EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and entered
into as of ________ __, 2002, between Continental Airlines, Inc., a Delaware
corporation ("Continental"), and ExpressJet Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of Continental ("Holdings").
WHEREAS, Continental currently owns all of the issued and outstanding
shares of Holdings' capital stock;
WHEREAS, Holdings has filed a Registration Statement (File No. 333-64808)
with the Securities and Exchange Commission (the "SEC") on Form S-1 (the
"Registration Statement") in connection with the initial public offering (the
"IPO") of shares of its common stock, par value $.01 per share ("Common Stock");
WHEREAS, Continental and Holdings desire to make certain arrangements to
provide Continental with registration rights with respect to any shares of
Common Stock it holds;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Effectiveness of Agreement; Term.
1.1 Effective Date. This Agreement shall become effective upon the
consummation of the IPO (the "Effective Date").
1.2 Shares Covered. This Agreement covers those shares of Common Stock that
are held by Continental immediately following the IPO (subject to the provisions
of Section 7, the "Shares"). The Shares shall include any securities issued or
issuable with respect to the Shares by way of a stock dividend or a stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Continental and any Permitted Transferees
(as defined in Section 2.5) are each referred to herein as a "Holder" and
collectively as the "Holders" and the Holders of Shares proposed to be included
in any registration under this Agreement are each referred to herein as a
"Selling Holder" and collectively as the "Selling Holders."
2. Demand Registration.
2.1 Notice. Upon the terms and subject to the conditions set forth herein,
upon written notice of any Holder requesting that Holdings effect the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of any or all of the Shares held by it, which notice shall specify the
intended method or methods of disposition of such Shares (which methods may
include, without limitation, a Shelf Registration, a Convertible Registration or
an
Exchange Registration (as such terms are defined in Section 2.6)), Holdings will
promptly give written notice of the proposed registration to all other Holders
and will use its best efforts to effect (at the earliest practicable date) the
registration under the Securities Act of such Shares (and the Shares of any
other Holders joining in such request as are specified in a written notice
received by Holdings within 20 days after receipt of Holdings' written notice of
the proposed registration) for disposition in accordance with the intended
method or methods of disposition stated in such request (each registration
request pursuant to this Section 2.1 is sometimes referred to herein as a
"Demand Registration"); provided, however, that:
(a) Holdings shall not be obligated to effect registration with respect
to Shares pursuant to this Section 2 within 60 days after the effective date of
a previous registration, other than a Shelf Registration, effected with respect
to Shares pursuant to this Section 2;
(b) if, while a registration request is pending pursuant to this
Section 2, the Board of Directors of Holdings determines in its good faith
judgment that such registration would reasonably be expected to have a material
adverse effect on any existing proposal or plans by Holdings or any of its
subsidiaries to engage in any material acquisition, merger, consolidation,
tender offer, other business combination, reorganization, securities offering or
other material transaction, Holdings may postpone for up to 60 days the filing
or effectiveness of such registration; provided, however, that Holdings may
delay a Demand Registration hereunder only once in any 12-month period;
(c) except in the case of a Convertible Registration or an Exchange
Registration, the number of the Shares registered pursuant to any registration
requested pursuant to this Section 2 shall have an aggregate expected offering
price of at least $25 million; and
(d) if a Demand Registration is an underwritten offering and the
managing underwriters advise Holdings in writing that in their opinion the
number of Shares requested to be included in such offering exceeds the number of
Shares that can be sold in an orderly manner in such offering within a price
range acceptable to the Holders of a majority of the Shares initially requesting
such registration, Holdings shall include in such registration the number of
Shares requested to be included therein that in the opinion of such underwriters
can be sold in an orderly manner within the price range of such offering, pro
rata among the respective Holders thereof on the basis of the amount of Shares
owned by each Holder requesting inclusion of Shares in such registration.
2.2 Registration Expenses. All Registration Expenses (as defined in Section
8) for any registration requested pursuant to this Section 2 (including any
registration that is delayed or withdrawn) shall be paid by Holdings.
2.3 Selection of Professionals. The Holders of a majority of the Shares
included in any Demand Registration shall have the right to select the
investment banker(s) and manager(s) to administer the offering; provided,
however, that if such Holders select an investment banker or manager that was
not one of the managers of the IPO, such investment banker or manager shall not
administer such offering if Holdings reasonably objects thereto. The Holders of
a majority of the Shares included in any Demand Registration shall have the
right to select one counsel for the
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Selling Holders that is reasonably acceptable to Holdings. Holdings shall have
the right to select the financial printer and the solicitation and/or exchange
agent (if any) that are reasonably acceptable to the Holders of a Majority of
the Shares included in a Demand Registration. Holdings shall select its own
outside counsel and independent auditors.
2.4 Third Person Shares. Holdings shall have the right to cause the
registration of securities for sale for the account of any Person (as defined in
Section 6(f)) (including Holdings) other than the Selling Holders (the "Third
Person Shares") in any registration of the Shares requested pursuant to this
Section 2 so long as the Third Person Shares are disposed of in accordance with
the intended method or methods of disposition requested pursuant to this Section
2; provided, however, that Holdings shall not have the right to cause the
registration of such securities of such other Persons if the registration
requested pursuant to this Section 2 is a Convertible Registration or an
Exchange Registration.
If a Demand Registration in which Holdings proposes to include Third Person
Shares is an underwritten offering and the managing underwriters advise Holdings
in writing that in their opinion the number of Shares and Third Person Shares
requested to be included in such offering exceeds the number of Shares and Third
Person Shares that can be sold in an orderly manner in such offering within a
price range acceptable to the Holders of a majority of the Shares initially
requesting such registration, Holdings shall not include in such registration
any Third Person Shares unless all of the Shares initially requested to be
included therein are so included.
2.5 Permitted Transferees. As used in this Agreement, "Permitted
Transferees" shall mean any transferee, whether direct or indirect, of Shares
designated by Continental (or a subsequent Holder) in a written notice to
Holdings as provided for in Section 9.7. Any Permitted Transferees of the Shares
shall be subject to and bound by all of the terms and conditions herein
applicable to Holders. The notice required by this Section 2.5 shall be signed
by both the transferring Holder and the Permitted Transferees so designated and
shall include an undertaking by the Permitted Transferees to comply with the
terms and conditions of this Agreement applicable to Holders.
2.6 Shelf Registration; Convertible Registration; Exchange Registration.
With respect to any Demand Registration, the requesting Holders may request
Holdings to effect a registration of the Shares (a) under a registration
statement pursuant to Rule 415 under the Securities Act (or any successor rule)
(a "Shelf Registration"); (b) in connection with such Holders' registration
under the Securities Act of securities (the "Convertible Securities")
convertible into, exercisable for or otherwise related to the Shares (a
"Convertible Registration"); or (c) in connection with such Holders' offer to
exchange the Shares for any debt or equity securities of such Holders, a
subsidiary or affiliate thereof or any other Person (an "Exchange
Registration").
2.7 SEC Form. Holdings shall use its best efforts to cause Demand
Registrations to be registered on Form S-3 (or any successor form), and if
Holdings is not then eligible under the Securities Act to use Form S-3, Demand
Registrations shall be registered on the form for which Holdings then qualifies.
If a Demand Registration is a Convertible Registration or an Exchange
Registration, Holdings shall effect such registration on the appropriate form
under the Securities
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Act for such registrations. Holdings shall use its best efforts to become
eligible to use Form S-3 and, after becoming eligible to use Form S-3, shall use
its best efforts to remain so eligible.
3. Piggyback Registrations.
3.1 Notice and Registration. If Holdings proposes to register any of its
securities for public sale under the Securities Act (whether proposed to be
offered for sale by Holdings or any other Person), on a form and in a manner
which would permit registration of the Shares for sale to the public under the
Securities Act (a "Piggyback Registration"), it will give prompt written notice
to the Holders of its intention to do so (provided that in no event shall such
notice be given less than 20 days prior to the proposed date of filing the
registration statement relating to such registrant), and upon the written
request of any or all of the Holders delivered to Holdings within 20 days after
the giving of any such notice (which request shall specify the Shares intended
to be disposed of by such Holders), Holdings will use its best efforts to
effect, in connection with the registration of such other securities, the
registration under the Securities Act of all of the Shares which Holdings has
been so requested to register by such Holders (which shall then become Selling
Holders), to the extent required to permit the disposition (in accordance with
the same method of disposition as Holdings proposes to use to dispose of the
other securities) of the Shares to be so registered; provided, however, that:
(a) if, at any time after giving such written notice of its intention to
register any of its other securities and prior to the effective date of the
registration statement filed in connection with such registration, Holdings
shall determine for any reason not to register such other securities, Holdings
may, at its election, give written notice of such determination to the Selling
Holders (or, if prior to delivery of the Holders' written request described
above in this Section 3.1, the Holders) and thereupon Holdings shall be relieved
of its obligation to register such Shares in connection with the registration of
such other securities (but not from its obligation to pay Registration Expenses
to the extent incurred in connection therewith as provided in Section 3.3),
without prejudice, however, to the rights (if any) of any Selling Holders
immediately to request (subject to the terms and conditions of Section 2) that
such registration be effected as a registration under Section 2;
(b) Holdings shall not be required to effect any registration of the Shares
under this Section 3 incidental to the registration of any of its securities in
connection with mergers, acquisitions, exchange offers, subscription offers,
dividend reinvestment plans or stock option or other employee benefit plans of
Holdings;
(c) if a Piggyback Registration is an underwritten primary registration on
behalf of Holdings and the managing underwriters advise Holdings in writing that
in their opinion the number of securities requested to be included in such
registration exceeds the number that can be sold in such offering without
materially adversely affecting the marketability of the offering or the market
for the Common Stock, Holdings shall include in such registration (i) first, the
securities Holdings proposes to sell, (ii) second, the Shares requested to be
included in such registration, pro rata among the Holders of such Shares on the
basis of the number of Shares owned by each such Holder, and (iii) third, any
other securities requested to be included in such registration; and
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(d) if a Piggyback Registration is an underwritten secondary registration
on behalf of holders of Holdings' securities entitled to demand registration
thereof and the managing underwriters advise Holdings in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number that can be sold in such offering without materially
adversely affecting the marketability of the offering or the market for the
Common Stock, Holdings shall include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Shares requested to be included in such registration, pro
rata among the holders of such securities on the basis of the number of
securities owned by each such holder, and (ii) second, any other securities
requested to be included in such registration.
No registration of the Shares effected under this Section 3 shall relieve
Holdings of its obligation to effect a registration of Shares pursuant to
Section 2.
3.2 Selection of Professionals. If any Piggyback Registration is an
underwritten offering and any of the investment banker(s) or manager(s) selected
to administer the offering was not one of the managers of the IPO, such
investment banker or manager shall not administer such offering if the Holders
of a majority of the Shares included in such Piggyback Registration reasonably
object thereto. The Holders of a majority of the Shares included in any
Piggyback Registration shall have the right to select one counsel for the
Selling Holders. Holdings shall select its own outside counsel and independent
auditors.
3.3 Registration Expenses. Holdings will pay all of the Registration
Expenses in connection with any registration pursuant to this Section.
4. Registration Procedures.
4.1 Registration and Qualification. If and whenever Holdings is required to
use its best efforts to effect the registration of any of the Shares under the
Securities Act as provided in Sections 2 and 3, including an underwritten
offering pursuant to a Shelf Registration, Holdings will as promptly as is
practicable:
(a) prepare and file (provided, that in no event (other than as provided in
Section 2.1(b)) shall such registration statement be filed later than 45 days
following written notice of any Holder of a Demand Registration pursuant to
Section 2.1) with the SEC a registration statement with respect to such Shares
and use its best efforts to cause such registration statement to become
effective; provided that as far in advance as practicable before filing such
registration statement or any amendment thereto, Holdings will furnish to the
Selling Holders copies of reasonably complete drafts of all such documents
prepared to be filed (including exhibits), and any such Selling Holder shall
have the opportunity to object to any information contained therein and Holdings
will make corrections reasonably requested by such Holder with respect to such
information prior to filing any such registration statement or amendment;
(b) except in the case of a Shelf Registration, Convertible Registration or
Exchange Registration, prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to
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keep such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all of the Shares until
the earlier of (i) such time as all of such Shares have been disposed of in
accordance with the intended methods of disposition set forth in such
registration statement or (ii) the expiration of nine months after such
registration statement becomes effective;
(c) in the case of a Shelf Registration (but not including any Convertible
Registration), prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Shares subject thereto for a period ending on the earlier of (i) 24 months after
the effective date of such registration statement and (ii) the date on which all
the Shares subject thereto have been sold pursuant to such registration
statement (the "Shelf Effective Period");
(d) in the case of a Convertible Registration or an Exchange Registration,
prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all of the
Shares subject thereto until such time as the rules, regulations and
requirements of the Securities Act and the terms of the Convertible Securities
no longer require such Shares to be registered under the Securities Act (the
"Convertible Effective Period");
(e) furnish to the Selling Holders and to any underwriter of such Shares
such number of conformed copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits and
documents incorporated by reference), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents as the Selling Holders or such
underwriter may reasonably request;
(f) use its best efforts to register or qualify all of the Shares covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as the Selling Holders or any underwriter of such Shares
shall reasonably request, and do any and all other acts and things that may be
necessary or advisable to enable the Selling Holders or any underwriter to
consummate the disposition in such jurisdictions of the Shares covered by such
registration statement, except that Holdings shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction where it is not so qualified, or to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any such
jurisdiction;
(g) (i) furnish to the Selling Holders (and each underwriter, if any),
addressed to them, an opinion of counsel for Holdings and (ii) use its best
efforts to furnish to the Selling Holders, addressed to them, a "cold comfort"
letter signed by the independent public accountants who have certified Holdings'
financial statements included in such registration statement,
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covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities and such other matters as the Selling Holders may
reasonably request, in each case, in form and substance and as of the dates
reasonably satisfactory to the Selling Holders;
(h) immediately notify the Selling Holders, at any time when a prospectus
relating to a registration pursuant to Section 2 or 3 is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and at
the request of the Selling Holders prepare and furnish to the Selling Holders as
soon as reasonably practicable following such request a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Shares, such
prospectus shall not include 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, in light of the circumstances under which they are made, not
misleading;
(i) permit any Selling Holder, which in such Selling Holder's sole and
exclusive judgment, might reasonably be deemed to be an underwriter or a
controlling person of Holdings, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to Holdings in writing, which in the reasonable judgment of
such Holder and its counsel should be included;
(j) to make reasonably available members of management of Holdings, as
selected by the Holders of a majority of the Shares included in such
registration, for assistance in the selling effort relating to the Shares
covered by such registration, including, but not limited to, the participation
of such members of Holdings' management in road show presentations;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, Holdings shall use it best efforts promptly to obtain the
withdrawal of such order;
(l) use its best efforts to cause Shares covered by such registration
statement to be registered with or approved by such other government agencies or
authorities as may be necessary to enable the sellers thereof to consummate the
disposition of such Shares;
(m) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, including the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and regulations
promulgated thereunder, and make available to its security holders, as soon as
reasonably practicable (but not more than fifteen (15) months) after
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the effective date of the registration statement, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder;
(n) enter into such agreements and take such other actions as a majority of
the Selling Holders shall reasonably request in order to expedite or facilitate
the disposition of such Shares; and
(o) immediately notify each Selling Holder:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(ii) of any written comments from the SEC with respect to any filing
referred to in clause (a) and of any written request by the SEC for
amendments or supplements to such registration statement or prospectus;
(iii) of the notification to Holdings by the SEC of its initiation of
any proceeding with respect to, or of the issuance by the SEC of, any stop
order suspending the effectiveness of such registration statement; and
(iv) of the receipt by Holdings of any notification with respect to
the suspension of the qualification of any Shares for sale under the
applicable securities or blue sky laws of any jurisdiction.
Holdings may require the Selling Holders to furnish Holdings with such
information regarding the Selling Holders and the distribution of such Shares as
Holdings may from time to time request in writing, which is required by law, the
SEC or any securities exchange or interdealer quotation system on which any
shares of Common Stock are then listed or quoted for trading in connection with
any registration.
4.2 Underwriting. If requested by the underwriters for any underwritten
offering in connection with a registration requested hereunder (including any
registration under Section 3 which involves, in whole or in part, an
underwritten offering), Holdings will enter into an underwriting agreement with
such underwriters for such offering, such agreement to contain such
representations and warranties by Holdings and such other terms and provisions
as are customarily contained in underwriting agreements with respect to
secondary distributions, including, without limitation, indemnities and
contribution to the effect and to the extent provided in Section 6 and the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 4.1(g). Holdings may require that the Shares
requested to be registered pursuant to Section 3 be included in such
underwriting on the same terms and conditions as shall be applicable to the
other securities being sold through underwriters under such registration;
provided, however, that no Selling Holder shall be required to make any
representations or warranties to Holdings or the underwriters (other than
representations and warranties regarding such Holder and such Holder's intended
method of distribution) or to
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undertake any indemnification obligations to Holdings or the underwriters with
respect thereto, except as otherwise provided in Section 6 hereof. The Selling
Holders shall be parties to any such underwriting agreement, and the
representations and warranties by, and the other agreements on the part of,
Holdings to and for the benefit of such underwriters shall also be made to and
for the benefit of such Selling Holders.
4.3 Blackout Periods for Shelf Registrations.
(a) At any time when a Shelf Registration effected pursuant to Section 2
relating to the Shares is effective, upon written notice from Holdings to the
Selling Holders that Holdings determines in its good faith judgment that the
Selling Holders' sale of the Shares pursuant to the Shelf Registration would
require disclosure of material information which Holdings has a bona fide
business purpose for preserving as confidential and the disclosure of which
would have a material adverse effect on Holdings (an "Information Blackout"),
the Selling Holders shall suspend sales of the Shares pursuant to such Shelf
Registration until the earlier of (i) one day following the date upon which such
material information is disclosed to the public or ceases to be material, (ii)
60 days after Holdings makes such good faith determination or (iii) such time as
Holdings notifies the Selling Holders that sales pursuant to such Shelf
Registration may be resumed (the number of days from such suspension of sales of
the Selling Holders until the day when such sales may be resumed hereunder is
hereinafter called a "Sales Blackout Period").
(b) If there is an Information Blackout and the Selling Holders do not
notify Holdings in writing of their desire to cancel such Shelf Registration,
the period set forth in Section 4.1(c)(i) shall be extended for a number of days
equal to the number of days in the Sales Blackout Period.
4.4 Listing. In connection with the registration of any offering of the
Shares pursuant to this Agreement, Holdings agrees to use its best efforts to
effect the listing or inclusion of such Shares on any securities exchange or
interdealer quotation system on which any shares of the Common Stock are then
listed or included or otherwise facilitate the public trading of such Shares.
4.5 Holdback Agreements.
(a) Holdings shall not effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and during the 90-day period
beginning on the effective date of any registration statement in connection with
a Demand Registration (other than a Shelf Registration) or a Piggyback
Registration, except pursuant to registrations on Form S-8 or any successor form
or unless the underwriters managing any such public offering otherwise agree.
(b) If any Holders of Shares notify Holdings in writing that they intend to
effect an underwritten sale of Shares registered pursuant to a Shelf
Registration pursuant to Section 2 hereof, Holdings shall not effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for its equity securities, during the seven
days prior to and during the 90-day period beginning on the date such notice is
received,
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except pursuant to registrations on Form S-8 or any successor form or unless the
underwriters managing any such public offering otherwise agree.
(c) If Holdings completes an underwritten registration with respect to any
of its securities (whether offered for sale by Holdings or any other Person) on
a form and in a manner that would have permitted registration and sale of the
Shares, regardless of whether any Holder actually elected to participate in such
registration, each Holder shall not effect any public sales or distributions of
equity securities of Holdings or any securities convertible into or exchangeable
or exercisable for such securities other than pursuant to such registration
until the termination of the holdback period required from Holdings by any
underwriters in connection with such previous registration, which shall not be
longer than 90 days from the effective date of such registration.
4.6 Rule 144. Holdings will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder (or, if Holdings is not required to file such
reports, will, upon the request of the Holders, make publicly available other
information) and will take such further action as the Holders may reasonably
request, all to the extent required from time to time to enable the Holders to
sell Shares without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time or (ii) any similar rule or regulation
hereafter adopted by the SEC. Upon the reasonable request of the Holders,
Holdings will deliver to such parties a written statement as to whether it has
complied with such requirements and will, at its expense, forthwith upon the
request of any such Holder, deliver to such Holder a certificate, signed by
Holdings' principal financial officer, stating (a) Holdings' name, address and
telephone number (including area code), (b) Holdings' Internal Revenue Service
identification number, (c) Holdings' SEC file number, (d) the number of shares
of each class of capital stock outstanding as shown by the most recent report or
statement published by Holdings, and (e) whether Holdings has filed the reports
required to be filed under the Exchange Act for a period of at least ninety (90)
days prior to the date of such certificate and in addition has filed the most
recent annual report required to be filed thereunder.
5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering the Shares
under the Securities Act and each sale of the Shares thereunder, Holdings will
give the Selling Holders and the underwriters, if any, and their respective
counsel and accountants, access to its financial and other records, pertinent
corporate documents and properties of Holdings and such opportunities to discuss
the business of Holdings with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of the Selling Holders and such underwriters or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
6. Indemnification and Contribution.
(a) In the event of any registration of any of the Shares hereunder,
Holdings will indemnify and hold harmless each of the Selling Holders, each of
their respective directors,
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officers, employees and agents, and each Person, if any, who controls each such
Selling Holder within the meaning of the Securities Act (collectively, the
"Covered Persons") against any losses, claims, damages, liabilities and
expenses, joint or several, to which such Person may be subject under the
Securities Act or otherwise insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any related registration statement filed under the Securities
Act, any preliminary prospectus or final prospectus included therein, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (ii) 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, and Holdings will reimburse each such Covered Person, as
incurred, for any legal or any other expenses reasonably incurred by such
Covered Person in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that Holdings shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus or final prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to Holdings by a Selling Holder
specifically for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
any such Covered Person and shall survive the transfer of such securities by the
Selling Holders. Holdings shall also indemnify each other Person who
participates (including as an underwriter) in the offering or sale of Shares,
their officers and directors and each other person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to the Covered Persons.
(b) Each of the Selling Holders, by virtue of exercising its respective
registration rights hereunder, agrees and undertakes to enter into customary
indemnification arrangements to indemnify and hold harmless (in the same manner
and to the same extent as set forth in clause (a) of this Section 6) Holdings,
its directors and officers, each Person who participates as an underwriter in
the offering or sale of such securities, each officer and director of each
underwriter, and each Person, if any, who controls Holdings or any such
underwriter within the meaning of the Securities Act, with respect to any
statement in or omission from such registration statement, any preliminary
prospectus or final prospectus included therein, or any amendment or supplement
thereto, if such statement or omission is contained in written information
furnished by such Selling Holder to Holdings specifically for inclusion in such
registration statement or prospectus; provided, however, that the obligation to
indemnify shall be individual, not joint and several, for each Selling Holder
and shall be limited to the net amount of proceeds received by such Selling
Holder from the sale of Shares pursuant to such registration statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of Holdings or any such director, officer or Person and
shall survive the transfer of the registered securities by the Selling Holders.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided, however, that the failure to give prompt notice
shall not impair any Person's rights to
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indemnification hereunder to the extent such failure has not prejudiced the
indemnifying party) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent shall not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that (i) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation or (ii) would impose injunctive relief on such indemnified party. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, promptly
as and when bills are received or expense, loss, damage or liability is
incurred.
(d) If for any reason (other than the reasons expressly specified in this
Section 6) the foregoing indemnity and reimbursement is unavailable or is
insufficient to hold harmless an indemnified party under paragraphs (a) and (b)
of this Section 6, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any loss, claim,
damage, liability or expense (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other. The
relative fault 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
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, or if the allocation
provided in the second preceding sentence provides a lesser sum to the
indemnified party than the amount hereinafter calculated, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault but
also the relative benefits to the indemnifying party and the indemnified party
as well as any other relevant equitable considerations. The parties agree that
it would not be just and equitable if contributions pursuant to this Section
6(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the preceding sentences of this Section 6(d). Notwithstanding anything in
this Section 6(d) to the contrary, no indemnifying party (other than Holdings)
shall be required pursuant to this Section 6(d) to contribute any amount in
excess of the net proceeds received by such indemnifying party from the sale of
Shares in the offering to which the losses, claims, damages, liabilities or
expenses of the indemnified parties relate. 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.
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(e) Indemnification and contribution similar to that specified in the
preceding subdivisions of this Section 6 (with appropriate modifications) shall
be given by Holdings and the Selling Holders with respect to any required
registration or other qualification of such Shares under any federal or state
law or regulation of governmental authority other than the Securities Act.
(f) "Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, any other form of business or professional entity
or any governmental entity or any department, agency or political subdivision
thereof.
7. Benefits and Termination of Registration Rights. The Holders may
exercise the registration rights granted hereunder in such manner and
proportions as they shall agree among themselves. The registration rights
hereunder shall cease to apply to any particular Shares and such securities
shall cease to be Shares when: (a) a registration statement with respect to the
sale of such Shares shall have become effective under the Securities Act and
such Shares shall have been disposed of in accordance with such registration
statement; (b) such Shares shall have been sold to the public pursuant to Rule
144 under the Securities Act (or any successor provision); (c) such Shares shall
have been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Holdings and
subsequent public distribution of them shall not require registration or
qualification of them under the Securities Act or any similar state law then in
force; (d) such Shares shall have ceased to be outstanding or (e) in the case of
Shares held by a Permitted Transferee, when such Shares become eligible for sale
pursuant to Rule 144(k) under the Securities Act (or any successor provision).
8. Registration Expenses. As used in this Agreement, the term "Registration
Expenses" means all expenses incident to Holdings' performance of or compliance
with the registration and listing requirements set forth in this Agreement
including, without limitation, the following: (a) all registration and filing
fees; (b) the fees, disbursements and expenses of Holdings' counsel and
accountants in connection with the registration of the Shares to be disposed of
under the Securities Act; (c) the fees, disbursements and expenses of the
Selling Holders' counsel and advisors in connection with the registration of the
Shares to be disposed of under the Securities Act; (d) all expenses in
connection with the preparation, printing and filing of the registration
statement, any preliminary prospectus or final prospectus, any other offering
document and amendments and supplements thereto and the mailing and delivering
of copies thereof to the underwriters and dealers and directly to
securityholders in the case of an Exchange Registration; (e) the cost of
printing and producing any agreements among underwriters, underwriting
agreements, and blue sky or legal investment memoranda, any selling agreements
and any amendments thereto or other documents in connection with the offering,
sale or delivery of the Shares to be disposed of; (f) all expenses in connection
with the qualification of the Shares to be disposed of for offering and sale
under state securities laws, including the fees and disbursements of counsel for
the underwriters in connection with such qualification and in connection with
any blue sky and legal investment surveys; (g) the filing fees incident to
securing any required review by the New York Stock Exchange or the Nasdaq
National Market and any other securities exchange or interdealer quotation
system on which the Common Stock is
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then traded or listed of the terms of the sale of the Shares to be disposed of
and the trading or listing of all such Shares on each such exchange or system;
(h) the costs of preparing stock certificates; (i) the costs and charges of
Holdings' transfer agent and registrar; and (j) the fees and disbursements of
any custodians, solicitation agents, information agents and/or exchange agents.
Registration Expenses shall not include underwriting discounts and underwriters'
commissions attributable to the Shares being registered for sale on behalf of
the Selling Holders, which shall be paid by the Selling Holders.
9. Miscellaneous.
9.1 Holdings Equity Offerings.
(a) Until the earlier of the first anniversary of consummation of the
IPO and the date upon which Continental and its controlled affiliates own less
than 20% of the total number of shares of Common Stock outstanding, Holdings
shall not, and shall not permit its subsidiaries, without the prior written
consent of Continental, issue or sell, or enter into any contract to issue or
sell, any capital stock of Holdings or any of its subsidiaries, other than any
such issuances or sales in connection with the employee benefits plans of
Holdings or any of its subsidiaries.
(b) If between the first anniversary and the second anniversary of
consummation of the IPO, Holdings or any of its subsidiaries issues or sells any
capital stock of Holdings or any of its subsidiaries, other than any such
issuances or sales in connection with the employee benefits plans of Holdings or
any of its subsidiaries, Holdings shall be required to cause the "Maker" of that
certain Promissory Note, dated as of March 31, 2001, made by Continental
Express, Inc. in favor of Continental (the "Note") to make a principal payment
on the Note (the "Principal Payment") in an amount equal to 75% of the net
proceeds, if any, received by Holdings from such sale (after deducting any
underwriters' discounts and commissions and reasonable expenses directly related
to such sale) on the closing date of such sale. Notwithstanding the foregoing,
Holdings shall have no obligation to cause the Maker to make the Principal
Payment with respect to any such sale of capital stock if immediately prior to
the time of consummation of such sale Continental and its controlled affiliates
own less than 20% of the total number of shares of Common Stock outstanding.
9.2 No Inconsistent Agreements. Holdings shall not on or after the date of
this Agreement enter into any agreement with respect to its securities that
violates or subordinates the rights expressly granted to the Holders in this
Agreement. Holdings shall not take any action, or permit any change to occur,
with respect to its securities which would adversely affect the ability of the
Holders of Shares to include such Shares in a registration undertaken pursuant
to this Agreement.
9.3 Complete Agreement. Except as otherwise set forth in this Agreement,
this Agreement shall constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and shall supersede all prior
agreements and understandings, whether written or oral, between the parties with
respect to such subject matter.
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9.4 Authority. Each of the parties hereto represents to the other that (i)
it has the corporate power and authority to execute, deliver and perform this
Agreement, (ii) the execution, delivery and performance of this Agreement by it
has been duly authorized by all necessary corporate action, (iii) it has duly
and validly executed and delivered this Agreement, and (iv) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.
9.5 Assignment. This Agreement shall be binding on and inure to the benefit
of and be enforceable by the parties hereto and with respect to Holdings, its
respective successors and assigns, and any Permitted Transferees.
9.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the laws regarding
conflicts of laws) as to all matters of validity, construction, effect,
performance and remedies.
9.7 Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
upon: (a) a transmitter's confirmation of a receipt of a facsimile transmission
(but only if followed by a confirmed delivery of a standard overnight courier
the following business day or if delivered by hand the following business day)
or (b) confirmed delivery of a standard overnight courier or delivered by hand,
to the parties at the following addresses:
If to Continental:
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Corporate Development
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any other Holder, the address indicated for such Holder in Holdings'
stock transfer records with copies, so long as Continental owns any Shares, to
Continental as provided above.
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If to Holdings:
ExpressJet Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for the purpose of this Section 9.7 by
giving the other party written notice of its new address in the manner set forth
above.
9.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.9 Remedies. Each of Continental and Holdings shall be entitled to enforce
its rights under this Agreement specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. Each of
Continental and Holdings acknowledges and agrees that under certain
circumstances the breach by Continental or any of its affiliates or Holdings or
any of its affiliates of a term or provision of this Agreement will materially
and irreparably harm the other party, that money damages will accordingly not be
an adequate remedy for such breach and that the non-defaulting party, in its
sole discretion and in addition to its rights under this Agreement and any other
remedies it may have at law or in equity, may apply to any court of law or
equity of competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Agreement.
9.10 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in a writing signed by the party against whom the
existence of such waiver is asserted. Unless otherwise expressly provided in
this Agreement, no delay or omission on the part of any party in exercising any
right or privilege under this Agreement shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any right or privilege under this
Agreement operate as a waiver of any other right or privilege under this
Agreement nor shall any single or partial exercise of any right or privilege
preclude any other or further exercise thereof or the exercise of any other
right or privilege under this Agreement. No failure by either party to take any
action or assert any right or privilege hereunder shall be deemed to be a waiver
of such right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.
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9.11 Amendment and Modification. This Agreement may not be amended or
modified in any respect except by a written agreement signed by Holdings,
Continental (so long as Continental owns any Shares) and the Holders of a
majority of the Shares.
9.12 Section and Paragraph Headings. The section and paragraph headings in
this Agreement are for reference purposes only, are not part of the agreement of
the parties hereto, and shall not affect the meaning or interpretation of this
Agreement. All references to days or months shall be deemed references to
calendar days or months. All references to "$" shall be deemed references to
United States dollars. Unless the context otherwise requires, any reference to a
"Section" shall be deemed to refer to a section of this Agreement. The words
"hereof," "herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, unless otherwise specifically provided, they shall be
deemed to be followed by the words "without limitation." This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be drafted.
9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
CONTINENTAL AIRLINES, INC.
By:
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Name:
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EXPRESSJET HOLDINGS, INC.
By:
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Name:
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