected shall serve until the next annual meeting or
until his or her successor shall be elected and shall qualify, unless the
director's term of office shall have terminated under the circumstances set
forth in the second sentence of this Section 3(b). If the director elected
by the holders of Series A 8% Preferred Stock as a class dies or becomes
incapacitated, the holders of Series A 8% Preferred Stock then outstanding
and entitled to vote for such director by written consent as hereinabove
provided, or at a special meeting of such holders called as provided above,
may elect his or her successor to hold office for the unexpired term.
Holders of Series A 8% Preferred Stock shall have the right to remove, with
or without cause, any director originally elected by such holders, upon the
affirmative vote of a majority of such holders by written consent as
hereinabove provided or at a special meeting of such holders called as
provided above. The rights of the holders of Series A 8% Preferred Stock to
elect directors pursuant to the terms of this Section 3(b) shall not be
affected adversely by the voting or other rights applicable to any other
security of the Corporation.
(c) Except as otherwise provided in these designations of Series
A 8% Preferred Stock or in the Restated Certificate of Incorporation, or as
required by law, the holders of shares of Series A 8% Preferred Stock shall
have no voting rights and their consent shall not be required for the taking
of any corporate action.
Section 4. Certain Restrictions.
(a) Whenever (i) dividends on shares of Series A 8% Preferred Stock
pursuant to the terms of Section 2(a) or 2(b) shall not have been paid in
full at or before 30 days following any Quarterly Dividend Payment Date, or
(ii) the Corporation shall have not redeemed shares of Series A 8% Preferred
Stock within five Business Days of a Redemption Date, thereafter and until
all accrued and unpaid dividends, whether or not declared, shall have been
paid in full or all such redemption payments shall have been made or all
necessary funds for such redemption shall have been Set Apart for Payment, as
the case may be, the Corporation shall not, nor shall it permit any
Subsidiary, as defined in Section 8, of the Corporation to: (A) declare or
pay dividends, or make any other distributions, on any shares of Common Stock
or other capital stock of the Corporation ranking junior (either as to
dividends or upon redemption, liquidation, dissolution or winding up) to
Series A 8% Preferred Stock, other than dividends or distributions payable in
capital stock of the Corporation ranking junior to Series A 8% Preferred
Stock with respect to dividends and upon redemption, liquidation, dissolution
or winding up ("Junior Stock"); (B) declare or pay dividends, or make any
other distributions on any shares of Parity Stock, other than dividends or
distributions payable in Junior Stock or Parity Stock, except dividends paid
ratably on Series A 8% Preferred Stock and all Parity Stock on which
dividends are payable or in arrears, in proportion to the total amounts to
which the holders of all such shares are then entitled; or (C) redeem or
purchase or otherwise acquire for consideration (other than Junior Stock) any
shares of Junior Stock or Parity Stock (other than, with respect to Parity
Stock, ratably with Series A 8% Preferred Stock).
(b) The Corporation shall not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of capital stock
of the Corporation unless the Corporation, pursuant to Section 4(a), could
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Redemption.
(a) The Corporation may redeem, in whole or in part, any
outstanding shares of Series A 8% Preferred Stock at any time, but only out
of funds legally available therefor, by paying therefor in cash $100 per
share plus an amount equal to all Accrued Dividends, as defined in Section 8,
thereon to the date of redemption (the "Redemption Price"). If less than all
outstanding shares of Series A 8% Preferred Stock are to be redeemed, the
Corporation shall redeem shares pro rata among the holders thereof in
accordance with the respective numbers of shares of Series A 8% Preferred
Stock held by each of them.
(b) On April 27, 2003, the Corporation shall redeem all outstanding
shares of Series A 8% Preferred Stock, if any, but only out of funds legally
available therefor, by paying the Redemption Price therefor.
(c) (i) Notice of any redemption of shares of Series A 8%
Preferred Stock pursuant to this Section 5 shall be mailed not less than 30,
but not more than 60, days prior to the date fixed for redemption to each
holder of shares of Series A 8% Preferred Stock to be redeemed, at such
holder's address as it appears on the transfer books of the Corporation. In
order to facilitate the redemption of shares of Series A 8% Preferred Stock,
the Board of Directors may fix a record date for the determination of the
holders of shares of Series A 8% Preferred Stock to be redeemed, not more
than 60 days or less than 30 days prior to the date fixed for such
redemption.
(ii) Notice having been given pursuant to Section 5(c)(i), from and
after the date specified therein as the date of redemption, unless default
shall be made by the Corporation in providing for the payment of the
applicable redemption price, all dividends on Series A 8% Preferred Stock
thereby called for redemption shall cease to accrue, and from and after the
earlier of (x) the date of redemption so specified, unless default shall be
made by the Corporation as aforesaid, and (y) the date (prior to the date of
redemption so specified) on which funds of the Corporation sufficient for the
payment of the Redemption Price shall have been Set Apart for Payment thereof
if the notice of redemption shall state the intention of the Corporation so
to deposit such funds on a date specified in such notice, all rights of
holders thereof as stockholders of the Corporation, except the right to
receive the applicable Redemption Price (but without interest), shall cease
and terminate. Any interest allowed on moneys so deposited shall be paid to
the Corporation. Any moneys so deposited which shall remain unclaimed by the
holders of such Series A 8% Preferred Stock at the end of six years after the
redemption date shall to the fullest extent permitted by law become the
property of, and be paid by such bank or trust company to, the Corporation.
If the Corporation shall default in providing for the redemption price as
required pursuant to this Section 5, dividends on such Series A 8% Preferred
Stock shall continue to accrue and be added to the required redemption
payments as provided in Section 2(a).
Section 6. Reacquired Shares.
Any shares of Series A 8% Preferred Stock redeemed, purchased or
otherwise acquired by the Corporation or any Subsidiary of the Corporation in
any manner whatsoever shall be retired promptly after the acquisition
thereof, and, if necessary to provide for the lawful redemption or purchase
of such shares, the capital represented by such shares shall be reduced in
accordance with the General Corporation Law of the State of Delaware. The
Corporation shall take all actions necessary so that all such shares become
authorized but unissued shares of Preferred Stock, $.01 par value, of the
Corporation and may be reissued as part of another series of Preferred Stock,
$.01 par value, of the Corporation subject to the conditions or restrictions
on authorizing or creating any class or series, or any shares of any class or
series, set forth in Section 3(a).
Section 7. Liquidation, Dissolution or Winding Up.
(a) If the Corporation shall liquidate, dissolve or wind up,
whether pursuant to federal bankruptcy laws, state laws or otherwise, no
distribution shall be made (i) to the holders of shares of Junior Stock,
unless prior thereto the holders of shares of Series A 8% Preferred Stock
shall have received $100 per share plus an amount equal to all Accrued
Dividends thereon to the date of such payment or (ii) to the holders of
shares of Parity Stock, except distributions made ratably on Series A 8%
Preferred Stock and all such Parity Stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up of the Corporation.
(b) Neither the consolidation, merger or other business combination
of the Corporation with or into any other Person or Persons, nor the sale,
lease, exchange or conveyance of all or any part of the property, assets or
business of the Corporation to a Person or Persons other than the holders of
Junior Stock shall be deemed to be a liquidation, dissolution or winding up
of the Corporation for purposes of this Section 7.
Section 8. Definitions.
As used in these designations of Series A 8% Preferred Stock, the
following terms shall have the meanings indicated.
"Accrued Dividends" to a particular date (the "Applicable Date")
means all unpaid dividends payable pursuant to Section 2(a) or Section 2(b),
whether or not declared, accrued to the Applicable Date.
"Affiliate" means any Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with the Person specified.
"Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a trust or other entity.
"Set Apart for Payment" means, when used with respect to funds of
the Corporation to be used to pay dividends or effect redemptions of shares
of Series A 8% Preferred Stock, that the funds of the Corporation to be used
to pay dividends on or effect redemptions of any shares of Series A 8%
Preferred Stock to the Corporation shall have irrevocably deposited with a
bank or trust company doing business in the Borough of Manhattan in the City
of New York, and having a capital and surplus of at least $50 million, in
trust for the exclusive benefit of the holders of shares of Series A 8%
Preferred Stock, funds sufficient to satisfy such payment of redemption
obligation.
"Subsidiary" of any Person means any corporation or other entity of
which all the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
Section 9. Rank.
Series A 8% Preferred Stock will rank, with respect to dividends and
upon distribution of assets in liquidation, dissolution or winding up, prior
to the Common Stock and pari passu with the Series A 12% Cumulative Preferred
Stock of the Corporation.
* * *
IN WITNESS WHEREOF, the undersigned officer of the Corporation
subscribes this Certificate of Designations of Series A 8% Cumulative
Preferred Stock and affirms that the statements made herein are true under
penalties of perjury this 30th day of June, 1995.
CONTINENTAL AIRLINES, INC.
By:__________________________
Name:
Title:
ATTEST:
By:_____________________
Name:
Title: