Form 8-K
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
 
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
 
June 9, 2006
 
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
 
 Delaware
1-10323
74-2099724
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
     
     
1600 Smith Street, Dept. HQSEO, Houston, Texas  
77002
(Address of principal executive offices)  
(Zip Code) 
 
(713) 324-2950
(Registrant’s telephone number, including area code) 
 
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
o Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
o Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e−4(c))



 
Item 1.01         Entry into a Material Definitive Agreement.
 
On June 9, 2006, Continental Airlines, Inc. (the “Company”) and Wilmington Trust Company, as Mortgagee, entered into the Trust Indenture and Mortgage, dated as of June 9, 2006 (the “Indenture”), and the Company issued equipment notes (the “Equipment Notes”) under the Indenture in the aggregate principal amount of $320,000,000. The Equipment Notes were issued in two series: $190,000,000 principal amount of Series G, bearing interest at the rate of USD 3-Month LIBOR+0.35%, and $130,000,000 principal amount of Series B, bearing interest at the rate of USD 3-Month LIBOR+3.125%. The interest on the Equipment Notes of both series is payable quarterly on each March 2, June 2, September 2 and December 2, beginning on September 2, 2006. The entire principal amount of the Equipment Notes is due on June 2, 2013. Maturity of the Equipment Notes may be accelerated upon the occurrence of certain Events of Default, including failure by the Company (in some cases after notice or the expiration of a grace period, or both) to make payments under the Indenture when due, to comply with certain covenants or to add collateral or redeem Equipment Notes if certain ratios of the value of the collateral securing the Equipment Notes to the outstanding principal amount thereof are not satisfied, as well as certain bankruptcy events involving the Company. The Equipment Notes are secured under the Indenture by a lien on certain aircraft spare parts owned by the Company.

The Equipment Notes were purchased by Wilmington Trust Company, as pass through trustee under certain pass through trusts newly formed by the Company, using the proceeds from the sale of Pass Through Certificates, Series 2006-1G, and Pass Through Certificates, Series 2006-1B (collectively, the “Certificates”). The Certificates were registered for offer and sale pursuant to the Securities Act of 1933, as amended (the “Securities Act”), under the Company’s automatic shelf registration statement on Form S-3 (File No. 333-133187) (the “Registration Statement”). For a more detailed description of the agreements and instruments entered into by the Company with respect to the Certificates, see the disclosure under the captions “Description of the Certificates”, “Description of the Liquidity Facilities for the Class G Certificates”, “Description of the Policy and the Policy Provider Agreement for the Class G Certificates”, “Description of the Intercreditor Agreement”, “Description of the Equipment Notes” and “Underwriting” contained in the Company’s final Prospectus Supplement, dated May 24, 2006 (the “Prospectus Supplement”), to the Prospectus, dated April 10, 2006, filed with the Securities and Exchange Commission on May 26, 2006 pursuant to Rule 424(b) under the Securities Act, which disclosure is hereby incorporated herein by reference.

The proceeds from the sale of the Equipment Notes were used by the Company, in part, to redeem on June 9, 2006, the Company’s outstanding Floating Rate Secured Notes Due 2007 and Floating Rate Secured Subordinated Notes Due 2007 at the aggregate redemption price of $292,673,230, comprised of principal, accrued interest and, in the case of such Subordinated Notes, a premium of $970,000. As a result of such redemption, on June 9, 2006, the Amended and Restated Indenture, dated as of May 9, 2003, among the Company, Wilmington Trust Company, as Trustee, Morgan Stanley Capital Services Inc., as Liquidity Provider, and MBIA Insurance Corporation, as Policy Provider, the Spare Parts Security Agreement, dated as of December 6, 2002, between Wilmington Trust Company, as Security Agent, and the Company, and certain related agreements were terminated. The collateral that secured the redeemed notes


 
was released from the lien under such Spare Parts Security Agreement and used to secure the newly-issued Equipment Notes.

This Current Report is also being filed for the purpose of filing as exhibits to the Registration Statement the documents listed in Item 9.01 below, which are hereby incorporated by reference in the Registration Statement.

Item 1.02. Termination of a Material Definitive Agreement.

See Item 1.01.

Item 2.03. Creation of Direct Financial Obligation.

See Item 1.01.
 
Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The Exhibit Index attached to this Current Report is hereby incorporated by reference. The documents listed on the Exhibit Index are filed as Exhibits with reference to the Registration Statement. The Registration Statement and the final Prospectus Supplement, dated May 24, 2006, to the Prospectus, dated April 10, 2006, relate to the offering of the Certificates.
 



 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, Continental Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
     
 
CONTINENTAL AIRLINES, INC.
 
 
 
 
 
 
June 14, 2006  By:   /s/ Jennifer L. Vogel 
 
Jennifer L. Vogel
 
Senior Vice President, General Counsel,
Secretary and Corporate Compliance
Officer








EXHIBIT INDEX
 
 
1.1
Underwriting Agreement, dated May 24, 2006, between Morgan Stanley & Co. Incorporated, as Underwriter, and Continental Airlines, Inc.
 
 
4.1
Trust Supplement No. 2006-1G, dated as of June 9, 2006, between Wilmington Trust Company, as Trustee, and Continental Airlines, Inc. to Pass Through Trust Agreement, dated as of September 25, 1997
 
 
4.2
Trust Supplement No. 2006-1B, dated as of June 9, 2006, between Wilmington Trust Company, as Trustee, and Continental Airlines, Inc. to Pass Through Trust Agreement, dated as of September 25, 1997
 
 
4.3
Revolving Credit Agreement (2006-1G), dated as of June 9, 2006, between Wilmington Trust Company, as Subordination Agent, as Borrower, and Morgan Stanley Bank, as Primary Liquidity Provider
 
 
4.4
ISDA Master Agreement, dated as of June 9, 2006, between Morgan Stanley Capital Services Inc. and Wilmington Trust Company, as Subordination Agent
 
 
4.5
Schedule to the Master Agreement, dated as of June 9, 2006, between Morgan Stanley Capital Services Inc. and Wilmington Trust Company, as Subordination Agent
 
 
4.6
Above-Cap Liquidity Facility Confirmation, dated as of June 9, 2006, between Morgan Stanley Capital Services Inc. and Wilmington Trust Company, as Subordination Agent
 
 
4.7
Guarantee, dated as of June 9, 2006, by Morgan Stanley, relating to the Above-Cap Liquidity Facility
 
 
4.8
Insurance and Indemnity Agreement, dated as of June 9, 2006, among Financial Guaranty Insurance Company, as Policy Provider, Continental Airlines, Inc. and Wilmington Trust Company, as Subordination Agent and Trustee
 
 
4.9
Financial Guarantee Insurance Policy #06030067 of Financial Guaranty Insurance Company
 
 
4.10
Intercreditor Agreement, dated as of June 9, 2006, among Wilmington Trust Company, as Trustee, Morgan Stanley Bank, as Primary Liquidity Provider, Morgan Stanley Capital Services Inc., as Above-Cap Liquidity Provider, Financial Guaranty Insurance Company, as Policy Provider, and Wilmington Trust Company, as Subordination Agent and Trustee



 
 
4.11
Note Purchase Agreement, dated as of June 9, 2006, among Continental Airlines, Inc. and Wilmington Trust Company, as Mortgagee, Subordination Agent and Trustee
 
 
4.12
Trust Indenture and Mortgage, dated as of June 9, 2006, between Continental Airlines, Inc. and Wilmington Trust Company, as Mortgagee
 
 
4.13
Collateral Maintenance Agreement, dated as of June 9, 2006, among Continental Airlines, Inc., Financial Guaranty Insurance Company, as Policy Provider, and Wilmington Trust Company, as Mortgagee
 
 
4.14
Reference Agency Agreement, dated as of June 9, 2006, among Continental Airlines, Inc. and Wilmington Trust Company, as Subordination Agent, Mortgagee and Reference Agent
 
 
4.15
Form of Continental Airlines Pass Through Certificate, Series 2006-1G (included in Exhibit 4.1)
 
 
4.16
Form of Continental Airlines Pass Through Certificate, Series 2006-1B (included in Exhibit 4.2)
 
 
23.1
Consent of Simat, Helliesen & Eichner, Inc., dated May 22, 2006
Underwriting Agreement, dated May 24, 2006





CONTINENTAL AIRLINES, INC.
$190,000,000
Continental Airlines Pass Through Certificates, Series 2006-1G
$130,000,000
Continental Airlines Pass Through Certificates, Series 2006-1B

UNDERWRITING AGREEMENT
 
May 24, 2006


MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036

Ladies and Gentlemen:

Continental Airlines, Inc., a Delaware corporation (the "Company"), proposes that Wilmington Trust Company, as trustee under each of the Trusts (as defined below) (each, a "Trustee"), issue and sell to Morgan Stanley & Co. Incorporated (the "Underwriter"), Continental Airlines Pass Through Certificates, Series 2006-1G (the "Class G Certificates"), and Continental Airlines Pass Through Certificates, Series 2006-1B (the "Class B Certificates" and, together with the Class G Certificates, the "Certificates"), in the aggregate principal amounts and with the interest rates and final expected distribution dates set forth on Schedule I hereto on the terms and conditions stated herein. Each Trustee will use the proceeds from the sale of the Certificates to acquire from the Company the Equipment Notes. The Company intends to use most of the proceeds from the sale of said Equipment Notes to redeem its outstanding Floating Rate Secured Notes due 2007 and Floating Rate Secured Subordinated Notes due 2007 (collectively, the "Existing Notes"), outstanding under the Amended and Restated Indenture (the "Existing Indenture") dated as of May 9, 2003, among the Company, Wilmington Trust Company, as trustee, Morgan Stanley Capital Services Inc., as liquidity provider, and MBIA Insurance Corporation, as policy provider (or, if the Company has funded such redemption prior to receipt of such proceeds, to reimburse the Company for such funding).

The Class B Certificates may only be sold by the Underwriter to persons reasonably believed by the Underwriter to be "qualified institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").

The Company has filed with the Securities and Exchange Commission (the "Commission") an automatic shelf registration statement on Form S-3 (File No.333-133187)

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relating to securities, including pass through certificates (the "Shelf Securities"), to be issued from time to time by the Company. The registration statement (including the respective exhibits thereto and the respective documents filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Exchange Act"), that are incorporated by reference therein), as amended to and including the date of this Agreement, including the information (if any) deemed to be part of the registration statement pursuant to Rule 430B under the Securities Act (and the Underwriter confirms that the first contract of sale of the Certificates by the Underwriter was made on the date of this Agreement), is hereinafter referred to as the "Registration Statement", and the related prospectus covering the Shelf Securities dated April 10, 2006 filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission on or prior to the date of this Agreement, is hereinafter referred to as the "Basic Prospectus". The Basic Prospectus, as supplemented by the final prospectus supplement specifically relating to the Certificates in the form as first filed with the Commission pursuant to Rule 424(b) under the Securities Act in accordance with Section 4(d) hereof is hereinafter referred to as the "Prospectus", and the term "preliminary prospectus" means any preliminary form of the Prospectus filed with the Commission pursuant to Rule 424 under the Securities Act. For purposes of this Agreement, (i) "free writing prospectus" has the meaning set forth in Rule 405 under the Securities Act and (ii) "Time of Sale Prospectus" means the preliminary prospectus together with the free writing prospectuses, if any, each identified in Schedule III hereto. As used herein, the terms "Registration Statement", "Basic Prospectus", "preliminary prospectus", "Time of Sale Prospectus" and "Prospectus" shall include the documents, if any, incorporated by reference therein. The terms "supplement", "amendment" and "amend" as used herein with respect to the Registration Statement, the Basic Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing prospectus shall include all documents subsequently filed by the Company with the Commission pursuant to the Exchange Act), and incorporated by reference therein.

The Certificates will be issued pursuant to a Pass Through Trust Agreement, dated as of September 25, 1997 (the "Basic Agreement"), between the Company and the Trustee, as supplemented with respect to the issuance of each class of Certificates by a separate Pass Through Trust Supplement to be dated as of the Closing Date (as defined below) (individually, a "Trust Supplement"), between the Company and the Trustee (the Basic Agreement as supplemented by each such Trust Supplement being referred to herein individually as a "Pass Through Trust Agreement"). The Trust Supplements are related to the creation and administration of Continental Airlines Pass Through Trust 2006-1G (the "Class G Trust") and Continental Airlines Pass Through Trust 2006-1B (the "Class B Trust" and, together with the Class G Trust, the "Trusts").

Certain amounts of interest payable on the Class G Certificates will be entitled to the benefits of a primary liquidity facility and an above-cap liquidity facility. Morgan Stanley Bank (the "Primary Liquidity Provider") will enter into a revolving credit agreement with respect to the Class G Trust (the "Primary Liquidity Facility"), to be dated as of the Closing Date, for the benefit of the holders of the Class G Certificates issued by the Class G Trust. Morgan Stanley Capital Services Inc. (the "Above-Cap Liquidity Provider") will enter into an interest rate cap agreement with respect to the Class G Trust (the "Above-Cap Liquidity Facility" and, together

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with the Primary Liquidity Facility, the "Liquidity Facilities"), to be dated as of the Closing Date, for the benefit of the holders of the Class G Certificates issued by the Class G Trust. The Liquidity Facilities will not cover any amounts payable in respect of the Class B Certificates.

Payments of interest on the Class G Certificates will be supported by a financial guaranty insurance policy for the Class G Trust (the "Policy") issued by Financial Guaranty Insurance Company, as policy provider (the "Policy Provider"), to the extent the Liquidity Facilities and any funds contained in the cash collateral account funded from the Primary Liquidity Facility or the Above-Cap Account funded from the Above-Cap Liquidity Facility, are insufficient or unavailable for that purpose. The Policy will also support the payment of the final distributions on the Class G Certificates and will take effect in certain other circumstances described in the Intercreditor Agreement and the Policy. The Policy will be issued pursuant to an Insurance and Indemnity Agreement to be dated as of the Closing Date (the "Policy Provider Agreement") among the Policy Provider, the Company and the Subordination Agent. Under the Intercreditor Agreement and the Policy Provider Agreement, the Policy Provider will be entitled to reimbursement for amounts paid pursuant to claims made under the Policy, subject to certain limitations. The Class B Certificates will not be entitled to the benefits of the Policy or any other financial guaranty insurance policy.

The Primary Liquidity Provider, the Above-Cap Liquidity Provider, the Trustees on behalf of the holders of the Certificates and the Policy Provider will be entitled to the benefits of an Intercreditor Agreement to be dated as of the Closing Date (the "Intercreditor Agreement") among the Trustees, Wilmington Trust Company, as subordination agent and trustee thereunder (the "Subordination Agent"), the Primary Liquidity Provider, the Above-Cap Liquidity Provider and the Policy Provider.

Capitalized terms used but not defined in this Underwriting Agreement (the "Agreement") shall have the meanings specified therefor in the Pass Through Trust Agreement, the Note Purchase Agreement (as defined in the Intercreditor Agreement) or the Intercreditor Agreement; provided that, as used in this Agreement, the term "Operative Agreements" shall mean the Intercreditor Agreement, the Liquidity Facilities, the Policy, the Pass Through Trust Agreements, the Policy Provider Agreement, the Reference Agency Agreement, the Collateral Maintenance Agreement, the Indenture, the Note Purchase Agreement, the Equipment Notes, the Certificates and the Indemnification Agreement, dated as of the Closing Date (the "Indemnification Agreement"), among the Policy Provider, the Company and the Underwriter.

1. Representations and Warranties. (a) The Company represents and warrants to, and agrees with the Underwriter that:

(i) The Company meets the requirements for use of Form S-3 under the Securities Act; the Registration Statement has become effective; and, on the original effective date of the Registration Statement, the Registration Statement complied in all material respects with the requirements of the Securities Act; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission. The Registration Statement is an "automatic shelf registration statement"

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(as defined in Rule 405 under the Securities Act) and the Company is a "well-known seasoned issuer" (as defined in Rule 405 under the Securities Act) eligible to use the Registration Statement as an automatic shelf registration statement, and the Company has not received notice that the Commission objects to the use of the Registration Statement as an automatic shelf registration statement. The Registration Statement does not, as of the date hereof, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. As of its date and on the Closing Date, the Prospectus, as amended and supplemented, if the Company shall have made any amendment or supplement thereto, does not and will not include an untrue statement of a material fact and does not and will not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Registration Statement, as of the date hereof, complies and the Prospectus complies, and as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder. The Time of Sale Prospectus did not, as of 5 p.m., Eastern Time, on the date of this Agreement (the "Applicable Time"), and the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentences do not apply to (x) statements in or omissions from the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon (A) written information furnished to the Company by the Underwriter expressly for use therein, (B) information under the caption "Description of the Policy Provider", the third paragraph under the caption "Experts" or Appendix III in the Prospectus or documents incorporated by reference thereunder (collectively, the "Policy Provider Information") or (C) statements or omissions in that part of each Registration Statement which shall constitute the Statement of Eligibility of the Trustee under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), on Form T-1.

(ii) The documents incorporated by reference in the Time of Sale Prospectus or the Prospectus (excluding any Policy Provider Information comprising documents incorporated by reference) pursuant to Item 12 of Form S-3 under the Securities Act, at the time they were filed with the Commission or hereafter, during the period mentioned in Section 4(a) hereof, are filed with the Commission, complied or will comply, as the case may be, in all material respects with the requirements of the Exchange Act.

(iii) The Company is not an "ineligible issuer" in connection with the offering of the Certificates pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing
 
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prospectuses, if any, identified in Schedule III hereto, the Company has not prepared, used or referred to, any free writing prospectus in connection with the offering of the Certificates.
 
(iv) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its property and to conduct its business as described in the Time of Sale Prospectus; 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 "Continental Material Adverse Effect").

(v) Each of Continental Micronesia, Inc. and Air Micronesia 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 corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Time of Sale Prospectus; 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 Continental 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 described in the Time of Sale Prospectus, each Subsidiary's capital stock owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects.

(vi) Except as described in the Time of Sale Prospectus, 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 Continental Material Adverse Effect. The execution, delivery and performance of this Agreement and the Operative Agreements to which the Company is or will be a party and the consummation by the Company 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 (other than any lien, charge or encumbrance created under any Operative Agreement) upon any property or assets of the Company pursuant to any indenture, loan agreement, contract, mortgage, note, lease 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 Continental 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.

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(vii) 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 Operative Agreements to which it is or will be a party and for the consummation of the transactions contemplated herein and therein, except (x) such as may be required under the Securities Act, the Trust Indenture Act, the securities or "blue sky" or similar laws of the various states and of foreign jurisdictions or rules and regulations of the NASD, Inc. ("NASD"), and (y) filings or recordings with the Federal Aviation Administration (the "FAA") and under the Uniform Commercial Code (the "UCC") or other laws in effect in any applicable jurisdiction governing the perfection of security interests, which filings or recordings referred to in this clause (y) shall have been made, or duly presented for filing or recordation, or shall be in the process of being duly filed or filed for recordation, on or prior to the Closing Date.

(viii) This Agreement has been duly executed and delivered by the Company and the Operative Agreements to which the Company will be a party will be duly executed and delivered by the Company on or prior to the Closing Date.

(ix) The Operative Agreements to which the Company is or will be a party, when duly executed and delivered by the Company, assuming that such Operative Agreements have been duly authorized, executed and delivered by, and constitute the legal, valid and binding obligations of, each other party thereto, will constitute valid and binding obligations of the Company enforceable in accordance with their terms, except (w) 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, (x) as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), (y) that the enforceability of the Indenture may also be limited by applicable laws which may affect the remedies provided therein but which do not affect the validity of the Indenture or make such remedies inadequate for the practical realization of the benefits intended to be provided thereby and (z) with respect to indemnification and contribution provisions, as enforcement thereof may be limited by applicable law. The Basic Agreement as executed is substantially in the form filed as an exhibit to the Company's current report on Form 8-K dated September 25, 1997 and has been duly qualified under the Trust Indenture Act. The Certificates and the Pass Through Trust Agreements will, upon execution and delivery thereof, conform in all material respects to the descriptions thereof in the Time of Sale Prospectus.

(x) The consolidated financial statements of the Company incorporated by reference in the Time of Sale Prospectus, 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

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accounting principles applied on a consistent basis throughout the periods involved, except as otherwise stated therein and except that unaudited financial statements do not have all required footnotes. The financial statement schedules, if any, incorporated by reference in the Time of Sale Prospectus present the information required to be stated therein.

(xi) 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, and holds an air carrier operating certificate issued 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 of 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.

(xii) On or prior to the Closing Date, the issuance of the Certificates will be duly authorized by the Trustee. When duly executed, authenticated, issued and delivered in the manner provided for in the Pass Through Trust Agreements and sold and paid for as provided in this Agreement, the Certificates will be legally and validly issued and will be entitled to the benefits of the relevant Pass Through Trust Agreement.

(xiii)  Except as disclosed in the Time of Sale Prospectus, 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 Continental Material Adverse Effect; and except as disclosed in the Time of Sale Prospectus, the Company and the Subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would have a Continental Material Adverse Effect.

(xiv) Except as disclosed in the Time of Sale Prospectus, 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 individually (or in the aggregate in the case of any class of related lawsuits), could reasonably be expected to result in a Continental 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 Operative Agreements.

(xv) Except as disclosed in the Time of Sale Prospectus, no labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that could reasonably be expected to have a Continental Material Adverse Effect.

(xvi) 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 described in

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the Prospectus, except to the extent that the failure to so obtain, declare or file would not have a Continental Material Adverse Effect.

(xvii) Except as disclosed in the Time of Sale Prospectus, (x) 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 Continental Material Adverse Effect, and (y) the Company is not aware of any pending investigation which might lead to such a claim that is reasonably expected to have a Continental Material Adverse Effect.

(xviii) The accountants that examined and issued an auditors' report with respect to the consolidated financial statements of the Company and the financial statement schedules of the Company, if any, included or incorporated by reference in the Registration Statement are independent public accountants within the meaning of the Securities Act.

(xix) Each preliminary prospectus filed pursuant to Rule 424 under the Securities Act and included in the Time of Sale Prospectus, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.

(xx) Neither the Company nor either of the Trusts is an "investment company", or an entity "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), in each case required to register under the Investment Company Act; and after giving effect to the offering and sale of the Certificates and the application of the proceeds thereof as described in the Prospectus, neither of the Trusts will be an "investment company", or an entity "controlled" by an "investment company", as defined in the Investment Company Act, in each case required to register under the Investment Company Act.

(xxi) This Agreement and the Operative Agreements to which the Company is a party will, upon execution and delivery thereof, conform in all material respects to the descriptions thereof contained in the Time of Sale Prospectus.

(xxii) Simat, Helliesen & Eichner, Inc. ("SH&E") is not an affiliate of the Company and, to the knowledge of the Company, does not have a substantial interest, direct or indirect, in the Company. To the knowledge of the Company, none of the officers and directors of SH&E is connected with the Company or any of its affiliates as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

(xxiii) The Company (A) makes and keeps books, records and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the

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material assets of the Company and its consolidated subsidiaries and (B) maintains a system of internal accounting controls sufficient to provide reasonable assurances that (1) transactions are executed in accordance with management’s general or specific authorization; (2) transactions are recorded as necessary: (x) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and (y) to maintain accountability for assets; (3) access to material assets is permitted only in accordance with management’s general or specific authorization; and (4) the recorded accountability for material assets is compared with the existing material assets at reasonable intervals and appropriate action is taken with respect to any differences.

(xxiv) The information provided by the Company to SH&E for use by SH&E in preparation of its report relating to the Pledged Spare Parts dated as of February 16, 2006, taken as a whole with respect to such report, did not contain an untrue statement of material fact or omit to state a material fact necessary to make such information not misleading.

(b) The parties agree that any certificate signed by a duly authorized officer of the Company and delivered to the Underwriter, or to counsel for the Underwriter, on the Closing Date and in connection with this Agreement or the offering of the Certificates, shall be deemed a representation and warranty by (and only by) the Company to the Underwriter as to the matters covered thereby.

2. Purchase, Sale and Delivery of Certificates. (a) 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 cause the Trustees to sell to the Underwriter, and the Underwriter agrees to purchase from the Trustees, at a purchase price of 100% of the principal amount thereof, the aggregate principal amount of each class of Certificates.

(b) The Company is advised by the Underwriter that the Underwriter proposes to make a public offering of the Certificates as set forth in the Prospectus as soon after this Agreement has been entered into as in the Underwriter’s judgment is advisable. The Company is further advised by the Underwriter that the Certificates are to be offered to the public initially at 100% of their principal amount -- the public offering price -- plus accrued interest, if any, and to certain dealers selected by the Underwriter at concessions not in excess of the concessions set forth in the Prospectus, and that the Underwriter may allow, and such dealers may reallow, concessions not in excess of the concessions set forth in the Prospectus to certain other dealers. 

(c) As underwriting commission and other compensation to the Underwriter for its commitments and obligations hereunder in respect of the Certificates, including the undertakings to distribute the Certificates, the Company will pay to the Underwriter the amount set forth in Schedule II hereto. Such payment will be made on the Closing Date simultaneously with the issuance and sale of the Certificates to the Underwriter. Payment of such compensation shall be made by Federal funds check or by wire transfer of immediately available funds.

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(d) The Company shall cause the Class B Trust to issue and deliver against payment of the purchase price the Class B Certificates to be purchased by the Underwriter hereunder and to be offered and sold by the Underwriter to QIBs in the form of one or more certificated securities in definitive, fully registered form without interest coupons (the "Restricted Definitive Securities") which shall be registered in the name or names designated by the Underwriter. The Restricted Definitive Security shall include the legend regarding restrictions on transfer set forth under "Description of the Certificates—Transfer Restrictions for Class B Certificates" in the Time of Sale Prospectus.

(e) Delivery of and payment for the Certificates shall be made at the offices of Hughes Hubbard & Reed LLP at One Battery Park Plaza, New York, New York 10004 at 10:00 A.M. on June 9, 2006 or such other date, time and place as may be agreed upon by the Company and the Underwriter (such date and time of delivery and payment for the Certificates being herein called the "Closing Date"). Delivery of the Class G Certificates issued by the Class G Trust shall be made to the Underwriter's account at The Depository Trust Company ("DTC") for the account of the Underwriter against payment by the Underwriter of the purchase price thereof. Delivery of the Restricted Definitive Securities evidencing the Class B Certificates shall be made to the Underwriter by physical delivery to, or at the direction of, the Underwriter. Payment for the Certificates issued by the Trusts shall be made by the Underwriter by wire transfer of immediately available funds to the accounts and in the manner designated prior to the Closing Date to the Underwriter by the Company or at such other date, time and place as may be agreed upon by the Company and the Underwriter. The Certificates shall be in the form of one or more fully registered global Class G Certificates, and shall be deposited with the Class G Trustee as custodian for DTC and registered in the name of Cede & Co.

(f) The Company agrees to have the Certificates available for inspection and checking by the Underwriter in New York, New York not later than 1:00 P.M. on the business day prior to the Closing Date.

3. Conditions of Underwriter's Obligations. The obligations of the Underwriter to purchase and pay for the Certificates pursuant to this Agreement are subject to the following conditions:

(a) On the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act and no proceedings therefor shall have been instituted or threatened by the Commission.

(b) On the Closing Date, the Underwriter shall have received an opinion of Hughes Hubbard & Reed LLP, as counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(c) On the Closing Date, the Underwriter shall have received the opinion of Hughes Hubbard & Reed LLP, counsel for the Company, dated the Closing Date, delivered in accordance with the provisions of Section 4.1.2(vii)(A) of the Note Purchase Agreement.

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(d) On the Closing Date, the Underwriter shall have received an opinion of the General Counsel, Secretary and Corporate Compliance Officer of the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(e) On the Closing Date, the Underwriter shall have received an opinion of the Legal Department of the Company, dated the Closing Date, delivered in accordance with the provisions of Section 4.1.2(vii)(B) of the Note Purchase Agreement.

(f) On the Closing Date, the Underwriter shall have received an opinion of Richards, Layton & Finger, P.A., special counsel to Wilmington Trust Company, individually and as Trustee, Mortgagee and Subordination Agent, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter, delivered in accordance with the provisions of Section 4.1.2(vii)(C) of the Note Purchase Agreement.

(g) On the Closing Date, the Underwriter shall have received an opinion as to the perfection of the security interest in the Pledged Spare Parts of Richards, Layton & Finger, P.A., counsel for Wilmington Trust Company, individually and as Trustee, Mortgagee and Subordination Agent.

(h) On the Closing Date, the Underwriter shall have received an opinion of Lytle Soulé & Curlee, special counsel in Oklahoma City, Oklahoma counsel, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter, delivered in accordance with the provisions of Section 4.1.2(vii)(D) of the Note Purchase Agreement.

(i) On the Closing Date, the Underwriter shall have received an opinion of Shearman & Sterling LLP, special New York counsel for the Primary Liquidity Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(j) On the Closing Date, the Underwriter shall have received an opinion of Ballard Spahr Andrews & Ingersoll, LLP, special Utah counsel for the Primary Liquidity Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(k) On the Closing Date, the Underwriter shall have received an opinion regarding the 2006-1G Pass Through Trust of Shearman & Sterling LLP, special New York counsel for the Above-Cap Liquidity Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter, delivered in accordance with the provisions of Section 4(a)(ii) of the ISDA Master Agreement.

(l) On the Closing Date, the Underwriter shall have received an opinion of Shearman & Sterling LLP, special New York counsel for the Above-Cap Liquidity Provider, dated the Closing Date, with respect to certain bankruptcy matters.

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(m) On the Closing Date, the Underwriter shall have received an opinion of in-house counsel of Above-Cap Liquidity Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(n) On the Closing Date, the Underwriter shall have received an opinion of Latham & Watkins, special New York counsel for the Policy Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(o) On the Closing Date, the Underwriter shall have received an opinion of Vice President and Senior Counsel of the Policy Provider, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriter.

(p) On the Closing Date, the Underwriter shall have received an opinion of Milbank, Tweed, Hadley & McCloy LLP, counsel for the Underwriter, dated as of the Closing Date, with respect to the issuance and sale of the Certificates, the Registration Statement, the Time of Sale Prospectus, the Prospectus and other related matters as the Underwriter may reasonably require.

(q) Subsequent to the execution and delivery of this Agreement, there shall not have occurred any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries considered as one enterprise that, in the Underwriter’s judgment, is material and adverse and that makes it, in the Underwriter’s judgment, impracticable to proceed with the completion of the public offering of the Certificates on the terms and in the manner contemplated by the Time of Sale Prospectus.

(r) The Underwriter shall have received on the Closing Date a certificate, dated the Closing Date and signed by the President or any Vice President of the Company, to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date as if made on the Closing Date (except to the extent that they relate solely to an earlier date, in which case they shall be true and accurate as of such earlier date), that the Company has performed all its obligations to be performed hereunder on or prior to the Closing Date and that, subsequent to the execution and delivery of this Agreement, there shall not have occurred any material adverse change, or 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 considered as one enterprise, except as set forth in or contemplated by the Time of Sale Prospectus.

(s) As of the Closing Date, the representations and warranties of the Policy Provider contained in the Indemnification Agreement shall be true and correct in all material respects as of the Closing Date (except to the extent that they relate solely to an earlier or later date, in which case they shall be true and correct as of such earlier or later date) and the Underwriter shall have received a certificate of the President or a Vice President of the Policy Provider, dated the Closing Date, to such effect.

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(t) The Underwriter shall have received from Ernst & Young LLP, (i) a letter, dated no earlier than the date hereof, in form and substance satisfactory to the Underwriter, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information included or incorporated by reference in the Registration Statement, the preliminary prospectus and the prospectus, and (ii) a letter, dated the Closing Date, which meets the above requirements, except that the specified date therein referring to certain procedures performed by Ernst & Young LLP will not be a date more than three business days prior to the Closing Date for purposes of this subsection.

(u) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, there shall not have been any downgrading 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, or any public announcement that any such organization has under surveillance or review, in each case for possible change, its ratings of any such securities other than pass through certificates (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating).

(v) SH&E shall have furnished to the Underwriter a letter, addressed to the Company and dated the Closing Date, confirming that SH&E and each of its directors and officers (i) is not an affiliate of the Company or any of its affiliates, (ii) does not have any substantial interest, direct or indirect, in the Company or any of its affiliates and (iii) is not connected with the Company or any of its affiliates as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

(w) At the Closing Date, each of the Operative Agreements shall have been duly executed and delivered by each of the parties thereto; and the representations and warranties of the Company contained in each of such executed Operative Agreements shall be true and correct as of the Closing Date (except to the extent that they relate solely to an earlier date, in which case they shall be true and correct as of such earlier date) and the Underwriter shall have received a certificate of the President or a Vice President of the Company, dated as of the Closing Date, to such effect.

(x) On the Closing Date, (i) the Class G Certificates shall be rated "AAA" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's") and (ii) the Class B Certificates shall be rated not lower than "B+" by S&P and not lower than "B1" by Moody's.

The Company will furnish the Underwriter with such conformed copies of such opinions, certificates, letters and documents as the Underwriter may reasonably request.

4. Certain Covenants of the Company. The Company covenants with the Underwriter as follows:

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(a) During the period described in the following sentence of this Section 4(a), the Company shall advise the Underwriter promptly of any proposal to amend or supplement the Registration Statement, Time of Sale Prospectus or the Prospectus (except by documents filed under the Exchange Act) and will not effect such amendment or supplement (except by documents filed under the Exchange Act) without the consent of the Underwriter, which consent will not be unreasonably withheld. If, at any time after the public offering of the Certificates, the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is required by law to be delivered in connection with sales of the Certificates by the Underwriter or a dealer, any event shall occur as a result of which it is necessary to amend the Registration Statement or amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is delivered to a purchaser, not misleading in any material respect, or if it is necessary to amend the Registration Statement or amend or supplement the Prospectus to comply with law, the Company shall prepare and furnish at its expense to the Underwriter and to the dealers (whose names and addresses the Underwriter will furnish to the Company) to which Certificates may have been sold by the Underwriter and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading in any material respect or amendments or supplements to the Registration Statement or the Prospectus so that the Registration Statement or the Prospectus, as so amended or supplemented, will comply with law and cause such amendments or supplements to be filed promptly with the Commission.

(b) During the period mentioned in paragraph (a) above, the Company shall notify the Underwriter immediately of (i) the effectiveness of any amendment to the Registration Statement, (ii) the transmittal to the Commission for filing of any supplement to the Prospectus or any document that would as a result thereof be incorporated by reference in the Prospectus, (iii) the receipt of any comments from the Commission with respect to the Registration Statement or the Prospectus, (iv) any request by the Commission to the Company for any amendment to the Registration Statement or any supplement to the Prospectus or for additional information relating thereto or to any document incorporated by reference in the Prospectus and (v) receipt by the Company of any notice of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, the suspension of the qualification of the Certificates for offering or sale in any jurisdiction, or the institution or threatening of any proceeding for any of such purposes; and the Company agrees to use every reasonable effort to prevent the issuance of any such stop order and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment and the Company shall (subject to the proviso to Section 4(i)) endeavor, in cooperation with the Underwriter, to prevent the issuance of any such stop order suspending such qualification and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

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(c) During the period mentioned in paragraph (a) above, the Company will furnish to the Underwriter as many conformed copies of the Registration Statement (as originally filed), Time of Sale Prospectus, the Prospectus, and all amendments and supplements to such documents (excluding all exhibits and documents filed therewith or incorporated by reference therein) and as many conformed copies of all consents and certificates of experts, in each case as soon as available and in such quantities as the Underwriter reasonably requests.

(d) Promptly following the execution of this Agreement, the Company will prepare a Prospectus that complies with the Securities Act and that sets forth the principal amount of the Certificates and their terms not otherwise specified in the preliminary prospectus or the Basic Prospectus included in the Registration Statement, the name of the Underwriter and the principal amount of the Certificates, the price at which the Certificates are to be purchased by the Underwriter from the Trustee, any initial public offering price, any selling concession and reallowance and any delayed delivery arrangements, and such other information as the Underwriter and the Company deem appropriate in connection with the offering of the Certificates. The Company will timely transmit copies of the Prospectus to the Commission for filing pursuant to Rule 424 under the Securities Act.

(e) The Company shall furnish to the Underwriter a copy of each free writing prospectus relating to the offering of the Certificates prepared by or on behalf of, used by, or referred to by the Company and shall not use or refer to any proposed free writing prospectus to which the Underwriter reasonably objects.

(f) If the Time of Sale Prospectus is being used to solicit offers to buy the Certificates at a time when a Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances when delivered to a prospective purchaser, not misleading in any material respect, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, the Company shall forthwith prepare, file promptly with the Commission and furnish, at the Company's expense, to the Underwriter and to the dealers (whose names and addresses the Underwriter will furnish to the Company) to which Certificates may have been sold by the Underwriter and to any other dealers upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when delivered to a prospective purchaser, be misleading in any material respect or so that the Time of Sale Prospectus, as so amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law.

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(g) The Company shall, in cooperation with the Underwriter, endeavor to arrange for the qualification of the Certificates for offer and sale under the applicable securities or "blue sky" laws of such jurisdictions in the United States as the Underwriter reasonably designates and will endeavor to maintain such qualifications in effect so long as required for the distribution of the Certificates; provided that the Company shall 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 jurisdiction.
 
(h) During the period of ten years after the Closing Date, the Company will promptly furnish to the Underwriter, upon request, copies of all Annual Reports on Form 10-K and any definitive proxy statement of the Company filed with the Commission; provided that providing a website address at which such Annual Reports and any such definitive proxy statements may be accessed will satisfy this clause (h).

(i) If the third anniversary of the initial effective date of the Registration Statement occurs before all the Certificates have been sold by the Underwriter, prior to the third anniversary, the Company shall file a new shelf registration statement and take any other action necessary to permit the public offering of the Certificates to continue without interruption, in which case references herein to the Registration Statement shall include the new registration statement as it shall become effective.

(j) Between the date of this Agreement and the Closing Date, the Company shall not, without the prior written consent of the Underwriter, offer, sell, or enter into any agreement to sell (as public debt securities registered under the Securities Act (other than the Certificates) or as debt securities which may be resold in a transaction exempt from the registration requirements of the Securities Act in reliance on Rule 144A thereunder and which are marketed through the use of a disclosure document containing substantially the same information as a prospectus for similar debt securities registered under the Securities Act), any equipment notes, pass through certificates, equipment trust certificates or equipment purchase certificates secured by aircraft spare parts owned by the Company (or rights relating thereto).

(k) The Company shall prepare a final term sheet relating to the offering of the Certificates, containing only information that describes the final terms of the Certificates or the offering in a form consented to by the Underwriter and shall file such final term sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date the final terms have been established for the offering of the Certificates.

(l) It is contemplated that the Company shall use part of the funds raised hereby to redeem the Existing Notes. Prior to any such redemption, (i) the Company shall comply with all conditions precedent for redemption of the Existing Notes set forth in Article 4 of the Existing Indenture and any other applicable sections of the Existing Indenture, subject to the receipt of the proceeds from the sale of the Equipment Notes pursuant to the Note Purchase Agreement, or (ii) the Company shall ensure that MBIA Insurance Corporation, as policy provider under the Existing Indenture, waives

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compliance with such conditions precedent set forth in Section 4.1 of the Existing Indenture and any other applicable sections of the Existing Indenture, in each case in accordance with the Existing Indenture; provided, however, that if the Existing Trustee accepts the redemption payment and releases the security interest on the Spare Parts Collateral (as defined in the Existing Indenture) in accordance with the terms of the Existing Indenture and the Security Agreement (as defined in the Existing Indenture), the Company shall not be held liable for non-compliance with (i) or (ii) of this clause (l).

5. Certain Covenants of the Underwriter. (a) The Underwriter represents and warrants that it is a QIB within the meaning of Rule 144A under the Securities Act. The Underwriter represents, warrants and agrees with the Company that it has solicited and will solicit offers for the Class B Certificates only from, and has offered and will offer and sell the Class B Certificates only to persons that it reasonably believes to be QIBs; provided that, in purchasing the Class B Certificates, such persons are deemed to have represented and agreed as provided in the Time of Sale Prospectus under the caption "Description of the Certificates—Transfer Restrictions for Class B Certificates".

(b) The Underwriter represents, warrants and covenants that it has not made and will not make any offer relating to the Certificates that would constitute an issuer free writing prospectus; provided that this Section 5(b) shall not prevent the Underwriter from transmitting or otherwise making use of one or more customary “Bloomberg Screens” to offer the Certificates or convey final pricing terms thereof that contain only information contained in the Time of Sale Prospectus.

6. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Underwriter, and each Person, if any, who controls the Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Underwriter or any such controlling person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any "issuer free writing prospectus" as defined in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or the Prospectus, or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as any of the aforementioned losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished to the Company in writing by or through the Underwriter expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus or the Prospectus, or any amendment or supplement thereto (the "Underwriter Information") or Policy Provider Information.

(b) The Underwriter agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who

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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 Underwriter but only with reference to the Underwriter Information.

(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either paragraph (a) or (b) above, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. The indemnifying party, upon request of the indemnified party, shall, and the indemnifying party may elect to, retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and the indemnifying party shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, or (iii) the indemnifying party shall have failed to retain counsel as required by the prior sentence to represent the indemnified party within a reasonable amount of time. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Underwriter in the case of parties indemnified pursuant to paragraph (a) above and by the Company in the case of parties indemnified pursuant to paragraph (b) above. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested in writing an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph (c), the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 90 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement, unless such fees and expenses are being disputed in good faith. The indemnifying party at any time may, subject to the last sentence of this paragraph (c), settle or compromise any proceeding described in this paragraph (c), at the expense of the indemnifying party. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (ii) does not include a

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statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party.

(d) To the extent the indemnification provided for in paragraph (a) or (b) of this Section 6 is required to be made but is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the applicable 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 Underwriter, on the other hand, from the offering of such Certificates 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 Underwriter, 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 Underwriter, on the other hand, in connection with the offering of such Certificates shall be deemed to be in the same respective proportions as the proceeds from the offering of such Certificates received by the Trusts (before deducting expenses), less total underwriting discounts and commissions received by the Underwriter, and the total underwriting discounts and commissions received by the Underwriter, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of such Certificates. The relative fault of the Company, on the one hand, and of the Underwriter, 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 information supplied by the Underwriter, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The Company and the Underwriter agree that it would not be just or equitable if contribution pursuant to this Section 6 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 6, the Underwriter shall not be required to contribute any amount in excess of the amount by which the total price at which the Certificates underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that the Underwriter 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.

(f) The indemnity and contribution provisions contained in this Section 6 and the representations and warranties of the Company contained in this Agreement shall remain

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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 Underwriter or any person controlling the Underwriter 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 Certificates. The remedies provided for in this Section 6 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.

7. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or its officers and of the Underwriter set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any termination of this Agreement, any investigation, or statement as to the results thereof, made by or on behalf of the Underwriter, the Company or any of their respective representatives, officers or directors or any controlling person and will survive delivery of and payment for the Certificates. If for any reason the purchase of the Certificates by the Underwriter is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 9 hereof and the respective obligations of the Company and the Underwriter pursuant to Section 6 hereof shall remain in effect. If the purchase of the Certificates by the Underwriter is not consummated for any reason other than solely because of the occurrence of the termination of the Agreement pursuant to Section 8 hereof, the Company will reimburse the Underwriter for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) reasonably incurred by the Underwriter in connection with the offering of such Certificates and comply with its obligations under Sections 6 and 9 hereof.

8. Termination. This Agreement shall be subject to termination by notice given by the Underwriter 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 materially 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 NASDAQ Global Market, (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, (iv) there shall have occurred any attack on, outbreak or escalation of hostilities or act of terrorism involving, the United States, or any change in financial markets or any calamity or crisis that, in each case, in the Underwriter’s judgment, is material and adverse or (v) any major disruption of settlements of securities or clearance services in the United States that would materially impair settlement and clearance with respect to the Certificates and (b) in the case of any of the events specified in clauses (a)(i) through (v), such event singly or together with any other such event makes it, in the Underwriter’s judgment, impracticable to market the Certificates on the terms and in the manner contemplated in the Time of Sale Prospectus.

9. Payment of Expenses. As between the Company and the Underwriter, the Company shall pay all expenses incidental to the performance of the Company's obligations under this Agreement, including the following:
 
(i) expenses incurred in connection with (A) qualifying the Certificates for offer and sale under the applicable securities or "blue sky" laws of such jurisdictions in

20


the United States as the Underwriter reasonably designate (including filing fees and fees and disbursements of counsel for the Underwriter in connection therewith), (B) endeavoring to maintain such qualifications in effect so long as required for the distribution of such Certificates, (C) the review (if any) of the offering of the Certificates by the NASD, (D) the determination of the eligibility of the Certificates for investment under the laws of such jurisdictions as the Underwriter may designate and (E) the preparation and distribution of any blue sky or legal investment memorandum by Underwriter’s counsel;

(ii) expenses incurred in connection with the preparation and distribution to the Underwriter and the dealers (whose names and addresses the Underwriter will furnish to the Company) to which Certificates may have been sold by the Underwriter on its behalf and to any other dealers upon request, either of (A) amendments to the Registration Statement or amendments or supplements to the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not materially misleading or (B) amendments or supplements to the Registration Statement, the Time of Sale Prospectus, or the Prospectus so that the Registration Statement, the Time of Sale Prospectus or the Prospectus, as so amended or supplemented, will comply with law and the expenses incurred in connection with causing such amendments or supplements to be filed promptly with the Commission, all as set forth in Section 4(a) hereof;
 
(iii) the expenses incurred in connection with the preparation, printing and filing of the Registration Statement (including financial statements and exhibits), as originally filed and as amended, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any issuer free writing prospectus and any amendments and supplements to any of the foregoing, including the filing fees payable to the Commission relating to the Certificates (within the time period required by Rule 456(b)(1), if applicable), and the cost of furnishing copies thereof to the Underwriter and dealers;
 
(iv) expenses incurred in connection with the preparation, printing and distribution of this Agreement, the Certificates and the Operative Agreements;

(v) expenses incurred in connection with the delivery of the Certificates to the Underwriter;

(vi) reasonable fees and disbursements of the counsel and accountants for the Company;

(vii) to the extent the Company is so required under any Operative Agreement to which it is a party, the fees and expenses of the Mortgagee, the Subordination Agent, the Trustees, the Reference Agent, the Primary Liquidity Provider, the Above-Cap Liquidity Provider and the Policy Provider and the reasonable fees and disbursements of their respective counsel;
 
(viii) fees charged by rating agencies for rating the Certificates (including annual surveillance fees related to the Certificates as long as they are outstanding);

21


(ix) reasonable fees and disbursements of counsel for the Underwriter;

(x) all fees and expenses relating to appraisals of the Pledged Spare Parts; and

(xi) all other reasonable out-of-pocket expenses incurred by the Underwriter in connection with the transactions contemplated by this Agreement; and

(xii) except as otherwise provided in the foregoing clauses (i) through (xi), all other expenses incidental to the performance of the Company's obligations under this Agreement, other than pursuant to Section 6.

10. Notices. All communications hereunder shall be in writing and effective only upon receipt and, if sent to the Underwriter, shall be mailed, delivered or sent by facsimile transmission and confirmed to it at Morgan Stanley & Co. Incorporated, 1585 Broadway New York, New York 10036, Attention: Equipment Finance Group, facsimile number (212) 761-1781; and, if sent to the Company, shall be mailed, delivered or sent by facsimile transmission and confirmed to it at 1600 Smith Street, HQSEO, Houston, TX 77002, Attention: Treasurer and General Counsel, facsimile number (713) 324-2447; provided, however, that any notice to the Underwriter pursuant to Section 6 shall be sent by facsimile transmission or delivered and confirmed to the Underwriter.

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 6, and no other person will have any right or obligation hereunder.

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 OTHER THAN ANY LAW WHICH WOULD REQUIRE THE APPLICATION OF A LAW OF A DIFFERENT JURISDICTION.

14. Submission to Jurisdiction; Venue; Appointment of Agent.

(a) Each party hereto hereby irrevocably agrees, accepts and submits itself to the non-exclusive jurisdiction of the courts of the State of New York in the City and County of New York and of the United States for the Southern District of New York, in connection with any legal action, suit or proceeding with respect to any matter relating to or arising out of or in connection with this Agreement. Each of the parties to this Agreement agrees that a final action in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other lawful manner.

22


(b) Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, and agrees not to assert, by stay of motion, as a defense, or otherwise, in any legal action or proceeding brought hereunder in any of the above-named courts, that such action or proceeding is brought in an inconvenient forum, or that venue for the action or proceeding is improper.

(c) To the fullest extent permitted by applicable law, each party hereto hereby waives its respective rights to a jury trial or any claim or cause of action in any court in any jurisdiction based upon or arising out of or relating to this Agreement.
15. LIBOR for Initial Interest Period. The Debt Rate (as defined in the Indenture) for the initial Interest Period under the Indenture shall be LIBOR, which the Underwriter shall determine as the rate for deposits in U.S. dollars for a period of three months that appears on the display designated as page "3750" on the Telerate Monitor as of 11.00 a.m., London time, on the second "Business Day" (as defined in the Indenture) prior to the Closing Date, plus the Applicable Margin.

16. No Fiduciary Duty. The Company hereby acknowledges that in connection with the offering of the Certificates: (a) the Underwriter has acted at arms length, is not an agent and owes no fiduciary duties to, the Company or any other person, (b) the Underwriter owes the Company only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (c) the Underwriter may have interests that differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Underwriter arising from an alleged breach of fiduciary duty in connection with the offering of the Certificates.
 
17. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
 
23


If the foregoing is in accordance with the Underwriter'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 Underwriter and the Company in accordance with its terms.
 
 
     
 
Very truly yours,
CONTINENTAL AIRLINES, INC.
 
 
 
 
 
 
  By:    
 
Name:
  Title:
 
     
  The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written
MORGAN STANLEY & CO. INCORPORATED
 
     
  By:    
 
Name:
  Title:
 
 

 
24

 
SCHEDULE I

(Continental Airlines Pass Through Certificates)

CONTINENTAL AIRLINES, INC.
 
 
Certificate
Designation
Aggregate
Principal
  Amount  
 
 
Interest Rate
Final
Expected Distribution
                Date                
 
2006-1G
 
$190,000,000
LIBOR + 0.350%
 
June 2, 2013
 
2006-1B
 
$130,000,000
LIBOR + 3.125%
 
June 2, 2013
       
 
 
25

 
SCHEDULE II

CONTINENTAL AIRLINES, INC.

 
Underwriting commission
and other compensation:
$2,800,000
   
Closing date, time and location:
June 9, 2006
10:00 A.M.,
New York time
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, NY 10004
 
 
26

 
SCHEDULE III


27


Time of Sale Prospectus
1. Basic Prospectus dated April 10, 2006 relating to Shelf Securities
 
 
2. the preliminary prospectus supplement dated May 24, 2006 relating to the Certificates
 
 
3. pricing supplement in the form attached as Annex A
   
 

28



ANNEX A
Issuer Free Writing Prospectus
Filed pursuant to Rule 433(d)
Registration No. 333-133187
May 24, 2006

Continental Airlines, Inc. ("Continental")
(NYSE Symbol: CAL)

Securities:
 
Class G Pass Through Certificates,
Series 2006-1 ("Class G Certificates")
Class B Pass Through Certificates,
Series 2006-1 ("Class B Certificates" and,
together with the Class G Certificates, the "Certificates")
 
Amount:
 
 
$190,000,000
 
$130,000,000
 
CUSIP: 
 
 
210795 PR5
 
210795 PS3
 
ISIN:
 
 
US210795PR55
 
US210795PS39
 
Coupon: 
 
 
USD 3-month LIBOR +0.350%
 
USD 3-month LIBOR + 3.125%
 
Maximum Interest Rate:
 
 
Interest rate for the Class G Certificates is subject to a maximum rate of 10.35% for any interest period commencing on any regular distribution date if a payment default by Continental occurs and is continuing on such regular distribution date
 
Capped Interest Rate:
 
 
Capped LIBOR (10% per annum) plus 0.35% per annum
 
Calculation of Amounts Available under Primary Liquidity Facility:
 
 
The amount available under the Primary Liquidity Facility for the payment of accrued interest on the Class G Certificates has been calculated utilizing the Capped Interest Rate of 10.35% per annum
 
Amount Available under
Primary Liquidity Facility at September 2, 2006:
 
 
$39,930,875
 
Optional Redemption:
 
 
In the case of an optional redemption of the Series B Equipment Notes that relate to the Class B Certificates on or after the third anniversary and prior to the fifth anniversary of the original issuance date of the Class B Certificates (except in connection with a redemption to satisfy the maximum Collateral Ratio requirements or the minimum Rotable Ratio requirement, or to the extent required as a result of certain reductions in Continental's aircraft fleet), the redemption price will include a Premium equal to the following percentage of the principal amount redeemed:
 
     
   
If redeemed during the year prior to the anniversary of
the original issuance date indicated below
Series B Premium
   
4th
4.0%
   
5th
2.0%
 
 

 
 
   
 
In the case of an optional redemption of Equipment Notes that relate to the Certificates prior to the fifth anniversary of the original issuance date of the Certificates required as a result of certain reductions in Continental’s aircraft fleet, the redemption price will include a Premium equal to the following percentage of the principal amount redeemed:
 
   
If redeemed during the year prior to the anniversary of the original issuance date indicated below
Series G
Premium
Series B
Premium
   
1st
1.0%
4.0%
   
2nd
1.0%
4.0%
   
3rd
1.0%
4.0%
   
4th
None
4.0%
   
5th
None
2.0%
Public Offering Price:
 
 
100%
 
Underwriting Commission and Other Compensation:
 
 
$2,800,000
 
Underwriting Agreement:
 
 
Dated May 24, 2006
 
Use of Proceeds:
 
 
The proceeds will be used to acquire Equipment Notes issued by Continental. Continental will use most of the proceeds from the sale of the Equipment Notes to redeem its outstanding Floating Rate Secured Notes Due 2007 and Floating Rate Secured Subordinated Notes Due 2007, each of which is secured by the collateral that will secure the Equipment Notes. Aggregate redemption price will be approximately $293 million, including accrued interest, LIBOR breakage costs and, in the case of the Floating Rate Secured Subordinated Notes, a premium
 
Settlement:
 
 
June 9, 2006 (T+11) closing date, the 11th business day following the date hereof
 
Preliminary Prospectus Supplement:
 
Continental has prepared and filed with the SEC a Preliminary Prospectus Supplement, dated May 24, 2006, which includes additional information regarding the Certificates
 
 
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Morgan Stanley toll-free 1-866-718-1649 (institutional investors). 
 

 
 

 


Trust Supplement 2006-1G, dated as of June 9, 2006
 


TRUST SUPPLEMENT No. 2006-1G
Dated as of June 9, 2006
 

 
between

WILMINGTON TRUST COMPANY
as Trustee,


and


CONTINENTAL AIRLINES, INC.

to

PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997


$190,000,000

Continental Airlines Pass Through Trust 2006-1G
LIBOR + 0.350%
Continental Airlines
Pass Through Certificates,
Series 2006-1G



TABLE OF CONTENTS

Page

 
 
2
2
 
ARTICLE II DEFINITIONS
3
Section 2.01. Definitions
3
 
8
 
8
Section 4.01. [Reserved].
8
8
9
10
 
ARTICLE V DEFAULT
11
11
14
 
ARTICLE VI THE TRUSTEE
14
14
Section 6.02. The Trustee
15
15
Section 6.04. Trustee Liens
16
 
16
16
16
17
17
17
17
18
18
18
 

i

 
 
 
18
18
Section 8.02. GOVERNING LAW
19
19
Section 8.04. Intention of Parties
19
 
 
Exhibit A        Form of Certification
Exhibit B        DTC Letter of Representation
ii


This Trust Supplement No. 2006-1G, dated as of June 9, 2006 (herein called the “Trust Supplement”), between Continental Airlines, Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company (the “Trustee”), to the Pass Through Trust Agreement, dated as of September 25, 1997, between the Company and the Trustee (the “Basic Agreement”).
 
W I T N E  ;S S E T H:

WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered;

WHEREAS, the Company intends to issue pursuant to the Indenture, on a recourse basis, up to (and including) two series of equipment notes (the “Equipment Notes”) to be secured by, among other things, certain aircraft spare parts owned by the Company;

WHEREAS, the Trustee hereby declares the creation of the Continental Airlines Pass Through Trust 2006-1G (the “Applicable Trust”) for the benefit of the Applicable Certificateholders, and the initial Applicable Certificateholders as the grantors of the Applicable Trust, by their respective acceptances of the Applicable Certificates, join in the creation of the Applicable Trust with the Trustee;

WHEREAS, all Certificates to be issued by the Applicable Trust will evidence fractional undivided interests in the Applicable Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property;

WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the “Agreement”) and the NPA (as defined below), the Trustee on behalf of the Applicable Trust, using the proceeds of the sale of the Applicable Certificates, shall purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Applicable Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Applicable Certificateholders;

WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized;

WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions.


NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows:
 
ARTICLE I
CREATION OF THE APPLICABLE CERTIFICATES

Section 1.01. The Applicable Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as “Continental Airlines Pass Through Certificates, Series 2006-1G” (hereinafter defined as the “Applicable Certificates”). Each Applicable Certificate represents a fractional undivided interest in the Applicable Trust created hereby. The Applicable Certificates shall be the only instruments evidencing a fractional undivided interest in the Applicable Trust.

The terms and conditions applicable to the Applicable Certificates are as follows:

(a) The aggregate principal amount of the Applicable Certificates that shall be authenticated under the Agreement (except for Applicable Certificates authenticated and delivered pursuant to Sections 3.03, 3.04, 3.05 and 3.06 of the Basic Agreement) is $190,000,000.

(b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means March 2, June 2, September 2 and December 2 of each year, commencing on September 2, 2006 (or, if any such date is not a Business Day, the next succeeding Business Day), until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made.

(c) The Special Distribution Dates with respect to the Applicable Certificates means any Business Day on which a Special Payment is to be distributed pursuant to the Agreement.

(d) (i) The Applicable Certificates shall be in the form attached hereto as Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an interest therein will, by such acquisition or acceptance, be deemed to represent and warrant to and for the benefit of the Company that either (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase Applicable Certificates or an interest therein or (ii) the purchase and holding of Applicable Certificates or an interest therein is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

(ii) The Applicable Certificates shall be Book-Entry Certificates and shall be subject to the conditions set forth in the Letter of Representations between the Company and the Clearing Agency attached hereto as Exhibit B.

2


(e) The “NPA” as defined in this Trust Supplement is the “Note Purchase Agreement” referred to in the Basic Agreement.

(f) The Applicable Certificates are subject to the Intercreditor Agreement.

(g) The Applicable Certificates are entitled to the benefits of the Primary Liquidity Facility, the Above-Cap Liquidity Facility and the Policy.

(h) The Responsible Party is the Company.

(i) The date referred to in clause (i) of the definition of the term “PTC Event of Default” in the Basic Agreement is the Final Maturity Date.

(j) The “particular sections of the Note Purchase Agreement”, for purposes of clause (3) of Section 7.07 of the Basic Agreement, is Section 8.1 of the NPA.

(k) The Equipment Note to be acquired and held in the Applicable Trust, and the related Pledged Spare Parts and Note Documents are described in the NPA.

(l) For purposes of Section 2.01(b)(4) of the Basic Agreement, there shall be no Cut-off Date with respect to the Applicable Certificates.

(m) For purposes of the second paragraph of Section 11.01 of the Basic Agreement, the notice of any termination of the Applicable Trust shall be mailed promptly by the Trustee to the Applicable Certificateholders not earlier than 60 days and not later than 15 days preceding the final distribution referenced in such Section.
 
ARTICLE II
DEFINITIONS

Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized terms have the following meanings (any term used herein which is defined in both this Trust Supplement and the Basic Agreement shall have the meaning assigned thereto in this Trust Supplement for purposes of the Basic Agreement as supplemented by this Trust Supplement):

Above-Cap Account: Has the meaning specified in the Intercreditor Agreement.

Above-Cap Liquidity Facility: Means, initially, the ISDA Master Agreement, dated as of June 9, 2006, between the Subordination Agent, as agent and trustee for the Applicable Trust, and the Above-Cap Liquidity Provider, together with the Schedule and Confirmation attached thereto, relating to the Applicable Certificates, and, from and after the replacement of such ISDA Master Agreement pursuant thereto, the replacement above-cap liquidity facility therefor, if any, in each case, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

3


Above-Cap Liquidity Provider: Means, initially, Morgan Stanley Capital Services Inc., a corporation organized under the laws of the state of Delaware, and any replacements or successors therefor appointed in accordance with the Intercreditor Agreement.
 
Agreement: Has the meaning specified in the recitals hereto.

Applicable Certificate: Has the meaning specified in Section 1.01 of this Trust Supplement.

Applicable Certificateholder: Means the Person in whose name an Applicable Certificate is registered on the Register for the Applicable Certificates.

Applicable Trust: Has the meaning specified in the recitals hereto.

Basic Agreement: Has the meaning specified in the first paragraph of this Trust Supplement.

Break Amount: Has the meaning specified in the Indenture.

Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Houston, Texas; New York, New York; or, so long as any Applicable Certificate is Outstanding, the city and state in which the Trustee, the Subordination Agent or the Loan Trustee maintains its Corporate Trust Office or receives and disburses funds and which is also a day for trading by and between banks in the London interbank Eurodollar markets.

Certain Excess Reimbursement Obligations: Means any amounts referred to in clause (c) of the definition of “Excess Reimbursement Obligations” in the Intercreditor Agreement.

Certificate: Has the meaning specified in the Intercreditor Agreement.

Class: Has the meaning specified in the Intercreditor Agreement.

Class B Purchasers: Has the meaning specified in Section 5.01(a) of this Trust Supplement

Collateral: Has the meaning specified in the Indenture.

Company: Has the meaning specified in the first paragraph of this Trust Supplement.

Controlling Party: Has the meaning specified in the Intercreditor Agreement.

Distribution Date: Means any Regular Distribution Date or Special Distribution Date as the context requires.

4


Equipment Notes: Has the meaning specified in the recitals hereto.

Final Maturity Date: June 2, 2015.

Indenture: Means the Trust Indenture and Mortgage dated as of June 9, 2006 between the Company and the Loan Trustee, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Intercreditor Agreement: Means the Intercreditor Agreement (2006-1) dated as of June 9, 2006 among the Trustee, the Other Trustee, the Above-Cap Liquidity Provider, the Primary Liquidity Provider, the Policy Provider and Wilmington Trust Company, as Subordination Agent and as trustee thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Investors: Means the Underwriter, together with all subsequent beneficial owners of the Applicable Certificates.

Issuance Date: Means the date of the issuance of the Applicable Certificates to the Underwriter pursuant to the Underwriting Agreement.

Liquidity Obligations: Has the meaning assigned to such term in the Intercreditor Agreement.

Non-Participating Certificateholders: Has the meaning specified in Section 5.01(a) of this Trust Supplement.

Non-Participating Class G Certificateholders: Has the meaning specified in Section 5.01(b) of this Trust Supplement.

Note Documents: Means the Equipment Notes with respect to the Applicable Certificates, the Indenture and the NPA.

NPA: Means the Note Purchase Agreement dated as of June 9, 2006 among the Trustee, the Other Trustee, the Company, the Loan Trustee and the Subordination Agent, providing for, among other things, the purchase of the applicable Equipment Note by the Trustee on behalf of the Applicable Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms.

Operative Agreements: Has the meaning assigned to such term in the Intercreditor Agreement.

Other Agreement: Means the Basic Agreement as supplemented by Trust Supplement No. 2006-1B dated the date hereof relating to the Other Trust.

5


Other Trust: Means the Continental Airlines Pass Through Trust 2006-1B, created by the Other Agreement.

Other Trustee: Means the trustee under the Other Agreement, and any successor or other trustee appointed as provided therein.

Participating Certificateholders: Has the meaning specified in Section 5.01(a) of this Trust Supplement.

Participating Class G Certificateholders: Has the meaning specified in Section 5.01(b) of this Trust Supplement.

Pledged Spare Parts: Has the meaning assigned to such term in the Indenture.

Policy: Has the meaning specified in the Intercreditor Agreement.

Policy Fee Letter: Has the meaning specified in the Intercreditor Agreement.

Policy Provider: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Agreement: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Amounts: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Default: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Obligations: Has the meaning assigned to such term in the Intercreditor Agreement.

Pool Balance: Means, as of any date, (i) the original aggregate face amount of the Applicable Certificates less (ii) the aggregate amount of all payments made as of such date in respect of such Applicable Certificates other than payments made in respect of interest or Premium or Break Amount thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any date shall be computed after giving effect to any payment of principal of the Equipment Notes, payments under the Policy (other than in respect of interest on the Applicable Certificates) or payment with respect to other Trust Property and the distribution thereof to be made on that date.

Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the original aggregate face amount of the Applicable Certificates. The Pool Factor as of any date shall be computed after giving effect to any payment of principal of the Equipment Notes, payment under

6


the Policy (other than in respect of interest on the Applicable Certificates) or payment with respect to other Trust Property and the distribution thereof to be made on that date.

Premium: Has the meaning specified in the Indenture.

Primary Liquidity Facility: Means, initially, the Revolving Credit Agreement dated as of June 9, 2006 between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the Applicable Trust, and the initial Primary Liquidity Provider, and from and after the replacement of such Revolving Credit Agreement pursuant to the Intercreditor Agreement, the replacement liquidity facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Primary Liquidity Provider: Means, initially, Morgan Stanley Bank, an industrial bank organized under the laws of the state of Utah, and any replacements or successors therefor appointed in accordance with the Intercreditor Agreement.

PTC Event of Default: Has the meaning assigned to such term in the Intercreditor Agreement.

Reference Agency Agreement: Has the meaning specified in the NPA.

Scheduled Payment: Has the meaning assigned to such term in the Intercreditor Agreement.

Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Collateral (as defined in the Indenture).

Stated Interest Rate: Has the meaning specified in the Intercreditor Agreement as such meaning is applicable to the Applicable Certificates.

Triggering Event: Has the meaning assigned to such term in the Intercreditor Agreement.

Trust Property: Means (i) subject to the Intercreditor Agreement, the Equipment Note held as the property of the Applicable Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI of the Basic Agreement of the Equipment Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of the Applicable Trust, under the Intercreditor Agreement, the NPA, the Above-Cap Liquidity Facility, the Primary Liquidity Facility and the Policy, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Applicable Trust pursuant to the Intercreditor

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Agreement, the NPA, the Above-Cap Liquidity Facility, the Primary Liquidity Facility or the Policy.

Trust Supplement: Has the meaning specified in the first paragraph of this trust supplement.

Trustee: Has the meaning specified in the first paragraph of this Trust Supplement.

Underwriter: Means Morgan Stanley & Co. Incorporated.

Underwriting Agreement: Means the Underwriting Agreement dated as of May 24, 2006 between the Underwriter and the Company, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.


ARTICLE III
[INTENTIONALLY OMITTED]


ARTICLE IV
STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS

Section 4.01. [Reserved].

Section 4.02. Statements to Applicable Certificateholders. (a)  On each Distribution Date, the Trustee will include with each distribution to Applicable Certificateholders of a Scheduled Payment or Special Payment, as the case may be, a statement setting forth the information provided below. Such statement shall set forth (per $1,000 face amount Applicable Certificate as to (ii) and (iii) below) the following information:
 
(i) the aggregate amount of funds distributed on such Distribution Date under the Agreement, indicating the amount allocable to each source, including any portion thereof withdrawn from the Above-Cap Account or paid by the Primary Liquidity Provider or the Policy Provider;
 
(ii) the amount of such distribution under the Agreement allocable to principal and the amount allocable to Premium and Break Amount, if any;
 
(iii) the amount of such distribution under the Agreement allocable to interest;
 
(iv) the Pool Balance and the Pool Factor; and
 
(v) the LIBOR rates and the resulting Stated Interest Rate on the Applicable Certificates for the current and immediately preceding Interest Periods.

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With respect to the Applicable Certificates registered in the name of a Clearing Agency or its nominee, on the Record Date prior to each Distribution Date, the Trustee will request from such Clearing Agency a securities position listing setting forth the names of all Clearing Agency Participants reflected on such Clearing Agency’s books as holding interests in the Applicable Certificates on such Record Date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of interests in the Applicable Certificates.
 
(b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was an Applicable Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i), (a)(ii) and (a)(iii) above for such calendar year or, in the event such Person was an Applicable Certificateholder of record during a portion of such calendar year, for such portion of such calendar year, and such other items as are readily available to the Trustee and which an Applicable Certificateholder shall reasonably request as necessary for the purpose of such Applicable Certificateholder’s preparation of its U.S. federal income tax returns. Such statement and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants to the holders of interests in the Applicable Certificates in the manner described in Section 4.02(a) of this Trust Supplement.
 
(c) Promptly following the date of any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Applicable Trust, the Trustee shall furnish to Applicable Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Note held as Trust Property at the date of such notice. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of interests in the Applicable Certificates.
 
(d) This Section 4.02 supersedes and replaces Section 4.03 of the Basic Agreement, with respect to the Applicable Trust.
 
Section 4.03. Distributions from Special Payments Account.

(a) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Note held (subject to the Intercreditor Agreement) in the Applicable Trust or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 4.01(b) of the Basic Agreement. There shall be so distributed to each Applicable Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 of the Basic Agreement concerning the final distribution) by check mailed to such Applicable Certificateholder, at the address appearing in the Register, such Applicable

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Certificateholder’s pro rata share (based on the Fractional Undivided Interest in the Applicable Trust held by such Applicable Certificateholder) of the total amount in the Special Payments Account on account of such Special Payment, except that, with respect to Applicable Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer in immediately available funds to the account designated by such Clearing Agency (or such nominee).
 
(b) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Applicable Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of the Equipment Note held in the Applicable Trust, such notice shall be mailed not less than 15 days prior to the Special Distribution Date for the Special Payment resulting from such redemption or purchase, which Special Distribution Date shall be the date of such redemption or purchase. In the case of any distribution pursuant to Section 3.6(c) or Section 3.6(e) of the Intercreditor Agreement, the Trustee will mail notice to the Applicable Certificateholders not less than 15 days prior to the Special Distribution Date determined for such distribution. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 15 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth:
 
(i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01 of the Basic Agreement),
 
(ii) the amount of the Special Payment for each $1,000 face amount Applicable Certificate and the amount thereof constituting principal, Premium or Break Amount, if any, and interest,
 
(iii) the reason for the Special Payment, and
 
(iv) if the Special Distribution Date is the same date as a Regular Distribution Date, the total amount to be received on such date for each $1,000 face amount Applicable Certificate.
 
If the amount of Premium or Break Amount, if any, payable upon the redemption or purchase of the Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any Premium or Break Amount received will also be distributed.
 
If any redemption of the Equipment Note held in the Applicable Trust is canceled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Applicable Certificateholder at its address as it appears on the Register.
 
(c) This Section 4.03 supersedes and replaces Section 4.02(b) and Section 4.02(c) of the Basic Agreement in their entirety, with respect to the Applicable Trust.
 
Section 4.04. Limitation of Liability for Payments. Section 3.09 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “the

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Owner Trustees or the Owner Participants” in the second sentence thereof and adding in lieu thereof “the Above-Cap Liquidity Provider, the Primary Liquidity Provider or the Policy Provider”.
 
ARTICLE V
DEFAULT

Section 5.01. Purchase Rights of Certificateholders; Election to Terminate Policy. (a) By acceptance of its Applicable Certificate, each Applicable Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Class B Certificateholder (other than the Company or any of its Affiliates) shall have the right to purchase all, but not less than all, of the Applicable Certificates upon ten days’ written notice to the Trustee and each other Class B Certificateholder, provided that (i) if prior to the end of such ten-day period any other Class B Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Class B Certificateholder that such other Class B Certificateholder (other than the Company or any of its Affiliates) wants to participate in such purchase, then such other Class B Certificateholder may join with the purchasing Class B Certificateholder (any such purchasing Class B Certificateholders shall be collectively referred to herein as the “Class B Purchasers”) to purchase all, but not less than all, of the Applicable Certificates based on the ratio of the Fractional Undivided Interest in the Class B Trust held by each such Class B Purchaser to the Fractional Undivided Interests in the Class B Trust held by all of the Class B Purchasers and (ii) if prior to the end of such ten-day period any other Class B Certificateholder fails to notify the Class B Purchasers of such other Class B Certificateholder’s desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Applicable Certificates pursuant to this Section 5.01(a). In addition, following the exercise by the Class B Purchasers of their right to purchase the Applicable Certificates, the Applicable Certificateholders shall have the right to elect upon 20 days’ written notice to the Trustee, the Policy Provider and each other Applicable Certificateholder to surrender the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy) and to pay (or cause to be paid) both of the following: (i) to the Policy Provider, to the extent not paid otherwise, all Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and (ii) to the Primary Liquidity Provider all outstanding Liquidity Obligations. If any of the Applicable Certificateholders (the “Non-Participating Certificateholders”) fails to elect to surrender the Policy and make such payments or fails to notify the Applicable Certificateholders making such election (together with any Applicable Certificateholders joining in such election, the “Participating Certificateholders”) prior to the end of such 20-day period of their intention to join with the Participating Certificateholders in surrendering the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy) and making such payments, the Participating Certificateholders shall have the right to purchase all, but not less than all, of the Applicable Certificates held by the Non-Participating Certificateholders, pro rata based on the ratio of the Fractional Undivided Interest in the Applicable Trust held by each such Participating Certificateholder to the Fractional Undivided Interests in the Applicable Trust held by all Participating Certificateholders and, following the consummation of such purchase, to make the election to surrender the Policy and make such payments (it being understood and agreed that the Policy may be surrendered if and only if the Participating Certificateholders hold
 
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all, but not less than all of the Applicable Certificates, and unanimously elect to so surrender the Policy and make such payments, in each case, whether initially or following the purchase of Applicable Certificates from Non-Participating Certificateholders). Payment of the purchase price of all the Applicable Certificates held by Non-Participating Certificateholders and the payment of all Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and Liquidity Obligations shall, in each case, be made by the Participating Certificateholders based on the ratio of the Fractional Undivided Interest in the Applicable Trust held by each such Participating Certificateholder to the Fractional Undivided Interests in the Applicable Trust held by all Participating Certificateholders. Following all such payments, the Trustee shall be subrogated to the rights of the Policy Provider and the Primary Liquidity Provider under the Operative Agreements and the Trustee shall direct the Subordination Agent to surrender (or cause the surrender of) the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy). Upon such surrender and payments, the Primary Liquidity Facility shall be terminated in accordance therewith. Following any such surrender of the Policy to the Policy Provider for cancellation and payment of the Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and the Liquidity Obligations, the Applicable Certificates shall no longer be entitled to the benefits of the Policy or the Primary Liquidity Facility.
 
(b) By acceptance of its Applicable Certificate, each Applicable Certificateholder agrees that, in the event that (i) none of the Class B Certificateholders has elected to exercise its right to purchase pursuant to clause (a) above or (ii) any Class B Certificateholder has so elected to exercise such right, but has not exercised its right to surrender the Policy pursuant to clause (a) above, the Policy Provider, if it is then the Controlling Party and no Policy Provider Default shall have occurred and be continuing and 120 days have elapsed since the occurrence of a Triggering Event that is continuing, shall have the right to purchase all, but not less than all, of the Applicable Certificates upon 20 days’ written notice to the Trustee, the Other Trustee and the Applicable Certificateholders; provided, that upon receipt of any such purchase notice, the Applicable Certificateholders shall have the right to elect upon written notice to the Trustee, the Policy Provider and all of the other Applicable Certificateholders given prior to the end of such 20-day period to surrender the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy) and to pay (or cause to be paid) both of the following: (i) to the Policy Provider, to the extent not paid otherwise, all Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and (ii) to the Primary Liquidity Provider all outstanding Liquidity Obligations. If any of the Applicable Certificateholders (the “Non-Participating Class G Certificateholders”) fails to make such election or fails to notify the Applicable Certificateholders making such election (together with any Applicable Certificateholders joining in such election, the “Participating Class G Certificateholders”) prior to the end of such 20-day period of its intention to join with such Participating Class G Certificateholders in surrendering the Policy and making such payments, the Participating Class G Certificateholders shall have the right to purchase all, but not less than all, of the Applicable Certificates held by such Non-Participating Class G Certificateholders, pro rata based on the ratio of the Fractional Undivided Interest in the Applicable Trust held by each such Participating Class G Certificateholder to the total Fractional Undivided Interests in the Applicable Trust held by all Participating Class G Certificateholders, and, following the consummation of such purchase, to make the election to surrender the Policy in the manner provided in the immediately preceding sentence and make such payments (it being understood

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and agreed that the Policy may only be surrendered if and only if the Participating Class G Certificateholders hold all, but not less than all of the Applicable Certificates whether initially or following the purchase of Applicable Certificates, and unanimously elect to so surrender the Policy and make such payments, in each case, whether initially or following the purchase of the Applicable Certificates from Non-Participating Class G Certificateholders from Non-Participating Class G Certificateholders). Payment of the purchase price of all Applicable Certificates held by Non-Participating Class G Certificateholders and the payment of the Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and Liquidity Obligations shall, in each case, be made by the Participating Class G Certificateholders based on the ratio of the Fractional Undivided Interest in the Applicable Trust held by each such Participating Class G Certificateholder to the total Fractional Undivided Interests in the Applicable Trust held by all Participating Class G Certificateholders. Following all such payments, the Trustee shall direct the Subordination Agent to surrender or cause the surrender of the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy). Upon such surrender and payments, the Primary Liquidity Facility shall be terminated in accordance therewith. Following any such surrender of the Policy to the Policy Provider for cancellation and payment of the Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and the Liquidity Obligations, the Applicable Certificates shall no longer be entitled to the benefits of the Policy or the Primary Liquidity Facility.
 
The purchase price with respect to the Applicable Certificates shall be equal to the Pool Balance of the Applicable Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without Premium or Break Amount, but including any other amounts then due and payable to the Applicable Certificateholders under the Agreement, the Intercreditor Agreement or any Note Document or on or in respect of the Applicable Certificates; provided, however, that no such purchase of Applicable Certificates shall be effective unless the purchaser(s) shall certify to the Trustee that contemporaneously with such purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the Agreement and, in the case of any purchase of the Applicable Certificates pursuant to clause (a) of this Section 5.01 and the Other Agreement, all of the Applicable Certificates. Each payment of the purchase price of the Applicable Certificates referred to in the first sentence hereof shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section 5.01. Each Applicable Certificateholder agrees by its acceptance of its Applicable Certificate that (at any time after the occurrence and during the continuation of a Triggering Event) it will, upon payment from such Class B Purchasers, Participating Class G Certificateholders or the Policy Provider, as the case may be, of the purchase price set forth in the first sentence of this paragraph, (i) forthwith sell, assign, transfer and convey to the purchaser(s) thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Applicable Certificateholder in the Agreement, the Intercreditor Agreement, the Above-Cap Liquidity Facility, the Primary Liquidity Facility, the Policy, the Note Documents and all Applicable Certificates held by such Applicable Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) (and the purchaser shall assume all of such Applicable Certificateholder’s obligations under the Agreement, the Intercreditor Agreement, the Above-Cap Liquidity Facility, the Primary Liquidity Facility, the Policy, the Note Documents and all such Applicable Certificates) and (ii) if such purchase occurs

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after a Record Date relating to any distribution and prior to or on the related Distribution Date, forthwith turn over to the purchaser(s) of its Applicable Certificate all amounts, if any, received by it on account of such distribution. The Applicable Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Applicable Certificateholders to deliver any Applicable Certificates and, upon such a purchase, (I) the only rights of the Applicable Certificateholders will be to deliver the Applicable Certificates to the purchaser(s) and receive the purchase price for such Applicable Certificates and (II) if the purchaser(s) shall so request, such Applicable Certificateholder will comply with all the provisions of Section 3.04 of the Basic Agreement to enable new Applicable Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Applicable Certificates shall be borne by the purchaser thereof.
 
As used in this Section 5.01 and elsewhere in this Trust Supplement, the terms “Class B Certificateholder”, “Class B Trust” and “Class B Trustee” shall have the respective meanings assigned to such terms in the Intercreditor Agreement.
 
(c) By their acceptance of the Applicable Certificates, the Applicable Certificateholders hereby agree that the surrender of the Policy to the Policy Provider for cancellation as contemplated in clauses (a) and (b) of this Section 5.01 shall (i) constitute an acknowledgment that the Applicable Certificates are no longer entitled to the benefits of Section 3.6 of the Intercreditor Agreement and (ii) without any further action by such Applicable Certificateholder, have the immediate effect of releasing the Policy Provider from its obligations under the Policy.
 
(d) This Section 5.01 supersedes and replaces Section 6.01(b) of the Basic Agreement, with respect to the Applicable Trust.
 
Section 5.02. Amendment of Section 6.05 of the Basic Agreement. Section 6.05 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto,” set forth in the first sentence thereof.
 
ARTICLE VI
THE TRUSTEE

Section 6.01. Delivery of Documents; Delivery Dates. (a)  The Trustee is hereby directed (i) to execute and deliver the Intercreditor Agreement and the NPA on or prior to the Issuance Date, each in the form delivered to the Trustee by the Company, and (ii) subject to the respective terms thereof, to perform its obligations thereunder. Upon request of the Company and the satisfaction or waiver of the closing conditions specified in the Underwriting Agreement, the Trustee shall execute, deliver, authenticate, issue and sell Applicable Certificates in authorized denominations equaling in the aggregate the amount set forth, with respect to the Applicable Trust, in Schedule I to the Underwriting Agreement evidencing the entire ownership interest in the Applicable Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the NPA. Except as provided in Sections 3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not

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execute, authenticate or deliver Applicable Certificates in excess of the aggregate amount specified in this paragraph. The provisions of this Section 6.01(a) supersede and replace the first sentence of Section 3.02(a) of the Basic Agreement, with respect to the Applicable Trust.
 
(b) All provisions of the Basic Agreement relating to Postponed Notes and Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.
 
(c) The Trustee acknowledges its acceptance of all right, title and interest in and to the Trust Property to be acquired pursuant to the NPA, and declares that it holds and will hold such right, title and interest for the benefit of all present and future Applicable Certificateholders, upon the trusts set forth in the Agreement. By its acceptance of an Applicable Certificate, each initial Applicable Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee in the creation of the Applicable Trust. The provisions of this Section 6.01(c) supersede and replace the provisions of Section 2.03 of the Basic Agreement, with respect to the Applicable Trust.
 
Section 6.02. The Trustee. (a)  Subject to Section 6.03 of this Trust Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the NPA or the due execution hereof or thereof by the Company or the other parties thereto (other than the Trustee), or for or in respect of the recitals and statements contained herein or therein, all of which recitals and statements are made solely by the Company, except that the Trustee hereby represents and warrants that each of this Trust Supplement, the Basic Agreement, each Applicable Certificate, the Intercreditor Agreement and the NPA has been executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf.
 
(b) Except as herein otherwise provided and except during the continuation of an Event of Default in respect of the Applicable Trust created hereby, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Trust Supplement other than as set forth in the Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Agreement, as fully to all intents as if the same were herein set forth at length.
 
Section 6.03. Representations and Warranties of the Trustee. The Trustee hereby represents and warrants that:
 
(a) the Trustee has full power, authority and legal right to execute, deliver and perform this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party;
 
(b) the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party (i) will not violate any provision of any United States federal law or the law of the state of the United States where it is located governing the banking and trust

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powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee’s performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein;
 
(c) the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the state of the United States where it is located regulating the banking and corporate trust activities of the Trustee; and
 
(d) this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party have been, or will be, as applicable, duly executed and delivered by the Trustee and constitute, or will constitute, as applicable, the legal, valid and binding agreements of the Trustee, enforceable against it in accordance with their respective terms; provided, however, that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity.
 
Section 6.04.Trustee Liens. The Trustee in its individual capacity agrees, in addition to the agreements contained in Section 7.17 of the Basic Agreement, that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any Trustee’s Liens on or with respect to the Trust Property which is attributable to the Trustee in its individual capacity and which is unrelated to the transactions contemplated by the Intercreditor Agreement or the NPA.
 
ARTICLE VII
ADDITIONAL AMENDMENTS; SUPPLEMENTAL AGREEMENTS

Section 7.01. Amendment of Section 2.01 of the Basic Agreement. Section 2.01(b) of the Basic Agreement shall be amended, with respect to the Applicable Trust, by replacing the phrase “related Aircraft” in clause (11) thereof with the phrase “related Pledged Spare Parts”.
 
Section 7.02. Amendment of Section 2.04 of the Basic Agreement. Section 2.04 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by replacing the term “Aircraft” with the term “Pledged Spare Parts” in both locations where the term “Aircraft” appears.

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Section 7.03. Amendment of Section 5.02 of the Basic Agreement. Section 5.02(a) of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:
 
“(a) the corporation formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be (i) organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia, (ii) a “citizen of the United States” as defined in 49 U.S.C. § 40102(a)(15), as amended, and (iii) a United States certificated air carrier, if and so long as such status is a condition of entitlement to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C. § 1110), with respect to the Pledged Spare Parts;”.
 
Section 7.04. Amendment of Section 6.05 of the Basic Agreement. Section 6.05(2) of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:
 
“(2) in the payment of the principal of, Premium or Break Amount, if any, or interest on the Equipment Notes held in the Applicable Trust, or”.
 
Section 7.05Amendment of Section 7.02 of the Basic Agreement. Section 7.02 of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:
 
“Section 7.02. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after, the occurrence of any default (as such term is defined below) hereunder known to the Trustee, the Trustee shall transmit by mail to the Company, the Loan Trustee and the Applicable Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal, Premium, if any, Break Amount, if any, or interest on the Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith shall determine that the withholding of such notice is in the interests of the Applicable Certificateholders. For the purpose of this Section 7.02 in respect of the Applicable Trust, the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default in respect of the Applicable Trust.”
 
Section 7.06. Supplemental Agreements Without Consent of Applicable Certificateholders. Without limitation of Section 9.01 of the Basic Agreement, under the terms of, and subject to the limitations contained in, Section 9.01 of the Basic Agreement, the Company may (but will not be required to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company’s request, at any time and from time to time enter into one or more agreements supplemental to the NPA, the Reference Agency Agreement, the Policy or the Policy Provider Agreement for any of the purposes set forth in clauses (1) through (9) of such Section 9.01, and (without limitation of the foregoing or Section 9.01 of the Basic Agreement)

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(a) the reference in the introductory paragraph of Section 9.01 of the Basic Agreement to a “Liquidity Facility” shall be deemed to refer to “the Above-Cap Liquidity Facility and the Primary Liquidity Facility”, (b) clauses (2) and (3) of such Section 9.01 shall also be deemed to include the Company’s obligations under (in the case of clause (2)), and the Company’s rights and powers conferred by (in the case of clause (3)), the NPA, the Reference Agency Agreement, the Policy or the Policy Provider Agreement, and (c) references in clauses (4), (6) and (7) of such Section 9.01 to “any Intercreditor Agreement or any Liquidity Facility” shall also be deemed to refer to “the Intercreditor Agreement, the Above-Cap Liquidity Facility, the Primary Liquidity Facility, the Reference Agency Agreement, the NPA, the Policy or the Policy Provider Agreement”.
 
Section 7.07. Supplemental Agreements with Consent of Applicable Certificateholders. Without limitation of Section 9.02 of the Basic Agreement, the provisions of Section 9.02 of the Basic Agreement shall apply to agreements or amendments for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Above-Cap Liquidity Facility, the Primary Liquidity Facility, the Reference Agency Agreement, the NPA, the Policy or the Policy Provider Agreement or modifying in any manner the rights and obligations of the Applicable Certificateholders under the Above-Cap Liquidity Facility, the Primary Liquidity Facility, the Reference Agency Agreement, the NPA, the Policy or the Policy Provider Agreement.
 
Section 7.08. Consent of Holders of Certificates Issued under Other Trust. Notwithstanding any provision in Section 7.06 or Section 7.07 of this Trust Supplement to the contrary, no amendment or modification of Section 5.01 of this Trust Supplement shall be effective unless the Other Trustee of the Certificates issued by the Other Trust that are affected by such amendment or modification shall have consented thereto.
 
Section 7.09. Amendment of Section 12.11 of the Basic Agreement. Section 12.11 of the Basic Agreement shall be amended, with respect to the Applicable Trust, in its entirety to read as follows: “In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate of any series shall not be a Business Day with respect to such series, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and interest shall accrue during the intervening period.”

ARTICLE VIII
MISCELLANEOUS PROVISIONS

Section 8.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. All replacements of provisions of, and other modifications of the Basic Agreement set forth in this Trust Supplement are solely with respect to the Applicable Trust.

18


Section 8.02. GOVERNING LAW. THE AGREEMENT AND THE APPLICABLE CERTIFICATES HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. THIS SECTION 8.02 SUPERSEDES AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.
 
Section 8.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.
 
Section 8.04. Intention of Parties. The parties hereto intend that the Applicable Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Applicable Certificateholder and Investor, by its acceptance of its Applicable Certificate or a beneficial interest therein, agrees to treat the Applicable Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to the Agreement shall be so construed so as to further such intent.

19


IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above.

     
  CONTINENTAL AIRLINES, INC.
 
 
 
 
 
 
  By:    
 
Name:
  Title:
 

 
 
 
     
 
WILMINGTON TRUST COMPANY,
    as Trustee
 
 
 
 
 
 
  By:    
 
Name:
  Title:

 


EXHIBIT A

FORM OF CERTIFICATE

Certificate
No.       

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]* 
 
CONTINENTAL AIRLINES PASS THROUGH TRUST 2006-1G

Continental Airlines
Pass Through Certificates, Series 2006-1G
Issuance Date: June 9, 2006

Final Maturity Date: June 2, 2015

Evidencing A Fractional Undivided Interest In The Continental Airlines Pass Through Trust 2006-1G, The Property Of Which Shall Include An Equipment Note Secured By Pledged Spare Parts Owned By Continental Airlines, Inc.
 
$____________ Fractional Undivided Interest
representing 0.000526316% of the Trust per $1,000 face amount

THIS CERTIFIES THAT            , for value received, is the registered owner of a $__________ (______________________ DOLLARS) Fractional Undivided Interest in the Continental Airlines Pass Through Trust, 2006-1G (the “Trust”) created by Wilmington Trust Company, as trustee (the “Trustee”), pursuant to a Pass Through Trust Agreement, dated as of
 
 


* This legend to appear on Book-Entry Certificates to be deposited with the Depository Trust Company.

 

A-2
 
September 25, 1997 (the “Basic Agreement”), between the Trustee and Continental Airlines, Inc., a Delaware corporation (the “Company”), as supplemented by Trust Supplement No. 2006-1G thereto, dated as of June 9, 2006 (the “Trust Supplement” and, together with the Basic Agreement, the “Agreement”), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as “Continental Airlines Pass Through Certificates, Series 2006-1G” (herein called the “Certificates”). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement. By virtue of its acceptance hereof, the holder of this Certificate (the “Certificateholder” and, together with all other holders of Certificates issued by the Trust, the “Certificateholders”) assents to and agrees to be bound by the provisions of the Agreement and the Intercreditor Agreement. The property of the Trust includes an Equipment Note and all rights of the Trust to receive payments under the Intercreditor Agreement, the NPA, the Policy, the Above-Cap Liquidity Facility and the Primary Liquidity Facility (the “Trust Property”). The Equipment Note is secured by, among other things, a security interest in certain aircraft spare parts owned by the Company.

The Certificates represent Fractional Undivided Interests in the Trust and the Trust Property and have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto.

Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on March 2, June 2, September 2 and December 2 of each year (or, in any such case, if not a Business Day, the next succeeding Business Day) (each, a “Regular Distribution Date”) commencing on September 2, 2006, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Note due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Note are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Note, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Special Distribution Date and interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate.
 

 

A-3
 
Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice.

The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, privileges, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request.

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates.

As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees.
 

 

A-4
 
The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith.

Each Certificateholder and Investor, by its acceptance of this Certificate or a beneficial interest herein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes.

The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar nor any such agent shall be affected by any notice to the contrary.

The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property.

Any Person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of the Company that either: (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase this Certificate or an interest herein or (ii) the purchase and holding of this Certificate or an interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

THE AGREEMENT AND THIS CERTIFICATE HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.
 

 

A-5
 
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.

     
 
CONTINENTAL AIRLINES PASS THROUGH
TRUST 2006-1G
     
  By:
WILMINGTON TRUST COMPANY,
as Trustee
 
 
 
 
 
 
  By:    
 
Name:
  Title:
 

 

A-6
 
FORM OF THE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

     
 
WILMINGTON TRUST COMPANY,
    as Trustee
 
 
 
 
 
 
  By:    
 
Name:
  Title:

 
EXHIBIT B

DTC Letter of Representations

Trust Supplement 2006-1B, dated as of June 9, 2006
 


TRUST SUPPLEMENT No. 2006-1B
 
Dated as of June 9, 2006
 
 
between
 

 
WILMINGTON TRUST COMPANY
as Trustee,
 

 
and
 

 
CONTINENTAL AIRLINES, INC.
 
to

PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997

$130,000,000

Continental Airlines Pass Through Trust 2006-1B
LIBOR + 3.125%
Continental Airlines
Pass Through Certificates,
Series 2006-1B




TABLE OF CONTENTS

Page

 
 
2
2
 
ARTICLE II DEFINITIONS
 
3
Section 2.01. Definitions
3
 
 
7
7
Section 3.02. Restrictive Legends
8
8
Section 3.04. Transfer and Exchange
8
9
 
 
11
Section 4.01. [Reserved].
11
11
12
13
 
ARTICLE V DEFAULT
 
13
13
14
 
ARTICLE VI THE TRUSTEE
 
14
14
Section 6.02. The Trustee
14
15
Section 6.04. Trustee Liens
16
 
 
16
16
16
16
16
16
 
i



17
17
17
17
 
 
18
18
Section 8.02. GOVERNING LAW
18
18
Section 8.04. Intention of Parties
18
 
 
Exhibit A  Form of Certificate


ii


This Trust Supplement No. 2006-1B, dated as of June 9, 2006 (herein called the “Trust Supplement”), between Continental Airlines, Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company (the “Trustee”), to the Pass Through Trust Agreement, dated as of September 25, 1997, between the Company and the Trustee (the “Basic Agreement”).

W I T N E  ;S S E T H:

WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered;

WHEREAS, the Company intends to issue pursuant to the Indenture, on a recourse basis, up to (and including) two series of equipment notes (the “Equipment Notes”) to be secured by, among other things, certain aircraft spare parts owned by the Company;

WHEREAS, the Trustee hereby declares the creation of the Continental Airlines Pass Through Trust 2006-1B (the “Applicable Trust”) for the benefit of the Applicable Certificateholders, and the initial Applicable Certificateholders as the grantors of the Applicable Trust, by their respective acceptances of the Applicable Certificates, join in the creation of the Applicable Trust with the Trustee;

WHEREAS, all Certificates to be issued by the Applicable Trust will evidence fractional undivided interests in the Applicable Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property;

WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the “Agreement”) and the NPA (as defined below), the Trustee on behalf of the Applicable Trust, using the proceeds of the sale of the Applicable Certificates, shall purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Applicable Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Applicable Certificateholders;

WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized;

WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions.
 

NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows:
 
ARTICLE I
CREATION OF THE APPLICABLE CERTIFICATES

Section 1.01.The Applicable Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as “Continental Airlines Pass Through Certificates, Series 2006-1B” (hereinafter defined as the “Applicable Certificates”). Each Applicable Certificate represents a fractional undivided interest in the Applicable Trust created hereby. The Applicable Certificates shall be the only instruments evidencing a fractional undivided interest in the Applicable Trust.

The terms and conditions applicable to the Applicable Certificates are as follows:

(a) The aggregate principal amount of the Applicable Certificates that shall be authenticated under the Agreement (except for Applicable Certificates authenticated and delivered pursuant to Sections 3.03 and 3.06 of the Basic Agreement and Sections 3.04 and 3.05 of this Trust Supplement) is $130,000,000.

(b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means March 2, June 2, September 2 and December 2 of each year, commencing on September 2, 2006 (or, if any such date is not a Business Day, the next succeeding Business Day), until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made.

(c) The Special Distribution Dates with respect to the Applicable Certificates means any Business Day on which a Special Payment is to be distributed pursuant to the Agreement.

(d) The Applicable Certificates shall be in the form attached hereto as Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an interest therein will, by such acquisition or acceptance, be deemed to represent and warrant to and for the benefit of the Company that either (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase Applicable Certificates or an interest therein or (ii) the purchase and holding of Applicable Certificates or an interest therein is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

(e) The “NPA” as defined in this Trust Supplement is the “Note Purchase Agreement” referred to in the Basic Agreement.

(f) The Applicable Certificates are subject to the Intercreditor Agreement.

2


(g) The Applicable Certificates will not have the benefit of a Liquidity Facility.

(h)  The Responsible Party is the Company.

(i) The date referred to in clause (i) of the definition of the term “PTC Event of Default” in the Basic Agreement is the Final Maturity Date.

(j) The “particular sections of the Note Purchase Agreement”, for purposes of clause (3) of Section 7.07 of the Basic Agreement, is Section 8.1 of the NPA.

(k) The Equipment Note to be acquired and held in the Applicable Trust, and the related Pledged Spare Parts and Note Documents are described in the NPA.

(l) For purposes of Section 2.01(b)(4) of the Basic Agreement, there shall be no Cut-off Date with respect to the Applicable Certificates.

(m) For purposes of the second paragraph of Section 11.01 of the Basic Agreement, the notice of any termination of the Applicable Trust shall be mailed promptly by the Trustee to the Applicable Certificateholders not earlier than 60 days and not later than 15 days preceding the final distribution referenced in such Section.
 
ARTICLE II
DEFINITIONS

Section 2.01.Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized terms have the following meanings (any term used herein which is defined in both this Trust Supplement and the Basic Agreement shall have the meaning assigned thereto in this Trust Supplement for purposes of the Basic Agreement as supplemented by this Trust Supplement):

Above-Cap Liquidity Provider: Means, initially, Morgan Stanley Capital Services Inc., a corporation organized under the laws of the state of Delaware, and any replacements or successors therefor appointed in accordance with the Intercreditor Agreement.

Agreement: Has the meaning specified in the recitals hereto.

Applicable Certificate: Has the meaning specified in Section 1.01 of this Trust Supplement.

Applicable Certificateholder: Means the Person in whose name an Applicable Certificate is registered on the Register for the Applicable Certificates.

Applicable Trust: Has the meaning specified in the recitals hereto.

3


Basic Agreement: Has the meaning specified in the first paragraph of this Trust Supplement.

Break Amount: Has the meaning specified in the Indenture.

Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Houston, Texas; New York, New York; or, so long as any Applicable Certificate is Outstanding, the city and state in which the Trustee, the Subordination Agent or the Loan Trustee maintains its Corporate Trust Office or receives and disburses funds and which is also a day for trading by and between banks in the London interbank Eurodollar markets.

Certain Excess Reimbursement Obligations: Means any amounts referred to in clause (c) of the definition of “Excess Reimbursement Obligations” in the Intercreditor Agreement.

Certificate: Has the meaning specified in the Intercreditor Agreement.

Class: Has the meaning specified in the Intercreditor Agreement.

Collateral: Has the meaning specified in the Indenture.

Company: Has the meaning specified in the first paragraph of this Trust Supplement.

Controlling Party: Has the meaning specified in the Intercreditor Agreement.

Distribution Date: Means any Regular Distribution Date or Special Distribution Date as the context requires.

Equipment Notes: Has the meaning specified in the recitals hereto.

Final Maturity Date: June 2, 2013.

Indenture: Means the Trust Indenture and Mortgage dated as of June 9, 2006 between the Company and the Loan Trustee, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Intercreditor Agreement: Means the Intercreditor Agreement (2006-1) dated as of June 9, 2006 among the Trustee, the Other Trustee, the Above-Cap Liquidity Provider, the Primary Liquidity Provider, the Policy Provider and Wilmington Trust Company, as Subordination Agent and as trustee thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Investors: Means the Underwriter, together with all subsequent beneficial owners of the Applicable Certificates.

4


Issuance Date: Means the date of the issuance of the Applicable Certificates to the Underwriter pursuant to the Underwriting Agreement.

Liquidity Obligations: Has the meaning assigned to such term in the Intercreditor Agreement.

Note Documents: Means the Equipment Notes with respect to the Applicable Certificates, the Indenture and the NPA.

NPA: Means the Note Purchase Agreement dated as of June 9, 2006 among the Trustee, the Other Trustee, the Company, the Loan Trustee and the Subordination Agent, providing for, among other things, the purchase of the applicable Equipment Note by the Trustee on behalf of the Applicable Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms.

Operative Agreements: Has the meaning assigned to such term in the Intercreditor Agreement.

Other Agreement: Means the Basic Agreement as supplemented by Trust Supplement No. 2006-1G dated the date hereof relating to the Other Trust.

Other Trust: Means the Continental Airlines Pass Through Trust 2006-1G, created by the Other Agreement.

Other Trustee: Means the trustee under the Other Agreement, and any successor or other trustee appointed as provided therein.

Pledged Spare Parts: Has the meaning assigned to such term in the Indenture.

Policy Provider: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Amounts: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Default: Has the meaning specified in the Intercreditor Agreement.

Policy Provider Obligations: Has the meaning assigned to such term in the Intercreditor Agreement.

Pool Balance: Means, as of any date, (i) the original aggregate face amount of the Applicable Certificates less (ii) the aggregate amount of all payments made as of such date in respect of such Applicable Certificates other than payments made in respect of interest or Premium or Break Amount thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any date shall be computed

5


after giving effect to any payment of principal of the Equipment Notes or payment with respect to other Trust Property and the distribution thereof to be made on that date.

Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the original aggregate face amount of the Applicable Certificates. The Pool Factor as of any date shall be computed after giving effect to any payment of principal of the Equipment Notes or payment with respect to other Trust Property and the distribution thereof to be made on that date.

Premium: Has the meaning specified in the Indenture.

Primary Liquidity Facility: Means, initially, the Revolving Credit Agreement dated as of June 9, 2006, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the Class G Trust, and the initial Primary Liquidity Provider, and, from and after the replacement of such Revolving Credit Agreement pursuant to the Intercreditor Agreement, the replacement liquidity facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Primary Liquidity Provider: Means, initially, Morgan Stanley Bank, an industrial bank organized under the laws of the state of Utah, and any replacements or successors therefor appointed in accordance with the Intercreditor Agreement.

PTC Event of Default: Has the meaning assigned to such term in the Intercreditor Agreement.

QIB: Means a qualified institutional buyer as defined in Rule 144A.

Reference Agency Agreement: Has the meaning specified in the NPA.

Register: Has the meaning specified in Section 3.04 of this Trust Supplement.

Registrar: Has the meaning specified in Section 3.04 of this Trust Supplement.

Restricted Definitive Certificates: Has the meaning specified in Section 3.01 of this Trust Supplement.

Restricted Legend: Has the meaning specified in Section 3.02 of this Trust Supplement.

Rule 144A: Means Rule 144A under the Securities Act and any successor rule thereto.

Scheduled Payment: Has the meaning assigned to such term in the Intercreditor Agreement.

6


Securities Act: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto.

Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Collateral (as defined in the Indenture).

Stated Interest Rate: Has the meaning specified in the Intercreditor Agreement as such meaning is applicable to the Applicable Certificates.

Triggering Event: Has the meaning assigned to such term in the Intercreditor Agreement.

Trust Property: Means (i) subject to the Intercreditor Agreement, the Equipment Note held as the property of the Applicable Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI of the Basic Agreement of the Equipment Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of the Applicable Trust, under the Intercreditor Agreement and the NPA, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Applicable Trust pursuant to the Intercreditor Agreement or the NPA.

Trust Supplement: Has the meaning specified in the first paragraph of this trust supplement.

Trustee: Has the meaning specified in the first paragraph of this Trust Supplement.

Underwriter: Means Morgan Stanley & Co. Incorporated.

Underwriting Agreement: Means the Underwriting Agreement dated as of May 24, 2006 between the Underwriter and the Company, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

ARTICLE III
TRANSFER OF THE APPLICABLE CERTIFICATES 

Section 3.01. Issuance of Applicable Certificates. The Applicable Certificates shall be issued and will only be available in the form of one or more certificated securities in definitive, fully registered form without interest coupons substantially in the form of Exhibit A hereto with such applicable legends as are provided for in Section 3.02 (each, a “Restricted Definitive Certificate”) duly executed and authenticated by the Trustee as hereinafter provided. The initial Restricted Definitive Certificates, delivered at the closing in accordance with the

7


Underwriting Agreement, shall be registered in the name or names designated by the Underwriter.
 
Section 3.02. Restrictive Legends. All Applicable Certificates issued pursuant to the Agreement shall bear a legend to the following effect (the “Restricted Legend”):
 
THIS CERTIFICATE IS SUBJECT TO TRANSFER RESTRICTIONS. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); AND (3) AGREES THAT IF IT SHOULD RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE, THE TRANSFEREE MUST COMPLETE THE FORM ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT SUCH FORM TO THE PASS THROUGH TRUSTEE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE REGISTRAR TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
 
Section 3.03. Amendment of Sections 3.04 and 3.05 of the Basic Agreement. Sections 3.04 and 3.05 of this Trust Supplement supersede and replace Sections 3.04 and 3.05 of the Basic Agreement, with respect to the Applicable Trust.
 
Section 3.04. Transfer and Exchange. The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.12 of the Basic Agreement a register (the “Register”) of the Applicable Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of such Applicable Certificates and of transfers and exchanges of such Applicable Certificates as herein provided. The Trustee shall initially be the registrar (the “Registrar”) for the purpose of registering such Applicable Certificates and transfers and exchanges of such Applicable Certificates as herein provided.
 
All Applicable Certificates issued upon any registration of transfer or exchange of Applicable Certificates shall be valid obligations of the Applicable Trust, evidencing the same interest therein, and entitled to the same benefits under this Agreement, as the Applicable Certificates surrendered upon such registration of transfer or exchange.
 
An Applicable Certificateholder may transfer, in whole or in part, an Applicable Certificate, or request that an Applicable Certificate be exchanged, in whole or in part, for Applicable Certificates in authorized denominations in an aggregate Fractional Undivided Interest equal to the Fractional Undivided Interest of such Applicable Certificate surrendered for

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exchange of other authorized denominations, by surrender of such Applicable Certificate to the Trustee with the form of transfer notice thereon duly completed and executed, and otherwise complying with the terms of the Agreement, including providing evidence of compliance with any restrictions on transfer, in form satisfactory to the Trustee and the Registrar. No such transfer shall be effected until, and such transferee shall succeed to the rights of an Applicable Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by an Applicable Certificateholder as provided herein, the Trustee shall treat the person in whose name the Applicable Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. When Applicable Certificates are presented to the Registrar with a request to register the transfer thereof or to exchange them for other authorized denominations of an Applicable Certificate in a Fractional Undivided Interest equal to the aggregate Fractional Undivided Interest of Applicable Certificates surrendered for exchange, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met.
 
The Registrar shall not register the transfer or exchange of any Applicable Certificate in the name of any Person unless and until evidence satisfactory to the Company and the Trustee that the conditions to any such transfer or exchange set forth in Section 3.05 shall have been satisfied is submitted to them. Such conditions shall be deemed satisfied with respect to a transfer if the transferor and transferee duly execute and deliver to the Trustee the transfer notice in the form attached to the Applicable Certificates, unless the Company or the Trustee has a reasonable basis for requesting additional evidence.
 
To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Applicable Certificates at the Registrar’s request. No service charge shall be made to an Applicable Certificateholder for any registration of transfer or exchange of Applicable Certificates, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Applicable Certificates. All Applicable Certificates surrendered for registration of transfer or exchange shall be canceled and subsequently destroyed by the Trustee.
 
Section 3.05. Special Transfer Provisions. 

(a) Transfers Limited to QIBs. If an Applicable Certificate is to be transferred, the Registrar shall register the transfer only if such transfer is being made to a proposed transferee who has provided the transfer notice attached to the form of Applicable Certificate stating that it is purchasing the Applicable Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A.

(b) Restricted Legend. Upon the transfer, exchange or replacement of Applicable Certificates, the Registrar shall deliver only Applicable Certificates that bear the Restricted Legend.

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(c) General. By acceptance of any Applicable Certificate, each Holder of such an Applicable Certificate will be deemed to:
 
(i)  Represent that it is accepting such Applicable Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB;
 
(ii)  Agree that any sale or other transfer by it of any Applicable Certificate will only be made to a QIB;
 
(iii)  Agree that it will deliver to each person to whom it transfers Applicable Certificates notice of these restrictions on transfer of the Applicable Certificates;
 
(iv)  Agree that no registration of the transfer of an Applicable Certificate will be made unless the transferee completes and submits to the Trustee the form included on the reverse of the Applicable Certificate in which it states that it is purchasing the Applicable Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB;
 
(v)  Understand that the Applicable Certificates will bear a legend substantially to the effect of the Restricted Legend;
 
(vi)  Acknowledge that the Company, the Trustee, the Underwriter, and others will rely on the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agree that, if any of the acknowledgments, representations, warranties and agreements deemed to have been made by its purchase of the Applicable Certificates is no longer accurate, it shall promptly notify the Company, the Trustee and the Underwriter. If it is acquiring any Applicable Certificates as a fiduciary or agent of one or more investor accounts, it represents that it has sole investment discretion with respect to each such investor account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such investor account;
 
(vii)  Acknowledge that the foregoing restrictions apply to holders of beneficial interests in the Applicable Certificates as well as to registered holders of Applicable Certificates; and
 
(viii)  Acknowledge that the Trustee will not be required to accept for registration of transfer any Applicable Certificate unless evidence satisfactory to the Company and the Trustee that the restrictions on transfer set forth herein have been complied with is submitted to them.
 
Until such time as no Applicable Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Section 3.05. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

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ARTICLE IV
STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS

Section 4.01. [Reserved].

Section 4.02. Statements to Applicable Certificateholders. (a)  On each Distribution Date, the Trustee will include with each distribution to Applicable Certificateholders of a Scheduled Payment or Special Payment, as the case may be, a statement setting forth the information provided below. Such statement shall set forth (per $1,000 face amount Applicable Certificate as to (ii) and (iii) below) the following information:
 
(i) the aggregate amount of funds distributed on such Distribution Date under the Agreement, indicating the amount allocable to each source;
 
(ii) the amount of such distribution under the Agreement allocable to principal and the amount allocable to Premium and Break Amount, if any;
 
(iii) the amount of such distribution under the Agreement allocable to interest;
 
(iv) the Pool Balance and the Pool Factor; and
 
(v) the LIBOR rates and the resulting Stated Interest Rate on the Applicable Certificates for the current and immediately preceding Interest Periods.
 
(b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was an Applicable Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i), (a)(ii) and (a)(iii) above for such calendar year or, in the event such Person was an Applicable Certificateholder of record during a portion of such calendar year, for such portion of such calendar year, and such other items as are readily available to the Trustee and which an Applicable Certificateholder shall reasonably request as necessary for the purpose of such Applicable Certificateholder’s preparation of its U.S. federal income tax returns. Such statement and such other items shall be prepared on the basis of information supplied to the Trustee by the Applicable Certificateholders.
 
(c) Promptly following the date of any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Applicable Trust, the Trustee shall furnish to Applicable Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Note held as Trust Property at the date of such notice.
 
(d) This Section 4.02 supersedes and replaces Section 4.03 of the Basic Agreement, with respect to the Applicable Trust.

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Section 4.03. Distributions from Special Payments Account.

(a) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Note held (subject to the Intercreditor Agreement) in the Applicable Trust or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 4.01(b) of the Basic Agreement. There shall be so distributed to each Applicable Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 of the Basic Agreement concerning the final distribution) by check mailed to such Applicable Certificateholder, at the address appearing in the Register, such Applicable Certificateholder’s pro rata share (based on the Fractional Undivided Interest in the Applicable Trust held by such Applicable Certificateholder) of the total amount in the Special Payments Account on account of such Special Payment.
 
(b) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Applicable Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of the Equipment Note held in the Applicable Trust, such notice shall be mailed not less than 15 days prior to the Special Distribution Date for the Special Payment resulting from such redemption or purchase, which Special Distribution Date shall be the date of such redemption or purchase. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 15 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth:
 
(i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01 of the Basic Agreement),
 
(ii) the amount of the Special Payment for each $1,000 face amount Applicable Certificate and the amount thereof constituting principal, Premium or Break Amount, if any, and interest,
 
(iii) the reason for the Special Payment, and
 
(iv) if the Special Distribution Date is the same date as a Regular Distribution Date, the total amount to be received on such date for each $1,000 face amount Applicable Certificate.
 
If the amount of Premium or Break Amount, if any, payable upon the redemption or purchase of the Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any Premium or Break Amount received will also be distributed.
 
If any redemption of the Equipment Note held in the Applicable Trust is canceled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Applicable Certificateholder at its address as it appears on the Register.

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(c) This Section 4.03 supersedes and replaces Section 4.02(b) and Section 4.02(c) of the Basic Agreement in their entirety, with respect to the Applicable Trust.
 
Section 4.04. Limitation of Liability for Payments. Section 3.09 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “, the Loan Trustees, the Owner Trustees or the Owner Participants” in the second sentence thereof and adding in lieu thereof “or the Loan Trustees”.
 
ARTICLE V
DEFAULT

Section 5.01. Purchase Rights of Certificateholders. (a) At any time after the occurrence and during the continuation of a Triggering Event, each Applicable Certificateholder (other than the Company or any of its Affiliates) shall have the right to purchase, for the purchase prices set forth in the Class G Trust Agreement all, but not less than all, of the Class G Certificates upon ten days’ written notice to the Class G Trustee and each other Applicable Certificateholder; provided that (i) if prior to the end of such ten-day period any other Applicable Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Applicable Certificateholder that such other Applicable Certificateholder (other than the Company or any of its Affiliates) wants to participate in such purchase, then such other Applicable Certificateholder may join with the purchasing Applicable Certificateholder to purchase all, but not less than all, of the Class G Certificates pro rata based on the Fractional Undivided Interest in the Applicable Trust held by each such Applicable Certificateholder and (ii) if prior to the end of such ten-day period any other Applicable Certificateholder fails to notify the purchasing Applicable Certificateholder of such other Applicable Certificateholder’s desire to participate in such a purchase, then such other Applicable Certificateholder shall lose its right to purchase the Class G Certificates pursuant to this Section 5.01(a).
 
As used in this Section 5.01 and elsewhere in this Trust Supplement, the terms “Class G Trust Agreement”, “Class G Certificateholder”, “Class G Trust” and “Class G Trustee” shall have the respective meanings assigned to such terms in the Intercreditor Agreement.
 
(b) Following any purchase of the Class G Certificates pursuant to Section 5.01(a) above, the purchasing Applicable Certificateholders shall have the right to surrender the Policy to the Policy Provider for cancellation (thereby releasing the Policy Provider from its obligations under the Policy) and to pay (or cause to be paid) both of the following: (i) to the Policy Provider, to the extent not paid otherwise, all Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and (ii) to the Primary Liquidity Provider all outstanding Liquidity Obligations in accordance with the terms and conditions set forth in the Other Agreement. Upon such surrender and payments, the Primary Liquidity Facility shall be terminated in accordance therewith. Following any such surrender of the Policy to the Policy Provider for cancellation and payment of the Policy Provider Amounts (other than Certain Excess Reimbursement Obligations) and the Liquidity Obligations, the Class G Certificates shall no longer be entitled to the benefits of the Policy or the Primary Liquidity Facility.
 
As used in this Section 5.01 and elsewhere in this Trust Supplement, the term “Policy” shall have the meaning assigned to such term in the Intercreditor Agreement.

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(c) This Section 5.01 supersedes and replaces Section 6.01(b) of the Basic Agreement, with respect to the Applicable Trust.
 
Section 5.02. Amendment of Section 6.05 of the Basic Agreement. Section 6.05 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto”, set forth in the first sentence thereof.
 
ARTICLE VI
THE TRUSTEE

Section 6.01. Delivery of Documents; Delivery Dates. (a)  The Trustee is hereby directed (i) to execute and deliver the Intercreditor Agreement and the NPA on or prior to the Issuance Date, each in the form delivered to the Trustee by the Company, and (ii) subject to the respective terms thereof, to perform its obligations thereunder. Upon request of the Company and the satisfaction or waiver of the closing conditions specified in the Underwriting Agreement, the Trustee shall execute, deliver, authenticate, issue and sell Applicable Certificates in authorized denominations equaling in the aggregate the amount set forth, with respect to the Applicable Trust, in Schedule I to the Underwriting Agreement evidencing the entire ownership interest in the Applicable Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the NPA. Except as provided in Sections 3.03 and 3.06 of the Basic Agreement and Sections 3.04 and 3.05 of this Trust Supplement, the Trustee shall not execute, authenticate or deliver Applicable Certificates in excess of the aggregate amount specified in this paragraph. The provisions of this Section 6.01(a) supersede and replace the first sentence of Section 3.02(a) of the Basic Agreement, with respect to the Applicable Trust.
 
(b) All provisions of the Basic Agreement relating to Postponed Notes and Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.
 
(c) The Trustee acknowledges its acceptance of all right, title and interest in and to the Trust Property to be acquired pursuant to the NPA, and declares that it holds and will hold such right, title and interest for the benefit of all present and future Applicable Certificateholders, upon the trusts set forth in the Agreement. By its acceptance of an Applicable Certificate, each initial Applicable Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee in the creation of the Applicable Trust. The provisions of this Section 6.01(c) supersede and replace the provisions of Section 2.03 of the Basic Agreement, with respect to the Applicable Trust.
 
Section 6.02. The Trustee. (a)  Subject to Section 6.03 of this Trust Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the NPA or the due execution hereof or thereof by the Company or the other parties thereto (other than the Trustee), or for or in respect of the recitals and statements contained herein or therein, all of which recitals and statements are made solely by the Company, except that the Trustee hereby represents and warrants that each of this Trust Supplement, the Basic Agreement, each Applicable Certificate, the Intercreditor Agreement and the NPA has been executed and

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delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf.
 
(b) Except as herein otherwise provided and except during the continuation of an Event of Default in respect of the Applicable Trust created hereby, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Trust Supplement other than as set forth in the Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Agreement, as fully to all intents as if the same were herein set forth at length.
 
Section 6.03. Representations and Warranties of the Trustee. The Trustee hereby represents and warrants that:
 
(a) the Trustee has full power, authority and legal right to execute, deliver and perform this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party;
 
(b) the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party (i) will not violate any provision of any United States federal law or the law of the state of the United States where it is located governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee’s performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein;
 
(c) the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the state of the United States where it is located regulating the banking and corporate trust activities of the Trustee; and
 
(d) this Trust Supplement, the Intercreditor Agreement and the Note Documents to which it is or is to become a party have been, or will be, as applicable, duly executed and delivered by the Trustee and constitute, or will constitute, as applicable, the legal, valid and binding agreements of the Trustee, enforceable against it in accordance with their respective terms; provided, however, that enforceability may be limited by

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(i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity.
 
Section 6.04. Trustee Liens. The Trustee in its individual capacity agrees, in addition to the agreements contained in Section 7.17 of the Basic Agreement, that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any Trustee’s Liens on or with respect to the Trust Property which is attributable to the Trustee in its individual capacity and which is unrelated to the transactions contemplated by the Intercreditor Agreement or the NPA.
 
ARTICLE VII
ADDITIONAL AMENDMENTS; SUPPLEMENTAL AGREEMENTS

Section 7.01. Amendment of Section 2.01 of the Basic Agreement. Section 2.01(b) of the Basic Agreement shall be amended, with respect to the Applicable Trust, by replacing the phrase “related Aircraft” in clause (11) thereof with the phrase “related Pledged Spare Parts”.
 
Section 7.02. Amendment of Section 2.04 of the Basic Agreement. Section 2.04 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by replacing the term “Aircraft” with the term “Pledged Spare Parts” in both locations where the term “Aircraft” appears.
 
Section 7.03. Amendment of Section 5.02 of the Basic Agreement. Section 5.02(a) of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:
 
“(a) the corporation formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be (i) organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia, (ii) a “citizen of the United States” as defined in 49 U.S.C. § 40102(a)(15), as amended, and (iii) a United States certificated air carrier, if and so long as such status is a condition of entitlement to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C. § 1110), with respect to the Pledged Spare Parts;”.
 
Section 7.04. Amendment of Section 6.05 of the Basic Agreement. Section 6.05(2) of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:
 
“(2) in the payment of the principal of, Premium or Break Amount, if any, or interest on the Equipment Notes held in the Applicable Trust, or”.
 
Section 7.05 Amendment of Section 7.02 of the Basic Agreement. Section 7.02 of the Basic Agreement shall be amended in its entirety, with respect to the Applicable Trust, to read as follows:

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“Section 7.02. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after, the occurrence of any default (as such term is defined below) hereunder known to the Trustee, the Trustee shall transmit by mail to the Company, the Loan Trustee and the Applicable Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal, Premium, if any, Break Amount, if any, or interest on the Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith shall determine that the withholding of such notice is in the interests of the Applicable Certificateholders. For the purpose of this Section 7.02 in respect of the Applicable Trust, the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default in respect of the Applicable Trust.”
 
Section 7.06. Supplemental Agreements Without Consent of Applicable Certificateholders. Without limitation of Section 9.01 of the Basic Agreement, under the terms of, and subject to the limitations contained in, Section 9.01 of the Basic Agreement, the Company may (but will not be required to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company’s request, at any time and from time to time enter into one or more agreements supplemental to the NPA or the Reference Agency Agreement for any of the purposes set forth in clauses (1) through (9) of such Section 9.01, and (without limitation of the foregoing or Section 9.01 of the Basic Agreement) (a) clauses (2) and (3) of such Section 9.01 shall also be deemed to include the Company’s obligations under (in the case of clause (2)), and the Company’s rights and powers conferred by (in the case of clause (3)), the NPA or the Reference Agency Agreement and (b) references in clauses (4), (6) and (7) of such Section 9.01 to “any Intercreditor Agreement or any Liquidity Facility” shall also be deemed to refer to “the Intercreditor Agreement, the Reference Agency Agreement or the NPA”.
 
Section 7.07. Supplemental Agreements with Consent of Applicable Certificateholders. Without limitation of Section 9.02 of the Basic Agreement, the provisions of Section 9.02 of the Basic Agreement shall apply to agreements or amendments for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Reference Agency Agreement or the NPA or modifying in any manner the rights and obligations of the Applicable Certificateholders under the Reference Agency Agreement or the NPA.
 
Section 7.08. Consent of Holders of Certificates Issued under Other Trust. Notwithstanding any provision in Section 7.06 or Section 7.07 of this Trust Supplement to the contrary, no amendment or modification of Section 5.01 of this Trust Supplement shall be effective unless the Other Trustee of the Certificates issued by the Other Trust that are affected by such amendment or modification shall have consented thereto.
 
Section 7.09. Amendment of Section 12.11 of the Basic Agreement. Section 12.11 of the Basic Agreement shall be amended, with respect to the Applicable Trust, in its entirety to read as follows: “In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate of any series shall not be a Business Day with respect to such series, then (notwithstanding any other provision of this Agreement) payment

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need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and interest shall accrue during the intervening period.”

ARTICLE VIII
MISCELLANEOUS PROVISIONS

Section 8.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. All replacements of provisions of, and other modifications of the Basic Agreement set forth in this Trust Supplement are solely with respect to the Applicable Trust.
 
Section 8.02. GOVERNING LAW. THE AGREEMENT AND THE APPLICABLE CERTIFICATES HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. THIS SECTION 8.02 SUPERSEDES AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.
 
Section 8.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.
 
Section 8.04. Intention of Parties. The parties hereto intend that the Applicable Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Applicable Certificateholder and Investor, by its acceptance of its Applicable Certificate or a beneficial interest therein, agrees to treat the Applicable Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to the Agreement shall be so construed so as to further such intent.

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IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above.
 
     
  CONTINENTAL AIRLINES, INC.
 
 
 
 
 
 
  By:    
 
Name:
  Title:
 

 
     
 
WILMINGTON TRUST COMPANY,
    as Trustee
 
 
 
 
 
 
  By:    
 
Name:
  Title:



EXHIBIT A

FORM OF CERTIFICATE
Certificate
No.       

THIS CERTIFICATE IS SUBJECT TO TRANSFER RESTRICTIONS. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); AND (3) AGREES THAT IF IT SHOULD RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE, THE TRANSFEREE MUST COMPLETE THE FORM ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT SUCH FORM TO THE PASS THROUGH TRUSTEE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE REGISTRAR TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
 
CONTINENTAL AIRLINES PASS THROUGH TRUST 2006-1B

Continental Airlines
Pass Through Certificates, Series 2006-1B
Issuance Date: June 9, 2006

Final Expected Distribution Date: June 2, 2013

Evidencing A Fractional Undivided Interest In The Continental Airlines Pass Through Trust 2006-1B, The Property Of Which Shall Include An Equipment Note Secured By Pledged Spare Parts Owned By Continental Airlines, Inc.


$____________ Fractional Undivided Interest
representing 0.000769231% of the Trust per $1,000 face amount

THIS CERTIFIES THAT            , for value received, is the registered owner of a $__________ (______________________ DOLLARS) Fractional Undivided Interest in the Continental Airlines Pass Through Trust, 2006-1B (the “Trust”) created by Wilmington Trust Company, as trustee (the “Trustee”), pursuant to a Pass Through Trust Agreement, dated as of


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September 25, 1997 (the “Basic Agreement”), between the Trustee and Continental Airlines, Inc., a Delaware corporation (the “Company”), as supplemented by Trust Supplement No. 2006-1B thereto, dated as of June 9, 2006 (the “Trust Supplement” and, together with the Basic Agreement, the “Agreement”), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as “Continental Airlines Pass Through Certificates, Series 2006-1B” (herein called the “Certificates”). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement. By virtue of its acceptance hereof, the holder of this Certificate (the “Certificateholder” and, together with all other holders of Certificates issued by the Trust, the “Certificateholders”) assents to and agrees to be bound by the provisions of the Agreement and the Intercreditor Agreement. The property of the Trust includes an Equipment Note and all rights of the Trust to receive payments under the Intercreditor Agreement and the NPA (the “Trust Property”). The Equipment Note is secured by, among other things, a security interest in certain aircraft spare parts owned by the Company.

The Certificates represent Fractional Undivided Interests in the Trust and the Trust Property and have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto.

Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on March 2, June 2, September 2 and December 2 of each year (or, in any such case, if not a Business Day, the next succeeding Business Day) (each, a “Regular Distribution Date”) commencing on September 2, 2006, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Note due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Note are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Note, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Special Distribution Date and interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate.


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Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice.

The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, privileges, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request.

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates.

As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a different denomination. As


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provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith.

Each Certificateholder and Investor, by its acceptance of this Certificate or a beneficial interest herein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes.

The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar nor any such agent shall be affected by any notice to the contrary.

The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property.

Any Person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of the Company that either: (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase this Certificate or an interest herein or (ii) the purchase and holding of this Certificate or an interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

By acceptance of this Certificate, each Certificateholder will be deemed to:

(i) Represent that it is accepting this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB;
 
(ii)  Agree that any sale or other transfer by it of this Certificate will only be made to a QIB;
 
(iii) Agree that it will deliver to each person to whom it transfers this Certificate notice of these restrictions on transfer of this Certificate;
 
(iv) Agree that no registration of the transfer of a Certificate will be made unless the transferee completes and submits to the Trustee the form included on the


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reverse of this Certificate in which it states that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB;
 
(v) Understand that this Certificate will bear a legend substantially to the effect of the Restricted Legend;
 
(vi) Acknowledge that the Company, the Trustee, the Underwriter, and others will rely on the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agree that, if any of the acknowledgments, representations, warranties and agreements deemed to have been made by its purchase of this Certificate is no longer accurate, it shall promptly notify the Company, the Trustee and the Underwriter. If it is acquiring this Certificate as a fiduciary or agent of one or more investor accounts, it represents that it has sole investment discretion with respect to each such investor account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such investor account;
 
(vii) Acknowledge that the foregoing restrictions apply to holders of beneficial interests in this Certificate as well as to registered holders of this Certificate; and
 
(viii) Acknowledge that the Trustee will not be required to accept for registration of transfer this Certificate unless evidence satisfactory to the Company and the Trustee that the restrictions on transfer set forth herein have been complied with is submitted to them.
 
THE AGREEMENT AND THIS CERTIFICATE HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.


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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
 
     
 
CONTINENTAL AIRLINES PASS THROUGH
TRUST 2006-1B
 
 
 
 
 
 
  By:
WILMINGTON TRUST COMPANY,
    as Trustee
     
     
  By:    
 
Name:
  Title:
 

 

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FORM OF THE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.
 
     
 
WILMINGTON TRUST COMPANY,
    as Trustee
 
 
 
 
 
 
  By:    
 
Name:
  Title:



TRANSFER NOTICE

FORM OF TRANSFER NOTICE
 
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto
 
Insert Taxpayer Identification No.
 

                                  
 
                                  
 
please print or typewrite name and address including zip code of assignee
 
                                  
the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing

 
                                  
attorney to transfer said Certificate on the books of the Registrar with full power of substitution in the premises.

 
In connection with any transfer of this Certificate, the undersigned confirms:
 
The Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.05 of the Trust Supplement shall have been satisfied.

 
Date:[___________, __]
 
[Name of Transferor]              
 
 
NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.
 
Signature Guarantee: ______________________
 
TO BE COMPLETED BY PURCHASER
 
The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended.

In addition, the undersigned has reviewed this Certificate and makes the representations, agreements, understandings and acknowledgments deemed made by a Person acquiring or accepting this Certificate as set forth therein.
 

 
Date:[___________, __]
 
    
 
 
NOTE: To be executed by an executive officer.

 

 
Revolving Credit Agreement, dated as of June 9, 2006
_________________________________________________________________
 
REVOLVING CREDIT AGREEMENT (2006-1G)
 
dated as of June 9, 2006
 
between

WILMINGTON TRUST COMPANY,
as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust 2006-1G,
as Borrower

and

MORGAN STANLEY BANK, as Primary Liquidity Provider
 
_________________________________________________________________
 
Continental Airlines Pass Through Trust 2006-1G
USD 3-month LIBOR + 0.35% Continental Airlines
Pass Through Certificates, Series 2006-1G




TABLE OF CONTENTS
Page
 
Article I DEFINITIONS
 
1
 
Section 1.01
1
 
7
 
Section 2.01
7
 
Section 2.02
7
 
Section 2.03
9
 
Section 2.04
9
 
Section 2.05
9
 
Section 2.06
10
 
Section 2.07
11
 
Section 2.08
11
 
Section 2.09
11
 
Section 2.10
12
 
 
12
 
Section 3.01
12
 
Section 3.02
13
 
Section 3.03
14
 
Section 3.04
15
 
Section 3.05
15
 
Section 3.06
15
 
Section 3.07
15
 
Section 3.08
17
 
Section 3.09
17
 
Section 3.10
17
 
Section 3.11
18
 
 
18
 
Section 4.01
18
 
Section 4.02
20
 
Article V COVENANTS
 
20
 
Section 5.01
20
 
Section 5.02
21
 
 
21
 
Section 6.01
21
 
Section 6.02
21
 
Article VII MISCELLANEOUS
 
21
 
Section 7.01
21
 
Section 7.02
22
 
Section 7.03
23


i



 
Section 7.04
23
 
Section 7.05
23
 
Section 7.06
23
 
Section 7.07
24
 
Section 7.08
24
 
Section 7.09
26
 
Section 7.10
26
 
Section 7.11
26
 
Section 7.12
27
 
Section 7.13
27
 
Section 7.14
27
 
SECTION 7.15
27

ANNEX I      Interest Advance Notice of Borrowing
 
ANNEX II    Non-Extension Advance Notice of Borrowing
 
ANNEX III  Downgrade Advance Notice of Borrowing
 
ANNEX IV   Final Advance Notice of Borrowing
 
ANNEX V    Notice of Termination
 
ANNEX VI  Notice of Replacement Subordination Agent
 



ii



REVOLVING CREDIT AGREEMENT (2006-1G)
 
This REVOLVING CREDIT AGREEMENT (2006-1G), dated as of June 9, 2006, is made by and between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity but solely as Subordination Agent under the Intercreditor Agreement (each as defined below), as agent and trustee for the Class G Trust (as defined below) (the “Borrower”), and MORGAN STANLEY BANK, a Utah industrial bank (the “Primary Liquidity Provider”).
 
W I T N E S S E T H:
 
WHEREAS, pursuant to the Class G Trust Agreement (such term and all other capitalized terms used in these recitals having the meanings set forth or referred to in Section 1.01), the Class G Trust is issuing the Class G Certificates; and
 
WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on the Class G Certificates in accordance with their terms, has requested the Primary Liquidity Provider to enter into this Agreement, providing in part for the Borrower to request in specified circumstances that Advances be made hereunder.
 
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
 
 
ARTICLE I
 
DEFINITIONS
 
Section 1.01 Certain Defined Terms. (a) As used in this Agreement and unless expressly indicated, or unless the context clearly requires otherwise, the following capitalized terms shall have the following respective meanings for all purposes of this Agreement:
 
Additional Costs” has the meaning assigned to such term in Section 3.01.
 
Advance” means an Interest Advance, a Final Advance, a Provider Advance or an Applied Provider Advance, as the case may be.
 
Agreement” means this Revolving Credit Agreement (2006-1G), dated as of June 9, 2006, between the Borrower and the Primary Liquidity Provider, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.
 
Applicable Liquidity Rate” has the meaning assigned to such term in Section 3.07(g).
 
Applicable Margin” means (i) with respect to any Unpaid Advance or Applied Provider Advance, 2.00% per annum and (ii) with respect to any Unapplied Provider Advance, the rate per annum specified in the Fee Letter applicable to this Agreement.
 


Applied Downgrade Advance” has the meaning assigned to such term in Section 2.06(a).
 
Applied Non-Extension Advance” has the meaning assigned to such term in Section 2.06(a).
 
Applied Provider Advance” has the meaning assigned to such term in Section 2.06(a).
 
Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to (a) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Primary Liquidity Provider from three Federal funds brokers of recognized standing selected by it, plus (b) one-quarter of one percent (1/4 of 1%).
 
Base Rate Advance” means an Advance that bears interest at a rate based upon the Base Rate.
 
Borrower” has the meaning assigned to such term in the recital of parties to this Agreement.
 
Borrowing” means the making of Advances requested by delivery of a Notice of Borrowing.
 
Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Houston, Texas, West Valley City, Utah, New York, New York or, so long as any Class G Certificate is outstanding, the city and state in which the Class G Trustee, the Borrower or the Mortgagee maintains its Corporate Trust Office or receives or disburses funds, and, if the applicable Business Day relates to any Advance or other amount bearing interest based on the LIBOR Rate, on which dealings are carried on in the London interbank market.
 
Consent Period” has the meaning assigned to such term in Section 2.10.
 
Downgrade Advance” means an Advance made pursuant to Section 2.02(c).
 
Downgrade Event” means a downgrading of the Primary Liquidity Provider’s short-term unsecured debt rating or short-term issuer credit rating, as the case may be, issued by either Rating Agency below the applicable Threshold Rating.
 
Effective Date” has the meaning assigned to such term in Section 4.01. The delivery of the certificate of the Primary Liquidity Provider contemplated by Section 4.01(e) shall be conclusive evidence that the Effective Date has occurred.
 

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Excluded Taxes” means (i) Taxes imposed on, based on or measured by the income of, or franchise Taxes imposed on, the Primary Liquidity Provider or its Lending Office by the jurisdiction where such Primary Liquidity Provider’s principal office or such Lending Office is located or any other taxing jurisdiction in which such Tax is imposed as a result of the Primary Liquidity Provider being, or having been, organized in, or conducting, or having conducted, any activities unrelated to the transactions contemplated by the Operative Agreements in, such jurisdiction and (ii) Excluded Withholding Taxes.
 
Excluded Withholding Taxes” means (i) withholding Taxes imposed by the United States except (but only in the case of a successor Primary Liquidity Provider organized under the laws of a jurisdiction outside the United States) to the extent that such United States withholding Taxes are imposed or increased as a result of any change in applicable law (excluding from change in applicable law for this purpose a change in an applicable treaty or other change in law affecting the applicability of a treaty) after the date hereof, or in the case of a successor Primary Liquidity Provider (including a transferee of an Advance) or Lending Office, after the date on which such successor Primary Liquidity Provider obtains its interest or on which the Lending Office is changed, and (ii) any withholding Taxes imposed by the United States which are imposed or increased as a result of the Primary Liquidity Provider failing to deliver to the Borrower any certificate or document (which certificate or document, in the good faith judgment of the Primary Liquidity Provider, the Primary Liquidity Provider is legally entitled to provide) which is reasonably requested by the Borrower to establish that payments under this Agreement are exempt from (or entitled to a reduced rate of) withholding Tax.
 
Expenses” means liabilities, obligations, damages, settlements, penalties, claims, actions, suits, costs, expenses, and disbursements (including, without limitation, reasonable fees and disbursements of legal counsel and costs of investigation), provided that Expenses shall not include any Taxes other than sales, use and V.A.T. taxes imposed on fees and expenses payable pursuant to Section 7.07.
 
Expiry Date” means June 7, 2007, initially, or any date to which the Expiry Date is extended pursuant to Section 2.10.
 
Final Advance” means an Advance made pursuant to Section 2.02(d).
 
GAAP” means generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as such principles may at any time or from time to time be varied by any applicable financial accounting rules or regulations issued by the Securities and Exchange Commission and, with respect to any person, shall mean such principles applied on a basis consistent with prior periods except as may be disclosed in such person’s financial statements.
 
Indemnified Tax” has the meaning assigned to such term in Section 3.03(a).
 
Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, among the Trustees, the Primary Liquidity Provider, the Above-Cap Liquidity
 

3


Provider, the Policy Provider and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.
 
Interest Advance” means an Advance made pursuant to Section 2.02(a).
 
Interest Period” means, with respect to any LIBOR Advance, each of the following periods:
 
(i) the period beginning on the third Business Day following either (A) the Primary Liquidity Provider’s receipt of the Notice of Borrowing for such LIBOR Advance or (B) the withdrawal of funds from the Primary Cash Collateral Account for the purpose of paying interest on the Class G Certificates as contemplated by Section 2.06(a) hereof and, in either case, ending on the next Regular Distribution Date; and
 
(ii) each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the next Regular Distribution Date;
 
provided, however, that if (x) the Final Advance shall have been made, or (y) other outstanding Advances shall have been converted into the Final Advance, then the Interest Periods shall be successive periods of one month beginning on the third Business Day following the Primary Liquidity Provider’s receipt of the Notice of Borrowing for such Final Advance (in the case of clause (x) above) or the Regular Distribution Date following such conversion (in the case of clause (y) above).
 
Lending Office” means the lending office of the Primary Liquidity Provider presently located at the offices of Morgan Stanley, New York, New York, or such other lending office as the Primary Liquidity Provider from time to time shall notify the Borrower as its Lending Office hereunder; provided that the Primary Liquidity Provider shall not change its Lending Office to a lending office outside the United States of America except in accordance with Section 3.11 hereof.
 
LIBOR Advance” means an Advance bearing interest at a rate based upon the LIBOR Rate.
 
LIBOR Rate” means, with respect to any Interest Period,
 
(i) the rate per annum appearing on display page 3750 (British Bankers Association-LIBOR) of the Telerate Service (or any successor or substitute therefor) at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period, or
 
(ii) if the rate calculated pursuant to clause (i) above is not available, the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which deposits in dollars are offered for the relevant Interest Period by three banks of recognized standing selected by the Primary Liquidity Provider in the London interbank market at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period in an amount approximately equal to the principal
 

4


amount of the LIBOR Advance to which such Interest Period is to apply and for a period comparable to such Interest Period.
 
Liquidity Event of Default” means the occurrence of either (a) the Acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy Event.
 
Liquidity Indemnitee” means (i) the Primary Liquidity Provider, (ii) the directors, officers, employees and agents of the Primary Liquidity Provider, and (iii) the successors and permitted assigns of the persons described in clauses (i) and (ii), inclusive.
 
Maximum Available Commitment” means, subject to the proviso contained in the third sentence of Section 2.02(a), at any time of determination, (a) the Maximum Commitment at such time less (b) the aggregate amount of each Interest Advance outstanding at such time; provided that following a Provider Advance or a Final Advance, the Maximum Available Commitment shall be zero.
 
Maximum Commitment” means initially $39,930,875, as the same may be reduced from time to time in accordance with Section 2.04(a).
 
Non-Extension Advance” means an Advance made pursuant to Section 2.02(b).
 
Notice of Borrowing” has the meaning assigned to such term in Section 2.02(e).
 
Notice of Replacement Subordination Agent” has the meaning assigned to such term in Section 3.08.
 
Primary Liquidity Provider” has the meaning assigned to such term in the recital of parties to this Agreement.
 
Prospectus Supplement” means the final Prospectus Supplement dated May 24, 2006 relating to the Certificates, as such Prospectus Supplement may be amended or supplemented.
 
Provider Advance” means a Downgrade Advance or a Non-Extension Advance.
 
Regulatory Change” has the meaning assigned to such term in Section 3.01.
 
Replenishment Amount” has the meaning assigned to such term in Section 2.06(b).
 
Required Amount” means, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Capped Interest Rate for the Class G Certificates, that would be payable on the Class G Certificates on each of the eight successive quarterly Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding seven quarterly Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class G Certificates on such day and without regard to expected future payments of principal on the Class G Certificates. The Pool
 

5


Balance solely for purposes of the definition of Required Amount shall, in the event of any Policy Provider Election, be deemed to be reduced to zero.
 
Termination Date” means the earliest to occur of the following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to the Primary Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that all of the Class G Certificates have been paid in full (or provision has been made for such payment in accordance with the Intercreditor Agreement and the Trust Agreements) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on which the Borrower delivers to the Primary Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that a Replacement Primary Liquidity Facility has been substituted for this Agreement in full pursuant to Section 3.5(e) of the Intercreditor Agreement; (iv) the fifth Business Day following the receipt by the Borrower of a Termination Notice from the Primary Liquidity Provider pursuant to Section 6.01 hereof; (v) the date on which no Advance is, or may (including by reason of reinstatement as herein provided) become, available for a Borrowing hereunder; (vi) the occurrence of the Liquidity Provider Reimbursement Date; and (vii) the occurrence of the Special Termination.
 
Termination Notice” means the Notice of Termination substantially in the form of Annex V to this Agreement.
 
Transferee” has the meaning assigned to such term in Section 7.08(b).
 
Unapplied Downgrade Advance” means any Downgrade Advance other than an Applied Downgrade Advance.
 
Unapplied Non-Extension Advance” means any Non-Extension Advance other than an Applied Non-Extension Advance.
 
Unapplied Provider Advance” means any Provider Advance other than an Applied Provider Advance.
 
Unpaid Advance” has the meaning assigned to such term in Section 2.05.
 
(b) For the purposes of this Agreement, the following terms shall have the respective meanings assigned to such terms in the Intercreditor Agreement:
 
Above-Cap Liquidity Provider”, “Acceleration”, “Affiliate”, “Capped Interest Rate”, “Certificate”, “Class B Certificates”, “Class G Certificateholder”, “Class G Certificates”, “Class G Trust”, “Class G Trust Agreement”, “Class G Trustee”, “Closing Date”, “Continental”, “Continental Bankruptcy Event”, “Controlling Party”, “Corporate Trust Office”, “Distribution Date”, “Downgraded Facility”, “Equipment Notes”, “Fee Letters”, “Final Legal Distribution Date”, “Investment Earnings”, “Liquidity Facility”, “Liquidity Obligations”, “Liquidity Provider Reimbursement Date”, “Moody’s”, “Mortgagee”, “Non-Extended Facility”, “Non-Performing Equipment Note”, “Note Purchase Agreement”, “Operative Agreements”, “Payment Default”, “Person”, “Policy”, “Policy Drawings”, “Policy Provider”, “Policy Provider Election”, “Pool Balance”, “Premium”, “Primary Cash Collateral Account”, “Primary Liquidity Facility”, “Rating Agencies”, “Ratings Confirmation”, “Regular Distribution Dates”, “Replacement Primary
 

6


Liquidity Facility”, “Responsible Officer”, “Scheduled Payment”, “Special Payment”, “Special Termination”, “Standard & Poor’s”, “Stated Interest Rate”, “Subordination Agent”, “Taxes”, “Threshold Rating”, “Trust Agreement”, “Trustees”, “Underwriter” and “Underwriting Agreement”.
 
 
ARTICLE II
 
AMOUNT AND TERMS OF THE COMMITMENT
 
Section 2.01 The Advances. The Primary Liquidity Provider hereby irrevocably agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until 12:00 noon (New York City time) on the Expiry Date (unless the obligations of the Primary Liquidity Provider shall be earlier terminated in accordance with the terms of Section 2.04(b)) in an aggregate amount at any time outstanding not to exceed the Maximum Commitment.
 
Section 2.02 Making the Advances. (a) Interest Advances shall be made in one or more Borrowings by delivery to the Primary Liquidity Provider of one or more written and completed Notices of Borrowing in substantially the form of Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Maximum Available Commitment at such time and shall be used solely for the payment when due of interest with respect to the Class G Certificates at the Stated Interest Rate for the applicable Interest Period (calculated assuming that Continental will not cure any Payment Default) in accordance with Section 3.5(a) of the Intercreditor Agreement. Each Interest Advance made hereunder shall automatically reduce the Maximum Available Commitment and the amount available to be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to reinstatement as provided in the next sentence). Upon repayment to the Primary Liquidity Provider in full or in part of the amount of any Interest Advance made pursuant to this Section 2.02(a), together with accrued interest thereon (as provided herein), the Maximum Available Commitment shall be reinstated by an amount equal to the amount of such Interest Advance so repaid but not to exceed the Maximum Commitment; provided, however, that the Maximum Available Commitment shall not be so reinstated at any time if (x) any Equipment Note is a Non-Performing Equipment Note and a Liquidity Event of Default shall have occurred and be continuing or (y) a Final Advance has been made.
 
(b) A Non-Extension Advance shall be made in a single Borrowing if this Agreement is not extended in accordance with Section 3.5(d) of the Intercreditor Agreement (unless a Replacement Primary Liquidity Facility to replace this Agreement shall have been delivered to the Borrower as contemplated by said Section 3.5(d) within the time period specified in such Section 3.5(d)) by delivery to the Primary Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex II attached hereto, signed by a Responsible Officer of the Borrower, in an amount equal to the Maximum Available Commitment at such time, and shall be used to fund the Primary Cash Collateral Account in accordance with such Section 3.5(d) and Section 3.5(f) of the Intercreditor Agreement.
 
(c) A Downgrade Advance shall be made in a single Borrowing upon the occurrence of a Downgrade Event (as provided for in Section 3.5(c) of the Intercreditor
 

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Agreement) unless a Replacement Primary Liquidity Facility to replace this Agreement shall have been previously delivered to the Borrower in accordance with Section 3.5(c), by delivery to the Primary Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex III attached hereto, signed by a Responsible Officer of the Borrower, in an amount equal to the Maximum Available Commitment at such time, and shall be used to fund the Primary Cash Collateral Account in accordance with Sections 3.5(c) and 3.5(f) of the Intercreditor Agreement.
 
(d) A Final Advance shall be made in a single Borrowing upon the receipt by the Borrower of a Termination Notice from the Primary Liquidity Provider pursuant to Section 6.01 hereof by delivery to the Primary Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex IV attached hereto, signed by a Responsible Officer of the Borrower, in an amount equal to the Maximum Available Commitment at such time, and shall be used to fund the Primary Cash Collateral Account in accordance with Sections 3.5(f) and 3.5(i) of the Intercreditor Agreement.
 
(e) Each Borrowing shall be made on notice in writing (a “Notice of Borrowing”) in substantially the form required by Section 2.02(a), 2.02(b), 2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Primary Liquidity Provider. Each Notice of Borrowing shall be effective upon delivery of a copy thereof to the Primary Liquidity Provider’s office at the address specified in Section 7.02. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing no later than 12:00 p.m. (New York City time) on a Business Day, upon satisfaction of the conditions precedent set forth in Section 4.02 with respect to a requested Borrowing, the Primary Liquidity Provider shall make available to the Borrower, in accordance with its payment instructions, the amount of such Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New York City time) on such Business Day or on such later Business Day specified in such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing on a day that is not a Business Day or after 12:00 p.m. (New York City time) on a Business Day, upon satisfaction of the conditions precedent set forth in Section 4.02 with respect to a requested Borrowing, the Primary Liquidity Provider shall make available to the Borrower, in accordance with its payment instructions, the amount of such Borrowing in U.S. dollars and in immediately available funds, before 12:00 noon (New York City time) on the first Business Day next following the day of receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing. Payments of proceeds of a Borrowing shall be made by wire transfer of immediately available funds to the Borrower in accordance with such wire transfer instructions as the Borrower shall furnish from time to time to the Primary Liquidity Provider for such purpose. Each Notice of Borrowing shall be irrevocable and binding on the Borrower.
 
(f) Upon the making of any Advance requested pursuant to a Notice of Borrowing in accordance with the Borrower’s payment instructions, the Primary Liquidity Provider shall be fully discharged of its obligation hereunder with respect to such Notice of Borrowing, and the Primary Liquidity Provider shall not thereafter be obligated to make any further Advances hereunder in respect of such Notice of Borrowing to the Borrower or to any other Person. If the Primary Liquidity Provider makes an Advance requested pursuant to a Notice of Borrowing before 12:00 noon (New York City time) on the second Business Day after the date of payment specified in Section 2.02(e), the Primary Liquidity Provider shall have fully
 

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discharged its obligations hereunder with respect to such Advance and an event of default shall not have occurred hereunder. Following the making of any Advance pursuant to Section 2.02(b), 2.02(c) or 2.02(d) hereof to fund the Primary Cash Collateral Account, the Primary Liquidity Provider shall have no interest in or rights to the Primary Cash Collateral Account, the funds constituting such Advance or any other amounts from time to time on deposit in the Primary Cash Collateral Account; provided that the foregoing shall not affect or impair the obligations of the Subordination Agent to make the distributions contemplated by Section 3.5(e) or 3.5(f) of the Intercreditor Agreement and provided further, that the foregoing shall not affect or impair the rights of the Primary Liquidity Provider to provide written instructions with respect to the investment and reinvestment of amounts in the Primary Cash Collateral Account to the extent provided in Section 2.2(b) of the Intercreditor Agreement. By paying to the Borrower proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement, the Primary Liquidity Provider makes no representation as to, and assumes no responsibility for, the correctness or sufficiency for any purpose of the amount of the Advances so made and requested.
 
Section 2.03 Fees. The Borrower agrees to pay to the Primary Liquidity Provider the fees set forth in the Fee Letter applicable to this Agreement.
 
Section 2.04 Reductions or Termination of the Maximum Commitment. (a)  Automatic Reduction. Promptly following each date on which the Required Amount is reduced as a result of a reduction in the Pool Balance of the Class G Certificates (including by reason of a Policy Provider Election with respect to the Series G Equipment Note) or otherwise, the Maximum Commitment shall automatically be reduced to an amount equal to such reduced Required Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic reduction of the Maximum Commitment to the Primary Liquidity Provider within two Business Days thereof. The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of the Maximum Commitment.
 
(b) Termination. Upon the making of any Provider Advance or Final Advance hereunder or the occurrence of the Termination Date, the obligation of the Primary Liquidity Provider to make further Advances hereunder shall automatically and irrevocably terminate, and the Borrower shall not be entitled to request any further Borrowing hereunder.
 
Section 2.05 Repayments of Interest Advances or the Final Advance. Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees, without notice of an Advance or demand for repayment from the Primary Liquidity Provider (which notice and demand are hereby waived by the Borrower), to pay, or to cause to be paid, to the Primary Liquidity Provider on each date on which the Primary Liquidity Provider shall make an Interest Advance or the Final Advance, an amount equal to (a) the amount of such Advance (any such Advance, until repaid, is referred to herein as an “Unpaid Advance”) (if multiple Interest Advances are outstanding, any such repayment to be applied in the order in which such Interest Advances have been made, starting with the earliest), plus (b) interest on the amount of each such Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the Primary Liquidity Provider shall make a Provider Advance at any time after making one or more Interest Advances which shall not have been repaid in accordance with this Section 2.05 or (ii) this Primary Liquidity Facility shall become a Downgraded Facility or Non-Extended Facility at any time when unreimbursed Interest Advances have reduced the Maximum Available Commitment to zero,
 

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then such Interest Advances shall cease to constitute Unpaid Advances and shall be deemed to have been changed into an Applied Downgrade Advance or an Applied Non-Extension Advance, as the case may be, for all purposes of this Agreement (including, without limitation, for the purpose of determining when such Interest Advance is required to be repaid to the Primary Liquidity Provider in accordance with Section 2.06 and for the purposes of Section 2.06(b)). The Borrower and the Primary Liquidity Provider agree that the repayment in full of each Interest Advance and Final Advance on the date such Advance is made is intended to be a contemporaneous exchange for new value given to the Borrower by the Primary Liquidity Provider.
 
Section 2.06 Repayments of Provider Advances. (a) Amounts advanced hereunder in respect of a Provider Advance shall be deposited in the Primary Cash Collateral Account and invested and withdrawn from the Primary Cash Collateral Account as set forth in Sections 3.5(c), 3.5(d), 3.5(e) and 3.5(f) of the Intercreditor Agreement. Subject to Sections 2.07 and 2.09, the Borrower agrees to pay to the Primary Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution Date after the making of a Provider Advance, interest on the principal amount of any such Provider Advance as provided in Section 3.07 hereof; provided, however, that amounts in respect of a Provider Advance withdrawn from the Primary Cash Collateral Account for the purpose of paying interest on the Class G Certificates in accordance with Section 3.5(f) of the Intercreditor Agreement (the amount of any such withdrawal being (y) in the case of a Downgrade Advance, an “Applied Downgrade Advance” and (z) in the case of a Non-Extension Advance, an “Applied Non-Extension Advance” and, together with an Applied Downgrade Advance, an “Applied Provider Advance”) shall thereafter (subject to Section 2.06(b)) be treated as an Interest Advance under this Agreement for purposes of determining the Applicable Liquidity Rate for interest payable thereon; provided further, however, that if, following the making of a Provider Advance, the Primary Liquidity Provider delivers a Termination Notice to the Borrower pursuant to Section 6.01 hereof, such Provider Advance shall thereafter be treated as a Final Advance under this Agreement for purposes of determining the Applicable Liquidity Rate for interest payable thereon and the obligation for repayment thereof and as an Applied Downgrade Advance or Applied Non-Extension Advance, as the case may be, for purposes of Section 2.6(c) of the Intercreditor Agreement. Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any amounts from the Primary Cash Collateral Account on account of a reduction in the Required Amount, the Borrower shall repay to the Primary Liquidity Provider a portion of the Provider Advances in a principal amount equal to such reduction, plus interest on the principal amount prepaid as provided in Section 3.07 hereof.
 
(b) At any time when an Applied Provider Advance (or any portion thereof) is outstanding, upon the deposit in the Primary Cash Collateral Account of any amount pursuant to clause “fourth” of Section 3.2 of the Intercreditor Agreement (any such amount being a “Replenishment Amount”) for the purpose of replenishing or increasing the balance thereof up to the Required Amount at such time, (i) the aggregate outstanding principal amount of all Applied Provider Advances (and of Provider Advances treated as an Interest Advance for purposes of determining the Applicable Liquidity Rate for interest payable thereon) shall be automatically reduced by the amount of such Replenishment Amount (if multiple Applied Provider Advances are outstanding, such Replenishment Amount to be applied in the order in which such Applied Provider Advances have been made, starting with the earliest) and (ii) the aggregate outstanding
 

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principal amount of all Unapplied Provider Advances shall be automatically increased by the amount of such Replenishment Amount.
 
(c) Upon the provision of a Replacement Primary Liquidity Facility in replacement of this Agreement in accordance with Section 3.5(e) of the Intercreditor Agreement, and upon the payment in full of the Class G Certificates, amounts remaining on deposit in the Primary Cash Collateral Account after giving effect to any Applied Provider Advance on the date of such replacement shall be reimbursed to the replaced Primary Liquidity Provider, but only to the extent such amounts are necessary to repay in full to the replaced Primary Liquidity Provider all amounts owing to it hereunder.
 
Section 2.07 Payments to the Primary Liquidity Provider Under the Intercreditor Agreement. In order to provide for payment or repayment to the Primary Liquidity Provider of any amounts hereunder, the Intercreditor Agreement provides that amounts available and referred to in Articles II and III of the Intercreditor Agreement, to the extent payable to the Primary Liquidity Provider pursuant to the terms of the Intercreditor Agreement (including, without limitation, Section 3.5(f) of the Intercreditor Agreement), shall be paid to the Primary Liquidity Provider in accordance with the terms thereof. Amounts so paid to the Primary Liquidity Provider shall be applied by the Primary Liquidity Provider to Liquidity Obligations then due and payable in accordance with the Intercreditor Agreement and shall discharge in full the corresponding obligations of the Borrower hereunder (or, if not provided for in the Intercreditor Agreement, then in such manner as the Primary Liquidity Provider shall deem appropriate).
 
Section 2.08 Book Entries. The Primary Liquidity Provider shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from Advances made from time to time and the amounts of principal and interest payable hereunder and paid from time to time in respect thereof; provided, however, that the failure by the Primary Liquidity Provider to maintain such account or accounts shall not affect the obligations of the Borrower in respect of Advances.
 
Section 2.09 Payments from Available Funds Only. All payments to be made by the Borrower under this Agreement including, without limitation, Section 7.05 and 7.07 hereof, shall be made only from the amounts that constitute Scheduled Payments, Special Payments or payments under the Fee Letter and Section 8.1 of the Note Purchase Agreement and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Primary Liquidity Provider agrees that it will look solely to such amounts in respect of payments to be made by the Borrower hereunder to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or the Note Purchase Agreement. Amounts on deposit in the Primary Cash Collateral Account shall be available to the Borrower to make payments under this Agreement only to the extent and for the purposes expressly contemplated in Section 3.5(f) of the Intercreditor Agreement. Nothing herein shall limit or
 

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otherwise affect the right of the Primary Liquidity Provider to receive payment from the Policy Provider under Section 3.6(d) of the Intercreditor Agreement.
 
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No earlier than the 60th day and no later than the 40th day prior to the then effective Expiry Date (unless such Expiry Date is on or after the date that is 15 days after the Final Legal Distribution Date for the Class G Certificates), the Borrower shall request that the Primary Liquidity Provider extend the Expiry Date to the earlier of (i) the date that is 15 days after the Final Legal Distribution Date for the Class G Certificates and (ii) the date that is the day immediately preceding the 364th day occurring after the last day of the Consent Period (as hereinafter defined). Whether or not the Borrower has made such request, the Primary Liquidity Provider shall advise the Borrower, no earlier than the 40th day (or, if earlier, the date of the Primary Liquidity Provider’s receipt of such request, if any, from the Borrower) and no later than the 25th day prior to the then effective Expiry Date (such period, the “Consent Period”), whether, in its sole discretion, it agrees to so extend the Expiry Date. If the Primary Liquidity Provider advises the Borrower on or before the date on which the Consent Period ends that such Expiry Date shall not be so extended, or fails to irrevocably and unconditionally advise the Borrower on or before the date on which the Consent Period ends that such Expiry Date shall be so extended (and, in each case, if the Primary Liquidity Provider shall not have been replaced in accordance with Section 3.5(e) of the Intercreditor Agreement), the Borrower shall be entitled on and after the date on which the Consent Period ends (but prior to the then effective Expiry Date) to request a Non-Extension Advance in accordance with Section 2.02(b) hereof and Section 3.5(d) of the Intercreditor Agreement.
 
 
ARTICLE III
 
OBLIGATIONS OF THE BORROWER
 
Section 3.01 Increased Costs. The Borrower shall pay to the Primary Liquidity Provider from time to time such amounts as may be necessary to compensate the Primary Liquidity Provider for any increased costs incurred by the Primary Liquidity Provider which are attributable to its making or maintaining any LIBOR Advances hereunder or its obligation to make any such Advances hereunder, or any reduction in any amount receivable by the Primary Liquidity Provider under this Agreement or the Intercreditor Agreement in respect of any such Advances or such obligation (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any change after the date of this Agreement in U.S. federal, state, municipal, or foreign laws or regulations (including Regulation D of the Board of Governors of the Federal Reserve System), or the adoption or making after the date of this Agreement of any interpretations, directives, or requirements applying to a class of banks including the Primary Liquidity Provider under any U.S. federal, state, municipal, or any foreign laws or regulations (whether or not having the force of law) by any court, central bank or monetary authority charged with the interpretation or administration thereof (a “Regulatory Change”), which: (1) changes the basis of taxation of any amounts payable to the Primary Liquidity Provider under this Agreement in respect of any such Advances or such obligation (other than with respect to Excluded Taxes); or (2) imposes or modifies any reserve, special deposit, compulsory loan or similar requirements relating to any extensions of credit or other assets of, or any deposits with other liabilities of, the Primary Liquidity Provider (including any
 

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such Advances or such obligation or any deposits referred to in the definition of LIBOR Rate or related definitions).
 
The Primary Liquidity Provider will notify the Borrower of any event occurring after the date of this Agreement that will entitle the Primary Liquidity Provider to compensation pursuant to this Section 3.01 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation, which notice shall describe in reasonable detail the calculation of the amounts owed under this Section. Determinations by the Primary Liquidity Provider for purposes of this Section 3.01 of the effect of any Regulatory Change on its costs of making or maintaining Advances or on amounts receivable by it in respect of Advances, and of the additional amounts required to compensate the Primary Liquidity Provider in respect of any Additional Costs, shall be prima facie evidence of the amount owed under this Section.
 
Notwithstanding the preceding two paragraphs, the Primary Liquidity Provider and the Subordination Agent agree that any permitted assignee or participant of the initial Primary Liquidity Provider which is not a bank shall not be entitled to the benefits of the preceding two paragraphs (but without limiting the provisions of Section 7.08 hereof).
 
Section 3.02 Capital Adequacy. If (1) the adoption, after the date hereof, of any applicable governmental law, rule or regulation regarding capital adequacy, (2) any change, after the date hereof, in the interpretation or administration of any such law, rule or regulation by any central bank or other governmental authority charged with the interpretation or administration thereof or (3) compliance by the Primary Liquidity Provider or any corporation controlling the Primary Liquidity Provider with any applicable guideline or request of general applicability, issued after the date hereof, by any central bank or other governmental authority (whether or not having the force of law) that constitutes a change of the nature described in clause (2), has the effect of requiring an increase in the amount of capital required to be maintained by the Primary Liquidity Provider or any corporation controlling the Primary Liquidity Provider, and such increase is based upon the Primary Liquidity Provider’s obligations hereunder and other similar obligations, the Borrower shall, subject to the provisions of Section 3.11, pay to the Primary Liquidity Provider from time to time such additional amount or amounts as are necessary to compensate the Primary Liquidity Provider for such portion of such increase as shall be reasonably allocable to the Primary Liquidity Provider’s obligations to the Borrower hereunder.
 
The Primary Liquidity Provider will notify the Borrower of any event occurring after the date of this Agreement that will entitle the Primary Liquidity Provider to compensation pursuant to this Section 3.02 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation, which notice shall describe in reasonable detail the calculation of the amounts owed under this Section. Determinations by the Primary Liquidity Provider for purposes of this Section 3.02 of the effect of any increase in the amount of capital required to be maintained by the Primary Liquidity Provider and of the amount allocable to the Primary Liquidity Provider’s obligations to the Borrower hereunder shall be prima facie evidence of the amounts owed under this Section.
 
Notwithstanding the preceding two paragraphs, the Primary Liquidity Provider and the Subordination Agent agree that any permitted assignee or participant of the initial
 

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Primary Liquidity Provider which is not a bank shall not be entitled to the benefits of the preceding two paragraphs (but without limiting the provisions of Section 7.08 hereof).
 
Section 3.03 Payments Free of Deductions. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction or withholding for or on account of any present or future Taxes of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed, other than Excluded Taxes (such non-excluded Taxes being referred to herein, collectively, as “Indemnified Taxes” and, individually, as an “Indemnified Tax”). If any Taxes are required to be withheld from any amounts payable to the Primary Liquidity Provider under this Agreement, (i) the Borrower shall within the time prescribed therefor by applicable law pay to the appropriate governmental or taxing authority the full amount of any such Taxes (including any additional Tax required to be deducted or withheld in respect of the additional amounts payable under clause (ii) hereof) and make such reports or returns in connection therewith at the time or times and in the manner prescribed by applicable law, and (ii) in the case of Indemnified Taxes, the amounts payable to the Primary Liquidity Provider shall be increased to the extent necessary to yield to the Primary Liquidity Provider (after deduction or withholding for or on account of all Indemnified Taxes required to be deducted or withheld by reason of the receipt or accrual of the additional amounts payable pursuant to this clause (ii)) interest or any other such amounts payable under this Agreement at the rates or in the amounts specified in this Agreement.
 
If the Primary Liquidity Provider (including a successor Primary Liquidity Provider) is not organized under the laws of the United States or any State thereof, to the extent it is eligible to do so, the Primary Liquidity Provider agrees to provide to the Borrower, prior to the first date any amount is payable to it hereunder, two executed original copies of Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Primary Liquidity Provider is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement. In addition, the Primary Liquidity Provider will provide, from time to time upon the reasonable request of the Borrower, such additional forms or documentation as may be necessary to establish an available exemption from (or an entitlement to a reduced rate of) withholding tax on payments hereunder. Within 30 days after the date of each payment hereunder, the Borrower shall furnish to the Primary Liquidity Provider the original or certified copy of (or other documentary evidence of) the payment of the Indemnified Taxes applicable to such payment.
 
(b) If the Primary Liquidity Provider (including a successor Primary Liquidity Provider) is not organized under the laws of the United States or any State thereof, all Advances made by the Primary Liquidity Provider under this Agreement shall be made free and clear of, and without reduction for or on account of, any Taxes that are imposed by a jurisdiction in which the Primary Liquidity Provider is organized, has its Lending Office or maintains its principal place of business. If any such Taxes are required to be withheld or deducted from any Advances, the Primary Liquidity Provider shall (i) within the time prescribed therefor by applicable law pay to the appropriate governmental or taxing authority the full amount of any such Taxes (and any additional Taxes in respect of the additional amounts payable under clause (ii) hereof) and make such reports or returns in connection therewith at the time or times and in the manner prescribed by applicable law, and (ii) pay to the Borrower an additional amount which (after deduction of
 

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all such Taxes) shall be sufficient to yield to the Borrower the full amount that would have been received by it had no such withholding or deduction been required. The Borrower shall, for federal income tax purposes and for all purposes hereunder, treat such payments as Interest Advances, and, as such, will treat such payments as loans made by the Primary Liquidity Provider to the Borrower, unless otherwise required by law. Within 30 days after the date of each payment hereunder, the Primary Liquidity Provider shall furnish to the Borrower the original or a certified copy of (or other documentary evidence of) the payment of the Taxes applicable to such payment.
 
(c) If any exemption from, or reduction in the rate of, any Taxes required to be deducted or withheld from amounts payable by the Primary Liquidity Provider hereunder is reasonably available to the Borrower to establish that payments under this Agreement are exempt from (or entitled to a reduced rate of) Tax, the Borrower shall deliver to the Primary Liquidity Provider such form or forms and such other evidence of the eligibility of the Borrower for such exemption or reduction as the Primary Liquidity Provider may reasonably identify to the Borrower as being required as a condition to exemption from, or reduction in the rate of, any such Taxes.
 
Section 3.04 Payments. The Borrower shall make or cause to be made each payment to the Primary Liquidity Provider under this Agreement so as to cause the same to be received by the Primary Liquidity Provider not later than 1:00 p.m. (New York City time) on the day when due. The Borrower shall make all such payments in U.S. dollars, to the Primary Liquidity Provider in immediately available funds, by wire transfer to the account of Morgan Stanley Bank, at Citibank, New York, New York, ABA No. 021000089, Account Name: MS Bank, Account No. 30463591; or to such other U.S. bank account as the Primary Liquidity Provider may from time to time direct the Subordination Agent.
 
Section 3.05 Computations. All computations of interest based on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the LIBOR Rate shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.
 
Section 3.06 Payment on Non-Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and no additional interest shall be due as a result (and if so made, shall be deemed to have been made when due). If any payment in respect of interest on an Advance is so deferred to the next succeeding Business Day, such deferral shall not delay the commencement of the next Interest Period for such Advance (if such Advance is a LIBOR Advance) or reduce the number of days for which interest will be payable on such Advance on the next interest payment date for such Advance.
 
Section 3.07 Interest. (a) Subject to Section 2.09, the Borrower shall pay, or shall cause to be paid, without duplication, interest on (i) the unpaid principal amount of each Advance from and including the date of such Advance (or, in the case of an Applied Provider Advance, from and including the date on which the amount thereof was withdrawn from the Primary Cash Collateral Account to pay interest on the Class G Certificates) to but excluding the
 

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